The week gone by was volatile and had an early weekend because of a holiday on account of Holi on Friday. This signals the onset of spring. One hoes that this would bring about a change in trend in the markets which have been on the losing side for about six months or so since September 24. BSESENSEX lost on all four trading sessions and was down 503.67 points or 0.68% to close at 73,828.91 points. NIFTY lost on three of the four trading sessions and gained on one. It was down a similar 155.30 points or 0.69% to close at 22,397.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.85%, 1.00% and 1.28% respectively. BSEMIDCAP lost 2.07% while BSESMALLCAP was down 3.86%. 

The Indian Rupee lost 13 paisa or 0.15% to close at Rs 87.00 to the US Dollar. Dow Jones had a torrid week and lost on four of the five trading sessions and gained on one. It lost 1,313.53 points or 3.07% to close at 41,488.19 points. Incidentally, Friday was a big recovery day as Dow gained a massive 674 points otherwise the weekly losses would have been about 2,000 points. This kind of figure does not come to mind in a very long time. After the fall in the Dollar Index the next concern for US markets is the 2nd April when tariffs are set to be announced and begin. At this point of time no one is sure how global trade would react to new rules and what the new rules would be. There would be a state of flux and residents and business men in the US are more worried than anyone else. It’s a mere fortnight away, but one that would be endless as time ticks away. 

Donald Trump is a very busy man these days. Besides the trade war, he is also busy brokering peace in Gaza, Ukraine -Russia and has taken on a new front in Yemen against the Houthi rebels. It sure is a terrific pace at which he is going. However, this keeps markets on edge and that has all of us worried. 

Indusind Bank was in the thick of news because of some discrepancies in its derivative earnings which is likely to eat into its earnings. The share lost a massive Rs 265 or 28.28% to close at Rs 672. The share has been falling since the previous week when it was around Rs 1,000. In what is glaring information and could be termed as dereliction of duty, is the resignation of the CFO on 17th of January and his last day of duty being 20th of January. Such senior positioned people are not relieved in three days’ time, and I strongly believe that RBI should look into this matter closely. To expect that the CFO was not aware is not acceptable and such a key KMP is relieved in three days defies logic. Shareholders and investors need to know the truth and accountability taken to task.

On the mutual fund front, there is some interesting data points available. The first is the SIP figure for February remained steady at Rs 26,400 crores which was similar to the previous month. Another piece of news which was not positive was the fact that lumpsum investments in mutual funds during February dropped to Rs 7,000 crores against Rs 18,800 crores in the previous month. One can look at these two bits of information in many ways. Depends on whether you are optimist, pessimist or neutral. What is the redeeming feature is the fact that mutual fund flows have not turned negative. 

Gold has crossed a key phycological level of $3000 mark for the first time. This is on the back of many Central Banks buying gold over the previous months. Further, many investors think gold is a safe haven in times of conflict. What next, only Trump knows. 

While expiry is still some time away and this would be the last time that NIFTY monthly futures expire on a Thursday, it would be an important one. Year end, volatile and one where markets have made an attempt to turn around. The present level of the series is lower by 147.85 points or 0.66% at 33,397.20 points. The series began at 22,545.05 points. 

There are no mainboard IPOs lined up as yet. Hopefully we should see some at the beginning of the new financial year in April 25. One also hopes and prays that the new year brings sanity in terms of pricing and valuation for these issues. 

Valuation had become absurd and at many a times it could be termed as bizarre. All stages of the market through which we have to pass. 

Coming to the markets in the week ahead, expect them to be tentative and volatile. While we seem to have made some short-term bottom temporarily, we are yet to get out of the woods. Markets are looking for direction and some sort of trend going forward. Neither seems to be confirmed as yet. Lows of the previous week at 72,633 points and 21,964 points would act as strong supports while the highs at 74,741 points and 22,675 points would act as resistances. While this range is big, it supports the fact that when the temporary bottom was made, we had a sell-off of sorts. Hence the range needs to be big. For any bullish move the resistances have to be taken out and sustained. 

In light of the uncertainty of the trade tariff front and Trump fronts which have opened, it makes sense to allow markets to settle and get into a trend of some sort. Till then lie low and trade cautiously. Comfort lies in large cap stocks. 

The week gone by began on an extremely quiet note not giving any indications of the storm ahead. The first two days saw the markets fall further but make very small losses and then it regained as if hell hath no fury. It rebounded quite sharply and recovered to begin the month of March on a very positive note. BSESENSEX gained 1,134.48 points or 1.55% to close at 74,332.58 points while NIFTY gained 427.80 points or 1.93% to close at 22,552.50 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.38%, 2.56% and 2.88% respectively. BSEMIDCAP gained 3.36% while BSESMALLCAP was up 5.86%. The top sectoral gainers were metal and capital goods while the one to perform the least was the Banking sector.  Our markets lost on the first two sessions and gained on three. 

The Indian Rupee gained 62 paisa or 0.71% to close at Rs 86.87. Dow Jones had a very volatile week gaining on two of the five trading sessions and losing on three. It was down 1,039.19 points or 2.37% to close at 42,801.72 points. 

The lows made on the BSESENSEX and NIFTY on Tuesday were at 72,633.54 points and 21,964.10 points respectively while the highs made on Friday were at 74,586.43 points and 22,633.80 points. Just goes to show the effect of the rebound on Tuesday and the extent of damage that happened when the low was made. It maybe important to also highlight that despite the sharp recovery in the week, the March series is up a mere 7.45 points after six trading sessions as the opening day of March futures on 28th of February were very weak and we saw NIFTY lose 421 points. Its also important to understand that though markets have rebounded, and the bottom made for the time being, the base is yet to be established. Readers would recall that on the downside, the band of 22,800-22,900 points acted as support on multiple occasions and when it gave way, we lost almost 900 points in next to no time. Now on the way up, this band would act as a strong resistance and would have to be pierced with news flow and tremendous buying pressure before it is surmounted. In short, a herculean task.  

What led to this rally is something which should weigh on the minds of all market participants. The Dollar index has weakened from about 109-110 to about 104, signifying that global currencies are becoming stronger and the dollar weakening. This led to a sharp rise in metal stocks. Secondly, people are more confused about tariff wars taking place in the US and there appears to be no clarity on what will happen. Auto makers set up factories to make components in Mexico so that they could benefit from cheaper wages in Mexico. If they have to pay the tariffs now, the entire advantage of creating that eco-system would be lost. Sweeping statements at the time of elections were fine but reality is certainly tougher. 

Further the prices cooling off in India have made many more stocks affordable and offer some value for money. A select pack from the midcap and small cap also fall in this category, but caution needs to be exercised as many stocks have gained double digit in the week gone by. One needs to shop wisely while still maintaining a bias in the large cap stocks. FPI selling has continued so far barring an isolated day here or there but could see signs of tapering off. At the same time one may also see the local institutions slowing down their purchases in the near future. 

Going forward we will continue to have volatility in our markets. Expect markets to trade in a broad band with immediate resistances being in the broad zone of 22,800-22,900 on NIFTY and at 75,000-75,300 points on BSESENSEX. On the support side while the lows made on Tuesday the 4th of March would be solid support, the band around these levels in plus or minus 50 points would be a better way to look at things. Prior support would be higher at 22,250-22,300 points on NIFTY and at 73,400-73,650 on BSESENSEX.

While we seem to have recovered from the falling trend last week, to conclude that the trend has become a rising trend and markets are back to their old ways is a long way off. Results for the January-March quarter would begin to be announced in a month’s time from now. Please bear in mind that the correction witnessed was on account of valuations and if results for the upcoming quarter do not show a substantial growth in performance on revenue coupled with profitability, things could worsen. 

The strategy for the week ahead would be to look at large cap and a select group of midcap and small cap stocks. Do not fall prey to stocks which may already have risen 15-20% I n the rebound. 

Trade cautiously.