Focus may shift to mid-& small-cap firms’ results

The period April 20-26 under review saw markets doing nothing for the first two days. They were up for the next two days and the last day (Wednesday) saw markets undecided which way they wanted to go. They were negative and positive and finally closed with decent gains. BSE Sensex gained 732.78 points or 1.26 per centfor the period to close at 60,300.58 points, while Nifty gained 194.85 points or 1.11 per cent to close at 17,813.60 points.

Dow Jones gained on two of the five sessions and lost on three with sharp losses on Tuesday. Dow Jones lost 445.70 points or 1.31 per cent to close at 33,530.83 points. The losses on Tuesday were big at 344 points.

The IPO from Mankind Pharma Ltd, which would close on Thursday, saw decent response from QIB and HNI segments. Unfortunately, it appears that the retail is not enthused with the issue and this segment is likely to remain undersubscribed. At the time of writing this article the issue was subscribed 0.59 times at 4 pm.

The April 27-May 3 period ahead would see April futures expire on Thursday (April 27). The current value of Nifty at 17,813.60 points is higher by 868 points or 5.12 per cent. The lead is huge and there is no way the bears can attack the bulls with just one trading session to go. Monday (May 1) is a holiday in India and in most markets globally as well. It would be a short four-day session week with bulls roaring into the May series.

Key resistance in the period ahead would be around the 17,850-17,900 levels on Nifty and at 60,450-60,600 levels on BSE Sensex. If this is crossed, the next level would be at 18,050-18,100 and at 61,500-61,650 levels. These have been acting as resistance for some time. If the market has strong momentum and crosses these levels as well, we would see sharp short covering and a rally of about 200 points on Nifty and about 500-600 points on BSE Sensex in next to no time.

This, however, is only if the previous rally is crossed. On the support side, the previous lows at around 17,600-17,650 and at 59,700-59,850 would act as strong supports. The next level of support would be at 17,300-350 and at 58,800-58,950 for BSE Sensex.

The strategy would be to buy into sharp dips and sell on strong rallies. With result season on, and the large heavyweight companies having declared results, action would shift to the results by mid-cap and small-cap firms. While broadly results are in line with expectations, there may be surprises both pleasant and unpleasant in the mid-cap and small-cap space. Trade cautiously.

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