Market focus back to large caps

By Arun Kejriwal
Markets were on a roll last week and set the tone of revival on the very first day of trading for the week. The tone of the markets when they closed in the previous week indicated weakness and consolidation. They began with a sharp downside and then recovered throughout the day and in the process manged not only gains for the day but also changing the sentiment for trading in the week ahead. BSESENSEX gained 580.59 points or 1.11 per cent to close at 52,925.04 points, while NIFTY gained 177 points or 1.13 per cent to close at 15,683.35 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.06 per cent, 1.10 per cent and 1.15 per cent, respectively. BSEMIDCAP gained 1.40 per cent while BSESMALLCAP was up 1.41 per cent. Markets gained on four of the five trading days.
Dow Jones reversed all the losses suffered in the previous week and gained 1,143.76 points or 3.44 per cent to close at 34,433.84 points. The Indian Rupee was under pressure and lost 34 paisa or 0.46 per cent to close at Rs 74.20 to the US Dollar.
Monday saw the markets open with a downside gap and BSESENSEX opened at 51,887 points against the previous closing of 52,344 points. The fall was 457 points. It made a low of 51,740 points and a high of 52,629 points before closing at 52,574 points. The gain was 230 points on a net basis and the intra-day movement was 889 points. On NIFTY. The open was 15,525 points against the previous days close of 15,683 points. The low was 15,505 points, the high was 15,765 points and the close was 15,746 points. The intraday movement was 260 points while the net change was 63 points. The movement on the benchmark indices on Monday and sharp recovery in Dow Jones changed the market direction.
BSESENSEX closed at lifetime high on Friday of 52,925.04 points and an intra-day lifetime high of 53,057.1 points made on June 22. NIFTY lifetime high and closing high were both made on 15th of June and the values were 15,901.60 points and 15,869.3 points.
June futures expired on Thursday the 24th of June with a series gain of 452.60 points or 2.95 per cent at 15,790.45 points. Markets were quite positive on expiry day and the bulls accelerated and pushed the bears further to gain 104 points.
Heineken has bought 396.44 lakhshares in UB from the DRT (Debt Recovery Tribunal) at a cost of Rs 5,850 cr. The proceeds would help SBI recover a significant part of its dues from fugitive Vijay Mallya.
PharmEasy has acquired 66.1% stake which was owned by the founder Velumani at a cost of Rs 4,546 cr in Thyrocare at a price of Rs 1,300 per share. This is the first acquisition by a Unicorn in a listed entity. Share price of Thyrocare during the week gained Rs 160.40 or 12.40 per cent to close at Rs 1,448.05 on Friday. Incidentally, Velumani has invested a third of the proceeds received by him from the stake sale or Rs 1,500 cr to acquire 5 per cent in PharmEasy, valuing this company at Rs 30,000 cr.
The primary issue from India Pesticides Limited which had tapped the capital markets with its primary issue of Rs 100 cr and an offer for sale of Rs 700 cr in a price band of Rs 290-296 was subscribed 29.64 times. The QIB portion was subscribed 43.84 times, HNI portion 52.95 times and Retail portion was subscribed 11.54 times. There were 16.59 lakh applications.
Shares of Shyam Metalics & Energy Limited listed on the bourses on Thursday and gained 27.12% during the two days of the week that they traded. The share closed at Rs 389 against the issue price of Rs 306.
Similarly shares of Sona BLW Precision Forgings Limited listed as well and closed at Rs 364.85, a gain of 25.38 per cent against its issue price of Rs 291.
On the Covid-19 front, the world saw 18,15,59,144 patients, 39,32,982 deaths and 16,60,88,524 patients who had recovered. In India we saw 3,02,33,183 patients, 3,95,780 deaths and 2,92,51,029 patients recovering. Compared to the previous week the world saw 25,97,246 new patients, 57,373 deaths and 25,98,014 patients recovering. In India we saw 3,51,218 new patients, 9,040 deaths and 4,85,020 patients recovering. Certainly, things are looking better on the covid-19 front in India and one hopes with the rate of vaccination per day increasing significantly, we should be prepared to fight the third wave if and when it does come.
Coming to the markets, the new July series has begun which consists of five weeks and would see results for the first quarter of April-June being declared. Typically, in such a period, one does not see wild movements in the benchmark indices. Expect the action to now shift back to the large cap stocks from the midcap and Smallcap stocks which we have seen over the last couple of months. It makes sense to move away from the lower category of stocks and move to safety in the larger ones. This would have two advantages, with the first being significantly higher liquidity and the second chances of getting caught on the wrong side of market movement being reduced. Expect volatility to continue and markets still attempting to make new highs.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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