Markets may open positive, but volatility could squeeze traders

KS Badri Narayanan | Updated on February 23, 2021

Sharp slide in Nasdaq may see Indian IT stocks come under pressure; RIL’s restructuring announcement could help keep index heavyweights firm

Chennai, February 23

Indian markets are expected to open on a positive note on Tuesday, as SGX Nifty points to a gap up opening of at least a 100 points. However, volatility is likely to hurt investors’ sentiment, as mixed signals emerge from Asia-Pacific markets and from the US markets overnight. The sharp slide in Nasdaq may keep Indian IT stocks under pressure. However, index heavyweights may help the market stay firm following the restructuring announcement.

SGX Nifty is ruling at 14,823 against Nifty March futures Monday closing of 14,722 and February futures closing of 14,672, signalling at least a gap up opening of 100 points for Nifty.

Also read: RIL expects completing O2C biz spin-off by Q2FY22

However, analysts expect the markets to remain volatile ahead of expiry of monthly contracts on the NSE on Thursday. Besides, foreign fund flows, Covid-19 cases and rising bond yields will anchor the market movement.

"Nifty has fallen 5 per cent from its all-time high in about 5 sessions. Indian equities came under selling pressure due to cautious trade in markets abroad, slowing FPI inflows, profit-taking and breach of key technical levels. Rising crude oil prices that could impact the macros and inflation and rising 10-year G-Sec yields were the key local factors that shook the equity markets. Also, markets have run up quite sharply since end January 2021," said Deepak Jasani, Head of Retail Research, HDFC Securities.

While Hong Kong and Australian markets are up, Korea and other markets are down marginally. Japan market is closed for a holiday. Overnight, the US markets ended in contrasting style with tech-heavy Nasdaq plunging almost 2.5 per cent, while Dow the Jones index ended flat in the green and S&P 500 slipped 0.77 per cent.

According to Vinod Nair, Head of Research at Geojit Financial Services, “Rising economic restrictions from spike in virus cases and weak global cues hit the domestic market sentiment. The rate of market fall was aggravated by a sharp rise in volatility, being a monthly F&O expiry week. FPI inflows that led the rally slowed down due to global vulnerabilities from rising bond yields and inflation. However, this is a buy on dip market, a short-term correction will trigger new buying, as economic fundamentals have improved, with more focus on industrial andñ cyclicals.”

Stocks to watch

Reliance Industries has announced the demerger of its oil-to-chemicals (O2C) business into a wholly-owned subsidiary. “Reorganisation of O2C business facilitates participation by strategic investors and marquee-sector focused investors,” it added. The Mumbai-headquartered oil major also announced that it aims to work with the O2C business to reduce its carbon footprint and become “net carbon zero” by 2035.

Zuari Agro Chemicals: The board Zuari Agro Chemicals has approved the sale of the company’s fertiliser plant at Goa and associated businesses of the company to Paradeep Phosphates Limited (PPL) as a going concern, on a slump sale basis for an agreed enterprise value of $280 million. The decision is subject to the approval of shareholders and such other necessary approvals, consents, permissions and / or sanctions of the appropriate authorities, institutions or bodies as may be required, it said in a notice to the stock exchanges.

The Committee of IndiaMART InterMESH Limited has decided to close the QIP issue on Monday. The board has accorded its consent for the issue of 12,42,212 equity shares of ₹10 each at ₹8,615 a share, a discount of 4.97 per cent to the floor price of ₹9,065.61.

Kimia Biosciences Ltd has been granted ‘Permission to manufacture new API for sale or for distribution’ namely Brivaracetam by Central Drugs Standard Control Organisation, Ministry of Health & Family Welfare.

Indiabulls Housing Finance Ltd has approved opening of a $200-million foreign currency convertible bonds at a floor price of ₹227.09.

Bharat Forge: Global aerospace and technology company Paramount Group and India-based engineering & technology conglomerate Bharat Forge, have announced a cooperation that will see them join the technologies, capabilities and expertise of both groups in order to manufacture armoured vehicles in India. An agreement to this effect was signed by both companies during the International Defence Expo (IDEX 2021) held in Abu Dhabi.

IPO corner

Heranba Industries: The ₹625-crore initial public offering of Heranba Industries will open for subscription on February 23 and close on February 25. The agrochemical company on Monday raised ₹187.5 crore from anchor investors.

The issue comprises a fresh issue of ₹60 crore and an offer-for-sale (OFS) of ₹565.2 crore by promoters. The price band for the issue has been fixed at ₹626-627 per share.

The company has allotted 29.90 lakh shares to anchor investors at ₹627 a share, the higher end of the price band. The marquee anchor investors include Government Pension Fund Global, Jupiter India, Cohesion MK Best Ideas Sub-Trust, Dovetail India Fund, Societe Generale and Morgan Stanley.

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Published on February 23, 2021
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