The week gone by behaved on expected lines for the first four days and then all hell let loose on Friday the 13th of December. We had an unexpected movement on the indices first downwards and then equally sharp upwards which had people wondering what happened even after the day and the weekend passed. I believe clarity of the sequence of events still eludes most people even though Friday is now three days old. Your writer is also one of those who is not sure as to what happened on Friday the 13th. Suffice to say that till the mystery is resolved we may assume that the volatility was as a result of the date.
BSESENSEX gained on two of the four trading sessions, lost on two and was flat on one. BSESENSEX gained 424 points or 0.52% to close at 82,133.12 points while NIFTY gained 90.50 points or 0.37% to close at 24,768.20 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.30%, 0.25% and 0.18% respectively. BSEMIDCAP gained 0.22% while BSESMALLCAP lost 0.16%. More on Friday the 13th in subsequent paragraphs.
The Indian Rupee continues to be under pressure and we lost 10 paisa or 0.12% to Rs 84.79 in the week gone by. Global currencies are under pressure against the dollar awaiting executive actions once Trump takes oer on the 21st of January in 2025 for his second stint at the US Presidency. Dow Jones was under pressure and lost on all five days of the week. Dow Jones lost 814.46 points or 1.82% to close at 43,828.06 points.
Coming to Friday the 13th of December. The previous day saw BSESENSEX close at 81,299.96 points and NIFTY at 24,548.70 points. At this point markets after four days of trading were negative for the week. The intraday lows registered were at 80,082.82 points and 24,180.80 points, a loss of 1,217.14 points and 367.9 points. Thereafter came the rally which saw markets hit a high of 82,213.92 points and 24,792.30 points. Thus, the intraday gains were at 2,131.10 points and 611.50 points. If one were to compute the intraday volatility which includes the losses and then the gains it would be a staggering 3,348.24 points on BSESENSEX and 978.40 points on NIFTY. The net change for the day was at 843.16 points on BSESENSEX and at 219.60 points on NIFTY which is not anything out of the unusual. It’s the intraday which caused the tremors and due to there being no event or series of events to justify the same, could be attributed to Friday the 13th of December.
It appears something is cooking in the primary markets which is yet to unfold and of which promoters and merchant bankers are aware but not investors. Last week we saw three issues opening and closing on the same day and yet another three issues lined up. This week we will see four issues opening and closing on the same dates. Further it appears that there is an IPO sale in the primary markets with four road shows to happen on Monday, and another four to five during the course of the week on a minimum. Why this maddening rush where all conventions have been thrown to the wind? One remembers that the regulator had asked merchant bankers not to club issues at the same time. Is not the three on same dates last week and four in the coming week, an apt case of bunching? Is someone looking? Going by the pace of IPOs, it appears there is a sale in the primary market. The unfortunate part however is that in a sale one gets a discount. Here, that is not the case and one continues to pay for absurd valuations which at times border on the bizarre.
Discussion and analysis on the issues which are happening during the week would be discussed separately through a newsletter, post there roadshows.
Coming to the markets in the week ahead, we did on Friday the 13th, manage to cross and close above the 24,750 mark, on the NIFTY. While the milestone was achieved the intraday volatility has shaken the markets and it would be safer to wait for confirmation of higher high and higher lows on the indices before jumping to conclusions. In terms of resistance the next levels are at around 25,050-25,100 points on NIFTY and at 82,900-83,100 points on BSESENSEX. Once this is taken out, the next resistance would be around 25,250 points or 83,550 points. These would be much tougher to break and sustain. On the downside we have support at 24,250 points and 80,500 points respectively. If these levels are broken, we have the next support zone at 23,850 and 79,300 points respectively.
In conclusion, we have seen a mixed reaction from FPIs where they have turned buyers and sellers on different dates and very clearly the continuous selling of the previous months has stopped. While its comforting we are not yet out of the woods. We need to be watchful and careful. It appears the world is waiting for action around the last ten days of January 25. One needs to be watchful and from a safety perspective look at large cap stocks rather than small cap and midcap.
Trade cautiously