Focus on strong fundamentals and upcoming IPO opportunities

While the first week of the new calendar year may have seen a positive start for the stock market, the current market situation is not indicating any clear direction. For new investors, it can be said that the period of volatility will continue. Investors should continue to look for companies with strong fundamentals and invest in small portions. Last week, the market saw a sharp surge one day, followed by a collapse the very next day, which has raised caution among experts. They believe that the next major trigger for determining the direction of the Indian stock market will be the Union Budget and the news surrounding its preparations, which could lead to continued volatility in the market.

Technically, the Nifty index closed above 24,000 points, but it was just 5 points higher. Experts across global markets are also focusing on the inauguration of Donald Trump’s government on January 20 and the new U.S. policies, which could be a significant factor influencing the market’s volatility.

Despite continued selling by Foreign Institutional Investors (FIIs), the BSE index saw a correction of 524.04 points (0.67%) last week, closing at 79,223.11 points. The NSE Nifty index also rose by 191.35 points (0.80%) and closed at 24,004.75 points. The correction in the market did not affect the Midcap and Smallcap indices, which closed in the red, while the main indices showed positive movement. The weakness in Midcap and Smallcap stocks suggests that there are still opportunities for investors, as any future rally will likely begin with these stocks.

Regarding this week’s outlook, market traders are predicting continued volatility. They believe that the market’s direction will be influenced by the interest of Foreign Institutional Investors, but with the influx of investments through SIPs and mutual funds, liquidity in Indian markets does not seem to face any major crisis. A significant obstacle to the market’s momentum is the rapidly growing public offerings and the funds being raised from them.

It is noteworthy that every small and large IPO is not only being fully subscribed but also trading at a premium, which could indicate potential financial irregularities. Traders suggest that risktaking investors should focus on stocks of banking, automobile, and pharmaceutical companies. Some investors may also consider limited investments in companies such as Vodafone Idea, Tata Motors, State Bank of India, JSW Infra, and government companies that regularly pay dividends. For investors looking to invest through IPOs, this week will offer opportunities to apply for IPOs from three companies on the main board and seven companies that have already launched or are about to launch on the MSME platform.

THESE ARE THE PERSONAL VIEWS OF THE AUTHOR

Vimal Kothari, Associate Editor, First India News & Senior Journalist