Market momentum to propel further gains

Markets in the week gone by behaved on expected lines and gained quite sharply. Markets opened on a weak note on Monday and then did a U-turn. They gained on four of the five trading days.

BSESENSEX gained 1,914.49 points or 3.34 per cent to close at 59,276.69 points while NIFTY gained 517.45 points or 3.02 per cent to close at 17,670.45 points. The broader markets saw BSE100, BSE200 and BSE500 gain 3.02 per cent, 3.01 per cent and 3.04 per cent respectively. BSEMIDCAP gained 2.75 per cent while BSESMALLCAP was up 3.23 per cent.

The Indian Rupee gained 41 paisa or 0.54 per cent to close at Rs 75.79 to the US Dollar. Dow Jones was flattish for the week losing 42.97 points or 0.12 per cent to close at 34,818.27 points.

The week was eventful with the financial year and March futures ending on the last trading day. March futures ended with gains of 1,216.80 points or 7.49 per cent. The financial year 2021-22 saw the BSESENSEX move from 49,509.15 points to 58,568.51 points, a gain of 9,059.36 points or 18.30 per cent. NIFTY moved from 14,690.70 points to 17,464.75 points, a gain of 2,774.05 points or 18.88 per cent. Despite the turmoil and the Russia Ukraine war, it has been much more than an average year for stock market returns. It is even more significant from the fact that this is the second consecutive year of super returns for the market.

The follow-on public offer from Ruchi Soya Industries Limited was subscribed 3.80 times. SEBI then directed the company to allow investors two days to withdraw their bids because some messages were circulated to induce investments. During the withdrawal, bids for 97.40 lakh shares were withdrawn against total bids received of 17.60 lakh shares. The follow-on offer oversubscription was reduced from 3.80 times to 3.60 times. The closing price of Ruchi Soya at the BSE on Friday was Rs 943.55, a premium of Rs 293.55 or 31.11 per cent to the discovered or allotted price of Rs 650. Shares from the FPO are likely to list on Friday the 8th of April. I believe the listing price/discovered price should be around Rs 700 on listing day.

The Russia-Ukraine war seems to have become a never ending one and we seem to be getting nowhere. The world carries on and there are the usual noises coming from the concerned parties. In the meanwhile, the world's largest miner of Gold, Russia, has announced a new fixed price for its currency with gold. The price per gram of gold has been specified as 5,000 Roubles. This has virtually reduced the value of gold by around 30 per cent. This announcement offers countries wanting to buy crude oil and gas from Russia, an alternate currency to Euros, Dollars and Roubles. How things pan out in the near future would be interesting developments.

India seems to have become an interesting hot spot from the political point of view. We have had unexpected and sudden visits from a number of large countries in the last fortnight. While such visits need not translate into instant results, it certainly improves India's stock as a global player. On the other hand, two of our neighbours are in dire straits. Pakistan Prime Minister is on the verge of being voted out in a no-confidence motion. Sri Lanka is on the verge of an economic crisis and things could get serious with civil riots as days pass by with power cuts being the order of the day.

Markets have entered the stage where annual results and fourth quarter results for the period January-March 2022 would be announced. Over the next 60 days these companies would have to announce their results. With the performance witnessed in the December quarter, expectations of good and improved results have been raised. There could be issues with the profitability as there has been massive cost pressure with commodity prices rising disproportionately. It would be interesting to see how companies which have seen sharp rise in selling prices manage their costs.

The week gone by saw two interesting developments in the market. The first was the change in approach from FII's or FPI's. They seem to have run out of shares to sell and have turned buyers. While their purchases are not yet that big to confirm a change in trend, it still gives a fair indication that big selling is unlikely to happen. The second is that after a very long time there is movement and participation in Smallcap and midcap stocks. This could be attributed to NAV propping during the last week to some extent. However, there is a strong undertone suggesting that these segments would witness buying as we go forward.

Coming to the markets in the week ahead, expect markets to continue their upward move. There is strong momentum in the markets and that should hold them in good stead. There would be equal amounts of traction in large cap as there would be in select midcap and Smallcap stocks. Markets are well poised to break out of the last resistances and gain as we go forward. As immediate targets, expect the BSESENSEX to gain another 1,000 points at the bare minimum and NIFTY about 350 points. This need not be a straight jump but would see some ups and downs as well. Post markets crossing 60,500 and 18,100 respectively, markets would take a call based on their strength and momentum. Enjoy the rally as it unfolds.