Last week, the market gained on just one of the four trading days. The net result was that benchmark indices closed in the red, but the midcap and smallcap continued to register gains and record new highs.
The BSE Sensex lost 245.16 points, or 0.83 per cent, and closed at 29,461.45 points, while the Nifty lost 47.50 points to close at 9,150.80 points. The market is looking tired and needs to consolidate before the next round of rally.
Dow Jones lost 202.91 points and closed at 20,453.25 points. The US exploded a bomb aka ‘MOAB’ (mother of all bombs) in Afghanistan on a cave held by ISIS fighters. This bombing took place on Thursday evening after the Indian market had closed and US markets were trading.
Friday was a global holiday and how markets would react to yet another conflict would be known only on Monday. The only thing clear is that the market doesn’t like conflict and there would be some fallout on this account.
The quarterly results season has kicked off with Infosys declaring results for the fourth quarter. It was a muted set of numbers and one that left the street unhappy. While the stock lost ground for the day and week, the only good piece of news is the fact that the company intends to return about Rs 13,000 crore by way of dividend or buyback in the current financial year.
The stock was down 3.86 per cent for the day and 5.08 per cent for the week. This implies that they want the stakeholders to be happy and also keep their interest in the company alive. Probably the former promoters may also be happy that their nominee is the vice-president and that large cash is being returned. The revenue guidance for the year 2017-2018 was muted at 6.5 per cent-8.5 per cent at constant currency terms.
Market is looking tired after having rallied for about four months on a trot. The fatigue factor seems to be creeping in now and needs big triggers for the momentum to continue.
I am not sure whether the technical signals one is getting from the charts, which before the bombing took place are the best indicators and therefore point to further weakness, or there could be another way of looking at it.
In either case, the clear fact that remains is the weakness and fatigue factor. The market need to pause for breath, consolidate and await fresh triggers to begin a new journey into unchartered waters.
I would like to play the cautious game and adopt a wait and watch strategy. One should use sharp dips to add position in the market and use rallies to book profits. Even when the market is correcting or consolidating, it would give opportunities to buy and sell. Use these opportunities judiciously as a lot of money could be made in them.
From Tuesday, shares of recently-listed CL Educate would be available for trading in the normal segment against the present trade-to-trade segment. The total volume in the nine days of trading on two exchanges combined is 9.81 lakh shares, which is 20.61 per cent of the IPO size and if this was to be considered on the non-anchor portion, the same would be 29.45 per cent. The company’s IPO, which consisted of a fresh issue and an offer for sale was for 47.60 lakh shares in a price band of Rs 500-502. The scrip in the last nine days has made a low of Rs 349.55 and closed for trading at Rs 425.70 on Thursday.
With intraday speculation allowed it would be interesting to see which way the share goes. This was a clear example of how wrong pricing and stiff valuation in a sector, which has turned disastrous for investors, can mar investor sentiment.
Use dips to invest and euphoria to sell in a tough upcoming week. Volatility is likely to increase amid global political tensions. Trade cautiously.
(The author is founder,
Kejriwal Research &
Investment Services)
