All eyes on RBI meet

Spurred by positive macroeconomic data, fall in international crude oil prices, short covering and value buying in most beaten down quality stocks including index heavyweights market closed higher during the week ended December 3, 2021. The BSE Sensex rallied 589.31 points to 57,696.46, and the NSE Nifty climbed 170.25 points to 17,196.70 points. Putting up a resilient show the broader markets also regained some traction with the BSE Midcap and Smallcap indices rising around 1.35 percent and 1.25 percent respectively.

FIIs have net sold shares worth Rs15,800 crore, however, purchases by DIIs were more than FII outflow with net purchases of Rs16,450 crores. For present, single defining factor for the markets is news flow on Omicron which created lot of fear in the minds of investors and traders. Observers say it would take another six to eight weeks for an 'Omicron wave', if at all, to become apparent. Several companies in sectors such as manufacturing and financial services had shifted close to full attendance after Covid numbers stayed consistently down. Any jitter to normalcy or curbs on the movement are likely to dampen the sentiments further.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is scheduled to meet on December 6-8. Amidst the rising inflationary pressure and the scare of Omicron, it is expected that RBI will keep the rates on hold and markets would keenly watch the commentary of the RBI governor. US Fed meeting on 15th December is also critical for the roadmap of new taper program. Market watchers feel the market is expected to continue with heightened volatility in the coming week as well, amid Monetary Policy Committee meeting, Omicron uncertainty, and economic data. For protecting portfolio from heightened volatility and inflation, the most important thing to remember is that no single strategy is a panacea.

IPO Bazaar: Four IPOs - RateGain Travel Technologies, Metro Brands, Shriram Properties, and CE Info Systems (MapmyIndia) - will open for subscription in the coming week. RateGain Travel Tech, the largest Software as a Service (SaaS) company in the hospitality and travel

industry in India, will launch its Rs 1,335.73-crore IPO during December 7- 9, with a price band of Rs 405-425 per share. Footwear company Metro Brands backed by Big Bull will open its public offer during December 10-14, 2021. India's leading map and navigation services provider CE Info Systems (MapmyIndia) will open its initial public offering for subscription during December 9-December 13, while South-based real estate developer Shriram Properties will launch its maiden public offer for subscription during December 8-10, with a price band of Rs 113-118 per share.

Anand Rathi Wealth will close its IPO on Monday, December 6, while Rakesh Jhunjhunwala-promoted Star Health and Allied Insurance Company will make its debut on the bourses on December 10. Tega Industries IPO garnered sixth largest subscription. The public issue has seen a massive subscription of 219.04 times with support from all kind of investors. The reserved portion of qualified institutional buyers saw the highest ever subscription of 215.45 times at least in a decade.

Tega Industries shares are available at Rs 863-903 per share in the grey market, registering a massive 90.5-99.3 percent premium (Rs 410-450) over expected final issue price of Rs 453 per share. Dalal Street will witness the listing of another Rakesh Jhunjhunwala backed Star Health and Allied Insurance Company, whose issue fell flat on Dalal Street. The issue was subscribed merely 79 per cent, forcing merchant bankers to trim OFS size to get the issue sail through.

Quote of the week: "We don't prognosticate macroeconomic factors, we're looking at our companies from a bottom-up perspective on their long-run prospects of returning — Mellody Hobson

It's very difficult to predict when the next recession or stock market crash will come, so many of the best investors don't even try. Instead, look for good companies with the strength to make it through the occasional challenging economic environment.

F&O/sector watch

Amidst the wild swings, derivatives segment witnessed robust volumes. On the back of alternate bouts of buying and selling, several traders were seen hedging trades and maintaining positions on both sides. On option front, maximum Call Open Interest (OI) was seen at 18000 followed by 17500 & 17400 strikes, and Call writing was seen at 17500 then 18000 & 17400 strikes. Maximum Put OI was seen at 17000 followed by 16000 & 17200 strikes, while Put writing was seen at 16400, strike followed by 16700 & 16500 strikes, with Put unwinding at 17300 and then 17100 & 17000 strikes. Implied volatility (IV) of Calls closed at 14.56 per cent, while that for Put options closed at 15.19. The Nifty VIX for the week closed at 18.09 per cent.

PCR of OI for the week closed at 1.35. The option data indicates that the Nifty range could be 16,800-17,700 levels in coming days. Only a resilient and sustainable move above 17,400 can stabilize the markets in near term. On the sectoral front, IT, metal and realty outperformed; while pharma and energy underperformed. The Department of Telecommunications (DoT) has returned a cumulative of around Rs6500 crore of bank guarantees (BGs) to Bharti Airtel and Vodafone Idea over the last few days.

This windfall for the telecom companies came after the government cut BG requirements against statutory dues such as licensee fees by 80 per cent, in its latest relief package. Punters expect Bharti Airtel and Vodafone to outperform in near term. Price target of Rs20 for Vodafone is not ruled out. Although the supply constraints of chips have gradually improved over the last few months, longer waiting periods with semiconductor shortage affecting production is beginning to show a negative impact on automobile sector. Only EV story is propping some shares say skeptics. Going forward in near term sectorally, IT, real estate and capital goods are expected to relatively outperform while BFSI, telecom and auto provide favourable risk-reward setups. Stock futures looking good Bharti Airtel,

Persistent Systems, Torrent Power, TCS, TechMahindra, SBI Cards and Wipro. Stock futures looking weak are Canfin Homes, Divi Labs, Dabur, Metropolis, Tata Consumer and Whirlpool.

(The author is a stock market expert. He is former vice chairman of AP Planning Board)