Market Watch: Markets maintain upward momentum, make use of volatility

Last Updated: Sun, Apr 07, 2019 17:15 hrs
Sensex

Markets continued their upward march and momentum was intact as well. During the course of the week, both the benchmark indices made life-time highs but on different days. There was a correction post the high as well, makings the markets healthy.

The BSE SENSEX gained 189.32 points or 0.49 per cent to close at 38,862.23 points. NIFTY gained 42.05 points or 0.36 per cent to close at 11,665.95 points. The broader indices saw BSE 100, BSE 200 and BSE 500 gain 0.31 per cent, 0.31 per cent and 0.28 per cent respectively. BSE Midcap was up 0.19 per cent while BSE Smallcap was up 0.12 per cent.

The Reserve Bank of India, in its first monetary policy review for 2019-2020, cut the repo rate by 0.25 per cent to 6 per cent on expected lines. It also cut reverse repo rates by 25 basis points to stand at 5.75 per cent. Markets, after initially rallying, slipped and lost ground on the day that the rate cut happened.

The week saw the issue from Metropolis Healthcare Ltd get subscribed 5.84 times. The issue received a late surge in the last 30 minutes from QIBs which saw their bucket being subscribed 8.88 times. The HNI portion was subscribed 3.03 times while retail was subscribed 2.21 times. Employees was under-subscribed at 0.05 times.

The offer for sale and fresh issue from Polycab India Ltd opened on Friday and closes on Tuesday. The price band is Rs 533-538 and is likely to see huge subscription as the HNI portion would be funded by NBFCs. The company had an EPS of Rs 26.23 for the 12 months ended March 2018. If one were to look at the nine months numbers for 2018-2019, the EPS has jumped from Rs 12.79 to Rs 25.31 a year ago. The fourth quarter is the best quarter for this industry and it would be fair that the company is likely to report an EPS closer to Rs 36-39 in the year ended March 2019.

If one were to look at revenues, they have grown from Rs 4,878 crore in nine months to Rs 5,561 crore in the current nine months. A year ago, the company had revenues of Rs 6,986 crore. The issue looks attractive and would receive excellent response. The issue consists of an offer for sale of 1.75 crore shares and a fresh issue to raise Rs 400 crore.

The first phase of polling would be held this week on Thursday, the 11th of April. The nation would now get into election mode and the markets would be waiting to see the BJP manifesto and how they counter the minimum Rs 72,000 a year that the Congress plans to give the bottom 20 per cent of India's population.

The mood in the market continues to be buoyant and FPIs are net buyers on almost a daily basis. An interesting development has happened with Infosys and TCS both deciding to declare their 4th quarter and annual results on Friday, the 12th of April.

It would be interesting to see how the companies fare and more important, the comparison between the two would be done in a matter of few hours. The performance of these two IT giants would set the tone for the quarterly results for the January-March 2019 period.

Markets are poised to trade higher and would generally have an upward trend. One would witness days of upward and downward movement with an upward bias. Markets are not going to run away in any direction and would have a much more laboured movement. With a vast majority of people not convinced about the rally and continuing to short at every rise, markets get an automatic spurt each time FIIs buy and markets rally.

The strategy for the week ahead would be to buy on dips and use sharp rallies to book profits. Use volatility to your advantage as there would be ample opportunities to buy and sell.

(Arun Kejriwal is founder of Kejriwal Research and Investment Services)



More from Sify: