Expect a volatile and choppy week

The week gone by saw a mixed market with some stocks and sectors behaving as if we were on two different planets. BSE-SENSEX lost 953.70 points or 1.14 per cent to close at 82,626.70 points while NSE-NIFTY lost 222.60 points or 0.87 per cent to close at 60,186.65 points. BANK-NIFTY gained 66.10 points or 0.11 per cent to close at 60,186.65 points.

The broader markets saw BSE-100, BSE200 and BSE-500 lose 0.78 per cent, 0.67 per cent and 0.54 per cent respectively. BSE-MIDCAP gained 1.25 per cent while BSE-SMALLCAP was up 2.43 per cent.

The top gainer was BSEAUTO which was up 2.29 per cent while the top loser was BSE-IT which was down 8.04 per cent. BSE-SENSEX gained on two of the five trading sessions and lost on three, while NIFTY gained on three and lost on two. The highs that the two indices made were at 84,487.34 points and 26,009.40 points.

The Indian Rupee lost one paisa or 0.01 per cent to close at Rs 90.64. Dow Jones lost 614.74 points or 1.23 per cent to close at 49,500.93 points. Dow gained on three of the five trading sessions and lost on two. The fall on Thursday in Dow was 670 points and that spooked markets in India on Friday as well.

Friday was a double whammy for Indian markets. Firstly it was a reaction to Dow’s fall on Thursday and secondly, it was Friday effect where typically every weekend we see profit taking on account of geo-political considerations.

This time we saw that markets corrected not only on these two reasons but also because FPI’s who have been buyers in February, turned big sellers on Friday and were net sellers to the tune of Rs 7,395 crores. The impact of this selling could spill over into Monday as well.

The response of the two mainboard IPO’s which opened and closed during the last week was muted without doubt even though they were fully subscribed.

The first was from Fractal Analytics Limited which was open from Wednesday the 11th of February to Friday the 12th of February. Subscription was 4.41 times in the QIB portion, 1.11 times in HNI portion and 1.08 times in Retail. Overall the issue was subscribed 2.81 times.

The second issue was from Aye Finance Limited which was open from Wednesday the 11th of February to Friday the 12th of February. Subscription was 1.52 times in the QIB portion, 0.05 times in HNI portion and 0.81 times in Retail. Overall the issue was subscribed 1.04 times.

Looking at the subscription numbers, the issues which are to list on Monday the 16th of February are likely to face a torrid time.

One is hearing of about three issues which are likely to have their road shows in the coming week. Details of the same are yet awaited and would be shared once the same are available.

Markets are trading in a broad zone and we need big news to break out or breakdown from the same zone. The broad zone at this point is 25,300 and 26,000. What we saw last week is the market hit the higher level and corrected.

We are currently at 25,471 points and the next level of support is at 25,300 points. However, if this were to break and fail to recover, we are looking at support at levels of 24,700 points. Expect markets in the coming week to be volatile and choppy. Geo-political tensions will continue to drive markets in both directions.

The strategy for the week would be to look for sharp dips to enter the markets and to exit any long positions on rallies. As mentioned earlier it is a trading market and one will have to play it by the ear. Trade cautiously.

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