Markets likely to be under pressure at open

The week gone by continued to be volatile and all gains built up during the course of the first four days were lost and even more, on Friday. The week ended with BSE SENSEX losing 163.23 points or 0.43 per cent to close at 37877.34 points while NIFTY lost 35.65 points or 0.32 per cent to close at 11,178.40 points.
The broader indices saw BSE100 lose 0.03 per cent while BSE200 and BSE500 gained 0.03 per cent and 0.18 per cent respectively. BSEMIDCAP was up 1.51 per cent while BSESMALLCAP was up 1.36 per cent. This kind of difference where the benchmark indices are in the red and the broader indices are in positive, has happened after a very long time. Normally the trend is clear and all indices are either positive or negative, not some positive and some negative.
The Indian Rupee gained 3 paisa or 0.04 per cent to close at Rs 74.90 to the US Dollar. Dow jones had a good week and gained 497.54 points or 1.81 per cent to close at 27,931.02 points. The Indian indices gained on two days and lost on three days with Friday being the sharp loser and BSESENSEX losing 467 points and NIFTY 122 points. What is significant is the fact that markets were gaining and in the positive till Friday happened.
RBI has agreed to pay to the government Rs 57,128 crores as dividend for 2019-2020.
ICICI has successfully completed its QIP for Rs 15,000 crores at a price of Rs 358. Th share had closed at Rs 361.45 on Friday, a weekly gain of Rs 3.60 or 1.01 per cent.
The Supreme Court hearing the AGR matter in case of telecom companies has come to the issue of Reliance industries and Reliance Communications. The spectrum was allotted to the erstwhile telecom company which was a part of Reliance Industries and then was split when the family division happened. Post Reliance Communications going belly-up and exiting the telecom business, it entered into a spectrum deal with Jio. The Supreme court is asking for the payment of Rs 31,000 crores towards the spectrum dues. Readers would recall that Reliance Jio had taken over the assets and liabilities of Reliance Communications Limited at almost zero value as it had agreed to take over the liabilities as well. This could affect the share prices when trading begins on Monday. Shares of Reliance industries had closed at Rs 2,114 a loss of Rs 33 or 1.54 per cent for the week when trading ended on Friday.
Shares of Yes Bank hit a high of Rs 17.16 before profit taking saw the share fall, and close at Rs 15.07, a weekly gain of Rs 0.93 or 7.39 per cent. The share has now entered a trading zone and would move between 13.5-16 over the next couple of weeks till news flow about the performance of the bank post fund raising are known.
IHH, the Malaysian based company which had acquired Fortis Healthcare has proposed in the board meeting to change the name of the company to Parkway from the present name and disassociate itself from the Singh brothers in all manners. This proposed change is of course subject to regulatory approvals and the Supreme Court, where there is a matter of the open offer also pending. As and when this issue is resolved, the company would have renamed itself with a brand which is operating in more than 10 countries and is predominantly a South Asian group of hospital chain. The share has been seeing steady accumulation on expectation of the open offer currently stayed by the Supreme Court being cleared. Shares had closed at Rs 135.80, down Rs 2.15 or 1.56 per cent.
Coming to the Covid-19 front, the world saw 216,17,987 patients, 7,69,006 deaths and 143,34,222 people recovering. In India, there were 25,90,501 patients, 50,099 deaths and 18,62,665 people recovering. Compared to the previous week, the world saw 18,06,240 new patients, 39,345 deaths and 16,08,074 people recovering. This effectively meant that 89.02 per cent of the patients added during the week have recovered overall. In India, there were 4,34,058 new patients, 6,611 deaths and 3,80,999 patients recovering. The recovery rate for the week was 87.77 per cent. Decent improvement in the recovery rate and one hopes and prays that work on the vaccine, which is globally on a war footing fructifies.
The week ahead would see markets open on a weak note and Reliance is likely to be under pressure on the AGR news. Markets would face resistance at the previous week’s high of 38,556 points and 11,366 on NIFTY. Incidentally, while BSESENSEX failed to cross the recent high of 38,617 points, NIFTY did cross 11,341 points. These levels would be difficult to cross currently and would become a resistance for the time being. On the downside, we would find support at 37,000 on BSESENSEX and at 10,900 points on NIFTY if not earlier. The strategy would be to buy on sharp dips or wait for the fall.

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

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