After a super volatile week, all eyes on new Cabinet

New Delhi: It was an eventful and extremely volatile week for the stock market where one saw wild gyrations in both directions. At the end of it, it left the weak-hearted gasping for breath, waiting to recover their composure. The net price movement does not reflect the extent of wild swings that one saw.

The Exit Polls on Saturday indicated a sweeping majority for the BJP-led NDA, but final results showed that the BJP fell short of the absolute majority by a good 32 seats. With the allies, they were able to go past the number of 272, and the Prime Minister, along with his Cabinet, will be sworn in on Sunday, June 9, for a third term.

The BSESENSEX gained 2,732.05 points or 3.69 per cent to close at 76,693.36 points, while NIFTY gained 759.45 points or 3.37 per cent to close at 23,290.15 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.50 per cent, 3.12 per cent and 3.17 per cent respectively.

BSEMIDCAP was up 2.94 per cent, while BSESMALLCAP was up 3.11 per cent. Let us look at the intra-week movements on the benchmark indices. Post exit polls, BSESENSEX gained 2,487 points while NIFTY gained 808 points. On Tuesday post results, markets saw BSESENSEX lose 6,234 points intraday while NIFTY lost 2,057 points. Over the next three days, markets saw BSESENSEX gain 6,561 points while NIFTY gained 2,039 points.

At the end of it all, the BSESENSEX saw a movement of intra-week, 15,282 points, while in the case of NIFTY, it was 4,904 points. Markets gained on four of the five trading sessions and lost on one.

Coming to retail investors and what they did in the markets, contrary to their perception, they were net sellers when markets rose on Monday and big buyers when markets fell on Tuesday. They bought small on Wednesday when markets recovered.

The data from the exchanges shows that retail investors bought directly. To this, one must add what retail investors put in through SIPs in mutual funds, which have now crossed Rs 25,000 crore monthly.

The rally on Friday post-RBI meeting saw auto stocks, FMCG and IT companies stage a super rally. The top sectoral gainers for the week were BSEIT 8.17 per cent, BSEFMCG 6.93 per cent and BSEAUTO 6.78 per cent. The biggest loser was BSEPSU, which was down 1.84 per cent.

In its bi-monthly review meeting, RBI kept interest rates unchanged on expected lines. They expect GDP to grow at 7.2 per cent in the year 2025.

The Indian Rupee gained nine paise or 0.11 per cent to close at Rs 83.37 to the US Dollar.

Dow Jones gained on three of the five sessions and lost on two. At the end of the week, the Dow gained 112.67 points or 0.29 per cent to close at 37,798.99 points.

In primary market news, Le Travenues Technology Limited, the owners of the online travel company ‘IXIGO’ tap the capital markets. The issue consists of a fresh issue of Rs 120 crore and an offer for sale of 6,66,77,674 shares in a price band of Rs 88-93. The issue would open on Monday, June 10, and close on Wednesday, June 12.

The company is present in all three verticals such as airline tickets, rail tickets and bus tickets. The company reported an EPS of Rs 0.57 for the year ended March 23. The same has improved significantly to Rs 1.75 for the nine months ended December 23.

Revenues for the year ended March 23, which were at Rs 517.5 crore, are now in the nine months at Rs 378.7 crore. Based on the EPS for the full year, the PE multiple comes at an exorbitant 154.39-163.16 times.

Considering the nine months earnings, this is more comparable with its peer set. Looking at the current market mood, investors may apply for the above share.

Coming to the markets in the week ahead, expect them to remain volatile and witness two-sided moves. While FPIs have not turned bullish on India as yet, they seem to be confused more than bearish as they were till the end of the last month.

They bought on Monday and Friday and sold on the remaining three days. With a new high on the intraday basis made on BSESENSEX on Friday and a closing basis on both BSESENSEX and NIFTY on Friday, expect markets to rally further in the early part of the week.

As government formation and the ensuing budget is likely to be presented in the first fortnight of July, the composition of the cabinet and how the government settles down will be the focus of attention. Post new highs in the earlier part of the week, expect markets to witness profit taking and settling down from the new levels it has attained.

In terms of support, the levels witnessed on Tuesday at the lower levels of 70,234 and 21,281 points will act as strong support, while we could see levels of 24,000-24,200 on NIFTY and 78,800-79,400 on BSESENSEX as ultimate targets in the near term.

The strategy for the week would be to allow markets to run their course and resort to profit-taking only when the fall starts. It’s not necessary that the upside targets have to be made this week itself. They could happen when the budget is announced, as there would be various expectations from them this time around. The key mantra to making money would be to trade, as volatility and trading opportunities galore would exist.