60,000 level in sight for this festive season

Markets finally brought cheer and smile to the faces of investors and traders after quite some time. Maybe it is on account of the festivity that one has at this time of the year. It could be because the Dow has rallied. Maybe our economy is more resilient than our global peers. Not sure what it is, but it could be a bit of all these factors. In the October 13-19 period under review, markets lost on just the first day and gained on the remaining four.

On Wednesday, it appeared that the rally needed to pause and there could be profit taking subsequently. BSE Sensex gained 1,481.28 points or 2.51 per cent to close at 59,107.19 points, while Nifty gained 388.65 points or 2.22 per cent to close at 17,512.25 points. The recovery was strong, across sectors and not concentrated in a couple of stocks.

Dow Jones gained on three of the five trading sessions and seems to have made some sort of a short-term bottom. The low was 28,661 and we are 1,850 points away from there currently. The uncertainty in Dow continues on the back of rising inflation and the consequential interest rates. Dow Jones gained 1,285.14 points or 4.21 per cent to close at 30,523.80 points.

In primary market news, shares of Electronics Mart India Limited, listed on Monday the 17th of October and had a great debut. The company had issued shares at Rs59. The shares closed day one at Rs84.50, a gain of Rs25.50 or 43.22 per cent. Over the next two days, the share hit upper circuit of 10 per cent and closed on Wednesday at Rs102.10, a gain of Rs43.10 or 73.05 per cent.

The other share issue, Tracxn Technologies Limited (an offer for sale) which had issued shares at Rs80, would be listing on Thursday. The company had issued shares at Rs80. The issue was subscribed twice over with retail investors subscribing their quota 4.85 times. It needs to be noted that the bidding for this share had closed on Friday and the share would be listing on the fourth trading day since issue closure.

This is as per the new SEBI norms and helped by the system that all funds have to be blocked under ASBA before the issue closes. There seems to be a rush of IPO's likely as companies want to beat the 135-day norm of accounts from 30th June, getting over on 12th November. One should not be surprised if we see companies having road shows even before Diwali week is over. Expect half a dozen issues or thereabouts to open between 1st and 11th November.

The period ahead from October 20th to 26th would see 'Muhurat' trading to take place for Samvat 2079 on Monday, the 24th of October. Markets would be open for just one hour of trading. There would also be a holiday on Wednesday as part of Diwali. Serious trading would happen only on Thursday and Friday and then markets would be back to normal with October futures expiring on Thursday the 26th of October. Expect markets to be very choppy on that day. There is one catch, however if markets move significantly in the US, we would have an impact and that would be in the short time that we are open.

Markets have had a sharp run up and need to pause for breath. The good thing is that they have crossed the intermediate top at 58,578 points and 17,428 points on the BSE Sensex and Nifty respectively and managed to even close above it. This makes these levels as immediate support and the next support, about a half percent lower than these levels. The next resistance would be around 17,650-17,700 on Nifty and 59,650-59,750 on BSE Sensex.

The strategy for the festival week would be to take it easy, enjoy Diwali and use sharp rallies and falls to sell or buy. The key level to watch for would be whether markets touch 60,000 on the BSE Sensex on Diwali day again or not. Wish 'Happy Diwali' to all the readers.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)