Analysis: India’s stock markets momentum is with bulls, will likely move up further

Arun Kejriwal

By Arun Kejriwal–

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

Markets have a mind of their own, and last week was a great example of that. India’s bourses fell on the opening day of the week on expected lines on the back of the Hamas-Israel conflict, but bounced back more than they lost on Tuesday itself.

At the end of last week, markets had actually closed in the positive. They lost on three of the five trading sessions and gained on two.

BSE Sensex gained 287.11 points or 0.44 per cent to close at 66,282.74 points while NSE Nifty gained 97.55 points or 0.50 per cent to close at 19,751.05 points.

The broader markets saw BSE100, BSE200 and BSE500 gain 0.55 per cent, 0.56 per cent and 0.58 per cent respectively. BSEMIDCAP was up 0.71 per cent while BSE Smallcap was up 0.86 per cent.

The Indian Rupee lost 2 paisa or 0.02 per cent to close at ₹83.26 to the US Dollar. Dow Jones gained on four of the five trading sessions. It gained 262.71 points or 0.79 per cent for the week to close at 33,670.29 points.

In primary market news, we saw one listing in the week gone by. Shares of Plaza Wires Limited which had issued shares at ₹54 listed on Thursday. Shares closed day one at ₹80.23, a gain of ₹26.23 or 48.57 per cent. On Friday, the share gained another 5 per cent to close at ₹84.24, a gain of ₹30.24 or 56 per cent.

The week ahead sees the primary issue from IRM Energy Limited open and close. The company is tapping the capital markets with its entirely fresh issue of 1.08 crore shares in a price band of ₹480-505. The issue opens on Wednesday (October 18) and closes on Friday (October 20). The company is in the business of CNG and PNG distribution and operates dispensing stations in three different areas and has just started in one more area.

The result season has begun and the first off the block was the IT sector. While TCS weathered the storm, Infosys took the stick and was hammered by investors. There is pain in the sector and is likely to take at least one to two quarters to come out of the present downtrend. The attractive buyback offered by TCS is also a contributor to the TCS share price stabilizing.

This week one would see some of the leading banks declaring results. HDFC Bank is holding its meeting over Sunday and Monday (October 15-16), followed by IndusInd Bank on Wednesday (October 18) and followed by Kotak Bank on Saturday (October 21).

Post these leading results, one would get a fair sense of how the BFSI sector has fared. Incidentally, BFSI accounts for roughly 42 per cent of NIFTY and is a very dominant part of the benchmark index.

The mood in the market is very positive and even though FPIs are net sellers for quite some time, their selling is being absorbed by domestic mutual funds on the back of very strong inflows from SIPs.

With this inflow they are able to ensure that markets don’t lose ground simply because of the selling. Further markets have given good returns to investors over the last couple of months with markets in general gaining and even more with the kind of outperformance witnessed from midcap and Smallcap sectors.

In such a scenario the attraction and domination of retail investors has increased significantly. The subscription in the retail segment of SME platform issues is a clear indication of this massive influx. In such a scenario it would be natural to expect markets to continue their upward movement backed by strong momentum.

Coming to the markets in the week ahead, the movement in the previous week demonstrates the strong momentum that the markets have. There is optimism and a strong belief that markets are wanting to go higher.

The immediate pivot for the markets is the levels of 19,800-19,850 points on NIFTY and 66,400-66,550 points on BSE Sensex. Once these levels are crossed and sustained, the next targets are the all-time highs with some small resistance at levels of 20,000-20,050 points and 67,000-67,150 points.

India has won a high-octane match against its neighbor and arch rival Pakistan in the on-going cricket world and sentiments could carry on to the market on Monday as well. With Navratri beginning, and a large part of India entering into a festive mood, expect markets to also have the same mood. This would make upward movement in the markets easier.

The strategy would be to play in large cap stocks and be careful in entering unmoved stocks from the midcap and Smallcap space. Markets seem to be on target for reaching the previous all-time highs if not bettering the same in the festive month of Dussehra to Diwali.

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