The week gone by consisted of five trading sessions and markets gained on three of the five sessions. On Friday, markets were up a tad with BSESENSEX up a mere 21 points while NIFTY was down 1 point. BSESENSEX gained 596.87 points or 0.81% to close at 74,248.22 points while NIFTY gained 186.80 points or 0.84% to close at 22,513.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.14%, 1.62% and 2.12% respectively. BSEMIDCP was up 3.84% while BSESMALLCAP was up 6.64%. The new highs on BSESENSEX was at 74,501.73 points while it was at 22,619 points on NIFTY. 

Indian Rupee gained 10 paisa or 0.12% to close at Rs 83.30 to the US Dollar. Dow Jones gained on two of the five sessions and lost on three. Dow lost 903.33 points or 2.27% to close at 38,904.04 points. The US markets are worried about the FED not cutting interest rates in the immediate short term. With employment data and the economic indicators pointing to a roaring economy, one wonders whether a cut would be appropriate at all. Further the concern about high inflation seems to have taken a back seat and the Central Bank is not too sure about the impact that a rate cut could do to contain inflation. This probably explains the sharp fall in the markets. 

RBI decided to keep rates unchanged and believes that inflation is being tamed. While inflation is cooling off, RBI Governor Shaktikanta Das ‘would like the elephant to return to the forest’. With the country in the midst of elections for the Lok Sabha, no one expected any rate cut this time around. 

In primary market news, we had one listing and one issue opening and closing for subscription during the week. There is no issue expected during the coming week on the main board. 

Shares of SRM Contractors Limited who had issued shares at Rs 210 listed on the bourses on Wednesday, the 3rd of April. The share debuted on day one at Rs 225 and closed at Rs 236.20, a gain of Rs 26.20 or 12.47%. By Friday, the share lost some ground and closed at Rs 228.30, a gain of Rs 18.30 or 8.71%. 

Bharti Hexacom had tapped the capital markets with its offer for sale of 7.5 crore shares in a price band of Rs 542-570. The issue was subscribed 29.88 times overall with QIB portion subscribed 48.57 times, HNI portion subscribed 10.51 times and Retail portion subscribed 2.82 times. There were 6.16 lakh applications in all. The shares being offered in the IPO are by the Government who is selling half of its 30% shareholding. 

The week ahead has a trading holiday on Thursday and would therefore see some profit taking on Wednesday as there is an extended break, with the holiday confined to India. The upside resistance for the markets would be the new highs made last week at 74,501 points on BSESENSEX and at 22,619 points on NIFTY. Support exists at the lows made at 72,416 and at 21,710 points. While these levels seem quite far away currently, they are good levels to fall back on if new long positions are to be initiated for the medium term. 

Expect markets to trade with sharp and two sided moves. There would be a lot of intraday movement and markets looking to decide a trend. In terms of FPI activity, it seems to be a mixed bag with them being buyers on some days and sellers on other days. Domestic institutions or funds have a continuous supply of flows from retail investors which makes them net buyers on more or less a continuous basis. The state of markets with their being at new highs, ensures a steady flow of new equity paper in the form of QIPs and OFS. This comes from promoters and PE investors and also ensures that appetite for new paper is continuously met. It also ensures that the supply demand mismatch does not happen and causes markets to spike because of supply constraints. 

The strategy for the week would be to buy on dips and sell on rallies. While the all-time highs are almost there, one needs to be cautious at these levels while maintaining a balance that if the same is crossed there could be a sharp up move as well. Caution needs to be exercised at the same time towards there being a stock rotation where different stocks move and markets remain around the same levels. Action in midcap and small cap space is again opening up and select counters from this space can be looked at. The first of the IT results would be declared by TCS on Friday, the 12th of April. Hopefully, this would set the trend.

In conclusion, while things look rosy and promising, it’s that time in the markets where one needs to be extra careful where a reversal also can happen any time. 

Trade cautiously.

The short, truncated three-day week was eventful and dramatic. It was the end of the week, month, March futures expiry and also the end of the financial year 2023-2024. Call it bear trap, NAV propping exercise, year end flourish, we had a super volatile Thursday to sign of the year in style. Markets gained on two of the three trading sessions and lost on one. At the end of the short and eventful week, BSESENSEX gained 819.41 points or 1.13% to close at 73,651.35 points while NIFTY gained 230.15 points or 1.04% to close at 22,326.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.33%, 1.34% and 1.33% respectively. BSEMIDCAP gained 1.34% while BSESMALLCAP was up 0.92%. 

The Indian Rupee gained 2 paisa or 0.02% to close at Rs 83.40 to the US Dollar. Dow Jones gained on two of the four trading sessions and lost on two. Dow was up 331.47 points or 0.84% to close at 39,807.37 points. 

Thursday, the 28th of March was the last trading day of the financial year 2023-2024. It was also the day when March futures expired. This increased the volatility and one saw the effect of the same on the markets. NIFTY made an intraday high of 22,516 points and closed at 22,326.90 points. This meant that NIFTY lost 190 points from the high of the day. NIFTY had gained on a net basis 203 points. Similarly, the intraday high on BSESENSEX was 74,190 points while it closed at 73,651.35 points. This meant that BSESENSEX lost 540 points from the high of the day. BSESENSEX had gained 655 points on a net basis.

Coming to the quarterly performance of the benchmark indices, one finds that the net change during the quarter January to March 2024 was a fairly quiet one. BSESENSEX gained 1,411.09 points or 1.95% while NIFTY gained 595.50 points or 2.74%. BSEMIDCAP was up 2,482.96 points or 6.74% while BSESMALLCAP was up 492.58 points or 1.15%. 

For the financial year 2023-2024 the gains have been spectacular and even though the current quarter was nothing great, the overall number is impressive. It may be also mentioned that the quarter January to March 23 (previous year) was negative and one saw the indices lose ground. BSESENSEX lost about 3% while NIFTY lost around 4%. Even the midcap and small cap indices lost about 5% and 7%. As a result, the annual gains were 24.85% on the BSESENSEX, 28.61% on NIFTY, 63.40% on BSEMIDCAP and 60.13% on BSESMALLCAP. 

A question in the form of food for thought is, would financial year 2024-2025, see similar or near about similar gains? Without going into discussion, suffice to say that the year ahead would be tough and trying to match the benchmark returns of last year would be near impossible. 

Expiry of March futures was on a positive note with the series gaining 344.10 points or 1.57% to close at 22326.90 points. More than 60% of the monthly or series gains came on the last day when NIFTY gained 203 points on a net basis. 

The week ahead sees the offer for sale from Bharti Hexacom Limited tapping the markets with its offer for sale of 7.5 crore shares in a price band of Rs 542-570. The issue opens on Wednesday the 3rd of April and closes on Friday the 5th of April. The selling shareholder is Telecommunications Consultants India Limited (A govt of India undertaking) which owns 30% of the company. The balance shareholding is owned by Bharti Airtel Limited which is a listed entity. The company is in the business of providing communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in Rajasthan and the North East telecommunication circles in India which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. The services are offered under the brand ‘Airtel’, 

The shares are being offered at valuations which are between 12-15% cheaper than the same for Bharti Airtel Limited. While the business of the parent company and the company going public is not identical, it’s the best example available. The selling shareholder who is the government is selling half of its shares through this offering and would hold 15% of the equity post this issue. There is a six-month lock in for the remaining shareholders post the listing of the shares. I believe the government sooner than later would look to monetise the remaining shares and sell them post the price discovery of this issue. In that case, investors who apply for this issue and are allotted shares, may have an opportunity to become a part of Bharti Airtel the parent company, as the possibility of this company being merged with the parent is a very bright possibility. Shares of Bharti Airtel trade are trading virtually at new lifetime high at around Rs 1,230. 

The week ahead would see markets being volatile and choppy. While the sharp volatility of Thursday could best be explained as an aberration and something which is unlikely to be repeated, the benchmark has been raised. Markets would find it tough to remain at the elevated levels which they have reached. The stop loss for any long positions would be the lows made last week and earlier support of 21,900 points on NIFTY and 72,300 on BSESENSEX. These should be taken as key supports and any dip below these levels would see sharp sell-off in the markets. On the upside, Thursday took us to new territory on NIFTY and these are tricky waters to navigate. 

The strategy would be to sell on strong rallies and wait for a sharp correction to enter. The picks should be large cap and very select midcap and small cap stocks. 

Trade cautiously.