Expect new turns and twists in financial markets in the coming days as well

CBI officials escort Gokulnath Shetty (c, grey hair), the former deputy manager of the Punjab National Bank (PNB) into a special CBI court in Mumbai in the Nirav Modi case. Pic/AFP

Markets were volatile on expected lines but ended flat after four choppy days of trade. They gained on two of the four days and lost on the remaining two. The noteworthy point was that the fall from intraday highs was always significant and indicated selling pressure. At the end of the week, markets were as flat as could be with the BSESENSEX gaining 5 points or 0.01 per cent to close at 34,010.76 points. NIFTY lost 2.65 points or 0.03 per cent to close at 10,452.30 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 0.13 per cent, 0.19 per cent and 0.24 per cent respectively. BSEMIDCAP was down 0.20 per cent and BSESMALLCAP was down 0.76 per cent.

BJP leader and Defence Minister Nirmala Sitharaman shows a document while addressing a press conference on the Nirav Modi issue in New Delhi. Pic/PTI

Metal mettle
The top sectoral gainer was BSEMETAL up 0.16 per cent. followed by BSEFMCG 0.10 per cent and BSEOIL&GAS 0.03 per cent. The top sectoral loser was BSEBANKEX down 1.71 per cent followed by BSECONDUR 1.23 per cent and BSEAUTO 1.09 per cent. In individual stocks, the top gainer was Reliance Industries up 2.60 per cent followed by HDFC 2.37 per cent and Wipro 1.96 per cent. The top loser was SBI down 9.07 per cent followed by Bharti Infratel 4.50 per cent and Yes Bank 4.38 per cent.

A struggle
Dow Jones gained 1,028.48 points or 4.08 per cent to close at 25,219.38 points. The Indian Rupee gained 19 paisa or 0.30 per cent to close at R64.21. While Dow recorded sharp gains, our markets struggled to remain flat, clearly showing the selling pressure at every higher level. FIIs have been sellers at higher levels and have booked profits at every rise across the board.

Scam time
A new scam has been unearthed involving a PSU bank and a diamond bilionaire. This scam involves the issuing of 'LOU'. The second largest PSU bank, Punjab National Bank is in the thick of an R11,300 crore hit. There would be repercussions on many other banks where money was effectively taken without collaterals or adequate assets. The people said to be involved are diamantaire Nirav Modi, and his maternal uncle Mehul Choksi who owns Gitanjali Gems and the group companies. Every person who commits a scam conveniently leaves the country. PNB during the four days of the week has lost R31.15 or 24.79 per cent to close at R125.65. Gitanjali Gems has lost significantly more and is down R21.15 or 56.32 per cent at R37.55. It is not yet the end of the road for this bank and the companies involved. There would be new turns and twists in the coming days as well.

Issue view
In primary market news, the issue from Aster DM Healthcare was subscribed 1.31 times. QIB portion was subscribed 1.31 times while HNI was undersubscribed at 0.55 times. Retail portion was subscribed 1.18 times. There are no issues on the main board in the current week. The situation on the SME board is completely different and it is quite usual to have 2/3 issues on each of the BSE and NSE exchanges from SME every week. This effectively means on an average one issue per day.

Bounce back
Markets are yet to recover from the selling which took place on February 2, which was the next day after the budget was presented and LTCG tax introduced in the budget. Markets thereafter have been under pressure and have lost significantly. The close on 31st of January was 35,965 on the BSESENSEX and it was 34,010 as of Friday the 16th of February. The loss was over 1,955 points or 5.43 per cent. This weakness is because of profit taking and also FII selling. Global cues improving are not helping. Considering the present sentiment, one gets a strong feeling that even though markets may in the near short term bottom out in terms of value, they would take considerable time before they bottom out as far as time is concerned. This could probably happen when results for the year end and March quarter are announced.

Choppy waters
The week ahead would continue to be volatile and with PNB and diamantaire Nirav Modi in the spotlight, and would determine course of markets in the short term. No bottom fishing in the shares of the bank and Mehul Choksi companies is advisable as one does not know what new events would unfold. With choppy and uncertain markets ahead, it would provide trading opportunities. Use the same stocks with which one is comfortable to buy on big dips and sell on sharp rallies. Trading in the known would provide returns while looking at retracement from the top and current price may result in getting stuck in the wrong stocks. Trade, but trade cautiously.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.
Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only.

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