Street signs: Markets turn range-bound, block deal activity rises & more

Markets turn range-bound
 

The benchmark Nifty is expected to remain range-bound but can whipsaw on account of the expiry of March series derivatives contracts and the financial year-end churn. “Volatility may pick up again because of rollover activity and quarter-ending fund rebalancing. But with Nifty futures open interest declining towards 10 million shares once again, declines seem to be limited,” said ICICI Direct in a note. The brokerage said the options data suggests that the Nifty has strong support around 17,000 and then 16,800, which can act as a stop-loss for those initiating long positions. The Nifty on Friday ended at 17,153.

Block deal activity rises

There has been a pick-up in block deal activity, which experts say may be a precursor to improvement in overall primary market activity. Last week saw block trades in stocks, such as Kotak Mahindra Bank, MTAR Technologies, and the BSE. “We are seeing a few large blocks getting launched and also lapped up by investors. This is a positive sign. One can expect fundraising activity to resume if the markets remain stable in the near term. Many companies and investors are waiting on the sidelines,” said an investment banker.

Escorts open offer oversubscribed 

Escorts’ open offer was subscribed 116 per cent a day before its close. Analysts are expecting seven shares to get accepted for every 10 that are tendered. However, the final acceptance can be lower if several more shares are tendered on Monday. This may lead to some bets on the open offer going awry if Escorts’ shares correct further after the conclusion of the open offer. Many investors have bought shares from the open market at around Rs 1,850-Rs 1,900 to tender at Rs 2,000 in the open offer. Shares of Escorts last closed at Rs 1,809. “Investors face the risk of selling their shares, which don’t get accepted in the open offer, at a loss,” said a broker.