Markets behaved on expected lines last week and bulls continued to drive home their advantage into June futures expiry. BSESENSEX gained 439.54 points or 1.27% to close at 35,171.27 points while NIFTY gained 138.60 points or 1.35% to close at 10,383.00 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.55%, 1.77% and 1.85% respectively. BSEMIDCAP was up 3.55% while BSESMALLCAP was up 2.88%. The benchmark indices gained on three days and lost on one day with expiry day being virtually flat.

The Indian Rupee gained 52 paisa or 0.68% to close at Rs 75.66 to the US Dollar. Dow Jones lost 855.91 points or 3.31% to close at 25,015.55 points. The bulk of these losses happened on Friday when it lost 730 points. This poor show on Friday was partly on account of the rise in Covid-19 cases in the US. This would certainly have a bearing on markets in Asia and India when they open for trading on Monday morning.

June NIFTY futures expired on a positive note gaining 798.80 points or 8.42% to close at 10,288.90 points. Volatility during the month has been quite high and one believes that the same would reduce going forward. The first quarter of the financial year 2020-2021 would come to an end during the week and this quarter has largely been one of almost total lockdown and disruptions. When reporting season begins closer to midway in July 2020, one would expect most companies to have next to negligible sales and expenses on the lower side. Manufacturing companies would be badly affected while those companies which came under the essential services tag like pharmaceuticals, food companies and many divisions of FMCG companies would be better off comparatively. IT companies were functioning on WFH (work from home) basis and were operating to a fairly high percentage of near normalcy. The sectors badly hit were hospitality, entertainment, travel and tourism and aviation. While flights have resumed, the breakeven factor for them has not yet been achieved and many more flights and more travel need to happen before the same is achieved.

SEBI continues to make life easier for the promoters to raise funds during the pandemic. Yet another relaxation has been given in allowing the increase in promoter holding from the customary 5% per year to 10% in this particular year i.e. 2020-2021. While this step is welcome, the regulator must ensure that in the name of pandemic, company/promoter management do not trample the rights of minority shareholders as was done by Vedanta recently. Even in the case of the mega rights issue of Reliance, a very large number of Reliance shareholders coming in the category of 1-500 shares were unable to exercise the right because of systems and procedures.

Talking of rights issues, Aditya Birla Fashion and Retail Limited has announced its rights issue of Rs 995 crs in the ratio of 9 shares for every 77 shares held at a price of Rs 110 per share. The rights issue would open on Wednesday 8th of July and close on Wednesday 22nd of July. The share price of the company closed at Rs 129.25 on Friday at close of trading, losing Rs 3.90 for the week.

The promoters of S W Solar Limited, seem to be under great financial stress. After the high drama of last year when they were unable to fulfil the objects of the issue which included repayment of inter-corporate debt within 90 days of the public issue. They then took an extension of another 300 days to pay in instalments, and are once again unable to pay Rs 500 crs due on 30th June 2020 and are asking for time. In an intimation to the exchange, the company has said that the promoters may default and have informed the exchange accordingly. One wonders whether the regulator is going to haul up the company or just allow the promoter to get away once again in the name of pandemic. This pandemic is becoming a means of arm twisting only minority shareholders rights and they seem to be at the receiving end. Most unfair at the way promoters are getting away with everything rightly or wrongly. The share price of the stock which was issued at Rs 780 is now trading at Rs 199 after hitting a low of Rs 69.25. What next is in store only time will tell?

Covid-19 seems to be moving ahead relentlessly and numbers seem to be spiking all over again. Probably this is the second wave of the pandemic. Global number of affected patients have crossed the 10 million or one crore mark and are now at 102.43 lac, while people who have died is at 5.044 lac people with 55.53 lac people recovering. In India the number has jumped quite sharply to 5.49 lac affected people. The number of deaths is 16,487 people while 3.21 lac people have recovered. Compared to last week, the number of people affected globally has increased by 11.97 lacs, with 33,800 deaths and 7.15 lac people recovering. In India, the number of new cases has increased by 1.22 lac people, 2,800 deaths and almost 84,500 people recovering. This sharp spike in numbers may be attributed to higher testing, opening up of the economy and also due to many people getting bored of sitting at home and now moving around without any valid reason. Mumbai Police has therefore issued instructions that if you are found outside a 2 km radius without valid reason, your vehicle would be impounded.

Coming to the markets, the increased volatility of the previous month would take a break and markets would become more range bound. Further they would pause to consolidate at these levels having gained almost 40% from the low of 25,600 in mid-March to now. In all probability they could open softer on Monday morning post the big fall on Friday and then spend the next couple of days moving up and recovering the initial losses. With expiry out of the way, the skewed market positions have normalised to a great extent and markets are more balanced between the bulls and bears now. Expect markets to trade in a broad range of 2.5% on either side of Fridays close during the week. While this is a trading zone, this does not imply the weekly change to be so much as markets seem to be alternating gains and losses.

Markets gained on three of the five trading days last week but registered very strong gains on the last two days of the week to end with gains of almost 2.8%. BSESENSEX was up 950.84 points or 2.81% to close at 34,731.73 points while NIFTYY gained 271.50 points or 2.72% to close at 10,244.40 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.44%, 2.45% and 2.53% respectively. BSEMIDCAP was up 1.62% while BSESMALLCAP was up 3.65%.

The Indian Rupee lost 34 paisa or 0.45% to close at Rs 76.18 to the US Dollar. Dow Jones at the end of a volatile week manged to end in positive territory gaining 265.92 points or 1.04% to close at 25,871.46 points.

Ever since the introducing of weekly settlements on futures in NIFTY and Bank Nifty, the markets have become significantly more volatile and trading on Thursday in the second half of the day is fraught with risk and huge uncertainty. Last Thursday was no exception and the shorts in the market were squeezed out.

Thursday the 25th of June will see June futures expire. The current value of NIFTY at 10,244.40 points is higher by 754.30 points or 7.95%. It’s a huge lead and bulls are unlikely to squander it away. As mentioned earlier there is a short build-up in the market considering the spate of negative news flow globally and nationally whether it be the Indo-China conflict, ‘Black lives matter’ protest in the US and now having a symbolic protest worldwide with respect to racism and of course the pandemic covid19. In normal circumstances, one would expect in such a scenario, markets to be subdued if not under severe pressure. Here we see markets not only doing well but moving up.

The current level of BSESENSEX of 34,731 is lower than the opening level of 1st January 2020 of 41,253 points by 15.8%. The low of the year so far has been 25,638 points which meant at that point the BSESENSEX was down 60% from the beginning of the year. From the low we have recovered and made up more than half the losses. This shows the resilience and belief that all that is happening will be surmounted.

Reliance claims that it has become a net debt free company well ahead of its commitment. There are various views on this as the amount that is to be received from the rights issue of about Rs 53,000 crs would be in two tranches of 12 months and 18 months from now. The company has received just a fourth of this amount so far and would receive another fourth in May 2021 and the balance half in November 2021. Shares of the company gained Rs 171 or 10.76% during the week to close at Rs 1,760.

The uncertainty on landlords and tenants with regards to rent during the lockdown period saw some clarity with regard to DLF writing to its customers in the NCR region. The company has proposed a scheme where it is willing to write of the rent for the lockdown period and offered a discount for the period from June to March 2021 in a staggered manner linked to sales. They have offered different terms to malls and to people who have offices in their complexes. This should set the path to some sort of reconciliation on a very contentious issue.

Glenmark has become the first Indian Pharmaceutical company to receive regulatory approval for oral antiviral ‘Favipiravir’ for mild to moderate covid-19 treatment. Shares of Glenmark have risen from Rs 354.90 on the last day of May to Rs 409.10 as of Friday 19th June, gaining Rs 54.20 or 15.27%. There could be more steam in the counter but almost everything is in the price. Remember the saying, buy the rumour and sell the fact.

In very significant news particularly considering the hostile nature of India China relations currently, the Chinese Communist Party (CCP) tried to force the European Union to recognize it as a market economy, a case it had already lost last year by a provisional decision, and now stands firm. This will see the United States and EU imposing high anti-dumping duties on imports from China. This would be good news in India as well for commodity manufacturers.

Coming to the covid-19 front, the number of affected people globally has moved up to 90.46 lac people with 4,70,703 deaths and 48.38 lac people having recovered. In India the number of patients is 4,26,910 people with 13,703 deaths and 2.37 lac people having recovered. Mumbai with over 66,488 patients and Delhi with 59,746 people lead the tally in India. Compared to a week ago, the number of new patients globally has increased by 10.8 lacs with 35,200 deaths while 7.30 lac people have recovered. In India the number of new patients has increased by 94,000 while there have been 4,183 deaths and almost 67,500 people having recovered.

Ridiculous comments coming from a leader of the largest opposition party in India questioning the army action is detrimental to the morale of the army. What vested interests warranted such comments may take some time for detailsto emerge. However, the demand that the MOU between the Congress Party and the CCP be investigated could lead to sensational revelations. An important point to remember is that the MOU was done when the UPA was in power in 2008.

Coming to the markets and the week ahead, there would be volatility and sharp two-sided moves. The bulls would like to press home their advantage and carry the series with a decent 8% gain as of date. There are shorts in the market with all the negativity around. Further with the breath of the market improving significantly, a section of the market men has used their longs in the midcap and Smallcap space and as a hedge shorted the benchmark indices. Come Thursday all of this would get squared off or rolled over. Either way volatility is imminent. The best possible strategy would be to book profits as the markets continue to rise. Remember there is always that bad day when nobody wants to buy.