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Markets Swing Amidst Geopolitical Uncertainty

The Indian Rupee lost 6 paise or 0.07 per cent to close at Rs 83.47 to the US Dollar. Dow Jones lost on two of the five trading sessions and gained on three. At the end of the week, Dow ended as flat as a doormat and was up 3.16 points or 0.01 per cent to close at 37,986.40 points…reports Asian Lite News

Markets in the week gone by were driven by fear, war-mongering and panic. Of course, all of this leads to extreme volatility and sharp two-sided moves.

At the end of the four-day week which had a mid-week holiday on Wednesday, markets lost on three sessions and gained on just one. BSESENSEX lost 1,156.57 points or 1.57 per cent to close at 73,088.33 points while NIFTY lost 372.40 points or 1.65 per cent to close at 22,147.00 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.74 per cent, 1.82 per cent and 1.75 per cent respectively. BSEMIDCAP was down 2.21 per cent while BSESMALLCAP lost 0.96 per cent.

Information on the Israel-Iran conflict took its toll on markets. On Monday, markets opened weak and remained weak throughout the day. Tuesday saw yet another gap down opening and markets closing slightly higher than the opening, but negative. Wednesday was a holiday. Thursday was a swing day where we opened higher than the previous day’s close and then closed sharply lower. Friday was what could be described as a massive swing day where markets opened with a sharp downside gap and then gained throughout the day to close with substantial gains.

Thursday, April 18, saw BSESENSEX open at 73,183 points against the previous day’s close of 72,943 points. It then made an intraday high of 73,473 points and a low of 72,365 points before closing at 72,488 points. Similar levels on NIFTY were, open at 22,212 points against the previous day’s close of 22,148 points. It then made an intraday high of 22,326 points and an intraday low of 21,961 points before closing at 21,995 points. Friday, April 19, was the opposite of Thursday. Markets opened lower, went down marginally and then recovered sharply. The numbers are: BSESENSEX opened at 71,999 points, low 71,816 points , high 73,210 points and close 73,088 points. NIFTY opened on Friday at 21,861 points, made a low at 21,777 points, high at 22,179 points and closed at 22,147 points.

The above would give good indications about the increase in volatility and sharp intraday movement being witnessed.

IT companies have declared results and the little optimism generated by the declaration of TCS results last Friday has turned into disappointment post results from Wipro and Infosys. There is pain in the segment and currently, there is a struggle going on to maintain margins. I believe there is still a couple of quarters of pain left.

In primary market news, the follow-on offer from Vodafone Idea Limited is currently on and will close on Monday, April 22. At the end of two of the three days that the FPO is open, the issue is subscribed 54 per cent at the top end of the price band of Rs 10-11, with the QIB and HNI portion subscribed. Expect subscription levels to pick up on the last day as we get closer to closing time. The anchor portion of the issue saw keen interest and there were marquee names in the list. In what would be an interesting listing for the shares being offered through the FPO is the fact that they would list on Thursday, April 25, which also happens to be the expiry day for April futures. The opening price of Vodafone when the series began was Rs 13.67. The share has also been in the ban status for futures and options over the last few days on account of the exposure limits being crossed.

The issue from JNK India Limited would open on Tuesday, April 23 and close on Thursday, April 25. The issue consists of a fresh issue of Rs 300 crores and an offer for sale of 84,21,052 shares. The price band is Rs 395-415.

The company is into the manufacturing and assembling of process-fired heaters, reformers and cracking furnaces. (Together known as heating equipment). The company has capabilities in thermal designing, engineering, manufacturing, supplying, installing and commissioning. This equipment is required in refineries, petrochemicals and fertiliser plants.

The company reported revenues of Rs 407.30 crores for the year ended March 23 and a profit after tax of Rs 46.36 crores. The EPS for the year was Rs 9.51. For the nine months ended December 23, the revenues were Rs 253.39 crores and the profit after tax was Rs 46.21 crores. The EPS was Rs 9.49. Based on the EPS for the full year ended March 23, the PE multiple for the issue is 41.54-43.64. The comparable peers on a limited basis for the company are Thermax and BHEL, but limited to the supply of heat exchangers and not the balance business that these companies do. The company is into an interesting business and offers an investment opportunity for the medium to long term.

The week ahead sees April futures expire on Thursday. The current value of NIFTY is 22,147.00 points which is lower by 179.90 points or 0.81 per cent compared to the opening level of 22,326.90 points at the beginning of the series. The bulls have in the last week squandered away their hold on the series and over the next four days it would be difficult for them to regain lost ground. The geo-political situation makes things worse for the bulls and it appears with reasonable certainty that bears would take this series.

Coming to the markets in the week ahead, expect sharp volatility and two-sided market movement to be the order of the day. Recent lower tops made last week at 73,905 points on BSESENSEX and at 22,427 points on NIFTY would act as strong resistances in the immediate short term. If these do get violated, previous tops at 75,124 points and 22,775 would be very strong resistances. On the support side, lows made last week at 71,816 points and 21,777 points would act as strong supports. If these are violated, then one could see markets slipping to 71,100 and to 21,550 points respectively.

The strategy for the week would be to keep positions light overnight as the situation in the Gulf or the Middle-East is very fluid. There can always be breaking news on a daily basis. Action would continue in the large-cap and select mid-cap space only. Buy on sharp dips and sell on rallies, one saw plenty of such opportunities just last week.

Trade cautiously.

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Markets End Dramatic Week with Impressive Gains

The Indian Rupee gained 2 paisa or 0.02 per cent 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 per cent to close at 39,807.37 points…reports Asian Lite News

The short and truncated week was eventful and dramatic. It was the end of the week, month, March futures expiry and also the end of the financial year 2023-24. Call it a 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, BSE SENSEX gained 819.41 points or 1.13 per cent to close at 73,651.35 points while NIFTY gained 230.15 points or 1.04 per cent to close at 22,326.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.33 per cent, 1.34 per cent and 1.33 per cent respectively. BSE MIDCAP gained 1.34 per cent while BSE SMALLCAP was up 0.92 per cent. The Indian Rupee gained 2 paisa or 0.02 per cent 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 per cent to close at 39,807.37 points. Thursday, March 28, was the last trading day of the financial year 2023-24. 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 BSE SENSEX 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. BSE SENSEX had gained 655 points on a net basis. 655 points. 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. BSE SENSEX gained 1,411.09 points or 1.95 per cent while NIFTY gained 595.50 points or 2.74 per cent. BSE MIDCAP was up 2,482.96 points or 6.74 per cent while BSE SMALLCAP was up 492.58 points or 1.15 per cent. 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. The quarter from January to March 2023 was negative and one saw the indices lose ground. BSESENSEX lost about 3 per cent while NIFTY lost around 4 per cent. Even the midcap and small cap indices lost about 5 per cent and 7 per cent. As a result, the annual gains were 24.85 per cent on the BSE SENSEX, 28.61 per cent on NIFTY, 63.40 per cent on BSE MIDCAP and 60.13 per cent on BSE SMALLCAP.

A question in the form of food for thought is, would financial year 2024-25, 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 per cent 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, April 3, and closes on Friday, April 5. The selling shareholder is Telecommunications Consultants India Limited, a government undertaking that owns 30 per cent 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 and offering consumer mobile services, fixed-line telephone and broadband services to customers in Rajasthan and the North East telecommunication circles, the latter comprising the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

The services are offered under the Airtel brand. The shares are being offered at valuations which are between 12-15 per cent 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 per cent 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 BSE SENSEX. 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.