Yet another week has come to an end on the bourses and the volatile and uncertain movement continues. Covid-19 and more importantly life after that is the talk around the world. Closer home, states and the centre are working on restoring life and industry to some sort of normalcy after the lockdown is partially lifted post 3rd May. Three of our largest cities, Delhi, Mumbai and Kolkata are quite badly affected and continue to be under threat. The lifting of the lockdown in the immediate term looks difficult. The administration needs to draw up a clear strategy for the same to happen. Without testing of the entire hotspot population and identification and segregation of affected people, no significant progress can be made.

BSESENSEX gained on two of the five trading days and lost 261.50 points or 0.83% to close at 31,327.22 points. NIFTY lost 162.25 points or 1.21% to close at 9,154.40 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.45%, 1.52% and 1.58% respectively. BSEMIDCAP was down 3.04% while BSESMALLCAP was down 1.55%. BSEHEALTHCARE continued its good showing and was up 3.57%. The healthcare index is at a new 52 week high and hit 15,588.56 intraweek before closing at 15,421.75 points.

The Indian rupee after a volatile week lost 6 paisa or 0.08% to close at Rs 76.45. Dow Jones lost 467.22 points or 1.93% to close at 23,775.27 points.

Facebook has agreed to invest 5.7 billion dollars or Rs 43,574 crs in acquiring a 9.9% stake in Jio. This would help leveraging the capabilities of both partners and also help Reliance reduce debt. Shares of Reliance gained Rs 192 or 15.67% to close at Rs 1,417.

Franklin Templeton Mutual Fund India which has an exposure of about Rs 28,000 crs in six debt-oriented funds has decided to shut shop. While the decision is certainly not welcome and has come as a shock, the way they have gone about the same leaves a lot to be desired. It would be appropriate for the trustees of the mutual fund to ascertain for themselves and make public, whether the investments in the various schemes were done by following laid down procedures or in the pressure of obtaining a better yield, the fund threw caution to the wind and violated investment norms. Finger pointing has begun and there are wild allegations alleging that the exposure to lower rated companies was higher than normal. Further the exposure to companies where the fund/funds were a single or sole investor was as high as 25% of the total corpus. The trustees must address these issues before the issue snowballs and puts the entire mutual fund industry under undue duress. We are passing through tough times and certainly cannot bear the entire mutual fund industry being targeted for this isolated act.

Various departments have started giving suggestion for fund raising post covid-19 coming under control. I believe it is very important to realise that the entire nation has gone through tough times and it is important that we realise that the need of the hour is to generate more revenue. This must come from more output, not more taxes. It’s very easy to raise GST across items and also tax the super-rich but that would be counterproductive. Incentivising production, growth and consumption is the need of the hour. At the time of writing this article a report circulating from the revenue department has been denied by the government and soothed many raw nerves.

The week ahead sees April futures expire on Thursday the 30th of April. The current value of NIFTY at 9,154.40 points is a good 512.95 points or 5.94% higher than March expiry at 8,641.45 points. Markets are looking to be much less volatile than the previous month and it would be fair to assume that the bulls would be able to carry their advantage through.

Coming to Covid-19, the number of affected persons globally has moved up to 29.95 lac people with 2,06,997 deaths and 8.79 lac people who have recovered. Compared to the previous week the number of affected people has increased by 5.87 lacs while those that have recovered has gone up by 2.53 lacs. Roughly 41,000 people have died. In India, the number of affected people has increased to 27,890 people with 881 deaths and 6,523 people recovered.

Coming to the week ahead, markets would remain choppy and volatile. Uncertainty on how life would return to normal and in what time frame is the moot question and cause for concern currently. It would be a long grind and one should take things as they happen. Brace for volatility and use swings in the market to your advantage. Results for the quarter would not have any surprises and would be on expected lines. It’s the current quarter which is the weak link and needs to be closely monitored. Use rallies to sell and any sharp dips to buy.

The week gone by behaved on expected lines and made an intraday low on Thursday before bouncing from there and registering very sharp gains in the remaining less than two days of the week. BSESENSEX gained 429.10 points or 1.38% to close at 31,588.72 points while NIFTY gained 154.85 points or 1.70% to close at 9,266.75 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.98%, 2.15% and 2.38% respectively. BSEMIDCAP was up 3.95% while BSESMALLCAP was up 4.93%.

The intraweek low made on Thursday on the BSESENSEX was at 30,016 points, which was a loss of 1,140 points till then, while it was 8,821.90 points on NIFTY, a loss of 290 points. The recovery from the intra week lows in less than two days was 1,570 points on BSESENSEX and 445 points on NIFTY. This momentum has steam and would carry the markets higher in the coming week and it would be worth watching how far this rally can go before profit taking steps in.

One must remember that the markets are like a patient and are yet to recover fully. What we are witnessing is relief rally, oversold rally or a rally by any other name that you can think of. Fundamentals of the market are yet to kick in and they would do so only when covid-19 is under full control and one can say that life has normalised.

The Indian Rupee after being extremely volatile settled with a marginal gain of 4 paisa or 0.03% to close at Rs 76.39 to the US Dollar. Dow Jones had a good week and gained 523.12 points or 2.21% to close at 24,242.49 points.

RBI cut reverse repo rates by 25 basis points to 3.75% from the earlier 4%, signalling to the market that banks should lend and that the system is full of liquidity. Whether banks will lend is a million-dollar question as the 90-day moratorium is a contentious issue going forward and complete clarity on provisioning norms post the 90 day are yet to emerge.

New guidelines have been announced for reopening of factories with stringent conditions. It has been specified about the number of people in the workplace maintaining social distancing etc have to be strictly followed. Public places like malls, theatres, eating places are not covered under these guidelines and will not open.

Being Mumbaikars, let us talk about Mumbai. Local trains which are Mumbai’s lifeline will not be opened and this would effectively keep the city closed. Mumbai’s officegoers typically eat outside food and a reasonable number of them get their lunch through the ‘Dabbawalla’ which unfortunately is shut. There would be a lot of hardship in the initial stages and it would take quite some time for things to become normal.

HDFC Bank reported an excellent set of numbers even considering the fact that it was only the last fortnight of March 2020 that was impacted by covid-19. The net profit for the 4th quarter rose 18% to Rs 6,928 crs.

The government has restricted the investment by neighbouring countries in Indian companies under the automatic route and they would have to now invest under government route and not under the FDI policy. This has been issued after PBOC, raised its stake in HDFC Bank from the earlier 0.8% to over 1%. SEBI raised queries on such investments and this was followed by the government release.

SBI Card which was an extremely hyped and controversial issue, completed thirty days of being listed on the bourses. This 30-day period is significant because the allocation to anchor investors comes with a 30-day lock-in. On completion of the same, anchor investors are free to sell. The share which was issued at Rs 755 and had created huge hype and demand and was oversubscribed 26.49 times overall saw its share touch a low of Rs 501.10. This means that the share has lost a third in value and the issue was oversubscribed 56.66 times by QIB’s and they have a reasonable time frame view on the share unlike the HNI, whose investment horizon is less than 48 hours. This loss is without considering the grey market premium which varied between 225-275 for about three months prior to the issue and touched a peak of just short of Rs 400. Understandable that covid-19 has impacted the business of SBI Card as well but to what extent? The share did recover from the lows to close at Rs 530.70, a weekly loss of Rs 64.15 or 10.78%.

Coming to covid-19, the total number of cases globally have risen to 24.07 lac cases with there being 1,65,069 deaths and over 6.25 lac patients recovering. In India the number of affected persons has increased to 17,615 cases with 559 deaths and 2,854 patients having recovered. There seems to be a larger number of patients recovering than before which is a positive sign. The battle would be won when patients recovering is larger than new cases. This of course is a long way off.

Coming to the markets in the week ahead, the momentum of the last two trading sessions will keep the market going in the initial part of the week after which there would be profit taking as well. This does not mean that this would signal the end of the rally but then markets would look to the expiry of April futures and how the relaxation of lock-down and reopening of factories happens. The rally should be more than what was gained on a weekly basis in the previous week before the profit taking.

In conclusion, a rally followed by profit taking and then cues from the lockdown to determine the flow of the market in the week ahead.