Monday, July 22, 2024

NIFTY at new lifetime highs, BSE SENSEX to follow

It was a shortened week at the bourses with Monday being a trading holiday. Markets gained on three of the four trading sessions and lost on one. Sharp gains were registered on Wednesday and were followed up with a strong opening day of December series as well on Friday.

The exit polls for the five states where elections were held indicate a close race but it appears there is change in the air. On balance the ruling party at the centre is likely to be an overall gainer post the results. This enthused the market and the strong rally in Dow too helped matters.

At the end of it all, BSE SENSEX gained 1,511.15 points or 2.29 per cent to close at 67,481.19 points, while NIFTY gained 473.20 points or 2.39 per cent to close at 20,267.90 points.

The broader markets saw BSE100, BSE200 and BSE500 gain 2.51 per cent, 2.68 per cent and 2.64 per cent, respectively.

BSEMIDCAP gained 2.90 per cent, while BSESMALLCAP was up 1.91 per cent. The rally was widespread and there were no sectoral losers.

The rupee gained 8 paisa or 0.10 per cent to close at Rs 83.29 to the US Dollar. Dow had a great week and is now trading at a 52-week high. Dow gained on the last four days consecutively and lost on the opening day of the week. Dow gained 855.35 points or 2.42 per cent to close at 36,245.50 points.

The week saw November futures expire on a positive note. The series gain was a big 1,275.90 points or 6.77 per cent at 20,133.15 points. The first day of trading in the new series saw NIFTY gaining a further 134 points.

The week gone by was all about new listings where we saw five main board listings in three days. The participation in four of the five issues was excellent and the shares performed well, beating the street’s expectations in terms of gains and appreciation.

The first to list was IREDA which had issued shares at Rs 32. The opening price or discovered price was Rs 50 and the closing price was the upper circuit at Rs 59.99 on BSE and Rs 60 at NSE. The share gained Rs 27.99 or 87.50 per cent.

By the end of the week, the share had gained further and closed at Rs 62.75, a gain of Rs 30.75 or 96.09 per cent.

The second share to list was Tata Technologies Limited which had issued shares at Rs 500. The discovered price was Rs 1,199.95 and the high on listing day was Rs 1,400. The share closed day one at Rs 1,314.25, a gain of Rs 814.25 or 162.85 per cent. There was profit booking on Friday and the share closed at Rs 1,220.20, a gain of Rs 720.20 or 144.04 per cent.

The third share to list was Gandhar Oil Refinery (India) Limited which had issued shares at Rs 169. The discovered price was Rs 295.40 and the closing price on day one was Rs 301.50, a gain of Rs 132.50 or 78.40 per cent. The share lost ground on Friday and closed at Rs 280.35, a gain of Rs 111.35 or 65.89 per cent.

The fourth share to list was from Fedbank Financial Services Limited which had issued shares at Rs 140. The discovered price was Rs 137.75 and the closing price was Rs 140, unchanged to the issue price. On Friday, the share gained marginally to close at Rs 142.50, a gain of Rs 2.50 or 1.79 per cent.

The fifth and final share to list was Flair Writing Industries Limited which had issued shares at Rs 304. The discovered price was Rs 503 and the closing price was Rs 452.70, a gain of Rs 148.70 or 48.91 per cent. Incidentally, the share closed day one at the lower circuit of 10 per cent after a strong showing. Why such a poor performance is something which needs to be looked into. Further the lower circuit happened within five minutes of trading post price discovery.

The five listings during the week show the increased power that retail investors have and the number of applications that they have made in these issues. There also seems to be better awareness amongst them that they did not wholeheartedly subscribe to the FedFina issue as the same looked expensive. This awareness is good but the price that they have paid during trading post listing, shows the euphoria that markets are in and retail investors have joined the band wagon. HNIs or high net worth investors overall numbers have increased which indicates that markets have seen new investors joining the investor pool. While this is good and welcome, there must be sanity and valuations need to remain reasonable.

The listing week euphoria will subside and values find realistic levels sooner than later. Incidentally the institutional support which new listings normally find is also currently missing in these five listings.

In economic data, GST collections for November 23 have come at 1.68 lakh crore which is a 15 per cent growth on a Y-O-Y basis. This augurs well for the economy and we are on track to cross 18 lakh crore from GST on an annual basis going forward. Even the GDP numbers were positive and came at 7.6 per cent for the July-September quarter, beating RBI’s estimate of 6.5 per cent. These factors and the strong showing in the US markets coupled with political enthusiasm pushed our markets to new highs.

Coming to the markets in the week ahead, the results for the five state elections would be out by the time you read this article. There would be continuation of the momentum that is being witnessed in the markets in the week ahead. NIFTY has made new lifetime highs on intraday and closing basis and the BSE SENSEX is not far behind. Expect BSE SENSEX to do that on Monday.

With new highs, expect the markets to open up new levels of a minimum 3 per cent from the previous highs. Approximately 600 points on NIFTY and about 1,800 points on BSE SENSEX is what we should be looking at. On the downside decent support exists at 19,800-19,850 levels on NIFTY and 66,150-66,300 on BSESENSEX. The strategy would be to ride the rally and enjoy the feeling with markets at new highs.

Trade cautiously.



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