Trading for the four-day week began on a strong note, but markets went into a correction mode for the next two days and Friday saw a flat market. BSESENSEX ended the week with losses of 473.92 points or 0.96 per cent at 48,732.55 points while NIFTY lost 145.35 points or 0.98 per cent to close at 14,677.80 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.75 per cent, 0.75 per cent and 0.69 per cent, respectively. BSEMIDCAP lost 0.49 per cent, while BSESMALLCAP lost 0.08 per cent.
The Indian Rupee gained 23 paisa or 0.31 per cent to close at Rs 73.28 to the US Dollar. Dow Jones had a volatile week and lost for the first three days and then gained for the next two days. The index hit a new lifetime high on Monday at 35,092 points before losing 35 points. It then lost 474 points and 681 points before gaining 434 points and 361 points to end the week with losses of 395.63 points or 1.14 per cent at 34,382.13 points. The volatility being witnessed in Dow clearly indicates that there is resistance and profit taking at each higher level. Markets there are also concerned about inflation.
Metals and commodities as mentioned last week were under pressure and lost ground. BSEMETAL index was the top loser and was down 4.47 per cent. There are concerns about resistance from user industry buyers to pay higher prices.
Units of PowerGrid Infrastructure Investment Trust which had tapped the capital markets with its issue for Rs 7,700 cr saw its units list on Friday the May 14. Units which were issued at Rs 100, debuted at Rs 104 and made an intra-day high of Rs 104.90 before closing at Rs 102.98. The performance was decent as far as day one is concerned. The regulator needs to take a clearer stand on issues concerning INVITS. The application size is Rs one lac or more and in the case of this instrument it was 1,100 units or Rs one lac ten thousand. The trading lot was however 100 units or effectively Rs 10,000. In the case of SME exchange, the application size and the trading lot remain the same for the period of two years or till the time the stock remains listed on the SME exchange before migrating to the main board. Here it appears that the retail investor is not capable of understanding the invit for applying and hence the lot size is above one lac but he is good to understand when trading and therefore the lot size is 100. This double standard must be eliminated at the earliest.
Covid-19 saw the world have 16,31,88,236 patients, 33,83,851 deaths and 14,15,07,121 patients recovering. In India we saw 2,46,84,077 patients, 2,70,319 deaths and 2,07,95,335 patients recovering. During the week the world saw, 48,53,795 new patients, 86,817 deaths and 56,99,403 patients recovering. In India we saw 23,87,663 new patients, 27,921 deaths and 24,77,931 patients recovering. The wave in many parts of India seems to have peaked while in many other parts it seems to be coming under control. The country has so far vaccinated 18 crore people and this number includes the first and second jab. Taking the lead from Mumbai and Maharashtra, many other states have imposed lockdown for about a fortnight. This forced lockdown helps in restricting movement and isolating areas which have high incidence of affected patients. The solution will always remain the following of SOPs strictly and observing social distancing. Hopefully things should be better in the coming days.
Markets are stuck in a broad range and are seeking direction desperately. They come close to the breakout or breakdown levels and then turn in the opposite direction viciously. The immediate support levels for the BSESENSEX and NIFTY are 48,050 points and 14,400 points while the resistance level is 50,250 points and 14,950-15,000 points respectively. On the downside, the next level of support is at 47,250 and 14,150 points. If these levels are broken for any reason, there could be a couple of days of sharp sell-off.
The other couple of disturbing facts in the market is that FPI’s are sellers on most days and secondly money making seems to have become too easy. These are very disturbing signs and indicate that some change in trend is imminent. Considering the factors enumerated above it appears that looking at the strong showing of Dow on Friday, we could see a strong beginning to the week ahead in our markets followed by a correction. Continue to sell on rallies and buy on sharp dips in the coming week as well.