Markets to remain in a trading zone (Opinion)

A choppy and volatile week came to an end with markets losing some ground. Fridays recovery at the start of the new April series saw markets post gains and hence recover some ground. BSESENSEX lost 849.74 points or 1.70% to close at 49,008.50 points, while NIFTY lost 236.70 points or 1.61 per cent to close at 14,507.30 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.50 per cent, 1.34 per cent and 1.36 per cent respectively. BSEMIDCAP lot 0.37 per cent while BSESMALLCAP lost 0.94 per cent.

In primary market, listings of IPO's which had closed for subscription in the previous week and now listed was not good news. As many as five issues listed during the week of which just one closed with gains, while another managed to recover on day two to close neutral. The other three were down in the region of 5 per cent to 13.45 per cent.

The first to list was Anupam Rasayan. The company had issued shares at Rs 555 and closed on day one at Rs 525.90, a loss of Rs 29.10 or 5.24 per cent. Shares had listed on Wednesday and by close of week, the price had fallen to Rs 495.90, a loss of Rs 59.10.

The second to list was Craftsman Automation Limited which listed on Thursday. The company had issued shares at Rs 1,490 and closed day one at Rs 1,433, a loss of Rs 57 or 3.83 per cent. It recovered lost ground on Friday and closed at Rs 1,492.60, a gain of Rs 2.60.

The third to list was Laxmi Organics Limited which listed on Thursday and had issued shares at Rs 130. The share closed listing day at Rs 164.60, a gain of Rs 34.60 or 26.62%. It gained further on Friday and closed at Rs 186.55, a gain of Rs 56.55 or 43.50%.

The fourth share to list was Kalyan Jewellers Limited which listed on Friday and had issued shares at Rs 87. The share closed trading at Rs 75.30, a loss of Rs 11.70 or 13.45 per cent. What is worrisome is the fact that besides the poor listing, the traded volume was just about 41 per cent of the issue size and delivery volume was 14.4 per cent of the issue size. This makes one believe that going by past precedent, the share would be under pressure going forward.

He fifth and final share to list was Suryoday Small Finance Bank Limited which listed on Friday and had issued shares at Rs 305. The share closed trading at Rs 276.20, a loss of Rs 28.80 or 9.44%. Here as well, trading volumes at a mere 25 per cent of the IPO size were very poor and could put the share under pressure going forward. Delivery volume was just about 10.37 per cent of the IPO size which is the lowest among all issue during 2020-2021.

Very clearly it appears the IPO rush has ensured that fatigue factor has hit the markets and issues are under pressure on day one.

During the week we also saw the IPO of Barbeque Nation Hospitality Limited get subscribed 5.97 times. The QIB portion was subscribed 5.11 times, HNI portion was subscribed 3.10 times, Retail portion was subscribed 13.13 times and Employee portion did not receive any subscription.

March futures expired on a weak note and the series lost 772.45 points or 5.12 per cent to close at 14,324.90 points. This was also the last series to expire for the financial year 2020-2021 where by and large, bulls have had the upper hand with the benchmark indices almost doubling from their lows made in March 2020.

On the covid-19 front, the world saw 12,77,87,053 patients, 27,96,526 deaths and 10,29,97,184 patients recovering. In India we saw 1,20,39,644 patients, 1,61,881 deaths and 1,13,55,993 patients recovering. Compared to the previous week the world saw, 43,48,420 new patients, 74,399 deaths and 35,68,650 patients recovering. In India we saw 4,40,514 new patients, 2,091 deaths and 2,25,705 patients recovering. Maharashtra is topping the number of new cases in India and people are quite taken aback by this upsurge. Night curfew has been imposed in Mumbai with effect from last night (Sunday). One hopes the administration is able to bring this outbreak under check as soon as possible.

The markets particularly the primary market has clearly come under fatigue and seems to be losing its grip. With poor performance of shares listing last week, one has also seen that shares which had listed earlier and registered gains are now slipping and many of them have slipped below their issue prices, while many more though still higher have seen most of the gains vanish.

Coming to the markets, the week ahead has mere three days of trade next week with holidays on Monday and Friday. With just three days, traders would like to be cautious and not go overboard on either side. Secondly the new financial year would have begun and people would be adjusting to the spate of bank holidays and getting their trading limits in place. Readers would recall that there is a bank holiday even on the 1st of April for normal banking activities on account of annual bank closure.

Markets seem to be getting support at the 48400-48600 levels on the BSESENSEX and 14250-14400 on NIFTY. This time is no different. At these levels, one finds the technical position/indicators in the market becoming oversold, FPI's turning buyers and short-term traders looking to add to their longs in the market. We should expect the market to bounce from here in the immediate short term and look to exit longs at the first signs of markets looking heavy, which could be after a minimum up move past the 51k mark on BSESENSEX and 15k mark on NIFTY.

Trade cautiously and with a mindset of a quick entry and exit.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

( With inputs from IANS )