Market momentum with bulls: Possibility of moving up further likely

NEW DELHI: Markets have a mind of their own and last week was a great example of the same. They 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 the week, markets had actually closed in the positive. They lost on three of the five trading sessions and gained on two.

BSESENSEX gained 287.11 points or 0.44 per cent to close at 66,282.74 points while 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 BSESMALLCAP was up 0.86 per cent.

The Indian Rupee lost 2 paisa or 0.02 per cent to close at Rs 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 Rs 54 listed on Thursday. Shares closed day one at Rs 80.23, a gain of Rs 26.23 or 48.57 per cent. On Friday, the share gained another 5 per cent to close at Rs 84.24, a gain of Rs 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 Rs 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 company is operating in Banaskatha and Diu, Gir and Somnath areas in Gujarat. It also has an operation in Fatehpur Sahib in Punjab. It started the first couple of pumps in the new area of Namakkal and Tiruchirappalli in Tamil Nadu in the first quarter of FY24. The object of issue is to raise funds for the capex of installing the network in the Tamil Nadu area.

The company reported revenues of Rs 980 crore for the year ended March 23 and an EBITDA of Rs 118.93 crore and a PAT of Rs 63.1 crore for the same year. The EPS for the year was Rs 20.93. The PE multiple is 22.93-24.13 based on the above EPS. Considering the fact that the company has just started business in the fourth geography in the previous quarter, it has a significant revenue growth ahead of it as it scales the distribution going forward.

The share looks attractively priced and offers growth for the medium-term investor. Application in the share is warranted.

The result season has begun and the first of the block were the IT sector results. 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 quite well.

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 BSESENSEX. 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 neighbour in the on-going world cup cricket match and sentiments would be carried on to the market front on Monday as well. With Navratri having begun 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.