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Volatility in a choppy market to continue (Market Watch)

Markets are witnessing extreme volatility and while day traders may be happy with the kind of movement, it is unnerving investors. BSE SENSEX lost 506.35 points or 1.48 per cent to close at 33,780.89 points, while NIFTY lost 169.25 points or 1.67 per cent to close at 9,972.90 points. The broader indices saw BSE 100, BSE 200 and BSE 500 lose 1.52 per cent, 1.35 per cent and 1.27 per cent respectively. BSE MIDCAP, however, gained 0.37 per cent while BSE SMALLCAP lost a mere 0.08 per cent. The week gone by wasn't without its share of drama where on Friday markets opened with a big gap down on the back of 1,861 points fall in Dow Jones on Thursday. BSE SENSEX after being down 1,190 points closed for the day with gains of 242 points. A huge intraday swing of almost 1,450 points.

Updated Jun 14, 2020 09:22 AM

Volatility in a choppy market to continue (Market Watch)

The Indian Rupee lost 26 paisa or 0.34 per cent to close at Rs 75.84 to the US Dollar. Dow Jones had a terrible week and lost 1,505.44 points or 5.55 per cent to close at 25,605.54 points. All of a sudden one felt at the end of the previous week that all negative factors were discounted and there were only positive factors left for the market. This week what one saw on Thursday was a reality check and brought investors to the ground with a big thud.

Reliance Industries has completed its record-breaking rights issue in terms of size and time with a great amount of help from the regulators who allowed a lot of flexibility in terms of compliance in covid-19 affected times. The company has given additional shares to the extent of 2.06 crore shares to the 5,45,925 shareholders whose applications were successful. There were 8,958 renouncees who were allotted 2.46 crore shares. Two key takeaways from this mammoth issue was the fact that of the 25 lakh odd shareholders of Reliance Industries just over a fifth participated in the rights offer. To make it more convenient for these bottom of the pyramid shareholders in these difficult times who missed out, the one-page application form could have been printed in the numerous advertisements that the company released. Shareholders could have cut out the same, filled in and submitted to the bank for ASBA. The second takeaway is that the issue has seen the promoters increase their stake in the company from 48.87 per cent to 49.14 per cent. This demonstrates their confidence in the company and its business going forward.

Reliance Industries had tapped the capital markets in 1977, when it was a textile company manufacturing textile. Its logo was 'Only Vimal' at that time. In 43 years, the company has evolved into a yarn manufacturer, PTA player, petrochemicals with upstream and downstream capabilities, retail and now telecom. Its latest venture is Jio Platform where it has raised over a trillion rupees by selling 22.38 per cent stake to nine investors in about six weeks' time. The company Jio Platform is valued at 4.91 trillion Rupees. In today's time, one fails to recall the last time 'only Vimal' fabric was bought by someone. Very clearly there is a transformation where Reliance has shifted tracks and is now focusing on digital and telecom or data and voice for its next stage of growth coupled with retail.

Covid-19 is not good news in India. We have been moving up the ladder for most affected persons and are currently fourth after the US, Brazil and Russia. The number of affected persons globally has increased to 78.84 lakh patients with 4.32 lakh deaths and 40.49 lakh patients having recovered. In India the number of affected persons is 3,21,963 people with 9,204 deaths and 1,62,439 people having recovered. Compared to the previous week, the world has seen 8.91 lakh new patients with 30,800 deaths and 6.20 lakh patients recovering. In India, new patients have increased by 75,000, with 2,258 deaths and 43,200 patients recovering. The three worst affected cities in India are Mumbai, Delhi and Chennai. In what can be termed as relief to profiteering by private companies in the name of covid-19, Maharashtra has cut the price of covid-19 test from Rs 4,500 to Rs 2,800. One hopes that the quality of test is now not compromised and safeguards are put in place to ensure that patients are not given a raw deal.

Coming to the markets, they will continue to remain volatile and see sharp intraday rallies and falls, unnerving edgy investors. While the longer term looks better and promising, the immediate short term will remain volatile and full of sharp two-sided moves. Use rallies to sell and sharp dips to buy, but be nimble footed and take profits when available. A bird in hand is always better than what is in the bush. Expect global cues to be even more volatile and hence expect gap-up and gap-down openings on the benchmark indices. Midcap and Smallcap will outperform the benchmark indices. Look for fundamental stocks in this space to take positions.

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

Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by FreshersLIVE.Publisher : IANS-Media