The week gone by had negative surprises for the market from the very first day of the week. Markets witnessed a sharp fall on Monday and then a nice rearguard action with recovery on the next three days where markets recovered about 60-65% of the opening day’s losses. Friday, markets fell again and the loss widened. At the end of it all, BSESENSEX lost on three of the five trading sessions and gained on two. It was down 759.58points or 0.98% to close at 76,619.33 points while NIFTY lost 228.30 points or 0.97% to close at 23,203.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.67%, 0.54% and 0.60% respectively. BSEMIDCAP lost 1.08% while BSESMALLCAP was down 0.78%. FPI selling continued unabated and now seems to be never ending.
The Indian Rupee was under pressure and lost 64 paisa or 0.74% to close at Rs 86.67 to the US Dollar. Dow Jones recovered very smartly and was up on four of the five trading sessions. It gained 1,549.38 points or 3.69% to close at 43,487.83 points. Donald Trump would be sworn in as the US President tomorrow. The world is waiting to see what kind of duties are imposed by the US on China and the rest of the world starting this week. All that he has said during the election campaign would start to fall in place in the coming week if not later. What would happen to world markets would normally draw a comment as “God only knows”, would now be phrased as Trump only knows. In the coming week, markets would be extremely choppy and volatile.
There were three listings in the week gone by with the first of them being from Standard Glass Lining Technologies Limited. The share listed on the bourses on Monday the 13th of January. Shares which were issued at Rs 140, closed day one at Rs 163.35, a gain of Rs 23.35 or 16.67%. By the end of the week, the price had moved up to Rs 190.41, a gain of Rs 50.41 or 36.01%.
The second share to list was Quadrant Future Tek Limited which had issued shares at Rs 290. The shares listed on Tuesday the 14th of January and closed listing day at Rs 448.75, a gain of Rs 158.75 or 54.74%. By Friday, the share gained further and closed at Rs 601.35, a gain of Rs 311.35 or 107.36%.
The third company to list was the INVIT from Capital Infra Trust who had allotted units at Rs 99. The trust debuted on Friday the 17th of January. The INVIT closed at Rs 99.01, a gain of Rs 0.01 or 0.01%. Very clearly as details of dividend distribution were not spelt out in the offer document, the issue has seen a poor debut. Hopefully, details of the same would be available in course of time and that would help in the share price gaining from these levels as people invest in an INVIT on the basis of the yield.
The week ahead would be crucial as we find that the market momentum has been broken and going forward, the same has to be restored, before any meaningful recovery may happen. FPI selling is yet another cause for concern. The strengthening dollar which has pushed bond yields way above the FED Interest rate is yet another cause for worry. All of this makes our markets vulnerable.
Last week we barely managed to survive the break below key support area of 23,200 points. We did go below that level intraday on Monday to touch 23,047 points before bouncing back. The new support level now moves downwards to 23,050-23,230 points and we have closed for the week at 23,203 points. Already in danger zone and five days to go in this week.
Very clearly its tough times for markets in the week ahead. Resistance is around 23,450-23,500 points and then higher at 23,750-800 points. On the downside if this time around 23,050 points level breaks, we are looking at a sharp downturn of 200 plus points to follow. Whether it would happen or not Trump only knows.
The strategy for the week would be to play defensive with only the large cap stocks and staying away from the mid and small cap stocks. Avoid intraday moves unless they are sharp in either direction. Even though volatility would persist, the results declared so far do not give any great comfort at this point of time. To sum up its tough times and with uncertainty looming large.
Trade cautiously.
