Markets had a decent week last time around, but Friday’s movement opens up many more possibilities going forward. BSESENSEX gained 1,808.25 points or 3.71% to close at 50,540.80 points while NIFTY gained 497.50 points or 3.39% to close at 15,175.30 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.34%, 3.50% and 3.55% respectively. BSEMIDCAP gained 4.77% while BSE SMALLCAP gained 4.19%. The top sectoral gainer was BSEBANKEX which gained 7.34%. In Individual stocks the top gainer was Indusind Bank up 14.03% followed by State Bank of India which gained 11.26%. Incidentally SBI declared its annual results on Friday and 40% of the weekly gains came post the results on Friday. It appears there is more steam left in the SBI counter in the coming week.

The Indian Rupee gained 45 paisa or 0.61% to close at Rs 72.83 to the US Dollar. Dow Jones was under pressure during the week and lost 174.29 points or 0.51% to close at 34,207.84 points. Dow lost for the first three days of the week and gained on the remaining two days.

Go Airlines (India) Limited has filed its draft red herring prospectus through which it plans to raise Rs 3,600 crs as a fresh issue. The document throws up very interesting facts about the brand and the ownership of the same. The popularly known brand “Go Air” is owned by a company which has one of the promoters own 99.99% of the share capital of that company. The company filing for DRHP has chosen to change the name to “GO FIRST” for the airline after being in existence for about 16 years. Readers would recall that when Jet Airways had tapped the capital markets way back in 2005, there were major valuation issues with the brand as it was owned by the promoter in his individual capacity and a separate valuation was being asked for.

Here we have a company going public in the most horrendous time possible with covid-19 having affected airlines around the world, having a full-on dispute between the promoter and the company about the brand. Surprises one has to how such an issue could meet with market expectations, raise money, and possibly see the light of day in reasonable time. More on this issue as time progresses.

The number of patients affected by covid-19 globally saw 16,75,27,962 patients, 34,78,355 deaths and 14,85,44,144 people recovering. In India we saw 2,67,52,447 patients, 3,03,751 deaths and 2,37,28,011 people recovering. Compared to the previous week, the world saw 38,11,823 new patients, 85,052 deaths and 63,82,778 patients recovering. In India we saw 17,87,522 new patients, 29,340 deaths and 25,60,402 patients recovering. It is indeed heartening to note that the number of new patients has dropped significantly while the recovery rate in terms of patients recovering is around the same. This has brought down the number of active cases significantly. Very clearly the 2nd wave seems to have peaked in India and is now coming under control. We need to get the number of deaths down.

Reserve Bank of India has transferred Rs 99,122 crs to the government as surplus for the nine months ended March 2021.

During the course of last week’s trading, we saw an important resistance level being crossed after a very long time. This puts the market in a different orbit, confirmation of which would be available over trading of the next week. On Friday, the markets gained slightly over half the week’s net change. BSESENSEX gained 976 points of the weekly 1,808 points while NIFTY gained 266 points of the 497 weekly points gained. Whether this was purely short covering or interested buying coupled with short covering would be visible over the next couple of days trading. Institutional buying by FPI was Rs 510 crs while by domestic institutions it was Rs 649 crs on Friday.

The immediate targets for the BSESENSEX are 51,821 points followed by the all-time high of 52,767 points made on 16th February. In terms of points the two levels are a mere 1,300 points and 2,200 points away. Similar levels on the NIFTY are 15,336 points and 15,431 points which are 160 points and 255 points away.

The week ahead has Nifty futures for May series expiring on Thursday the 27th of May. The current series is higher by 280.40 points or 1.88%. Readers would recall that before the start of the previous week, the series was in the red and bulls have an upper hand for the first time during this series. This incidentally is the highest level of NIFTY since the middle of March.

The week ahead is very heavily skewed towards sharp volatility and the first couple of days movement would determine the immediate future of the markets. Continued follow up is a must for the present rally to continue which has already gained significant ground. In case that does not happen, we could see correction and make the expiry a messy affair. One thing however is clear that sooner than later, markets are poised to hit a new life-time high and this could happen as early as in the June series.

Buy on dips and sell on sharp rallies would be the strategy to continue in the market for the coming week. Opportunities on both sides would be available.

Trading for the four-day week began on a strong note, but markets went into a correction mode for the next two days and Friday saw a flat market. BSESENSEX ended the week with losses of 473.92 points or 0.96% at 48,732.55 points while NIFTY lost 145.35 points or 0.98% to close at 14,677.80 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.75%, 0.75% and 0.69% respectively. BSEMIDCAP lost 0.49% while BSESMALLCAP lost 0.08%.

The Indian Rupee gained 23 paisa or 0.31% to close at Rs 73.28 to the US Dollar. Dow Jones had a volatile week and lost for the first three days and then gained for the next two days. The index hit a new lifetime high on Monday at 35,092 points before losing 35 points. It then lost 474 points and 681 points before gaining 434 points and 361 points to end the week with losses of 395.63 points or 1.14% at 34,382.13 points. The volatility being witnessed in Dow clearly indicates that there is resistance and profit taking at each higher level. Markets there are also concerned about inflation.

Metals and commodities as mentioned last week were under pressure and lost ground. BSEMETAL index was the top loser and was down 4.47%. There are concerns about resistance from user industry buyers to pay higher prices.

Units of PowerGrid Infrastructure Investment Trust which had tapped the capital markets with its issue for Rs 7,700 crs saw its units list on Friday the 14th of May. Units which were issued at Rs 100, debuted at Rs 104 and made an intraday high of Rs 104.90 before closing at Rs 102.98. The performance was decent as far as day one is concerned. The regulator needs to take a clearer stand on issues concerning INVITS. The application size is Rs one lac or more and in the case of this instrument it was 1,100 units or Rs one lac ten thousand. The trading lot was however 100 units or effectively Rs 10,000. In the case of SME exchange, the application size and the trading lot remain the same for the period of two years or till the time the stock remains listed on the SME exchange before migrating to the main board. Here it appears that the retail investor is not capable of understanding the invit for applying and hence the lot size is above one lac but he is good to understand when trading and therefore the lot size is 100. This double standard must be eliminated at the earliest.

Covid-19 saw the world have 16,37,16,139 patients, 33,93,303 deaths and 14,21,61,366 patients recovering. In India we saw 2,49,64,925 patients, 2,74,411 deaths and 2,11,67,609 patients recovering. During the week the world saw, 47,47,974 new patients, 86,628 deaths and 56,50,539 patients recovering. In India we saw 23,02,515 new patients, 28,265 deaths and 25,02,343 patients recovering. The wave in many parts of India seems to have peaked while in others it seems to be coming under control. The country has so far vaccinated 18 crore people and this number includes the first and second jab. Taking the lead from Mumbai and Maharashtra, many other states have imposed lockdown for about a fortnight. This forced lockdown helps in restricting movement and isolating areas which have high incidence of affected patients. The solution will always remain the following of SOP’s strictly and observing social distancing. Hopefully things should be better in the coming days.

Markets are stuck in a broad range and are seeking direction desperately. They come close to the breakout or breakdown levels and then turn in the opposite direction viciously. The immediate support levels for the BSESENSEX and NIFTY are 48,050 points and 14,400 points while the resistance level is 50,250 points and 14,950-15,000 points respectively. On the downside, the next level of support is at 47,250 and 14,150 points. If these levels are broken for any reason, there could be a couple of days of sharp sell-off.

The other couple of disturbing facts in the market is that FPI’s are sellers on most days and secondly money making seems to have become too easy. These are very disturbing signs and indicate that some change in trend is imminent. Considering the factors enumerated above it appears that looking at the strong showing of Dow on Friday, we could see a strong beginning to the week ahead in our markets followed by a correction. Continue to sell on rallies and buy on sharp dips in the coming week as well.