Markets to continue to remain volatile, undecided
Markets behaved on expected lines and were under pressure in the week gone by and lost some ground. BSESENSEX was down 522.01 points or 1.37 per cent to close at 37,606.89 points. NIFTY lost 120.70 points or 1.08 per cent to close at 11,073.45 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.65 per cent, 0.55 per cent and 0.48 per cent respectively. BSEMIDCAP was up 0.41 per cent, while BSESMALLCAP gained 0.43 per cent. In sectoral indices, BSEIT gained 5.02 per cent, while BSEBANKEX lost 4.22 per cent.
The Indian Rupee gained 2 paisa or 0.03 per cent to close at Rs 74.81 to the US dollar. Dow Jones lost 41.57 points or 0.16 per cent to close at 26,469.89 points.
July futures expired on a positive note for the series but lost ground during the week. The series gained 813.25 points or 7.90 per cent to close at 11,102.15 points.
In individual stocks, the top gainer was Dr Reddy's up Rs 458 or 11.27 per cent, while the top loser was HDFC Bank down Rs 86 or 7.69 per cent.
Shares of Yes Bank issued through the mega follow on offer of Rs 15,000 crore were listed for trading on July 27. They settled down by the end of the week to trade at Rs 11.95, down Rs 1.70 or 12.45 per cent for the week. Compared to the issue price they are down Rs 0.05. Volumes have reduced significantly and one should not be surprised if the share tends to make small gains from hereon in the coming week.
Results season is on in full earnest and they are a mixed bag. Clearly the period for which results are being declared April-June were the worst affected months due to the Covid-19 pandemic. Banking results are under strain as there is moratorium which has been provided during the period. Subsequently provisions have gone up and recoveries from NPA's are ruled out in this period. While this is not indicative of the future, one hopes that life returns to near normalcy as early as possible.
The public issue from Mindspace Business Parks Reit received excellent response and was oversubscribed just under 13 times. The QIB portion was subscribed 10.61 times while the non-institutional portion was subscribed 15.77 times. The issue received 51,749 applications and the average ticket size was 25.81 lacs. Retail investors who would get pro-rata application would be given a raw deal as there was no bucket for them nor would they get the typical one lot each and then prorata followed in equity issues. This is an area which needs urgent attention of the regulator who is looking to promote this as a product for investment by retail and has progressively cut the application size from Rs 10 lachs to Rs 50,000.
The controversial up-front margin for trading in the equity segment of the capital markets as proposed by SEBI has been extended by one month to September. The rule seems quite misplaced and would cause great hardships to the small investor. The idea that sale proceeds would not be available for purchase until the pay-out is done, will lead to cash volumes shrinking even further. The derivatives segment would remain unaffected where margins are released on trade being squared up and does not have to wait for settlement. This will ensure that investors are pushed towards speculation which is not their forte or their capability. Most unfortunate but stark reality.
Coming to COVID-19, the world saw 180.26 lakh patients, 6.89 lakh deaths and 113.35 lakh recoveries. In India we saw 17.54 lakh patients, 37,415 deaths and 11.48 lakh recoveries.
Compared to the previous week the world saw 18.19 lakh new patients, 40,469 deaths and 14.18 lakh recoveries. In India, there were 3.70 lakh new patients, 5,288 deaths and 2.61 lakh recoveries.
Markets have had a great run from their lows made in March and seem to be ignoring all the global issues that are currently there. Liquidity, lack of conviction, left out feeling, waiting for correction to buy are some of the reasons for the present state of the market. In such a scenario it makes sense to be a contrarian and sell on rallies and buy on dips. Markets will remain volatile and therefore provide plenty of opportunities to buy and sell. Use them to your advantage.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)
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