After sharp Friday rally, expect markets to ponder on trend going forward
T
he week gone by had a mere four trading sessions but had plenty of action. At the end of the week, in which we celebrated our 78th Independence Day, markets staged a smart recovery on Friday, and changed the sentiment completely.
BSESENSEX gained on two of the four trading sessions and lost on two. BSESENSEX gained 730.93 points or 0.92 per cent to close at 80,436.84 points, while NIFTY gained 173.65 points or 0.71 per cent to close at 24,541.15 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.65 per cent, 0.66 per cent and 0.57 per cent respectively. BSEMIDCAP gained 0.43 per cent, while BSESMALLCAP was up 0.45 per cent.
The Indian Rupee remained unchanged at Rs 83.96 to the US Dollar. Dow Jones had a great showing and was up 1,162.22 points or 2.94 per cent at 40,659.76 points. Data from the US now gives plenty of comfort that the US FED, in its meeting in September, would cut interest rates. How much the same would be cut is still debatable, but the cut is imminent. One must also remember that the Presidential elections are due in November in the US, and the FED would like to be cautious in whatever they do.
The week saw plenty of action, and one needs to understand the importance of Friday. In the last four weeks, Friday has played a very significant role. The first was Friday, July 26, the first day of the August series. On this day, BSESENSEX gained 1,293 points, whilst NIFTY was up 428 points. The next was Friday, August 2, when BSESENSEX lost 886 points while NIFTY lost 293 points. This was after markets made a new high on the previous day, at 82,129 points and 25,078 points, respectively.
Incidentally, this was followed by what could be termed 'Black Monday', when markets fell very sharply. The third such day was Friday, August 16, post-Independence Day, when BSESENSEX gained 1,321 points while NIFTY gained 398 points. With three out of four Fridays having a big movement, it sure becomes imperative to track future Fridays, as charts are all about patterns and history.
In primary market news, the week saw two listings during the week and one issue opening and closing for subscription. The week ahead will see one listing and two issues open and closed for subscription.
The first issue to list was Brainbees Solutions Limited, better known as 'Firstcry,' which had issued shares at Rs 465. The listing happened on Tuesday, August 13. The share debuted at Rs 625 and closed on day one at Rs 678.25, a gain of Rs 213.25 or 45.86 per cent. During the course of the week, the share slipped marginally to close at Rs 669.05, a gain of Rs 204.05 or 43.88 per cent.
The second share to list was Unicommerce Esolutions Limited, which had issued shares at Rs 108. This share too, was listed on Tuesday, August 13. The discovered price was Rs 230. The share closed day one at Rs 210.05, a gain of Rs 102.05 or 94.49 per cent. By the end of the week, the share witnessed profit-taking and closed at Rs 189.60, a gain of Rs 81.60 or 75.56 per cent.
The issue from Saraswati Saree Depot Limited, which had a price band of Rs 152-160, received an excellent response. The issue overall was subscribed 107.52 times, with the QIB portion subscribed 64.12 times, the HNI portion subscribed 358.65 times, and the Retail portion subscribed 61.88 times. There were 21.80 lakh applications in all. This issue will be listed on Tuesday, August 20.
The first issue to open would be from Interarch Building Products Limited. The issue would open on Monday, August 19, and close on Wednesday, August 21. The price band is Rs 850-900. The issue consists of a fresh issue of Rs 200 crore and an offer for sale of 44,47,630 shares.
The company is in the business of turnkey pre-engineered steel construction solution providers in India. It reported revenues of Rs 1,293.30 crore for the year ended March 2024. It had an EBITDA margin of 8.74 per cent and a PAT margin of 6.67 per cent. The company reported an EPS of Rs 58.68. The PE for the company is 14.49-15.34, which is attractive at current levels of the markets and when compared with its listed peers.
The second issue to tap the capital markets is Orient Technologies Limited, which is opening its issue on Wednesday, August 21, and closing on Friday, August 23. The issue consists of a fresh issue of Rs 120 crore and an offer for sale of 46 lakh shares, in a price band of Rs 195-206.
The company is an information technology (IT) solutions provider headquartered in Mumbai. The company reported revenues of Rs 602.89 crore for the year ended March 24 with an EBITDA margin of 9.39 per cent and a PAT margin of 6.87 per cent. The EPS for the year was 11.80, and the PE band was 16.53-17.46. The company has entered the promising and lucrative business of cyber security, which is a crucial and fast-growing area and also enjoying higher margins.
Ola Electric Mobility Limited, which had issued shares at Rs 76 and listed on August 9, is on a roll. Shares closed higher by 74.68 per cent at Rs 132.76. They seem to have further momentum in them as at their annual event, 'Sankalp', the company has launched four motorcycles in a range of Rs 75,000 to Rs 2,50,000.
These motorcycle bookings have opened, and they will be delivered from Diwali Day 2025. The motorcycle market is the largest market, with 70-72 per cent market share amongst 2-wheelers in the country. However, in the EV space, this share of motorcycles is a mere 1 per cent, and this gives an opportunity for the company to penetrate. Expect the share to gain momentum after this event.
Post the correction, markets have recovered very sharply and smartly over the last couple of days. We are now near the resistance zone, and markets need to decide where they are headed. For the immediate short term, we seem to be in a broad trading zone with levels of 23,850-23,900 on NIFTY Acting as support.
In case the market has strength, we need to quickly move past 24,550 and head towards 24,900 or thereabouts. In case markets struggle at current levels, we could see them slipping again.
In terms of FPI action, they continue to be net sellers in the markets. One did see a large short covering on Friday, but with their present mindset, they are capable of, again, shorting the markets in the coming week. The trading strategy would be to avoid large exposures in either direction and play by the ear. At best, it appears we will test the upper limits and then head down. Effectively trade in a broad range from hereon.
Trade cautiously.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)
✔️ After sharp Friday rally, expect markets to ponder on trend going forward
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