Today was a make or break day, at least for the short term,for investors in the Indian capital markets – National Stock Exchange (NSE) andBSE (formerly Bombay Stock Exchange).
The benchmark indices of the stock markets – Nifty andSensex – closed on Friday (on a daily basis) at their resistance forming a dojicandle on the price chart.
In technical analysis a tiny doji candle indicates a tiring outof both buyers and sellers. Also, a candle is to be evaluated in the context ofthe location where it occurs.
This doji candle formed at a resistance a little below 15,500for Nifty. The index was turned downwards from this price zone earlier onFebruary 16, 2021 also.
Though the day opened with the indices falling but theygathered support and began moving upwards around 9:30 am.
The current relatively large-bodied day candle of Nifty indicatesconviction of buyers and thus following technical analysis rule of resistanceand support interchanging roles once broken, 15,500 can be considered to havebeen achieved.
However, resistance or support, both are tested at leastonce when they are broken. In other words, after a small rise, the index isexpected to come back to price zone of 15,500 and then if it shows upmove, thatwould be powerful to the upside.
Talking about the sectoral performance around 1:35 pm,realty stocks are leading the upmove with the index being up by 1.33%, followedby private banks whose index is up by 0.7%.
The sectors pulling the markets down today are public banksand media with the indices change by -0.8% and -0.77% respectively.
In other news, PNB Housing Finance is one of the darling ofthe day with the stock rising more than 20% intraday. This is believed to havehappened as the company’s board has agreed to raise Rs 4,000 crore via preferentialissue of equity and warrants.
The key participants are Aditya Puri, former CEO of HDFCBank and Carlyle Group.
Even though, the investors are cheering the development asclearly demonstrated by aggressive buying that has exhausted all the willingsupply in the market, still, technically, preferential allotment reduces theownership per share and thus there is no point in rewarding this decision ofthe company with buying.
In simpler terms, preferential allotment is like cutting apizza into more slices and everyone’s slice will be cut into smaller parts forno fault of theirs.
In other words, on existingshareholders there is a negative impact of preferential allotment as is thecase with PNB Housing Finance. The development and the investors’ reaction maybe fine for trading, but for investing and ownership purposes, the stock deservesa sell at the moment since, as explained above, the ownership percentage pershare will reduce.
Another superstar performer is REDINGTON, which too is up by20%. Though no readily available fundamental analysis reason is available toassuage a retail investor or trader’s foolish need for a story, but the priceaction indicates something big is happening in this stock too.
The largest losers include DISHTV which changed by -6.79%, ADVENZYMESwhich changed by -5.36%.