By Arun Kejriwal
We had another week of gains on the benchmark indices and saw BSESENSEX make a new lifetime high closing, yet fail to hit a lifetime intraday high. BSESENSEX gained 677.17 points or 1.32 per cent to close at 52,100.05 points while NIFTY gained 234.60 points or 1.52 per cent to close at 15,670.25 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.76 per cent, 2.09 per cent and 2.14 per cent, respectively. BSEMIDCAP was up 3.92 per cent, while BSESMALLCAP gained 3.34 per cent.
The Indian Rupee was under pressure and lost 56 paisa or 0.77 per cent to close at Rs 73 to the US Dollar. Dow Jones even after gaining on four of the five trading days managed gains of just 226.94 points or 0.66 per cent to close at 35,429.45 points. Incidentally most of the weekly gains were recorded on Friday when Dow Jones gained 179.35 points.
The RBI announced its bimonthly credit policy and kept policy rates unchanged on expected lines. It would continue with its accommodative stance and has highlighted that there is a risk of inflation rising to 5.1 per cent. It has also corrected downwards the GDP for FY 2021-2022.
GST collection for May 2021 was Rs 1 lac cr and is significantly lower than the April 21 number of 1.41 lac cr on expected lines. The impact on account of Covid-19 second wave and the resultant lockdown in many states took its toll on the numbers.
Shares of PNB Housing are rocking after the PE investor Carlyle decided to infuse further capital of Rs 4,000 cr into the company at a price of Rs 390 per share. The open offer to acquire shares from the public to the extent of 26 per cent of the equity is at Rs 403.22. This open offer price is now well below the market price as the share has gained sharply and closed at Rs 838.75, a gain of Rs 401.05 or 91.62 per cent for the week. With marquee names including Aditya Puri, the erstwhile MD of HDFC Bank being an advisor to Carlyle, there is no way this share can fall to anywhere near the open offer price. For record purposes, the 52-week high and low of the share is Rs 838.75 and Rs 190.20. The price to book value is at 1.59 times after the share price has almost doubled in a week's time. The share has been hitting upper circuits on every day of the week since the announcement. This capital infusion will bring about a renewed thrust in the affordable housing space as well.
Shares of Spandana Sphoorty had a great speculative run on the bourses after unconfirmed news reports about Axis Bank expressing its desire to strengthen its priority sector lending by acquiring a company with a micro-finance background. Three names cropped up which included yet to be listed, Arohan Financial Services from Kolkata, Satin Creditcare Network Limited and Spandana Sphoorty Limited. While nothing has been confirmed or denied, shares of Spandana were the one chosen by the market to speculate. The share saw the price move from Rs 577.65 on Friday 28th May to Rs 570.45 on Wednesday. It hit the upper circuit on Thursday at Rs 684.50 and did the same on Friday at Rs 820, but closed significantly lower at Rs 743.60. Volumes on the counter were manifold, with traded volumes being about 85 lac shares and delivery volumes of just 11.77 per cent at 10 lac shares. It is significant to note that the share closed lower than the weighted average of the day of Rs 758.51 as well. This clearly indicates the mood of the market and the temptation to buy or trade on just any news.
The markets have been in an uptrend for the last three weeks and seem to be indicating their tiredness from the reducing level of rise each week. Over the last three weeks, BSESENSEX has gained 677 points, 882 points and 1,808 points in reverse order with the current week gains being mentioned first. On the NIFTY similar gains have been 234, 260 and 497 points respectively. The week ahead therefore becomes the best chance for BSESENSEX to complete the target of registering the lifetime
high on intraday basis of 52,516.76 points. There is every possibility that if it does not happen in the earlier part of the week, we could go into a correction and then may take longer to consolidate and make another attempt at breaking the top. Normally BSESENSEX and NIFTY move in tandem, and this time we are already a week apart with some distance still to go.
On the Covid-19 front, the world saw 17,37,27,096 patients, 37,36,409 deaths and 15,66,05,997 patients who had recovered. In India we saw 2,88,09,339 patients, 3,46,784 deaths and 2,69,84,781 patients who recovered. Compared to the previous week the world saw 30,89,185 new patients, 1,87,572 deaths and 39,86,399 patients who recovered. In India we saw 9,14,539 new patients, 20,786 deaths and 15,30,461 patients who recovered. The number of new patients in India has consistently been dropping to below the 1.30 lac per day mark and the number of patients recovering averaging 1.5 patients compared to new patients. This augurs well. We need to bring down the death rate significantly lower to say with surety that wave 2 of covid-19 is under control.
Coming to the markets, it is our best chance to hit a new lifetime intra day high on BSESENSEX when trading resumes on Monday or maybe on Tuesday. If we are unable to do so in the earlier part of the week, the fatigue and tiredness may delay the inevitable to say after a correction and consolidation which may take 7-10 calendar days. The strategy should be to continue to trade the markets with buying on sharp dips and selling on rallies. Book profits and if in doubt remain on the side-lines. Final advice, do not buy stocks on the basis of market rumours.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)