Market correction likely to end with Feb expiry
THE markets corrected quite sharply in the last four trading sessions beginning from Thursday the 18th of February. They closed in negative territory on three of the four days and were flat on Thursday. Every Monday since the beginning of February and presentation of the Union Budget, markets have seen sharp rallies. Yesterday was an exception. They fell and fell even more sharply. The rise on the BSE Sensex on the 1st, 8th and 15th of February was 2,315 points, 617 points and 610 points in that order. Similar rise on NIFTY was 647 points, 191 points and 151 points. The fall this time around was 1,145 points on BSE Sensex and 306 points on NIFTY. The change in four trading sessions was a loss of 1,952 points or 3.92 per cent on BSE Sensex and 501 points or 3.41 per cent on NIFTY.
With this correction, markets have given up quite a bit of the gains made post Budget. They have corrected over 40 per cent which could be termed as healthy. In two days' time we have February series futures expiring and with the current fall, the lead of the bulls for the series has reduced to 890.25 points or 6.44 per cent. The market would trade sideways with a negative bias in the remaining two days to expiry. There could be some fall as well if global markets decide to take a plunge. Thursday, expiry day would be volatile and see sharp two-sided moves. Friday, the first day of a new settlement is likely to open with fresh gains and see the benchmark indices gain.
In the first fortnight of March, one is likely to see bulls take the lead and dominate proceedings once again. One should not be surprised if the losses of the last four to five days are made up in this period. Why this would happen is difficult to explain at this juncture, but the event happening is quite likely and more likely than not. It would also be important for market participants to take note of the fact that the primary market in the month of March would be packed with primary offerings and we would have almost two issues if not more opening every week.
Thursday and Friday would see the primary issues from Nureca Limited and RailTel Corporation Limited lists on the bourses. It would be interesting to see how they fare on listing day.
Coming to the markets in the next six days, I would bet my money on markets beginning to start gaining ground from Friday or thereabouts. The initial rally would be slow and begin to gain movement as we get into the new month of March. All those of you who have sold in the current fall and booked profits would have opportunities to not only re-enter the market at lower levels, but also have more disposable funds to invest. Markets are a roller coaster with them being higher than you at times and at other times, you being higher than them. The key to making money remains timely movement whether buying or selling. Further, booking profits should be a system and an important part of the activity in the market.
Trade with caution into expiry.
(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)