The week saw markets gain further ground with the breadth improving significantly. The midcap and small cap segments are where all the action is currently focused. BSESENSEX gained 557.38 points or 1.47% while NIFTY gained 193.20 points or 1.73%. The broader markets saw BSE100, BSE200 and BSE500 gain 1.74%, 1.97% and 2.26% respectively. BSEMIDCAP gained 3.61% while BSESMALLCAP was up 5.56%. While the benchmark indices had a decent showing, the breadth in the market was significant with none of the sectoral indices being tracked, closing in the negative. Further the number of shares hitting upper circuits is on the rise and many have also hit new 52-week highs and some made lifetime highs as well.

The reason for this optimism is clearly liquidity and nothing negative seems to be on the mind of investors. The fact that the pandemic effect and consequences doesn’t seem to hurt the optimism or the valuations of companies in the stock market. It could even be argued that people have discounted the same at this point of time and believe that FY 2021 is a wipe out.

The AGR issue affecting telecom companies took its toll on Reliance on expected lines. The share price of Reliance lost Rs 32 or 1.51% to close at Rs 2,082. The fall was insignificant but considering that the broad markets were up and Reliance has led this rally over the past four months, one would normally expect the share to be leading from the front. Another share that would be under pressure for the same reason in the coming week is Bharti Airtel which had acquired spectrum from Videocon and Aircel. The word acquired has different connotations and is used broadly here to indicate a lease agreement or even right to use or sharing system. With the Supreme Court veering around to the view that the dues would have to be paid by the current user of spectrum, Bharti could come under further pressure this week. Shares of Bharti lost Rs 8.90 or 1.68% to close at Rs 520 on Friday.

Yes bank shares remained in the trading zone talked about last week with a high of Rs 16.40 and a low of Rs 13.85. Shares closed at Rs 15.57, a gain of Rs 0.50 or 3.32%. This trading zone would continue for some time and one would have to see when the share sees a complete dry up of trading volumes or a huge spurt in volumes to indicate the change in trading zone.

The week ahead sees August futures expire on Thursday the 27th of August. The present value of NIFTY at 11,371.60 points is up for the month by 269.45 points or 2.43%. Compared to the previous month the gains lower and one would expect the bulls to pile on the pressure on bears considering that the market has momentum. With the rally becoming broader by the day it should be easier even though the benchmark indices may not gain as much as they have been doing in the recent past. Clearly as mentioned earlier the action has shifted to the mid and small cap segments.

Coming to covid-19, the world has 235,86,023 affected people, 812,527 deaths and 160,84,558 patients who have recovered as on date. In India we have 31,06,348 affected people, 57,692 deaths and 23,38,035 recovered people. Compared to the previous week, the world saw 17,61,216 new patients, 39,495 deaths and 15,26,230 people recovering. In India the number of people affected during the week increased by 4,59,032 people, deaths by 6,647 and 4,19,959 people recovered. The world is now waiting to see what is the effect of a second wave if it comes and how severe it is. No one knows for sure and they are waiting for two major developments, one a fool proof vaccine and second for this second wave. In either case one has to keep one’s fingers crossed and hope for the best.

Coming to the markets in the week ahead, with momentum coming back to the markets, expect indices to gain further. While the climb in the benchmark indices is likely to be small, expect the action to continue in mid and small cap space. It is here that the retail investor has exposure and trading volume increase is noticeable. Different shares move up sharply and then become flat before falling ultimately. This is a time immemorial movement and one needs to be careful and avoid temptation. Take your gains and exit and don’t expect to get the whole pie. Expect the broader market indices to once again outperform the SENSEX and NIFTY. Further expiry day and maybe a day before the event could get extra volatile.

The week gone by continued to be volatile and all gains built up during the course of the first four days were lost and even more, on Friday. The week ended with BSESENSEX losing 163.23 points or 0.43% to close at 37877.34 points while NIFTY lost 35.65 points or 0.32% to close at 11,178.40 points. The broader indices saw BSE100 lose 0.03% while BSE200 and BSE500 gained 0.03% and 0.18% respectively. BSEMIDCAP was up 1.51% while BSESMALLCAP was up 1.36%. This kind of difference where the benchmark indices are in the red and the broader indices are in positive, has happened after a very long time. Normally the trend is clear and all indices are either positive or negative, not some positive and some negative.

The Indian Rupee gained 3 paisa or 0.04% to close at Rs 74.90 to the US Dollar. Dow jones had a good week and gained 497.54 points or 1.81% to close at 27,931.02 points. The Indian indices gained on two days and lost on 3 days with Friday being the sharp loser and BSESENSEX losing 467 points and NIFTY 122 points. What is significant is the fact that markets were gaining and in the positive till Friday happened.

RBI has agreed to pay to the government Rs 57,128 crs as dividend for 2019-2020.

ICICI has successfully completed its QIP for Rs 15,000 crs at a price of Rs 358. Th share had closed at Rs 361.45 on Friday, a weekly gain of Rs 3.60 or 1.01%. Almost all the bigger private banks have done there fundraising in the last three to four months. They have enough muscle power on their balance sheet now to take care of any unforeseen circumstances on account of covid-19 or post pandemic in terms of slower recoveries. It may also be mentioned that BFSI sector accounts for just under a fourth of the NIFTY weightage, while in BSESENSEX it is slightly more than a fourth of the weightage.

The Supreme Court hearing the AGR matter in case of telecom companies has come to the issue of Reliance industries and Reliance Communications. The spectrum was allotted to the erstwhile telecom company which was a part of Reliance Industries and then was split when the family division happened. Post Reliance Communications going belly-up and exiting the telecom business, it entered into a spectrum deal with Jio. The Supreme court is asking for the payment of Rs 31,000 crs towards the spectrum dues. Readers would recall that Reliance Jio had taken over the assets and liabilities of Reliance Communications Limited at almost zero value as it had agreed to take over the liabilities as well. This could affect the share prices when trading begins on Monday. Shares of Reliance industries had closed at Rs 2,114 a loss of Rs 33 or 1.54% for the week when trading ended on Friday.

Shares of Yes Bank hit a high of Rs 17.16 before profit taking saw the share fall, and close at Rs 15.07, a weekly gain of Rs 0.93 or 7.39%. The share has now entered a trading zone and would move between 13.5-16 over the next couple of weeks till news flow about the performance of the bank post fund raising are known.

IHH, the Malaysian based company which had acquired Fortis Healthcare has proposed in the board meeting to change the name of the company to Parkway from the present name and disassociate itself from the Singh brothers in all manner. This proposed change is of course subject to regulatory approvals and the Supreme Court where there is a matter of the open offer also pending. As and when this issue is resolved, the company would have renamed itself with a brand which is operating in more than 10 countries and is predominantly a South Asian group of hospital chain. The share has been seeing steady accumulation on expectation of the open offer currently stayed by the Supreme Court being cleared. Shares had closed at Rs 135.80, down Rs 2.15 or 1.56%.

Coming to the covid-19 front, the world saw 218,24,807 patients, 7,73,032 deaths and 145,58,328 people recovering. In India there were 26,47,316 patients, 51,045 deaths and 19,18,076 people recovering. Compared to the previous week, the world saw 18,00,544 new patients, 39,037 deaths and 16,60,090 people recovering. This effectively meant that 92.12% of the patients added during the week have recovered overall. In India, there were 4,33,179 new patients, 6,579 deaths and 3,83,798 patients recovering. The recovery rate for the week was 88.60%. Decent improvement in the recovery rate and one hopes and prays that work on the vaccine which is on globally on a war footing fructifies.

The week ahead would see markets open on a weak note and Reliance is likely to be under pressure on the AGR news. Markets would face resistance at the previous week’s high of 38,556 points and 11,366 on NIFTY. Incidentally while BSESENSEX failed to cross the recent high of 38,617 points, NIFTY did cross 11,341 points. These levels would be difficult to cross currently and would become a resistance for the time being. On the downside we would find support at 37,000 on BSESENSEX and at 10,900 points on NIFTY if not earlier. The strategy would be to buy on sharp dips or wait for the fall.