Street Signs: Markets stretch their legs, May 12's phantom rally, and more

Markets stretch their legs: The sprint isn’t over yet

 

The Nifty benchmark jumped more than 1,000 points (4.2 per cent) last week, gussied up by positive developments, including the Pakistan ceasefire ‘understanding’, renewed hope for a US trade deal, and expectations of further Reserve Bank of India interest rate cuts. The 50-share index closed at 25,020, positioning itself for a possible advance towards 25,500. Technical analysts see last week’s gains and broad sector support as signs of a bullish trend. Key indicators include the relative strength index staying above 60 and India Vix dropping nearly 23 per cent to 16.55. Om Mehra, a technical research analyst at Samco Securities, observes the critical support level for Nifty at 24,800 in case of a pullback. Resistance zones to watch are 25,150 and 25,300, which could become breakout levels if buying interest holds.

 

From silence to signal: IPOs blink back to life

 

While secondary markets have wavered, primary markets have been largely dormant over the past three months, with only one initial public offering (IPO) from Ather Energy. However, a strong rebound in secondary markets has sparked a tentative revival in IPO activity. Next week, two mainboard IPOs — Belrise Industries (₹2,150 crore) and Borana Weaves (₹145 crore) — are scheduled to debut. Encouragingly, both companies’ shares currently trade at a grey market premium above 20 per cent. Investment bankers report that three to four smaller IPOs are also nearing liftoff.

 

May 12’s phantom rally: The gains came, but not the buyers

 

The Sensex and Nifty posted their largest single-day gains in four years on Monday, May 12, triggered by the ceasefire ‘understanding’ with Pakistan. Market capitalisation jumped by a record ₹16 trillion. Usually, such sharp rallies come from strong buying by foreign portfolio investors (FPIs), mutual funds (MFs), and retail investors. Surprisingly, exchange data showed FPIs and retail investors were net sellers, offloading ₹2,400 crore each. Banks, insurers, and portfolio management services firms also sold shares worth ₹313 crore, ₹965 crore, and ₹177 crore, respectively. Only MFs and the ‘others’ category were net buyers, with modest purchases of ₹2,146 crore and ₹1,558 crore. “Sentiment, not actual capital flows, drove the market that day,” a dealer observed.