Best you take money off the table and wait for consolidation
Markets were weak and under pressure every day, last week. The BSE SENSEX closed with modest losses of 294.75 points or 1.05 per cent at 27,782.25 points. NIFTY lost 94.35 points or 1.09 per cent to close at 8,572.55 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 0.92 per cent, 0.85 per cent and 0.76 per cent respectively. BSEMIDCAP lost 0.27 per cent while BSESMALLCAP gained 0.22 per cent.
Finance Minister Arun Jaitely (left) with Economic Affairs Secretary Shaktikanta Das at the Valedictory Session of the Conference on ‘International Arbitration in BRICS: Challenges, Opportunities and Road Ahead’ in New Delhi. Pic/PTI
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The top sectoral gainer was BSECONDUR up 0.82 per cent while the top loser was BSECAPGOOD down 2.99 per cent. The Dow Jones lost 157.17 points or 0.85 per cent to close at 18,395.40 points. The Indian rupee remained unchanged at Rs 67.06.
August futures series expired on Thursday and were under pressure. The series ended at 8,592.20 points, a loss of 74.10 points or 0.81 per cent. The series had begun at a level of 8,666.30 points. I must emphasise because it is important that though the series lost less than one percent, the undertone or sentiment was really much worse.
The opening day of the new series saw markets opening positive but succumbing to selling pressure, and, turned negative by close of day. Interestingly FIIs who have been buyers and providing liquidity to an overheated market, turned sellers and sold right through the week. This writer, has over the last few weeks, asking readers to take money off the table, as markets were looking overheated and overvalued. Clearly the correction seems to have begun and we have a long way to go.
The issues
In primary market news, the IPO from RBL Bank Limited received excellent response and was oversubscribed 69.92 times. The QIB portion was subscribed 85.73 times, HNI 198.66 times and Retail 5.72 times. In terms of applications there were a total of 10.69 lac applications received which means on lot basis the retail portion was subscribed 3.68 times.
There are no equity issues opening during the week. There are of course debt issues opening and the pipeline from companies looking to raise non-convertible debentures is scary in term of size and number of issues coming. The market seems to get one stock every week which tanks on news flow. Two weeks ago, it was Grasim and more so Aditya Birla Nuvo on news of a merger and demerger.
Last week, it was the turn of Welspun India on news of a large customer raising issues on quality and asking for a review. The share price which, was at Rs 102.85 lost a massive Rs 53.15 or 51.68 per cent to close at Rs 49.70. The company had intimated news of the same last Monday morning and arranged a conference call for analysts before markets opened for the week. What next would be watched by the market quite closely and one needs to understand that “Egyptian Cotton” is something from the past. The production of this cotton is on the decline and is now less than two per cent of world production. It will be safe to assume that upcoming generations will be unaware that Egypt produced cotton.
Trade cautiously
Markets are certainly tired and they gave ample indication of the same, all through trading last week. I believe the correction will continue this week and one should not be surprised if we have a sharp fall on one of the days. What day it would be or what would be the circumstances, one is unsure. But it would happen.
Trade cautiously and take some money off the table as better opportunities would arise in the future. Markets are tired and have lost the momentum with which they rose over the last two months. Consolidation in time or value, or a combination of both is imminent. Ride out the same.
Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website https://ak57.in
Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.
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