Market in trading zone (Market Watch)


The short and truncated week gone by had a mere three trading days but was highly volatile. Each of the three days saw the benchmark indices move by more than 1 per cent with Tuesday, which was the first day of the week seeing a movement in excess of 2 per cent. Markets gained on two of the three days. BSESENSEX gained 1,021.33 points or 2.08 per cent to close at 50,029.83 points, while NIFTY gained 360.05 points or 2.48 per cent to close at 14,867.35 points. The broader indices saw BSE100, BSE200 and BSE500 gained 2.42 per cent, 2.62 per cent and 2.70 per cent respectively. BSEMIDCAP was up 2.73 per cent, while BSESMALLCAP was up 3.91 per cent. There were no sectoral losers during the week with BSEMETAL gaining 8.54 per cent on the back of an expected stimulus in the US which would lead to increased spending on infrastructure.

The Indian Rupee lost 59 paisa or 0.81 per cent to close at Rs 73.10 to the US dollar. Dow Jones gained 80.33 points or 0.24 per cent to close at 33,153.21 points.

Shares of Nazara Technologies listed on Tuesday and after debuting at Rs 1,971 a gain of Rs 970 or 79 per cent, closed at the lower circuit of the day at Rs 1,576.80 on BSE. The gain for the day was Rs 475.80 or 43.22 per cent. At end of week, the share recovered some lost ground and closed at Rs 1,669.85 a gain of 51.67 per cent.

The week ahead sees the mega IPO from Macrotech Developers Limited, formerly known as Lodha Developers tap the market. The issue would raise Rs 2,500 crore in a price band of Rs 483-486 and would open on Wednesday (April 7) and close on Friday (April 9). Macrotech Developers is focussed on the affordable housing and mid-segment sections of the real estate market and is a developer in MMR (Mumbai Metropolitan Region). It has a few years ago entered the adjoining Pune market as well.

The company reported revenues of Rs 9,576 crs, EBITDA of Rs 2,925 and a profit after tax of Rs 1,205 crs for the year ended March 2020. Its EBITDA margins were Rs 30.5 per cent while PAT margins were 12.6 per cent. The company has been delivering large number of dwellings every year and with its huge land parcels which are concentrated in nature, and thus has the ability to focus on the affordable segment. This segment has incentives from the government and is the fastest growing segment in the real estate market. The affordable segment fetches a realisation of about Rs 5,000 per square foot while in the mid-segment the average realisation is Rs 7,500 per square foot. The company believes that their business model is like a FMCG company and is confident of continuing to delivering the largest number of sales across real estate developers in residential segment. They have been delivering close to 10 million square feet in the last yar and expect to do even better in the coming years. The issue based on EPS for the year ended March 20, of Rs 18.46, values the company at a PE multiple of 26.15-26.33 times. This valuation is in line with its peers.

The week ahead sees RBI’s monetary policy meeting which would be held from Monday to Wednesday. While RBI I expected to keep rates unchanged, it I widely expected to maintain an accommodative stance.

On the Covid-19 front, the surge witnessed in the previous week continues unabated. The world saw 13,09,54,934 patients, 28,53,007 deaths and 10,54,31,002 patients recovering. In India we saw 1,23,96,450 patients, 1,64,157 deaths and 1,15,70,440 patients recovering. Compared to the previous week, the world saw 31,67,881 new patients, 56,481 deaths and 24,33,818 patients recovering. In India we saw 3,56,800 new patients, 2,276 deaths and 2,14,447 patients recovering. India has vaccinated over 6.5 crore people and over 30 lac vaccinations are taking place daily. While we need to step up the pace of vaccination, care by all needs to be taken on maintaining social distancing irrespective of whether they are vaccinated or not.

GST collections hit a record 1.24 lakh crore mark in February 2021 and this would be an encouraging number for all concerned. The week ahead would continue to remain volatile and look for cues on the covid-19 front amongst other news. US and global cues will have an important bearing as well as quarterly results as they are announced.

Use sharp rallies to sell and sharp dips to buy in the market as we continue to remain in a trading zone.

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