Market under pressure as momentum picks up
By Arun Kejriwal
The past week had four trading sessions, but the action and drama that unfolded was as expected. The final closing gives no idea what happened in the four sessions.
For the record books, BSESENSEX lost 107.97 points or 0.19% to close at 55,329.32 points. NIFTY lost 78.60 points or 0.48% to close at 16,450.50 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 0.60%, 0.65% and 0.89% respectively. BSEMIDCAP lost 1.14% while BSESMALLCAP lost 2.27%. To continue with the story, BSEFMCG rose 3.92 percent while BSEMETAL lost 8.62 percent.
In individual stocks, Hind Unilever gained 214 rupees or 8.90 percent, followed by Britannia Industries at 8.89 percent and Nestle at 7.03 percent. On the losing side, Vedanta lost 17.99%, followed by Hindalco by 8.65%, JSW Steel by 8.54% and Tata Steel by 5.82%. Most of those gains and losses came on Friday when the market was down sharply. Hind Unilever contributed 108 points to BSESENSEX while Tata Steel lost 88 points.
Benchmarks have hit new highs, both on an intraday basis and on a closing basis during the week as well. BSESENSEX hit 56,118.570 intraday and 55,792.27 close. NIFTY hit an intraday high of 16,701.85 points and 16,614.60 points in close. The breadth of the markets was extremely negative and for five declining stocks there was only one winner.
The Indian rupee lost 13 paise or 0.18 percent to close at Rs 74.38 to the US dollar. The Dow Jones hit a new lifetime high and intraday high on Monday August 16 at 35,631 points and 35,625.4 points before the correction took hold. The week ended with losses of 395.30 points or 1.11% to 35,120.08 points. Concerns about the Fed’s cut, rising inflation and the fallout from the withdrawal from Afghanistan are central concerns for US markets.
The past week has seen the list of five major shows, two of them debuting for less than the issue price. These were Windlas Biotech Limited and Car Trade Tech Limited. As the week progressed, another headline, Krsnaa Diagnostics moved into negative territory. The two that trade above par are Devyani International and Exxaro Tiles. The coming week will see the list of the top three remaining issues on Monday and Tuesday. The possibility that all three perform poorly is quite likely and the record books would say that out of the last 8 entries, six would be in the red. These are Nuvoco Vistas, Aptus Housing and Chemplast Sanmar. In addition, there were no new issues the week before and none are expected for the coming week. A 15-day lull seems like a shock to the series of problems we have seen. Four issues opening on a single day.
It is not far to see that this state is brought about by the greed of private equity players with equally responsible promoters and investment bankers, who have pushed the valuation parameters beyond reality. and valuing companies at what can be described as “obscene valuations”. After greed of this magnitude, there can only be one fallout and it is disaster.
On the Covid-19 front, the world has seen 21,21,62,969 patients, 44,36,906 deaths and 18,97,93,091 cured patients. In India, we saw 3,24,24,234 patients, 4 34,399 deaths and 3,16 36,469 cured patients. Compared to the previous week, the world recorded 46 21,286 new patients, 69,533 deaths and 37 53,874 cured patients. In India, we saw 2,31,658 new patients, 3,146 deaths and 2,60,454 cured patients. The latest number of vaccinations has risen to 58.14 crore. The pace of vaccination is encouraging and it appears that people’s reluctance to get vaccinated is decreasing.
The coming week, August futures will expire on Thursday, August 26. NIFTY’s current level of 16,450 points means the August series is ahead by 672 points or 4.26%. This clearly shows that the Bulls are in control of the series and it seems impossible that they could lose control of it. As the market mood has shifted from bullish to fairly corrective, losing that much in just four days seems next to impossible.
Over the past week, markets hit a new high, corrected from there, mid and small cap stocks were under great pressure and we saw a heavyweight stock like Hind Unilever gain strongly. The strategy going forward of selling on rallies and buying on steep dips is being changed. While the general idea remains the same, an additional caveat is added that the purchase will be delayed for a week or until key support levels are tested or achieved. Readers will recall the resistance zones of 53,000 levels on BSESENSEX and 15,950 levels on NIFTY. These would become key support areas and should be used to buy in the market. Until these levels are reached, it makes sense to wait for strong corrections or the trend becoming clearer. The primary market would also add to the pain of the secondary market in the coming week.