Investors hurt as markets turn extremely volatile; the road ahead is going to be bumpy
Markets have been very volatile and have hurt investors badly. There was a very sharp recovery on Friday, which has reduced the weekly loss by almost half but that seems to have damaged the immediate near term view of the market.
The BSE SENSEX closed at 19,508.89 points losing 458.04 points or 2.29 per cent but not before hitting an intra-week low of 19,074.57, early on Friday, the last day of last week.
The NSE NIFTY similarly closed at 5,857.35 losing 135.45 points or 2.26 per cent and making an intra week low of 5721.15 points.
Low
The weekly lows came quite close to the previous fortnight's low of 18,954.82 on the SENSEX and 5690.35 on the NIFTY made on Friday, November 26. The markets have been falling and the brunt has been borne by small and mid cap stocks.
The BSE MIDCAP Index lost 477.05 points or 6.05 per cent to close at 7,405.97 points. The BSE SMALLCAP index lost a staggering 907.68 points or 9.20 per cent to close at 8,951.30 points.
There has been selling in this space and there is concern with so many people being named in various wrongdoings and more importantly, with the market expecting more names of individuals and companies to be announced in the near future.
Foreign Institutional Investors (FII) have been sellers for each of the five days last week with aggressive selling of over Rs 1,200 crores on each of the last three days. Domestic institutions have been sellers for the first two days and have bought for the last three days.
New
R P P Infra was the new listing during the week and lost 23.67 per cent of its issue price of Rs 75 in the first week itself.
In new issues during the week, A2Z Maintenance just about managed to raise 97 per cent of the issue and the issue was closed for subscription as it had an offer for sale component as well.
The under subscription would be offset by reducing the offer for sale proportionately. The other issue from Ravi Kumar Distilleries managed to get subscribed 2.22 times due to HNI support of 7.3 times their quota.
List
Coming to this week PSU Company MOIL will list most probably on Wednesday, December 15. The issue price was Rs 375 and the issue was a grand success being very heavily subscribed. The entire retail quota has been allotted on a lottery system and successful applicants will get 17 shares each.
The premium for this share had touched Rs 300 at one point of time but has become half at Rs 150 with the fall in the market.
In all probability by the end of the week shares of SCI offered in the follow on offer would be allotted and available for trading. The stock price has fallen and is currently at a marginal discount to the issue price of Rs 140.
Sharp
The markets in the week will continue to be volatile. The sharp sell off we saw in the previous week and the steep fall in the mid cap and small cap indices will have a telling effect on the market.
FII selling is likely to affect the sentiment negatively. Advance tax numbers due on December 15 could provide a positive kicker to the market and one should keep fingers crossed for the same. RBI policy review on December 16 may provide some direction to the market.
Ahead
In the week ahead the BSE SENSEX has resistance at 19,675, then at 19,995 and finally at 20,220 points. It has support at 19,209, then at 18,954 points, then at 18,750 points and finally at 18,455 points.
The NSE NIFTY has resistance at 5,910 points, then at 5,995 points and finally at 6,050 points. It has support at 5,765 points, then at 5,695 points, then at 5,620 points and finally at 5,450 points. Readers must keep an eye on 18.954 on the SENSEX and 5,690 on the NIFTY.
If these levels get violated on the downside and the markets fail to recover, there could be more pain. Investors should look for buying opportunities on sharp dips but use them as only trading opportunities as markets do not appear to have bottomed out. Be cautious as more pain and short-term volatility awaits the market.
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 http://ak57.in
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