After last week’s fall, expect markets to remain range-bound

New Delhi: Markets had a crazy week and were under pressure throughout. They fell on expected lines and this time, we could not blame the US markets as they gained on all five trading sessions.

What happened is a blessing in disguise as it has cooled of the markets, even though Mumbai is having sweltering heat currently.

BSE SENSEX lost 1,213.68 points or 1.64 per cent to close at 72,664.47 points while NIFTY lost 420.65 points or 1.87 per cent to close at 22,055.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.83 per cent, 2.04 per cent and 2.25 per cent respectively. BSEMIDCAP lost 3.27 per cent while BSESMALLCAP lost 3.80 per cent. In what could best be described as an unusual situation, markets lost on two trading sessions but were flat on the remaining three sessions. Just an instance to point out the flatness was NIFTY closing at unchanged levels down to two decimal points on Wednesday at 22,302.50 points compared to Tuesday. I do not remember any other instance in recent times when the levels have remained identical like this.

The Indian Rupee lost 8 paisa or 0.10 per cent to close at Rs 83.50 to the US Dollar. Dow Jones had a stellar week and gained on all five trading sessions of the week. It was up 836.96 points or 2.16 per cent to close at 39,512.64 points.

The week gone by saw three IPOs open and close for subscription. The first was Indegene Limited which had issued shares in a price band of Rs 430-452. The issue was open from Monday the 6th of May to Wednesday the 10th of May. The issue was subscribed an overall 70.26 times with QIB portion subscribed 192.72 times, HNI portion subscribed 55.84 times and Retail portion subscribed 7.8 times. There were 27.80 lakh applications in all.

The second issue was from Aadhar Housing Finance Limited which was open from Wednesday the 8th of May to Friday the 10th of May. The price band was Rs 300-315. The issue was subscribed 26.76 times overall with QIB portion subscribed 76.42 times, HNI portion subscribed 17.33 times and Retail portion subscribed 2.58 times. There were 16.38 lakh applications.

The third issue was from TBO TEK Limited which was open from Wednesday (8th May) to Friday (10th of May). The price band was Rs 875-920. The issue was subscribed 86.68 times overall with QIB portion subscribed 125.51 times, HNI subscribed 50.51 times and Retail portion subscribed 25.65 times. There were 23.75 lakh applications.

The week ahead sees one IPO from general insurer, Go Digit General Insurance Limited. The issue opens on Wednesday the 13th of May and closes on Friday the 15th of May. The issue consists of a fresh issue of Rs 1,125 crores and an offer for sale of 5,47,66,392 equity shares in a price band of Rs 258-272. The company is promoted by Prom Watsa of Fairfax.

The company helps in customising products as required in the general insurance space. It became profitable in FY22-23 and has built on the same in the current nine months ended December 23. The valuations based on current nine months are attractive and offer scope for appreciation on listing as well as for people with a minimum, medium term holding period.

Markets on Thursday, made the intraweek lows at 72,334.18 points on BSESENSEX and at 21,932.48 points on NIFTY. These were higher than the lows made on April 19, at 71,816.46 points and 21,777.65 points.

The fourth round of voting out of seven phases would be held on May 13, followed by the fifth round the following Monday. Volatility has increased in line with the significance of the event and is further borne out by the fact that FPIs have sold close to Rs 30,000 crores in the current month which has been counterbalanced by domestic institutions who have spent their entire kitty of record SIP inflows for the month.

Coming to the markets in the week ahead, while support exists at the lows made on Thursday and the previous lows made on 19th April, even if they are broken, support exists around 21,500 on NIFTY and at 71,650 points on BSESENSEX. On the upside hurdles exist around 22,450-500 and at 73,900 points on BSESENSEX. These levels need to be broken and sustained for any further up move. Expect markets to trade in a narrow range till then.

The trading strategy for the coming week would be simple. Sell on rallies and expect markets to trade in a broad range. Volatility would increase if the levels on either side whether lower or higher are likely to be breached. Trading opportunities will exist and allow the disciplined trader to make money.

Trade cautiously.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)