Markets to remain range bound and trade in a broad range (Market Watch)The week gone by saw consolidation and markets rallying as well as the benchmark indices lost on three of the five trading days, while gaining on the remaining two. The weekend saw BSE SENSEX gain 115.89 points or 0.28 per cent to close at 41,257.74 points while NIFTY gained 15.10 points or 0.12 per cent to close at 12,113.45 points. The broader markets saw BSE 100, BSE 200 and BSE 500 lose 0.25 per cent, 0.33 per cent and 0.43 per cent respectively. BSE MIDCAP was down 1.53 per cent, while BSES MALLCAP was down 1.06 per cent. It could be said while the benchmark indices registered small gains, the rest were under pressure.
The Indian Rupee gained 5 paisa or 0.07 per cent to close at Rs 71.40 to the US Dollar. Dow Jones was up 295.57 points or 1.02 per cent to close at 29,398.08 points. On the Coronavirus front, there is no positive news and the same continues to spread with isolated cases in many more countries. In China, even the earlier health workers are beginning to get affected with the virus.
The International Energy Association (IEA) has forecast a drop in global energy demand for the first time in a decade for the current Quarter, January to March 2020. A big contributor of this is the slowdown and lockdown being witnessed in China on account of the Coronavirus.
The result season is over for the third quarter of FY20 and it has been a mixed bag so far. While there have been some green shoots visible, it could partly be on account of the tax rebate announced by the government for corporates in September 2019, which has now been factored in. The financial sector has seen some rebound-on resolution of many insolvency cases and further there seems to be a demand increase as well. While it is early days, in another fortnight there would be better clarity.
Results from the railway companies have seen a stellar performance and the street has reacted positively to them. IRCTC, IRCON and RITES have gained on the street while RVNL has faltered. Incidentally, RVNL has yet to take a call on the new tax rates and would do so in the final quarter of FY20. Shares of IRCTC touched an intra-week high of Rs 1,609.30 before closing at Rs 1.579.95, a weekly gain of Rs 66.10. Since its IPO listed on the October 14, the share which was issued at Rs 320 has moved up almost 5 times gaining 393.73 per cent.
Coming for the week ahead there would be both sided movement and market trading in a broad range. The BSE SENSEX is likely to trade in a range of 40,900-41,900 while NIFTY would trade in a range of 12,000-12,400 points. The breakdown or breakout in either direction, if it does happen and sustain, could see a sharp movement, but that looks highly unlikely.
The strategy for the week would be to buy on any sharp fall and sell on strong rallies. The possibility of the same happening may not materialise, but one must be prepared.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)