The diamond hands (meme slang for long-term investors) stormed Twitter and every other social media outlet to express their joy as shares of ITC jumped nearly 7 per cent today. The stock is one of the most widely held among retail investors, who own over 12 per cent stake in it.
While there was as much confusion over why the stock saw such a sudden spurt as there is on why it doesn’t perform, technical analysts suggested that the move might have come thanks to one of those rare technical breakouts.
The volumes on the stock today were the highest in over 12 months but curiously, the gains lacked conviction as delivery volumes were only 32 per cent, sharply lower than the one-month average of 54 per cent. The lack of delivery-based buying in the stock makes the sustenance of today’s gains questionable. But hey, that’s tomorrow’s problem; today we are going to the moon.
New life and all that
While ITC naturally dominated Street talk, it was
where the real money was made today. Shares of the beleaguered telecom company soared 28 per cent as investors’ confidence in the company’s ability to survive received a fillip from the relief measures announced by the government on Wednesday.
The Street is now looking forward to the company raising tariffs and trimming down its debt burden to make its balance sheet healthy. Money managers said that once the balance sheet is put in order, the company’s existing promoters may look to attract new strategic investors as both Aditya Birla Group and Vodafone UK have little appetite to infuse new money.
The optimism of the market was supported by investors putting their money on the line as unlike ITC, delivery volumes in Vodafone Idea today were sharply higher than the past one-month average. That shows conviction that the telecom operators’ troubled days may be behind it.
Troubling internals
After many months, the Nifty50, BSE-Sensex, Nifty Bank and Nifty Midcap 100 index ended at their respective record highs on the same day. The Nifty Smallcap 100 index, too, rose 0.2 per cent and was tantalisingly close to its lifetime high.
Yet, raise the carpet and one could see that the exuberance of the surface wasn’t trickling down to the bottom. More stocks closed in the red today than they did in the green despite a stellar day for the benchmarks.
The volatility gauge India VIX soared 5 per cent, an odd phenomenon given the general optimism, suggesting that institutional investors may be loading up on Put options to protect themselves from an impending correction.
There is much to celebrate about India’s market these days, but it pays to bear in mind what a money manager told this writer a few days ago: “The day ITC moves 10 per cent, that will be the end of this bull market.”
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