Time to offload in mid-& small-cap stocks

The domestic market in the March 14-20 period, was extremely volatile and choppy. After the sharp fall witnessed on Wednesday (March 13) in the previous week, we witnessed a pullback, which lasted a mere 24 hours. Markets fell again on Friday. This alternating day movement continued with Wednesday seeing markets alternating between negative and positive throughout the day. They finally closed positive at the end of a tough and volatile day. BSE Sensex lost 636.89 points or 0.74 per cent to close at 72,093.40 points, while Nifty lost 162.70 points or 0.74 per cent to close at 21,836.55 points. Markets gained on three of the five trading sessions.

Dow Jones gained on three of the five trading sessions and lost on two. It gained 105.36 points or 0.27 per cent to close at 39,110.76 points.

In primary markets, there were two listings and one issue, which opened and closed for subscription. The first listing was from Gopal Snacks Ltd, which happened on Thursday (March 14). The company had issued shares at Rs401, and the share debuted at Rs350, a loss of Rs51. By the end of the day, the share gained some ground and closed at Rs360.05, a loss of Rs40.95 or 10.21 per cent. By Wednesday, the share recovered some ground and closed at Rs375.05, a loss of Rs25.95 or 6.47 per cent.

The second share to list was Popular Vehicles and Services Ltd, which had issued shares at Rs295. The share debuted on Tuesday (March 19). The share debuted at Rs292 on BSE which was also the high of the day. The share closed day one at Rs276.25, a loss of Rs18.75 or 6.35 per cent. On Wednesday, the share gained some ground and closed higher at Rs284.90, a loss of Rs10.10 or 3.42 per cent.

The issue from Krystal Integrated Services Ltd was oversubscribed an overall 13.49 times. The issue was open during March 14-18. The price band was Rs680-715. The QIB category was subscribed 7.32 times, HNI portion subscribed 45.22 times and Retail portion was subscribed 3.41 times. There were 2.64 lakh applications in all. The issue would list on Thursday March (21).

There seems to be a temporary lull in the primary markets as of now with no new issues slated for having their roadshows in the immediate foreseeable future.

The March 21-27 period ahead has a trading holiday on account of Holi on Monday (March 25). This would pressure on Friday (March 22) when markets closed for an extended weekend. Also, when the period ends on March 27, March futures would be expiring on Thursday March 28 which would be followed by a trading holiday on account of Good Friday.

Markets have tried to rally from levels of 21,825 points, but have not been successful so far. While the closing is higher, markets are currently fighting for survival. The next level of support is around 21,500 levels followed by 21,250 points. We need stability and markets remaining range-bound for a couple of days before one can say that there is stability in the markets. Till such time, markets would remain volatile and choppy.

The strategy for the period ahead would be to sell on any rallies, particularly in the mid-cap and small-cap space. The safety lies in the large-cap space and one should look for opportunities in this space only. Trade cautiously and with just a three day period next week, which includes March expiry, expect markets to turn super volatile.

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