Investors chary of volatility, uncertainty

On the back of lack of major news on both domestic and global front, markets were in consolidation mode during the week ended September 9, 2021. Stocks remained close to record highs, but investor concerns about a volatile market in near term are clearly evident. The BSE Sensex climbed 175.12 points to close at 58,305.07 points, and the NSE Nifty rose 45.65 points to 17,369.25 points. Outperformance in broader markets continued with the BSE Midcap and Smallcap indices rising more than a percent each. FIIs have net sold Rs1,113.88 crore worth of shares against more than Rs6,800 crore of net buying in the previous week. On the contrary, domestic institutional investors turned net buyers during the week, to the tune of Rs1,115.55 crore worth of shares against net selling of Rs1,421.12 crore in previous week. In the week ahead market momentum will be dictated by inflation data. Consumer Price Index (CPI) inflation, one of the key points in the list of RBI before taking interest rate decision, is expected to be steady at around 5.6 percent for the month of August. Wholesale Price Index in July 2021 eased to 11.16 per cent YoY as it finally fell below 12 per cent after seeing a record high in May. Near term direction of the market will be dictated by the macroeconomic data, crude oil prices, rupee movement and global cues. Coming week will witness the listing of shares of Ami Organics and Vijaya Diagnostic Center.

Heard on the Street: How to Keep Your Cool When Markets Are Sizzling. When everyone around you seems to be getting rich quick, it's hard to control your fear of missing out. But buying assets just because they're hot is a good way to get burned. Buy low, sell high. Is any investing advice more universal—or more universally ignored? Even the world's greatest investors find selling harder than buying. Many of them have admitted that 'greatest mistakes' were selling at the wrong time. That's largely because of the unbearable feeling of FOMO (fear of missing out).

Sell a winner too soon, and you have to watch from the sidelines as it continues to soar. The most you could have lost from keeping it is 100 per cent, but the gains you can miss out on by selling too soon are unlimited. It hurts not to buy an asset that goes on to become a huge winner. But it stings far worse to sell one. That's an active decision, easier to imagine undoing. Imagine that a company was cheap at price A and overvalued at price C. Then you would know what to do: Buy at price A and sell at price C. If only it were that simple. "The hard part of investing," is that most stocks, most of the time, hang around what "price B," anywhere between cheap and overvalued. In that ambiguous range of price B, "it becomes tough to tell" whether or not to sell. The range of price B varies inversely with how much you know about the company or its industry. If you know a lot, price B is a narrow zone; if you know only a little, then it is wide and fuzzy.

F&O/sector watch

Derivatives segment continued to witness large stock-specific moves. Most of the 'sizzling' stocks are either new entrants or those coming to F&O segment. On option front, the maximum Put Open Interest (OI) was seen at 17,300 strike followed by 17,000 & 16,800 strikes, while maximum Call Open Interest was seen at 17,400 followed by 17,500 & 17,600 strikes. Call writing was seen at 17,400 strike with Call unwinding at 18,000 and 17,500 strikes, while Put writing was seen at 17,300 & 17,000 strikes with Put unwinding at 17,200, 16,500 &17,100 strikes. Looking at the options base, the Nifty has the highest Open Interest concentration at ATM 17,400 Call strike.

In the present bull market, listed AMCs are still at reasonable valuations. Buy HDFC AMC and Nippon Life. Realty stocks look pretty good for medium term. Companies having very good balance sheets without any baggage and less debt will be the choice of funds. Buy on declines DLF and Oberoi Realty. Stock futures looking good are Coromandel, HDFC AMC, PFC, Pidilite, Metropolis, Syngene and Zee Entertainment. Stock futures looking weak are Granules, Gujarat Gas, InduSind Bank, TVS Motors and SBI Life.

(The author is a stock market expert. He is former vice chairman of AP Planning Board)