New Delhi Market Review and Outlook
The financial markets experienced a tumultuous end to the week, driven by global concerns about an impending recession. Following the Federal Reserve’s recent policy meeting, which hinted at potential rate cuts but failed to address immediate market anxieties, U.S. markets experienced a sharp decline on Thursday. This downward trend extended to international markets, including India, where the indices also fell sharply.
Market Performance Overview
On Thursday, U.S. markets declined significantly as investors grappled with the potential for an economic downturn. This sentiment was mirrored in Indian markets, with a notable decline on Friday. The BSE Sensex and Nifty, which had previously been setting new highs, faced substantial losses. The Sensex hit an intraday high of 82,129.49 points and closed at 81,867.55 points, while the Nifty reached an intraday peak of 25,078.30 points, closing at 25,010.90 points.
By the end of the week, the BSE Sensex had dropped by 350.77 points or 0.43%, closing at 80,981.95 points. The Nifty saw a decline of 116.65 points or 0.47%, ending at 24,717.70 points. The broader market indices also reported losses, with the BSE100, BSE200, and BSE500 down by 0.37%, 0.17%, and 0.13%, respectively. The BSE Midcap index fell by 0.07%, though the BSE Smallcap index saw a modest increase of 0.62%.
The markets’ decline on Friday ended an eight-week streak of gains, a noteworthy occurrence given the significance of the Fibonacci number 8 in technical analysis.
The Indian Rupee also experienced a minor decline, falling by 2 paise or 0.02% to close at Rs 83.75 against the U.S. Dollar. The Dow Jones, meanwhile, ended the week with a loss of 852.08 points or 2.10%, closing at 39,737.26 points. Market reactions to the Federal Reserve’s policy review revealed unease over the delayed rate cut and the potential for a recession, contributing to the week’s volatility.
Primary Market Highlights
The primary market was active, with several Initial Public Offerings (IPOs) generating significant interest. Akums Drugs and Pharmaceuticals Limited’s IPO, priced between Rs 646 and 679, was notably successful, being oversubscribed 63.56 times. The Qualified Institutional Buyers (QIB) portion was oversubscribed 90.09 times, while the High Net-Worth Individuals (HNI) and Retail portions were oversubscribed 42.21 times and 21.3 times, respectively.
Ceigall India Limited’s IPO, which opened on August 1 and closes on August 5, is currently subscribed 1.29 times. The company, a road developer, is offering shares at a price band of Rs 380 to 401. With a revenue of Rs 3,066.19 crore and a net profit of Rs 304.91 crore for the year ended March 2024, the company appears to have promising prospects.
Ola Electric Mobility Limited’s IPO, opening on August 2 and closing on August 6, is priced between Rs 72 and 76. The fresh issue size is Rs 5,500 crore with an offer for sale of 80,86,26,207 equity shares. Despite being currently loss-making, Ola holds a dominant position in the electric vehicle market with a 42-45% market share, presenting a medium-term investment opportunity.
Brainbees Solutions Limited, the operator of Firstcry.com, is set to open its IPO on August 6 and close on August 8. The issue, priced between Rs 440 and 465, includes a fresh issue of Rs 1,666 crore and an offer for sale of 5,43,59,733 equity shares. While the company is currently reporting negative earnings, it operates a unique model catering to mothers, newborns, and children.
Market Outlook
As we move into the week of August 5, markets are expected to open with a downward bias. Key support levels to watch are the July lows of 24,200 on the Nifty and 79,500 on the BSE Sensex. Should these levels be breached, further declines could trigger a cascading effect among investors unaccustomed to sharp market drops, potentially leading to forced liquidations.
Amidst the market turbulence, there may be opportunities for strategic investments as stocks reach attractive levels. Investors are advised to exercise caution and allow the markets to stabilize before making significant moves. Identifying and capitalizing on buying opportunities could prove beneficial as the market recalibrates.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal.)
