It’s a very dull day today, with Nifty not moving significantly in either direction. The market seems to be in a holding pattern, waiting for some fresh cues. We’ve now seen four days of consolidation, and the market is awaiting new signals to make a move. It’s neither going up nor down, but I believe the current trend is in an intermediate uptrend, and I expect this trend to continue in the coming days.
In today’s discussion, we’ll focus on a significant warning being issued by SEBI. We’ll delve into that in the second half of the video, so please stay tuned for more details.
Where is the market headed?
Market Overview
Let’s start with the Nifty chart, which is looking absolutely dull and listless today, showing just a 0.13% gain. If you look at the last four candles on the chart, you’ll notice that they are all very short. A short candle indicates a tight range, meaning the market is in a state of equilibrium, moving very little around the center point. Something will eventually trigger a break from this equilibrium, and the market will move to a new price point where it will try to establish a fresh equilibrium. This process of moving from one equilibrium to the next, with volatility in between, is a pattern that can be observed in the markets. Right now, it seems like we’re in a consolidation phase, and based on my analysis, we could see an upward continuation of this trend unless something major changes. The next move may take Nifty to at least the 25,200 level, so we’re about 500-600 points away from this potential target.
Nifty Next 50
The Nifty Next 50 index gained 0.27% today, continuing to inch upwards, which is a positive sign.
Nifty Mid and Small Cap
Mid-caps also saw a small gain of 0.32%, slowly recovering all the ground lost over the past two months. Interestingly, we’re now at the same level as we were at the beginning of October. For those who might have prematurely sold their positions, this could be a moment of regret. Meanwhile, the small-cap index also gained 0.2%, but we’re very close to the top of the small-cap moves observed over the last 3-4 months. This range may hold for some time before potentially breaking out or consolidating further.
The recovery in the small-cap space has been impressive, with the index rising from 16,600 to 18,500, but without much fanfare.
Nifty Bank Overview
The Bank Nifty, on the other hand, mirrored Nifty’s performance, showing a minor loss of 0.35% today. Once again, the last four candles were very small, indicating a lack of significant movement.
Gold, in US dollar terms, is doing well. It broke out of a downward-sloping trendline yesterday and today retested that breakout level before bouncing back up. This is a positive sign, and unless the price falls below the trendline, we could see it heading towards 2,720 and 2,785 in the short to medium term.
Advanced Declined Ratio Trends
Momentum trends are almost balanced, with 275 gainers and 222 decliners. While there is a slight bias towards the green, the market remains largely neutral.
Nifty Heatmap
Among the notable decliners were Reliance and State Bank of India, both losing around half a percent. NTPC, Adani Ports, and GSW Steel also lost ground. On the other hand, stocks like Infosys, Bajaj Finance, Sham Finance, and Trent were among the gainers. ITC and Hindustan Unilever remained flat, while Nestle was up 1.2%. The Nifty Next 50 index had more red than green today, with stocks like Dmart, Zomato, Adani Green, PNB, and LIC losing ground. However, there was some positive movement in the public sector finance companies, with stocks like IRFC, BHEL, and IRCTC seeing gains.
Sectoral Overview
Sector-wise, there was little to talk about. PSU banks lost 0.9%, and energy and private banks also lost some ground. FMCG and consumption stocks recovered some of the losses from the past week, though FMCG is still in negative territory for the last month.
Sectors of the Day
Nifty MNC Index
The MNC stock segment, including United Breweries, ABB, Colgate Palmolive, and Honeywell, showed some recovery, but it’s still not out of the woods.
Stock of the Day
PNC Infra
In terms of individual stock performances, PNC Infra did very well today, rising 12.3%. While it had lost some ground in recent months, falling from nearly 600 rupees to 300 rupees, it now seems to be gearing up to build back up. This could be a stock to watch for potential setups on dips.
Story of the Day
Now, let’s shift our focus to the significant warning being issued by SEBI. This warning pertains to unlisted securities, and one prime example of this issue is the upcoming Mobiquik IPO. The stock was trading at as high as 1,200 rupees in the gray market, while the official IPO price range is set at 265 to 279 rupees. This massive discrepancy highlights the risks associated with unlisted securities. The gray market for unlisted stocks is thriving, but the lack of research and information surrounding these stocks makes it highly speculative.
SEBI recently issued a clarification regarding transactions in unlisted securities. It states that certain electronic platforms and websites are facilitating transactions in unlisted securities of public limited companies. These activities are in violation of the Securities Contracts (Regulation) Act and the SEBI Act. SEBI has warned investors against using any electronic platform that is not registered to deal with unlisted securities, whether equity or debt. Engaging with such unregulated entities is considered a violation of SEBI rules. The concern is that these platforms are not registered with SEBI, which leaves investors with no recourse if something goes wrong.
The issue lies in the fact that these unlisted platforms are offering huge margins to traders. For example, someone might buy 1,000 shares of a company at 2,000 rupees each and then sell them piecemeal at 2,500 rupees each, making a 25% margin. If the stocks were listed, such margins would not exist because the price would be discovered in the open market. However, due to the illiquidity and lack of price transparency in the gray market, buyers are often forced to pay a premium, leading to potential losses once the stock is listed or an IPO is announced.
SEBI’s warning also extends to unauthorized virtual trading platforms, paper trading, and fantasy games. Many innocent investors get trapped in these get-rich-quick schemes, only to realize that they have overpaid for unlisted stocks. There have been numerous cases where stocks were hyped up in the gray market, but when the company eventually listed, the price was much lower than expected.
SEBI has advised investors to conduct transactions in unlisted shares only through authorized brokers or their intermediaries, as there is some regulatory oversight in those cases. If you’re dealing with unlisted securities through unregistered platforms, you have no recourse if things go wrong. It’s crucial to verify the legitimacy of the platform or broker before investing.
In conclusion, SEBI’s warning highlights the inherent risks involved in trading unlisted securities. These platforms offer substantial margins for traders, but without proper regulation and transparency, investors are exposed to significant risks. While unlisted stocks can sometimes create value, there’s no guarantee that the price you’re paying is fair or that the stock will even list at all. It’s crucial to approach this space with caution, as there are no guarantees, and the risks are much higher than in the listed space.
