Use volatility to your advantage (Column: Market Watch)

Markets behaved on expected lines and witnessed huge intra-day volatility on a daily basis. The BSESENSEX saw intraday moves of over 500 points on three of the five trading days and around 325 on the remaining two days. Similarly, NIFTY saw moves of around 150 points on three days, 100 on one day and 81 points on the fifth day. The average intraday move on the BSESENSEX was 458 points while it was 132 points on NIFTY. This kind of volatility has not been seen for a long time.

BSESENSEX lost 72.95 points or 0.19 per cent to close at 39,0637.33 points. NIFTY gained 1.85 points or 0.02 per cent to close at 11,754.65 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.31 per cent, 0.47 per cent and 0.54 per cent respectively. BSEMIDCAP lost 2.07 per cent while BSESMALLCAP was down 1.38 per cent.

 

Dow Jones was virtually flat, losing 16.21 points or 0.06 per cent to close at 26,543.33 points. The Indian rupee was under pressure on account of crude oil and lost 65 paisa or 0.94 per cent to close at Rs 70.01 to the US Dollar.

April futures expired on Thursday and it was a very choppy series. The expiry at 11,641.80 points, was a gain of 71.80 points or 0.62 per cent. The new series which began on Friday, April 26, is for five weeks and would have the election exit polls coming in on Sunday, May 19, followed by results on Thursday, May 23. Expiry for May would be on Thursday, May 30. The rollovers for the month have been the highest in a very long time at 81 per cent. Similarly, premiums of call and puts are very high, indicating that punters and traders are expecting a volatile series and both bulls and bears are not willing to let go.

The fourth phase of polling will be held on Monday, April 29. This includes Mumbai where the two exchanges are situated and is therefore a trading holiday for the markets. With the fourth round which would see polling for 71 seats, total voting for 373 seats or 69 per cent of Parliament would have been completed on Monday evening.

There is also a holiday on Wednesday for Labour Day in the country and in Maharashtra for being the day when Maharashtra was formed as a state in 1960. With just three trading days in the week, there would again be sharp swings and intra-day volatility. With only crude being a negative factor and some resolution on the US China trade wars becoming imminent, markets would see bulls having the upper hand.

The lifetime highs that were crossed in April seem to be holding as a level of support and we seem to be on track to reach the minimum 3 per cent spillover from those levels in the immediate short term. Even this 3 per cent is substantial as we are just about at the level of highs made in August September 2018. This effectively means we have 3 per cent from the current levels to go.

Use volatility to your advantage as this election has three weeks to go which is a long time in the markets. There would be plenty of opportunity so do not panic. Results are a mixed bag with IT doing well and the auto slowdown continuing. Pick and choose sectors and within sectors individual companies to invest.

(Arun Kejriwal is founder of Kejriwal Research and Investment Services)

--IANS

kejriwal/am