Market volatility will continue with some initial market surge
The September series expired on the last trading day of the month at 17,618.15 points, a gain of 981.25 points or 5.90 percent for the month. Markets were under pressure this week and gave up a lot and gave in to the bears.
The opening day of the October series started on a low note and continued with the dominant weakness of the previous three days. NIFTY on day one of the series dropped 86.10 points and started on a low note. The last time we saw such a trend was in the May 21 series which started on a low note, dropping 263 points on opening day, April 30. The May streak ended with gains of 442.95 points or 2.97 percent. Using this as empirical evidence would suggest that while we started day one of a new streak on a low note, we would in all likelihood end up with wins for the streak.
In the week that we have seen, offers for Air India have been opened and in all likelihood it looks like the circle has come full circle. Air India, which was nationalized in 1952-53, is likely to be owned and operated by Tatas again. While all the details of the same are still awaited, Tatas, with his interest in the new acquisition of Air India, which includes Air India, the former Alliance Air, Air India Express and Indian Airlines as well as their existing joint ventures with Vistara and Air Asia would become a key and dominant aviation player in India in the future.
In primary market news, the Aditya Birla Sun Life AMC Limited issue was closed for subscription and has been subscribed 5.25 times. The QIB share was subscribed 10.36 times, the HNI share 4.39 times, the Retail share was subscribed 3.24 times and the preferential shareholder quota was subscribed 1.68 times. There were 15.66 lake requests.
On the sidelines of this show, Standard Life sold 1.06 cr HDFC AMC shares while this show was in progress and collected nearly Rs 3,000 cr. Their sale size was greater than the amount raised by Aditya Birla AMC through their show.
Shares of Paras Defense and Space Technologies Limited, which has been the most answered show since 2007, debuted on the stock exchanges on Friday and took off on day one. The shares that were issued at Rs 175 closed on the upper circuit of Rs 498.75 on BSE, a gain of Rs 323.75 or 185%. It’s a good start and the last time we saw this kind of gain was in the case of the IRCTC in October 2019.
The Reserve Bank of India is meeting for its bimonthly monetary policy review between Wednesday and Friday with the announcement Friday. There may be a slight tightening in pension rates
to reduce excess liquidity in the system, but the wait is not necessarily a consensus point of view. Otherwise, the consensus is that rates should remain at the status quo.
Calendar year 2021 was the year of primary markets, but with one major difference. This year, 75 percent of the funds raised or more have been in the form of divestment mainly by the actors of the PE and part of that by the promoters. Growth capital or the injection of capital into the company represented less than a quarter of the funds raised. PE investors invest money in a business through SPV where the name of the entity is different in each business they invest in and it is difficult for an investor to understand who is behind the business. In such a scenario as in the case of investment bankers who give a three-year track record of their performance in new issues, a similar exercise should be mandated by SEBI for investors in PE. This will go a long way in making investors smarter and leveraging their understanding of the value and valuations of a business. It will also give an idea in which the divestment of PE Investor is something left on the table.
On the covid-19 front, the world has seen 23 54 35 786 patients, 48 11 868 deaths and 21 22 44 299 recovered patients. In India, we saw 3,38 13,903 patients, 4,486,846 deaths and 3,3094,529 cured patients. Compared to the previous week, the world recorded 21 42,991 new patients, 54,291 deaths and 33 36,047 cured patients. In India, we saw 1,61,158 new patients, 1,898 deaths and 1,928,178 cured patients. In terms of vaccinations, 88.94 cr vaccines were administered. This number includes the first and second vaccination combined.
As for the markets over the coming week, there should be some upward movement early in the week following the sharp correction seen over the past week. This is also due to weakness in global markets led by Dow and worrying news from China on many fronts. The strong recovery seen on Dow on Friday should influence the market opening on Monday, but may not be enough for the rest of the week.
Given the vulnerability and extreme volatility seen over the past week, it makes sense to continue with the strategy of buying in the event of a sharp decline and selling in the event of a strong recovery. Keep some amount of money in cash as opportunities present themselves as they did last week. Second, with the start of the earnings reporting season, there would be more specific action for stocks visible starting next week. On the back of the results of the leaders, one would have a good idea of how the sector is behaving. Use this analysis to play the markets.
Negotiate carefully and limit the temptation.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. Opinions expressed are personal)
arun / ksk /