Markets to remain choppy in expiry week with range bound movement

The week gone by behaved on expected lines and saw a decent recovery in the markets. It initially began just as a pullback but gathered steam as the week moved on and Dow also chipped in with decent gains.

BSESENSEX gained 1,367.56 points or 2.66 per cent to close at 52,727.98 points while NIFTY gained 405.75 points or 2.65 per cent to close at 15,699.25 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.57 per cent, 2.60 per cent and 2.48 per cent respectively. BSEMIDCAP gained 2.38 per cent while BSE SMALLCAP was up 1.61 per cent. The recovery in the benchmark indices were about 46.45 per cent on BSESENSEX and 44.60 per cent on NIFTY of the previous week's fall. The same on BSE MIDCAP was about 40 per cent and just about 22.5 per cent on BSE SMALLCAP. The indices gained on four of the five trading days.

The Indian Rupee lost 27 paisa or 0.35 per cent to close at Rs 78.34 to the US Dollar. Dow Jones gained on all four trading sessions of the week. It gained 1,611.90 points or 5.39 per cent to close at 29,888.78 points. It has recovered all that it lost in the previous week. FED Chairperson Jerome Powell remarked last week "Steep rate hike could turn US into recession". While we have all the reasons for markets being under pressure, what we saw was completely different.

Zomato has decided to acquire Blinkit, formerly known as Grofers in an all-share deal. Zomato would pay Rs 4,447 crore in shares for the same. Readers would recall that Zomato had tapped the capital markets with its IPO at Rs 76 for a fresh issue of Rs 9,000 crore and an offer for sale of Rs 375 crore and listed on 23rd of July 2021. Shares closed day one at Rs 125.85.

The share hit a 52-week high and low of Rs 169.10 and 50.35 respectively. Currently, the share trades at Rs 70.35 and is below the issue price like most new age technology platform companies. Probably, the honeymoon that markets had with them is behind us. Both the companies, Blinkit and Zomato are currently loss making. Zomato on a consolidated net total revenue of Rs 4,192 crore lost Rs 1,222 crore for the year ended March 2022. What is interesting is the fact that the deal has been done at a discount to the fund raise from Zomato and Tiger Global of 120 million USD just about a year ago, which valued the company at 1 billion Dollars. This current valuation is at 570 million.

The week ahead sees June futures expire on the last trading day of the month, 30th June. The current value of NIFTY of 15,699.25 points is down 470.90 points or 2.91 per cent. To expect the bulls to recover all of it looks tough, but they will certainly fight having got the momentum back during last week. One must remember that there is strong resistance around the 15,900-15,950 levels, all the way to 16,100 points. Further, there was a downward gap made on 13th June at the level of 16,172 to 15,886 points. This would need strong momentum to overcome and sustain.

Coming to the week ahead, we have June futures expiring in four days as already mentioned. While bulls will try to pullback, it would be a herculean task to level the deficit of 471 points. On global cues, Dow has had an excellent week, but could run into profit taking and resistances at higher levels.

Our markets would see sharp bouts of volatility and both sided movements in the coming week. Strong resistances exist at the gap of 54,205-53,207 level on BSESENSEX and 16,172-15,886 on NSE NIFTY as mentioned earlier. While entering the gap area seems likely, crossing the same and sustaining looks difficult. Expect markets to gain initially before profit taking takes over. Use rallies to sell and refrain from overnight positions.