Monday factor, Markets to open stronger and trade with positive bias

Markets continued to remain volatile and have sharp two-sided movements. They gained on the first three days of the week and then witnessed profit booking on the remaining days of the week. BSESENSEX ended the week with gains of 1,305.33 points or 2.66% to close at 50,405.32 points while NIFTY gained 408.95 points or 2.81% to close at 14,938.10 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.84%, 2.97% and 2.99% respectively. BSEMIDCAP was up 3.05% while BSESMALLCAP gained 3.87%. The rally was widespread and there were no sectoral losers. The top gainer was BSEIT up 4.13% while the one to rise the least was BSEMETAL up 1.36%.

The Indian Rupee recovered quite sharply and made up quite a bit of the previous week’s losses. The Rupee gained 63 paisa or 0.86% to close at Rs 72.83 to the US Dollar. Dow Jones gained 563.63 points or 1.82% to close at 31,496.30 points.

The government has sold spectrum and realised Rs 77,800 crs. Of this Reliance Jio has bid for Rs 57,100 crs, Airtel for Rs 18,700 crs and Vodafone Idea for Rs 2,000 crs. From the above amount Rs 19-20,000 would be received before 31^st March and another 7,000 crs by the calendar year end. Balance would be over the next 15-20 years.

In primary market news, the issue from Heranba Industries listed on Friday. Shares of the company were issued at Rs 627 and debuted at Rs 900. After hitting a high of Rs 945, the share was under pressure and went below Rs 800 as well. The share closed at Rs 812.25, a gain of Rs 85.25 or 29.55%.

The issue from MTAR Technologies Limited received overwhelming support and was subscribed over 200 times. The company had tapped the markets with a fresh issue of 21.48 lac shares and an offer for sale of 82.24 lac shares in a price band of Rs 574-575. The QIB portion was subscribed 165 times, HNI portion was subscribed 650 times and Retail portion was subscribed 28.40 times.

There is one issue opening for subscription on Monday the 8^th of March and closing on Wednesday the 10^th of March. Easy Trip Planners which runs an online travel portal is tapping the markets with its offer for sale of Rs 510 crs in a issue price band of Rs 186-187. The company reported revenues of Rs 181 crs for the year ended March 2020 and a net profit of Rs 33 crs. In the nine-month period ended December 2020, the revenues were Rs 81.5 crs while the net profit was Rs 30.5 crs. The company reported an EPS of Rs 3.04 for year ended March 2020. Based on this EPS, the PE ratio is 61.51 to 61.81 times. The EPS for the nine-month period has improved significantly to Rs 2.81. The company is in an interesting business and a sweet spot. Not having PE investors, it did not have free cash to burn which has turned out to be a blessing in disguise. Getting listed will get the company to be a more recognised name and earn it better respectability as well. This would help the company’s business grow. Small size of issue and the present market craze for new issues is the one factor against the company.

SEBI had auctioned the demat accounts and trading accounts held with Karvy Stock Broking, who had fraudulently pledged shares held by its customers and not returned them. After SEBI conducted the auction, Karvy has challenged the same in the high court and is now trying to act as if it has been wronged. A custodian of shares, Karvy in the first place used the shares from client demat accounts and fraudulently usurped them and for reasons best known to the powers that be managed to get extension for over 12 months to cover his backside. He failed in covering up is a secondary story but his now crying wolf is indeed amusing. More on this matter as it progresses in court.

Mondays have been very interesting for the markets recently. Right since the 1^st of February 2021, when the FM presented the budget, markets have gained on four of the five Monday’s that have come. The only exception was the 22^nd February when we actually lost about 1,100 points on the BSESENSEX. Monday the 8^th of March will be no exception and we should see a smart gap up opening. There are various factors due to which this would happen. Firstly, markets corrected on Thursday and Friday. Secondly the technical position of the market indicates that it is oversold. Thirdly we had a smart rally in the Dow Jones as well on Friday.

On the covid-19 front, the world saw 11,74,35,194 patients, 26,04,847 deaths and 9,29,42,798 patients recovering. In India we saw 1,12,29,271 patients, 1,57,840 deaths and 1,08,80,880 patients recovering. During the week the world saw 27,58,041 new patients, 61,833 deaths and 27,10,330 patients who had recovered. In India we saw 1,17,215 new patients, 695 deaths and 96,312 patients who had recovered. There is a surge in new cases and extra care needs to be taken to ensure that things do no go out of control.

The week ahead would open with a bang and then continue its choppy and volatile manner. We have a midweek holiday on Thursday which is likely to add to the volatility as weekly options would expire on Wednesday this time around. With markets expected to trade with a positive bias, expect sharp intra-day moves and volatility to continue. Trade cautiously.