Markets in the week gone by behaved on expected lines and gained quite sharply. Markets opened on a weak note on Monday and then did a U-turn. They gained on four of the five trading days. BSESENSEX gained 1,914.49 points or 3.34% to close at 59,276.69 points while NIFTY gained 517.45 points or 3.02% to close at 17,670.45 points. The broader markets saw BSE100, BSE200 and BSE500 gain 3.02%, 3.01% and 3.04% respectively. BSEMIDCAP gained 2.75% while BSESMALLCAP was up 3.23%.

The Indian Rupee gained 41 paisa or 0.54% to close at Rs 75.79 to the US Dollar. Dow Jones was flattish for the week losing 42.97 points or 0.12% to close at 34,818.27 points.
The week was eventful with the financial year and March futures ending on the last trading day. March futures ended with gains of 1,216.80 points or 7.49%. The financial year 2021-22 saw the BSESENSEX move from 49,509.15 points to 58,568.51 points, a gain of 9,059.36 points or 18.30%. NIFTY moved from 14,690.70 points to 17,464.75 points, a gain of 2,774.05 points or 18.88%. Despite the turmoil and the Russia Ukraine war, it has been much more than an average year for stock market returns. It is even more significant from the fact that this is the second consecutive year of super returns for the market.

The follow-on public offer from Ruchi Soya Industries Limited was subscribed 3.80 times. SEBI then directed the company to allow investors two days to withdraw their bids because some messages were circulated to induce investments. During the withdrawal, bids for 97.40 lac shares were withdrawn against total bids received of 17.60 lac shares. The follow-on offer oversubscription was reduced from 3.80 times to 3.60 times. The closing price of Ruchi Soya at the BSE on Friday was Rs 943.55, a premium of Rs 293.55 or 31.11% to the discovered or allotted price of Rs 650. Shares from the FPO are likely to list on Friday the 8th of April. I believe the listing price/discovered price should be around Rs 700 on listing day.

The Russia-Ukraine war seems to have become a never ending one and we seem to be getting nowhere. The world carries on and there are the usual noises coming from the concerned parties. In the meanwhile, the word’s largest miner of Gold, Russia, has announced a new fixed price for its currency with gold. The price per gram of gold has been specified as 5,000 Roubles. This has virtually reduced the value of gold by around 30%. This announcement offers countries wanting to buy crude oil and gas from Russia, an alternate currency to Euros, Dollars and Roubles. How things pan out in the near future would be interesting developments.

India seems to have become an interesting hot spot from the political point. We have had unexpected and sudden visits from a number of large countries in the last fortnight. While such visits need not translate into instant results, it certainly improves India’s stock as a global player. On the other hand, two of our neighbours are in dire straits. Pakistan Prime Minister is on the verge of being voted out in a no-confidence motion. Sri Lanka is on the verge of an economic crisis and things could get serious with civil riots as days pass by with power cuts being the order of the day.

Markets have entered the stage where annual results and fourth quarter results for the period January-March 2022 would be announced. Over the next 60 days these companies would have to announce their results. With the performance witnessed in the December quarter, expectations of good and improved results have been raised. There could be issues with the profitability as there has been massive cost pressure with commodity prices rising disproportionately. It would be interesting to see how companies which have seen sharp rise in selling prices manage their costs.

The week gone by saw two interesting developments in the market. The first was the change in approach from FII’s or FPI’s. They seem to have run out of shares to sell and have turned buyers. While their purchases are not yet that big to confirm a change in trend, it still gives a fair indication that big selling is unlikely to happen. The second is that after a very long time there is movement and participation in Smallcap and midcap stocks. This could be attributed to NAV propping during the last week to some extent. However, there is a strong undertone suggesting that these segments would witness buying as we go forward.

Coming to the markets in the week ahead, expect markets to continue their upward move. There is strong momentum in the markets and that should hold them in good stead. There would be equal amount of traction in large cap as there would be in select midcap and Smallcap stocks. Markets are well poised to break out of the last resistances and gain as we go forward. As immediate targets, expect the BSESENSEX to gain another 1,000 points at the bare minimum and NIFTY about 350 points. This need not be a straight jump but would see some ups and downs as well. Post markets crossing 60,500 and 18,100 respectively, markets would take a call based on their strength and momentum. Enjoy the rally as it unfolds.

The week gone by was volatile and saw markets losing on four of the five trading sessions. While at the end of the week, BSESENSEX was down 501.73 points or 0.87% to close at 57,362.20 points while NSENIFTY lost 134.05 points or 0.78% to close at 17,153.00 points. While the net result looks quite small, it does not convey the volatility and uncertainty that markets witnessed. The broader markets saw BSE100, BSE200 and BSE500 lose 0.62%, 0.52% and 0.42% respectively. BSEMIDCAP lost 0.15% while BSESMALLCAP gained 0.34%.

The Indian Rupee lost 40 paisa or 0.53% to close at Rs 76.70 to the US Dollar. Dow Jones gained 106.31 points or 0.31% to close at 34,861.24 points.

The follow-on public offer to raise Rs 4,300 crs from Ruchi Soya Industries Limited is currently on. The issue priced in a band of Rs 615-650 had opened on Thursday the 24th of March 2022 and would close on Monday the 28th of March. Over the first two days of the issue, the subscription has been about 38%.

The issue has been very attractively priced and offers scope for appreciation on listing and in the medium to long term as well. The key takeaway from the RHP is the announcement from the group that the Patanjali management has taken a conscious decision to bring all food business under the Ruchi Soya brand and management. To this end, the biscuits, breakfast cereals and noodles business was transferred to Ruchi Soya from Patanjali as a slump sale in May-June of 2021 at a cost of Rs 60 crs. Going forward the remaining food business would also be transferred on similar lines. This is big news for Ruchi Soya which had revenues of Rs 17,500 crs in nine months ended December 2021 and a net profit of Rs 572 crs. Finally, its entry into the nutraceuticals business would also be a win-win situation for the company.

The company earned an EPS of Rs 23.02 for the year ended March 2021 which is Rs 11.42 in the period April to September 21 and has improved to Rs 19.33 in the nine-month period ended December 2021. The PE for the company based on March 21 earnings is 26.72- 28.24 times. The closing price of Ruchi Soya on Friday on the BSE was Rs 866.70, which is a discount of Rs 216.70 or 25% to the closing price. Expect the market price post the listing of the FPO shares to converge closer to the issue price.

The Russia-Ukraine war has completed its first month. The war had begun on 24th of February and we would be entering the month of April during the course of the week. US President in a show of strength was in Poland to meet soldiers posted on the border with Ukraine. While there has been a lot of posturing and news flow about meetings, the ground reality is that we are nowhere near an acceptable settlement. Russia has made its stance clear that it doesn’t want NATO forces breathing down its neck and such guarantees need to be backed by the people who give them. How and when they would be given is the multimillion-dollar question. Till then we can hope that things do not go out of control.

The week ahead sees March futures expiring on the last trading day of the month on 31st March. Even though the month has been extremely volatile and choppy, we must remember that a short-term bottom was made in the markets in March. Incidentally February series had expired on the day Russia-Ukraine war had started. The current series is ahead by 905.05 points or 5.57%. The March series had begun at 16,247.95 points while the current level is 17,153 points. The bulls have a sizeable lead of a little over 900 points. With just four days to go, they would look to push the pedal and end the financial year on a high. They will be helped by some positive sentiment on account of NAV propping over the next four days as well.

For the week ahead, the previous bottom of last week at the 57,230 level on BSESENSEX and 17,100 on NIFTY will be key support levels for the market. The possible upside for the market whether in the coming week or over a longer time frame could be 59,500-59,600 on BSESENSEX and 17,800 on NIFTY. These are very key levels and need to be breached for any meaningful breakout or breakdown. We may also see markets threatening to breakout and breakdown but faltering around these levels. One needs to keep these levels in mind before taking any positions. Further the war will be an important factor as crude oil prices after the first rally and fall, have again started rising. The demand from Russia, that they be paid in Roubles as there are sanctions against them, has found no takers amongst the beneficiaries of oil importers. However, from Russia’s standpoint it becomes a valid argument as the dollars are not valid while the roubles are. Secondly, the Russian economy needs support.

Expect in the week ahead volatility to continue. Expect the week to open with a positive bias and markets to follow geo-political news flow. With March futures and year end considerations, markets would be choppy and volatile. Some NAV considerations could cause sharp movement in midcap and Smallcap stocks as well. Trade cautiously.