It was a dream week at the bourses and markets were on a roll. They gained for the first four days and were flat on the final day of trading. BSESENSEX gained 1,213.28 points or 3.47% to close at 36,194.30 points. NIFTY gained 350 points or 3.32% to close at 10,176.75 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 2.89%, 3.32% and 2.48% respectively.

Crude oil prices continued to remain under pressure and Brent crude prices are now under 60 dollars to a barrel. To add to the kitty is the fact that the Indian Rupee appreciated by Rs 1.08 or 1.53% to end at Rs 69.59. Dow Jones to has had a spectacular run and gained 1,252.51 points or 5.16% to close at 25,538.46 points.

November futures expired on a positive note and bulls have not had it so good in a very long time. There were quite a few trading holidays in November and yet the series gained 733.80 points or 7.25% to end at 10.858.70 points. At the beginning of the series the sentiment was negative and with the rupee under pressure and crude on a boil one would never have imagined the outcome.

The G-20 summit saw US and China trade talks making significant headway. US has agreed to freeze imposition of duties for 90 days at the current 10%. In this period China would make efforts to buy more of agricultural produce and industrial goods from USA. It would also make serious efforts on issues of intellectual property theft, non-tariff barriers and forced technology transfer. While this is certainly a temporary truce, intent and action will determine what happens thereafter. As far as markets are concerned it is certainly good news and will add to the current sentiment at the market place.

Prime Minister Narendra Modi presented a nine-point agenda calling on strong and active cooperation among the group to comprehensively deal with fugitive economic offenders. The noose around proclaimed offenders is certainly going to become tighter going forward.

The response to the follow-on offer of CPSE ETF has been spectacular. Looking at the response the government has decided to retain the full green shoe option and raise Rs 17,000 crs from the offer. This amount is higher than the total divestment during the current financial year so far. The anchor portion received bids for Rs 13,300 crs. Prices of the heavyweight stocks in the basket of 11 which comprise the ETF saw big losses during the week particularly the last three days. ONGC was down 7.88%, Coal India down 4.85% and NTPC 4.21% respectively. It would not be unexpected if these three stocks rally strongly when trading resumes in the coming week. Retail participation saw about 1.75 lakh applications, something which has not happened before in an ETF. Clearly the product is being understood and the discount of 4.5% for all participants helped.

Elections would conclude on Friday the 7th of December and there would be exit polls available that evening. The election results would be available from the morning of Tuesday the 11th of December. Markets are aware that the results could be close and has factored some of it. Assuming the worst happens there could be some knee jerk reaction and we could lose all the gains of last week and maybe some more. If they are on expected lines there could be status quo and some amount of profit taking. If it is a clean sweep, markets could rise.

For the moment the truce at Buenos Aires between US and China and the appreciating rupee and falling crude prices would keep the market momentum going. RBI in its credit policy review is likely to keep interest rates unchanged for the time being which would help matters further. Ride the momentum but do take money of the table to take advantage of any adverse election results.

Markets began the week on a positive note and registered gains. They lost ground on the remaining three days of the week and ended with losses. BSESENSEX lost 476.14 points or 1.34% to close at 34,981.02 points. NIFTY lost 155.45 points or 1.46% to close at 10,526.75 points. The broader indices too saw losses of between 1.14% to 1.27% on the BSE100, BSE200 and BSE500.

The Indian rupee gained significant ground on the back of crude falling. Crude has fallen below the 60-dollar mark which is a one year low. The Rupee gained 1.25 Rs or 1.74% to close at Rs 70.67. Dow Jones lost 1,127.27 points or 4.44% to close at 24,285.95 points. On a year to date basis the Dow Jones is now down 1.75%.

The week ahead sees November futures expire on Thursday the 29th. The current value of NIFTY of 10,526.75 points means that the bulls have a lead of 401.85 points or 3.97%. It is enough for the current moment and gives the bulls the leeway to pull this series through. They can afford to lose a hundred points daily and still survive. Incidentally in the previous week they lost on three of the four trading days and were able to contain the losses at 155 points. This time around they have four trading days and 400 points to defend. Should be defendable.

The next tranche or Follow on Offer of the CPSE ETF opens for subscription on Tuesday the 27th of November. The issue size is Rs 8,000 crs and has a green shoe option of 6,000 crs. There is a discount of 4.5% for all investors. Further there has been tweaking in the composition of the ETF, with construction and renewable energy being introduced for the first time. The current composition has 11 stocks against the earlier 10 with four additions and three exclusions. One must also consider the fact that public sector companies are high dividend paying companies and the dividend yield of public sector companies is between 3-4 times that of the NIFTY average. With low valuations and reduced interest in PSU shares currently, this offer looks attractive.

With crude prices having fallen below 60 dollars to the barrel and now trading at a year’s low and consequentially the rupee appreciating quite sharply, things couldn’t be better. There is one cause of concern at to how some stocks have crashed in the US. Apple the I-Phone maker and currently one of the most prized companies in the Dow Jones has had a price range of 150.24 dollar to 233.47 dollars. The high was made as recently as about a month ago and the share is currently trading at 172.29. The share has lost over 61 dollars in under a month and this is close to 30%. This share is a company which sells products, telephones, computers and watches. A company like this with so much of respect not in the USA but globally, means some serious issues are there which probably most people are not aware. The point I am making is that the trade war is hurting al countries. It’s not just China and therefore markets are worried.

Economic data is due in the week ahead and of interest would be the GDP numbers for the second quarter. While they are expected to provide positive upside, the current focus is the elections and their results thereafter. Markets will continue to be volatile and take cues from overseas markets particularly Dow Jones in the week ahead. The strategy of buying on dips is being reviewed as any sharp dip from here could make the market vulnerable and weak. We would then have to allow the market to find its base and consolidate at lower levels. The new strategy would be selling on rallies and wait for buying opportunities. Secondly with expiry due, there could be roll-over pressure on Thursday.

Trade cautiously.