The week gone by was a short week with just four trading sessions. Markets saw gains on three of the four trading sessions and gained substantially. BSESENSEX was up 2,313.60 points or 4.16% to close at 57,863.93 points while NIFTY gained 656.60 points or 3.95% to close at 17,287.05 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.78%, 3.56% and 3.41% respectively. BSEMIDCAP gained 2.21% while BSESMALLCAP was up 2.08%.

The Indian Rupee gained 79 paisa or 1.03% to close at Rs 75.80 to the US Dollar. Dow Jones had a great showing and was up 1,810.74 points or 5.50% to close at 34,754.93 points.

The Russia-Ukraine war will complete one month in another three days. The attack had begun on Thursday the 24th of February. The level of BSESENSEX and NIFTY on the previous day (23rd February) was at 57,232.06 points and 17,063.25 points. The low was made on 8th March at 52,260.82 points and 15,671.45 points. The closing levels on Thursday were 57,863.93 points and 17,287.05 points respectively. The effect of the war on Indian markets lasted a mere seven days with the bottom being established on the eight-trading day. (8th March). Thereafter in another seven days markets have overtaken the levels from where they began to fall. As of the weekly closing, we are up about 650 points on BSESENSEX and about 220 points on NIFTY.

No effect of supply constraints, disruption, runaway rise in commodity prices, edible crude oil, crude oil prices, which have now come down. Sanctions imposed on Russia and people who would trade with them. Looking at the markets in their current state it appears as if there was no war.

The US FED has raised interest rates for the first time since 2018 and kept the rate at 0.25%-0.50%. The tone of the press conference was extremely hawkish and experts believe that going forward one would see 4-5 rate hikes in the coming 12 months or earlier. The US government is concerned at inflation which is ruling at a 42 year high since 1980.

Russia is alleging that US has financed the setting up and running of biological warfare labs in Ukraine which has become a matter of serious concern. While aggression, bombing and surrounding of key cities and towns in Ukraine continues, talks are also being contemplated with little or no result. When the two parties will thrash out a solution is anybody’s guess.

In economic news in India, gross tax collections for the current financial year have been extremely robust at Rs 13.63 lac crs against 9.18 lac crs in the previous year at the same time. A buoyant stock market has also helped matters and the collections on the STT front are an indication of this where the revised estimate which was increased has been crossed as well.

The follow-on public offer from Ruchi Soya of Rs 4,300 crs would open on Thursday the 24th of March and close on Monday the 28th of March. The price band as announced on the stock exchanges today, is a very attractive Rs 615-650. If one looks at the closing price as of 17th March of Rs 1,004.45, the discount is around 35% at the top end. Even if one considers the price prevailing one week ago when the issue dates were announced of Rs 804, the discount at the top end is more than decent amount of 20%. Very clearly the intention of the company is to give a sweet deal to new investors who would become a part of the company post this follow-on offer.

Indian oil companies have been buying Russian crude at deep discounts and the overall share of Russian crude in the oil basket has gone up substantially. With the lifting of sanctions on Iran, Iran has offered to supply crude to India by reviving the Rupee-Rial trade as well. These two steps would help reduce the pressure on the Indian government on account of rising crude price worries.

Geo political tensions will continue to dominate the world markets in the coming weeks. The fact that losses on account of war have been wiped out from Indian markets and also the US markets, its time to look at the risk-reward profile from hereon. All the risks have disappeared as far as market level or stock price is concerned. What remains is the head winds on all those fronts. One does not know the impact of war because there seems no time frame in which this could be resolved. The impact of interest rate hike in US has to be understood by markets and digested. Corporate results are just a fortnight away and it would be interesting to see how corporates have fared.

Coming to the markets in the week ahead, it seems war impact has been felt and more than neutralised in just 7+7 trading days. In 15 days, it’s all over as if Russia-Ukraine never happened. The possibility of timing the bottom and the sharp rally has also been felt. Going forward it would be business as usual. The strategy would be to sell on any rallies and wait for meaningful corrections before re-entering the markets. The chances of sharp rallies would also reduce from hereon as we enter the phase where markets look for consolidation more than anything else. A safe strategy would be to restrict oneself to the large cap space only. Trade cautiously and allow markets to consolidate.

The week gone by had plenty of action and it was from the battleground of Ukraine and the election results of five states in India. As expected, markets tend to react to each of such news in the manner, they feel apt. Markets fell sharply on Monday losing 1,500 points on BSESENSEX and almost 385 on NIFTY. They recovered more than their losses on Tuesday and Wednesday and gained 1,800 points and 480 points respectively. Thursday saw markets open at the high of the day and then lose between 35-40% of the gains still closing with handsome gains for the day. Friday was a day for resting and recuperation with markets gaining 0.2% for the day. With gains on four of the five trading sessions, BSESENSEX gained 1,216.52 points or 2.24% to close at 55,550.33 points while NIFTY gained 385.10 points or 2.37% to close at 16,630.45 points. The broader market saw BSE100, BSE200 and BSE500 gain 2.29%, 2.39% and 2.43% respectively. BSEMIDCAP was up 3.06% while BSESMALLCAP gained 3.25%. The top sectoral gainer was Healthcare with Cipla gaining 12.02% while Banking sector though closed with minor gainers was under pressure.

The Indian Rupee was under pressure and lost 43 paisa or 0.56% to close at Rs 76.59 to the US Dollar. Dow Jones lost 670.61 points or 1.99% to close at 32,944.19 points. Dow Jones lost on four of the five trading days. The US Fed is meeting on the 15th and 16th of March and is expected to increase interest rates. Inflation in the US has touched a 40plus year high and has become a major cause of concern. How much is the rate hike and the stance on announcing the same would be a key for markets not only in the US but globally.

Election results to the five states saw the ruling party BJP win in four states of UP, Uttarakhand, Goa and Manipur. The fifth state of Punjab, saw Congress the ruling party being badly beaten by AAP who won a 3/4th majority. The gains on account of the election results were distributed on Tuesday and Thursday as first exit poll and then results flowed.

On the Ukraine front, war has now entered the 18th day and it is unlikely to end in a jiffy with Russia having begun the attack and encirclement of the capital, Kyiv. While we also hear that Ukraine President Zelensky is likely to have conversation and negotiation with Russian President Putin, one can never be sure of such meetings or the outcome. To add to the current mess there is confusion on the biological labs supposed to be present in Ukraine. Very clearly, the Ukraine issue seems to have stretched beyond expected timelines and settlement may also take that much longer.

The IPO or primary market front seems to be getting hotter with just a fortnight left for the financial year 2021-22 to end. Ruchi Soya, has informed the exchanges that they have filed their RHP with ROC and that the FPO for Rs 4,300 crs would open on Thursday the 24th of March and close on Monday the 28th of March. The closing price of Ruchi Soya was Rs 803.70 on BSE on Friday, 11th March. As this is an FPO of a fairly large size, one may expect the price band to be closer to a discount of about 10% to the current close. One must also keep in mind that the current price band has to have a difference of 5% between the higher and lower price which is about Rs 35-40 in this case.

Besides the above issue, one is hearing some other names of issues which may hit the market as well but they are more of a speculative nature and none have made such final announcements as yet.

LIC is yet to take a call on its IPO timing. It however has announced results for the quarter, October to December21, which saw its net profit rise very sharply from Rs 90 lacs to Rs 234.90 crs.

Coming to the markets in the week ahead which has a holiday on Friday the 18th of March for Holi, would see markets continuing to remain choppy and volatile. During the course of trading last week, markets have made lower bottoms and that makes the upside limited while keeping the possibility of falling further open. With global cues from the Ukraine front and market news from US, quite volatile, its not the best time to be in the markets currently. It may also be borne in mind that with just a fortnight to go for the year to end, markets during the year have retained gains of just about half of what they had gained at their peak. The high point was about 26% on the benchmark indices which is down to about 12% currently. It is interesting to note that of this 12% annual gains, almost half have come in the last four days of the previous week. The idea is to show where markets are currently and in the next two weeks, global uncertainty may cause markets to swing wildly.

The strategy for the coming four days should be to sell on any rallies that happen and wait for clarity from the US Fed on their meeting slated for Tuesday-Wednesday. This outcome would give us one day to respond, as Friday is a holiday in our markets. In any case, even traders should restrict themselves to large cap stocks as safety lies in them only. The healthcare sector looks a better one as it has been under pressure and in current times may outperform with NAV of mutual funds coming up in about 10 days from now. Trade cautiously.