Hunting season for bulls and bears

Plenty of steam left in the market, so expect more sizzle than fizzle in the near future

Markets continued their upward trajectory and both the benchmark indices, BSESENSEX and NIFTY made new life-time highs during the week, but on different days. The BSESENSEX gained 189.32 points or 0.49T to close at 38,862.23 points. NIFTY gained 42.05 points or 0.36 per cent to close at 11,665.95 points. The broader indices saw BSE100, BSE200 and BSE500 gain 0.31 per cent, 0.31 per cent and 0.28 per cent respectively. BSEMIDCAP was up 0.19 per cent while BSESMALLCAP was up 0.12 per cent.

Metal fettle
The top sectoral gainer was BSEMETAL up 3.12 per cent followed by BSEREALTY 2.98 per cent and BSEAUTO 2.67 per cent. The top sectoral loser was BSECON DURABLE down 1.68 per cent followed by BSEBANKEX 1.14 per cent and BSEFMCG 0.67 per cent. The top gainer amongst individual stocks was Tata Motors which gained 18.04 per cent followed by Bharti Tele 7.12 per cent and Lupin 6.77 per cent. The top loser was Bharat Petro down 9.64 per cent followed by Zee Entertainment 7.42 per cent and Hind Petro 7.09 per cent. Dow Jones had a strong showing and gained 496.31 points or 1.91 per cent to close at 26,424.99 points. The Indian Rupee lost 7 paisa or 0.10 per cent to close at R 69.22 to the US dollar.

Rate cut
RBI in its first monetary policy review for 2019-2020, cut repo rate by 0.25 per cent to 6.00 per cent on expected lines. It also cut reverse repo rates by 25 basis points to stand at 5.75 per cent. Markets after initially rallying slipped and lost ground on the day that the rate cut happened. The week saw the issue from Metropolis Healthcare Ltd get subscribed 5.84 times. The issue received a late surge in the last 30 minutes from QIB's which saw their bucket being subscribed 8.88 times. HNI portion was subscribed 3.03 times while Retail was subscribed 2.21 times. Employees was under subscribed at 0.05 times.

Quarter cool
The offer for sale and fresh issue from Polycab India Ltd opened on Friday and closes on Tuesday. The price band is R 533-538 and it is likely to see huge subscription as the HNI portion would be funded by NBFCs. The company had an EPS of R 26.23 for the 12 months ended March 2018. If one were to look at the 9 months numbers for 2018-2019, the EPS has jumped from R 12.79 to R 25.31 a year ago. The fourth quarter is the best quarter for this industry and it would be fair that the company is likely to report an EPS closer to R 36-39 in the year ended March 2019. If one were to look at revenues, they have grown from R 4,878 crore in nine months to R 5,561 crore in the current nine months. A year ago, the company had revenues of Rs 6,986 core. The issue consists of an offer for sale of 1.75 crore shares and a fresh issue to raise Rs 400 crore.

Result season
The first phase of polling would be held this week on Thursday, April 11. The nation would now get into election mode and the markets would be waiting to see the BJP manifesto and how they counter the minimum R 72,000 a year that the Congress plans to give the bottom 20 per cent of India's population. This time around in result season the two IT giants, Infosys and TCS would be declaring their results on the same day, i.e. Friday, April 12. The performance of these two companies would lead to comparisons and also give an idea of how the other companies from the sector would fare.

Trade sentiment
FPIs or FIIs continue to be net buyers on almost a daily basis and they seem to be determined to use the opportunity to buy into the Indian market. Results of the general elections will be declared on May 23. If we have a stable Govt, there would be no holding back of the market. Secondly, a large section of the trading community believes that the markets have no reason to go up and are willing to short every rally. It is this action of the bearishly inclined that is ensuring that markets do not have a meaningful correction.

The momentum
The current market momentum indicates that we have more steam left in the market and they are likely to rise further. There would be opportunities for both bulls and bears as volatility would increase as we trade in unchartered territory. The strategy for trading would be to buy on dips and sell on sharp rallies. Markets would be in range bound movement with an upward bias. Make the most of the movement by being bullishly inclined.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only.

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