The inevitable had to happen. India struck at the terrorist infrastructure in POK and deep in Pakistan and neutralized nine different locations. It did shake Pakistan and they attacked India across the border from Kashmir right down to Gujarat and also targeted civilians in Jammu and Kashmir. Over the next three days it was retaliation and restrained India keeping cool and calm. Friday evening saw a ceasefire being called from across the border and being violated in less than four hours. There was drama thereafter where first Donald Trump talked about the ceasefire a day earlier and then China stepped in. Very clearly everyone wants to take credit even where it is not due. Status as of day is that things have been quiet and today detailed terms of the ceasefire would be spelled out. How long will it last? Your guess is as good as mine.
Coming to the markets, momentum was broken on expected lines. BSESENSEX lost 1,047.52 points or 1.30% to close at 79,454.47 points while NIFTY lost 338.70 points or 1.39% to close at 24,008.00 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.48%, 1.55% and 1.50% respectively. BSEMIDCAP lost 1.40% while BSESMALLCAP was down 1.32%. Markets lost on three of the five trading sessions and gained on two.
The Indian Rupee lost 84 paisa or 0.99% to close at Rs 85.37 to the US Dollar. Dow Jones was fairly range bound and lost on three of the five trading sessions and gained on two. It was down 68.05 points or 0.16% to close at 41,249.38 points.
On the global trade front, India and UK have come to an agreement on the trade front. One of the big gainers post the same were shares of Tata Motors which incidentally was the top gainer in the week. Shares gained Rs 57 or 8.74% to close at Rs 709.
Mitsubishi Corporation of Japan has acquired a 20% stake in Yes Bank at Rs 21.50 per share. The bulk of this stake has been sold by SBI while the balance has been sold by the remaining banks who had invested when the deal of Yes Bank was done at the time of bail-out. This share has been active and with an event having taken place this would become even more active than before. Closing price was Rs 20 on Friday.
Markets are still eyeing the trade agreements that the US would be doing. Incidentally it is having trade discussion with China in Geneva. The tariff issue is still a global matter which would affect markets in the short term and be a big news item to decide the market trend for the future. Closer home events on the border would be at the back of everyone’s mind as we have past experience, where depending on the neighbor is not reliable. This will keep markets on the boil and always under pressure.
Levels of 24,500-600 have been strong resistance in the immediate short term and would continue to remain so. There could be a sharp uptick when markets open on Monday morning but the day would be volatile. Further with terms of ceasefire to be agreed upon, there could always be that proverbial slip between the cup and lip. On the support side levels of 23,800-850 would act as strong supports. Suffice to say we are in a broad trading range waiting for political developments to spell out and the results season to end. The icing on the cake could be the trade deal.
The strategy for the week ahead would be to keep eyes and ears to the ground and take things in stride as they come. Keep positions light and allow events to unfold. A lot has happened but is not yet over. A troubled neighbor is a dangerous neighbor and we know that the public there has to be kept fed with a lot of false propaganda at all times. A note of caution, do not believe rumors and wait for verification. Trade cautiously and wisely.
