Markets were on fire last week and managed to build on its gains after crossing crucial resistance of 25200 points on NIFTY. They took June expiry in their stride and steamrolled their way through. Going forward, the center of attention would be shifted to April-June quarterly results and also the upcoming announcement of trade talks between USA and India. Markets gained on four of the five trading sessions and lost on one. BSESENSEX gained 1,650.73 points or 2.00% to close at 84,058.90 points while NIFTY gained 525.40 points or 2.09% to close at 25,637.80 points. BANKNIFTY gained 1,191.05 points or 2.15% to close at 57,443.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.27%, 2.32% and 2.50% respectively. BSEMIDCAP gained 2.33% while BSESMALLCAP was up 3.57%.
The Indian Rupee gained Rs 1.10 or 1.27% to close at Rs 85.48 to the US Dollar. Dow Jones too had a great week and gained on four of the five trading sessions, losing on just one. Dow gained 1.180.02 points or 2.80% to close at 43,386.84 points.
June futures expired on a positive note and the series gained 715.40 points or 2.88% to close at 25,549.00 points. However, when compared to the gains that markets made in the last week, the series gains look paled.
It took multiple attempts for the markets to cross and sustain levels of 25,150-200 points and we saw that once crossed, how quickly markets built on the same. Going forward immediate target would be 26,000 but the next would be reaching all-time high intra-day targets of 26,277.35 points and 26,216.05 points on closing basis. Similar levels on BSESENSEX would be at 85,978.25 points on intra-day basis and 85,836.12 points on closing basis.
Primary markets saw five mainboard IPOs raise money last week. The key take away from them was the fact that investors are not willing to buy anything at any price. They want value for money and they are willing to wait. With a pipeline which could be termed as something, never before so deep, it’s important for merchant bankers to learn the art of leaving something on the table. There is huge appetite and every week we see OFS from PE Investors and promoters being lapped up. There is liquidity, appetite and even though markets are just about 2-3% away from all-time highs, there is no euphoria or frenzied buying whatsoever. Time for merchant bankers to understand market mood and keep things at reasonable levels.
There was one listing during the week of Aris Infra Solutions Limited which listed on Wednesday the 27th of June. The company had issued shares at Rs 222 and shares debuted on day one at Rs 209.10 and closed at Rs 174.10. By the end of the week, they gained marginally to close at Rs 177.05, a loss of Rs 44.95 or 20.25%.
Coming to the markets in the week ahead, results season for the April to June quarter would kick in. There is expectancy that the larger section of companies would stand to benefit after three successive rate cuts by RBI. Impact of the first two cuts would be felt on the bottom line of corporates and this should help in better earnings. Revenues or topline growth is expected subsequently when the liquidity infused by RBI through the CRR cut of 100 basis points in four tranches of 25 basis points each kicks in to match festival season.
The other big kicker would be the long awaited US-India trade deal. A lot is expected and more than anything else expect the uncertainty to now die. Business would be back to normal.
Coming to markets in the week ahead, expect them to build on what they have achieved so far. Next targets would be 26,000 on NIFTY and as mentioned above all-time high thereafter. It would not happen in a jiffy and certainly not without news flow. On the support side, levels of 25,200 would act as strong supports. The new listings to happen in the week ahead will also determine the mood of the street for forthcoming IPOs slated during July. Look for opportunities in the midcap space.
Trade cautiously.
Arun Kejriwal (Market Veteran Investor & Opinion Maker)
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