For the first time in the past few months we are seeing some rationality coming in amongst mid/small-caps.
The week began with losses led by Infosys post its poor results and guidance for the upcoming year. Markets lost on three of the five trading sessions and gained on one. The fifth session which was the last day of the trading week remained flat.
At the end of the week, BSESENSEX lost 775.94 points or 1.28 per cent to close at 59,655.06 points while NIFTY lost 203.95 points or 1.14 per cent to close at 17,624.05 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.94 per cent, 0.84 per cent and 0.75 per cent respectively. BSEMIDCAP gained 0.50 per cent while BSESMALLCAP was up 0.30 per cent.
The Indian Rupee lost 24 paisa or 0.29 per cent to close at Rs 82.09 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on the remaining three. It closed flattish for the week losing 77.51 points or 0.23 per cent at 33,808.96 points.
Coming to Infosys, the share lost Rs 131 on Monday and closed at Rs 1,258. During the remaining four days of the week, it lost a further Rs 31 to close at Rs 1,227, a weekly loss of Rs 162 or 11.66 per cent. In comparison, TCS lost 0.88 per cent and HCL technologies lost 2.15 per cent. Amongst the major IT players, Wipro is yet to declare results and would be doing so on April 28 after its board meeting held over April 27-28. Very clearly markets have not liked the poor performance from Infosys and its single digit growth guidance for the financial year 2023-24.
The week ahead sees Mankind Pharma Limited tapping the capital markets with its offer for sale of 4,00,58,544 shares in a price band of Rs 1,026-1080. The issue would garner Rs 4,326 crore at the top end of the price band. The issue opens on Tuesday the 25th of April and closes on Thursday the 27th of April. The company is almost entirely selling its products in India with 97.60 per cent of its revenue of Rs 7,781.55 crore being domestic in the year ended March 2022.
It reported a profit after tax of Rs 1,434.12 crore and the EPS was Rs 35.78. In the nine months ended December 2022, revenues have increased to Rs 6,696.76 crore and the profit after tax was at Rs 990.66 crore. The profit in the year ended March 2022 included an extraordinary income of about Rs 150 crore which needs to be computed accordingly. The PE at the offer price is 28.68-30.18.
The issue is attractively priced and offers scope for investors with a medium to long term outlook. The company has an active R&D lab and a sizable team to talk about. They would be commercialising a product within the next couple of quarters which would be sold globally and would make them only the second manufacturer of the same globally. Investment in the company would make for a decent investment looking at the sector, its growth and valuations.
The week ahead sees April futures expire on Thursday the 27th of April. The current value of NIFTY at 17,624.05 points is higher at 679 points or 4.01 per cent compared to the previous close of March expiry at 16,945.05 points. Markets had rallied for a good three weeks before the correction seen this week. The bulls have a clear edge and it looks unlikely that they would surrender this massive lead to the bears. There could however be some pressure and they may concede some ground.
Reliance Industries Limited declared its results post market close on Friday and they would enthuse the markets when they open on Monday. The key point however is whether the Reliance results are enough to pull the markets and rebuild the momentum which existed a week ago. Looks highly unlikely. Expect market intraday volatility to increase and on a net basis, markets remaining in a broad band.
The key resistance for the markets would be in the region of 17,850-900 on NIFTY and at 60,550-60,700 on BSESENSEX. If these are breached, then the next levels would be at 18,050-18,100 and at 61,100-61,250 points. On the support side, the immediate levels are at 17,500-17,550 and at 59,250-59,400 points. In case this is breached the next levels would be at 17,250-17,300 and at 58,800-58,950 points.
The trading strategy would be to use intraday volatility to one’s advantage. Further with results season on the sector where results are declared becomes a good area to trade. On a broader perspective, markets would be going nowhere.