The week gone by behaved on
expected lines and saw a decent recovery in the markets. It initially began
just as a pullback but gathered steam as the week moved on and Dow also chipped
in with decent gains. BSESENSEX gained 1,367.56 points or 2.66% to close at
52,727.98 points while NIFTY gained 405.75 points or 2.65% to close at
15,699.25 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.57%,
2.60% and 2.48% respectively. BSE MIDCAP gained 2.38% while BSE SMALLCAP was up
1.61%. The recovery in the benchmark indices were about 46.45% on BSESENSEX and
44.60% on NIFTY of the previous week’s fall. The same on BSEMIDCAP was about
40% and just about 22.5% on BSE SMALLCAP. The indices gained on four of the
five trading days.
The Indian Rupee lost 27 paisa or
0.35% to close at Rs 78.34 to the US Dollar. Dow Jones gained on all four
trading sessions of the week. It gained 1,611.90 points or 5.39% to close at
29,888.78 points. It has recovered all that it lost in the previous week. FED
Chairperson Jerome Powell remarked last week “Steep rate hike could turn US
into recession”. While we have all the reasons for markets being under
pressure, what we saw was completely different.
Zomato has decided to acquire
Blinkit, formerly known as Grofers in an all-share deal. Zomato would pay Rs
4,447 crs in shares for the same. Readers would recall that Zomato had tapped
the capital markets with its IPO at Rs 76 for a fresh issue of Rs 9,000 crs and
an offer for sale of Rs 375 crs and listed on 23rd of July 2021. Shares
closed day one at Rs 125.85. The share hit a 52-week high and low of Rs 169.10
and 50.35 respectively. Currently the share trades at Rs 70.35 and is below the
issue price like most new age technology platform companies. Probably the
honeymoon that markets had with them is behind us. Both the companies, Blinkit
and Zomato are currently loss making. Zomato on a consolidated net total
revenue of Rs 4,192 crs lost Rs 1,222 crs for the year ended March 2022. What
is interesting is the fact that the deal has been done at a discount to the
fund raise from Zomato and Tiger Global of 120 million USD just about a year
ago, which valued the company at 1 billion Dollars. This current valuation is
at 570 million.
The week ahead sees June futures
expire on the last trading day of the month, 30th June. The current
value of NIFTY of 15,699.25 points is down 470.90 points or 2.91%. To expect
the bulls to recover all of it looks tough, but they will certainly fight
having got the momentum back during last week. One must remember that there is
strong resistance around the 15,900-15950 levels, all the way to 16,100 points.
Further, there was a downward gap made on 13th June at the level of
16,172 to 15,886 points. This would need strong momentum to overcome and
sustain.
Coming to the week ahead, we have June futures
expiring in four days as already mentioned. While bulls will try to pullback,
it would be a herculean task to level the deficit of 471 points. On global
cues, Dow has had an excellent week, but could run into profit taking and
resistances at higher levels. Our markets would see sharp bouts of volatility
and both sided movements in the coming week. Strong resistances exist at the
gap of 54,205-53207 level on BSESENSEX and 16,172-15,886 on NSE NIFTY as
mentioned earlier. While entering the gap area seems likely, crossing the same
and sustaining looks difficult. Expect markets to gain initially before profit
taking takes over. Use rallies to sell and refrain from overnight positions.