The bulls of Dalal Street were badly mauled last week. The BSESENSEX lost 800 points on Thursday and ended the week with losses of 1,630 points or 6.62% on the BSESENSEX. NIFTY too lost 508 points or 6.79% for the week. The market lost across the board and it was difficult to find exceptions. All the sectors were losers with BSEREALTY down 11.35% and BSECONDURABLE the least at 4%.

Since the beginning of the calendar year it’s been six weeks now and the BSESENSEX is down 3,174 points or 12.13%. Interestingly the markets lost in one week what it lost in five earlier weeks combined. On the NIFTY the year to date loss is 983 points or 12.34% and the story hereto is almost similar. Such was the magnitude of the fall that it spared no one. Even IT stocks which are normally solid when the rupee is weak were falling as well.

All this happened when China was celebrating their new year- The year of the monkey. What the new Chinese New Year has in store only the monkey knows and he sure knows how to somersault. Results season for the quarter October-December 2015 has come to an end and left a lot to be desired. There were hardly any turnaround signs that one could have spotted and the PSU banks NPA’s have hit the ceiling. Results because of NPA’s have been terrible and if this is leading to a complete cleansing of the system it would be more than welcome. With some of the private banks cleaning up as well it should be time for the remaining to follow suit in the last quarter of FY2016.

The week ahead would be dominated by extreme volatility and there could be some initial gains after the sharp fall last week. I however expect these gains to be short lived as any sustainable gains can only emerge after some real money comes into the markets. In the short run a rally would be on account of short covering more than anything else.

In such a fluid and volatile situation it’s a place for just the nimble footed and not the faint at heart.