Market: 2023 begins on a cautious note

The calendar year 2022 has come to an end and it's that time of the year to reflect on what happened in the past months. BSESENSEX gained for the seventh year in a row and was up 2,587.22 points or 4.44 per cent for the year at 60,840.74 points.

NIFTY gained 751.25 points or 4.33 per cent to close at 18,105.30 points. BANK NIFTY was a very important sector in the domestic markets and gained handsomely. It was up 7,504.75 points or 21.15 per cent to close at 42,986.45 points.

In comparison, Dow Jones lost 3,425.86 points or 9.43 per cent to close at 32,912.44 points. NASDAQ was indeed very weak and lost 5,178.52 points or 33.10 per cent to close at 10,466.48 points. Looking at what happened in the U.S., India is clearly an out performer.

Coming to the week gone by, we saw markets rally and close the last week on a positive note. On the last day however, they gained at open but closed on selling pressure at the end and ended with losses. BSESENSEX gained 995.45 points or 1.66 per cent to close at 60,840.74 points while NIFTY gained 298.50 points or 1.68 per cent to close at 18,105.30 points.

The broader markets saw BSE100, BSE200 and BSE500 gain 1.93 per cent, 2.40 per cent and 2.71 per cent respectively. BSEMIDCAP gained 3.63 per cent and BSESMALLCAP was up 6.14 per cent. Markets gained on three of the five trading sessions during the week. The best performing sectoral index was BSEMETAL which gained 8.06 per cent led by Tata Steel, Hindalco and Vedanta.

The Indian Rupee gained 14 paisa or 0.17 per cent to close at Rs 82.72 to the U.S. Dollar. Dow Jones gained on three of the five trading sessions but ended with marginal losses for the week. Dow lost 56.68 points or 0.17 per cent to close at 33,147.25 points.

In primary market news there were two listings and one issue that closed for subscription during the week. The first to list was KFIN Technologies Limited which had tapped the markets with its offer for sale of Rs 1,500 crore at a price of Rs 366. The share which listed on Thursday had a discovered price of Rs 369, but it closed on listing day at Rs 364, a loss of Rs 2 or 0.54 per cent. On Friday the share slipped and closed at Rs 344.55, a loss of Rs 21.45 or 5.86 per cent.

The second share to list was ELIN Electronics Ltd which had tapped the markets with a fresh issue and an offer for sale at Rs 247. The discovered price of the share which listed on Friday was Rs 242.80. It closed on debut day at Rs 227.80, a loss of Rs 19.20 or 7.77 per cent.

The issue from Radiant Cash Management Services Limited which had tapped the markets with its fresh issue and offer for sale in a price band of Rs 94-99 struggled in getting subscribed. It was undersubscribed at the end of the period and was technically subscribed on the offer for sale portion being reduced from the original. The issue was subscribed 0.46 times overall. The QIB portion was subscribed 1.01 times, HNI portion was subscribed 0.66 times and Retail portion was subscribed 0.21 times. Overall, the issue was subscribed 0.53 times.

The primary markets have been under pressure over the last couple of months and subscription levels and performance of shares post listing is under pressure. Of the last nine issues to list, all are currently trading with losses. Further, all except one of these nine have listed and traded with discounts since day one. The one exception traded positive for the first two days but is now trading with losses. Clearly, it's a wakeup call for the merchant bankers and promoters.

SEBI, the regulator, has recently passed an order against the NSE Clearing Corporation and Indian Clearing Corporation in the matter of Karvy Stock Broking. The fines imposed were to the tune of Rs 25 lakh and Rs 50 lakh respectively. While action being taken by SEBI is appreciated, somewhere natural justice is not being done.

The stock broking entity and the depository account have the responsibility of acting as a custodian of the client. When these funds have been diverted and misused it amounts to cheating of the highest order. The penalty for such action cannot be a few lacs. It should be in terms of being debarred from doing business for some period of time so that an example may be set on others, and such acts are prevented from happening in future.

With the listing of KFIN Technologies Limited on the exchange, there is a separate entity for the RTA activities and the erstwhile promoter is segregated from the business. This is an open letter for the chairperson of SEBI to look into the matter and take a call on this whole issue with equality and justice for betrayal of trust and suffering of patrons and clients of Karvy the broker and DP.

Coming to the markets in the week ahead, we are precariously poised at levels which could be termed as dangerous. The failure of the markets to build on the rally during last week is cause for worry. Levels of 18,250-18,300 on NIFTY and 61,250-61,400 on BSESENSEX are key hurdles to be overcome and sustained for a couple of days in the short term. Immediate support lies at 17,750-17,800 and 59, 700-59,800. Assuming these get broken we have support around 17,500 and around 59,000. The markets would await action from FIIs or FPIs to pick up now that the year has ended.

Trade cautiously as markets are in a tight spot and need to move up quickly if momentum is to be sustained.

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