Expiry week to see new life time highs

Markets continued their upward movement in the week after Diwali and gained on three of the four trading sessions. BSESENSEX gained 439.25 points or 1.01% to close at 43,882.25 points while NIFTY gained 139.10 points or 1.09% to close at 12,859.05 points. The one day of correction saw BSESENSEX lose more than the net gains of the week and was down 580 points while NIFTY lost 167 points. This is just to give a sense of the sharp correction that happened. The broader markets saw BSE100, BSE200 and BSE500 gain 1.13%, 1.44% and 1.57% respectively. BSEMIDCAP was up 3.53% while BSESMALLCAP gained 3.47%.

The Indian rupee gained 44 paisa or 0.56% to close at Rs 74.16 to the US dollar. Dow Jones lost 216.33 points or 0.73% to close at 29,263.48 points.

In primary market news, the issue from Gland Pharma Limited debuted on the bourses and had a decent showing. The company which had raised Rs 6,480 crore from a fresh issue of Rs 1,250 crore and an offer for sale of 3.48 crore shares at Rs 1,500 listed at Rs 1,701 on the BSE. The share closed at Rs 1,820.45 gaining Rs 320.45 or 21.36%. The company saw trading of almost 121 lac shares and 68.32 lakh shares were delivered. The company would be closely monitored as there is a foreign holding cap of 75% and the company is quite close to it with the promoter post diluting being close to 58%. The remaining shares are largely held by various institutions, both domestic and Foreign and also retail individuals. The enforcement directorate also holds 60 lac shares, a shade over 3% belonging to the erstwhile promoters of Satyam Computer.

The week ahead sees November futures expire on November 26. Currently the series is up 1,188.25 points or 10.18%. This is probably one of the best gains seen in any series over the last few months. With such an overpowering lead there is no way the bulls would like to allow the bears to claw back into the series. Over the last three weeks the series saw gains of 621 points, 456 points and 139 points on the NIFTY. On the BSESENSEX in the same period we saw gains of 2,279 points, 1,550 points and 439 points. In such a scenario it appears we are heading for a situation where the ensuing expiry day could lead to a culmination of the rally in the short and immediate term before a reasonable correction in terms of time and value sets in. If this were to happen which looks very likely, expect a sharp movement during the week and thereafter during the correction.

On the Covid-19 front, the world saw 5,84,94,801 patients, 13,86,570 deaths and 4,04,67,954 people who have recovered. In India we saw 90,95,908 patients, 1,33,263 deaths and 85,21,617 people recovering. Compared to the previous week the world saw 41,65,697 new patients, 68,284 deaths and 25,96,579 people recovering. In India, we saw 2,80,916 new patients, 3,589 deaths and 3,15,889 people recovering. While the overall numbers for India show things improving, being a large country, we have pockets where things are out of control. Two such places are the national capital Delhi and Maharashtra's 2nd largest city Pune. Other places include Ahmedabad and a few more cities in Gujarat.

The week ahead sees November futures expiring and a long weekend on account of a holiday on November 30. This extended weekend would ensure that there is large winding up of positions on Friday. Being the start of a new series, the same may start on a weak or a flattish note as we enter the last month of the calendar year 2020. Readers would recall that FII's tend to take a Christmas and New Year break in the last week or fortnight of December and markets globally are quiet during this period, India included. This could be a good period for markets to consolidate and digest the sharp gains of the current month.

It therefore makes sense to book profits in any meaningful rally which happens in the coming four days and wait for markets to cool off, and correct in the following month before making any fresh purchases.