Market likely to trade soft then pick momentum in week ahead

Markets last week behaved more or less on expected lines, except for the fact that the correction actually happened on Friday instead of Wednesday. Readers would recall that Thursday was a holiday on account of Holi. What is significant is the fact that though markets fell on Friday, they ended with marginal gains for the week. The extent of the fall from the intra-day highs of Friday was even more significant.

The BSESENSEX gained 140.29 points or 0.37 per cent to close at 38,164.61 points. NIFTY was up 30.05 points or 0.26 per cent to close at 11,456.90 points. The broader indices manged to close in the green and BSE100, BSE200 and BSE500 were up 0.09 per cent, 0.10 per cent and 0.04 per cent respectively. As mentioned earlier, while BSESENSEX ended with gains of 140 points for the week, it lost 400 points from the intra-day high on Friday. Net loss on Friday was 222 points on the BSESENSEX. Similarly, NIFTY lost 116 points from the intra-day high while the day’s loss was 54 points. The point being emphasised is the sharp correction that happened on Friday.

In the coming week, March futures expires on Thursday, March 28. The current value of NIFTY implies a series gain of 664.60 points or 6.16 per cent. The lead that bulls have is too big for the bears to make any serious challenge to them. There would, however, be some more softening in the market before the series expires in four days. A point to be noted is that the financial year ends this week with the last day of trade for the equity segment being Wednesday, March 27, and derivatives being expiry day. It would, therefore, be appropriate that the market trades softer in the initial part of the week and then picks up momentum.

Dow Jones was under a lot of pressure on Friday and lost ground. On a weekly basis, it was down 346.55 points or 1.34 per cent to close at 25,502.32 points. FIIs have continued their buying and bought on all four trading days. Their average purchase is in the range of Rs 2,200 crore to Rs 2,500 crore on a daily basis.

Jet Airways resolution seems to be going nowhere and I believe DGCA, the regulator, needs to step in to alleviate the problems of passengers. If a passenger cancels a ticket, he is levied a fee which could be as high as Rs 4,500 and if Jet cancels the flight, he has to just refund the fare. To add insult to injury, Jet can cancel the flight even 72 hours before the flight time. Where does the passenger go? DGCA needs to look at the charter of passengers it had announced some time back and take care of this extraordinary event where Jet is now operating just a third of its flights and these are also likely to reduce with each passing day. In a lighter note, someone had remarked that it is not Jet Airways but Jet Roadways.

The issue from MSTC was finally subscribed after being extended for three days. The issue was subscribed 1.46 times with QIB portion subscribed 1.12 times, HNI 2.15 times and Retail 2.95 times. The other issue during the week, which was the first of its kind ‘REIT’, Real Estate Investment Trust from Embassy Office Parks was subscribed 2.58 times with the institutional portion subscribed 2.15 times and non-institutional portion subscribed 3.10 times.

The government has crossed their divestment target of Rs 80,000 crore and received over Rs 85,000 crore. This is the second year in a row when the target has been reached. The CPSE ETF has received record subscription and the same was oversubscribed many times over. The government has a green shoe option and final figured would be known only on Monday.

The week ahead is likely to begin with a soft opening on global cues and expiry issue. The market would pick up steam and momentum as the week progresses. Use dips as an opportunity to buy.