Markets to remain range bound but volatile (Market Watch)

Yet another week has come to an end on the bourses and the volatile and uncertain movement continues. COVID-19 and more importantly life after that is the talk around the world. Closer home, states and the centre are working on restoring life and industry to some sort of normalcy after the lockdown is partially lifted post 3rd May. Three of our largest cities, Delhi, Mumbai and Kolkata are quite badly affected and continue to be under threat. The lifting of the lockdown in the immediate term looks difficult. The administration needs to draw up a clear strategy for the same to happen. Without testing of the entire hotspot population and identification and segregation of affected people, no significant progress can be made.

BSESENSEX gained on two of the five trading days and lost 261.50 points or 0.83 per cent to close at 31,327.22 points. NIFTY lost 162.25 points or 1.21 per cent to close at 9,154.40 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.45 per cent, 1.52 per cent and 1.58 per cent respectively. BSEMIDCAP was down 3.04 per cent while BSESMALLCAP was down 1.55 per cent. BSEHEALTHCARE continued its good showing and was up 3.57 per cent. The healthcare index is at a new 52-week high and hit 15,588.56 intraweek before closing at 15,421.75 points.

The Indian rupee after a volatile week lost 6 paisa or 0.08 per cent to close at Rs 76.45. Dow Jones lost 467.22 points or 1.93 per cent to close at 23,775.27 points.

Facebook has agreed to invest 5.7 billion dollars or Rs 43,574 crore in acquiring a 9.9 per cent stake in Jio. This would help leveraging the capabilities of both partners and also help Reliance reduce debt. Shares of Reliance gained Rs 192 or 15.67 per cent to close at Rs 1,417.

Franklin Templeton Mutual Fund India which has an exposure of about Rs 28,000 crore in six debt-oriented funds has decided to shut shop. While the decision is certainly not welcome and has come as a shock, the way they have gone about the same leaves a lot to be desired. It would be appropriate for the trustees of the mutual fund to ascertain for themselves and make public, whether the investments in the various schemes were done by following laid down procedures or in the pressure of obtaining a better yield, the fund through caution to the wind and violated investment norms. Finger pointing has begun and there are wild allegations alleging that the exposure to lower rated companies was higher than normal. Further the exposure to companies where the fund/funds were a single or sole investor was as high as 25 per cent of the total corpus. The trustees must address these issues before the issue snowballs and puts the entire mutual fund industry under undue duress. We are passing through tough times and certainly cannot bear the entire mutual fund industry being targeted for this isolated act.

Various departments have started giving suggestion for fund raising post COVID-19 coming under control. I believe it is very important to realise that the entire nation has gone through tough times and it is important that we realise that the need of the hour is to generate more revenue. This must come from more output, not more taxes. Its very easy to raise GST across items and also tax the super-rich but that would be counterproductive. Incentivising production, growth and consumption is the need of the hour.

The week ahead sees April futures expire on Thursday the 30th of April. The current value of NIFTY at 9,154.40 points is a good 512.95 points or 5.94 per cent higher than March expiry at 8,641.45 points. Markets are looking to be much less volatile than the previous month and it would be fair to assume tat the bulls would be able to carry their advantage through.

Coming to COVID-19, the number of affected persons globally has moved up to 29.23 lakh people with 2,03,307 deaths and 8.37 lakh people who have recovered. Compared to the previous week the number of affected people has increased by 5.9 lakh while those that have recovered has gone up by 2.37 lakh. Roughly 43,000 people have died. In India, the number of affected people has increased to 26,496 people with 825 deaths and 5,939 people recovered.

Coming to the week ahead, markets would remain choppy and volatile. Uncertainty on how life would return to normal and in what time frame is the moot question and cause for concern currently. It would be a long grind and one should take things as they happen. Brace for volatility and use swings in the market to your advantage. Results for the quarter would not have any surprises and would be on expected lines. It’s the current quarter which is the weak link and needs to be closely monitored.

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