With expiry week ahead, trade cautiously

In the week gone by, markets were volatile and had huge intraday movement as well. They did close at new lifetime highs on intraday and closing basis. However, there were plenty of ups and downs which accompanied this rise as well.

BSESENSEX gained 1,032.58 points or 1.75 per cent to close at 60,048.47 points while NIFTY gained 268.05 points or 1.52 per cent to close at 17,853.20 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.30 per cent, 1.15 per cent and 1.08 per cent respectively. BSEMIDCAP gained 0.59% while BSESMALLCAP was up 0.06 per cent. Market gained on three of the five days and lost on two. The intraweek low on BSESENSEX was 58,232.54 points and 17,326.10 points on NIFTY. The intraday highs registered on Friday were 60,333 points and 17,947.65 points respectively.

The reason why the intraweek lows and highs are being highlighted is to give a sense of the sharp movement witnessed during the week. BSESENSEX lost 800 points and then gained 2100 points, a total movement of 2,900 points. NIFTY similarly lost 160 points and then gained 620 points, for a total movement of 780 points.

The Indian Rupee lost 22 paise or 0.30 per cent to close at Rs 73.70 to the US Dollar. Dow Jones ended the week with gains of 213.12 points or 0.62 per cent to close at 34,798 points. This close was on the back of losses for the first two days of the week, followed by consecutive gains on the remaining three days with Friday being the day with least gains of a mere 33 points.

The week saw realty stocks shoot through the roof and the normally quiet BSEREALTY index gained a massive 21.31 per cent and close at 4,002.46 points. The top sectoral loser was BSEMETAL which was down 3.49 per cent.

In economic news, gross tax collections were at Rs 6.46 lakh crore as on September 22, which were up 47 per cent compared to a year ago. Similarly, net direct taxes were at 5.71 lakh crore up 74 per cent compared to a year ago. These numbers indicate the buoyancy in the economy, and point to significant rebound in the economy.

Zee Entertainment continued to be in the news and was the top gainer for the week, up Rs 63.55 or 24.89 per cent at Rs 318.85, after it announced the proposed merger with Sony Entertainment. The wily Subash Chandra has negotiated a deal where Punit Goenka would continue to remain at the helm of affairs of the merged entity. While there is a 90-day period to complete due diligence, there could be ifs and buts in the process, but it appears that by and large the Zee issue is broadly resolved.

Shareholder activism is gaining momentum and after the earlier issues involving Zee's two directors, Eicher Motors and All-Cargo delisting, it was time for IDFC. Here the minority shareholders rejected the reappointment of Vinod Rai as director. This activism is a good sign for corporate INC and would be a wake-up alarm for promoters to not take shareholders for granted.

In primary market news we had one issue tapping the markets, yet another getting listed and the third having its roadshow for the issue opening next week. Paras Defence and Space Technologies Limited had tapped the capital markets with its fresh issue for Rs 140.6 crore and an offer for sale of 17,24,490 equity shares in a price band of Rs 165-175. The issue had received phenomenal support and became the most oversubscribed issue since 2007, getting oversubscribed 304.26 times. QIB portion was subscribed 169.65 times, HNI portion 927.70 times and Retail portion was subscribed 112.81 times. There were over 36 lakh applications. The issue which set out to raise about Rs 170 crore, garnered subscription of Rs 38,071 crore.

Shares of Sansera Engineering Limited which had tapped the markets with its OFS for 1,72,44,328 shares in a price band of Rs 734-744 listed on the bourses on Friday. The discovered price was Rs 811.35 and the share closed at Rs 818,70, a gain of Rs 74.70 or 10.04 per cent. The share had a sedate beginning but unlike many shares on debut was fairly range bound on opening day with a range of just under 6 per cent. The intraday high and low was Rs 842-800.80.

The offer for sale of 3,88,80,000 equity shares of Aditya Birla Sun Life AMC Limited in a price band of Rs 695-712, opens on Wednesday, September 29 and closes on Friday the 1st of October. The company has earned an EPS of Rs 18.27 for the year ended March 2021, and the PE band for the issue is at 38-04-38.97. The company is jointly promoted by the Aditya Birla group and SunLife Insurance Co Ltd.

The AMC is the fourth largest by AUM and would be the fourth company from the sector to list after HDFC AMC, Nippon Mutual Fund and UTI AMC. The company has a total AUM of 2.93 lakh crore of which 36.5 per cent is in equity, 59.5 per cent is in non-equity and 4 per cent in other assets. Looking at the under penetration in India of saving products, lack of retirement products which beat inflation, the mutual fund industry has excellent prospects going forward. Given the dynamics and the performance of stock markets over the last 15-18 months and the expected traction, post-Covid recovery, this industry has a great future. Investment is warranted considering the pedigree of the company and its valuations compared to its peers.

On the Covid-19 front, the world saw 23,22,92,795 patients, 47,57,577 deaths and 20,89,08,252 patients recovering. In India we saw 3,36,52,745 patients, 4,46,948 deaths and 3,29,02,351 patients recovering. Compared to the previous week, the world saw 33,40,773 new patients, 57,298 deaths and 33,57,136 patients recovering. In India we saw 2,04,582 new patients, 2,079 deaths and 2,31,184 patients recovering. The total number of people who have received their vaccination in India touched 85.60 crore, which is higher by 5.17 crore compared to the previous week. This would correspond to 74 lakh vaccinations average per day for the week. This number would include both first and second vaccination doses.

Coming to the markets in the week ahead, we have September futures expiring on Thursday the 30th of September. Currently, the series is up a massive 1,216.30 points or 7.31 per cent from the opening level of 16,636.90 points. With a huge and almost unassailable lead and a mere four days to go, bulls have complete control over the series and will toy with the bears in the coming days. Markets have seen BSESENSEX cross an important psychological level of 60,000 on Friday and as the street jokes, BSESENSEX has finally become a senior citizen. Similarly, the street expects NIFTY to become a major in the coming week by crossing 18,000. While these are just symbolic numbers and nothing more, one could expect volatility to remain at significantly high levels.

There would be swift intra day moves and markets would move in both directions. Some technical indicators suggest that there was a cooling off effect witnessed on Friday which could be a second half profit booking spree or just a typical Friday effect. For the records, the advance-decline ratio was negative for the day, indicating caution.

The strategy for the coming week would be to continue to book profits on rallies and buy on sharp dips with the focus being on large cap stocks. Very few select midcap stocks could be looked at. While the current month has seen FPI being net buyers for the month, one is not sure what October would be like. The coming month would also see results being declared for the July-September quarter which could lead to stocks being re-rated or downgraded. The week would be super volatile and needs to be cautiously traded.