The inevitable had to happen. India struck at the terrorist infrastructure in POK and deep in Pakistan and neutralized nine different locations. It did shake Pakistan and they attacked India across the border from Kashmir right down to Gujarat and also targeted civilians in Jammu and Kashmir. Over the next three days it was retaliation and restrained India keeping cool and calm. Friday evening saw a ceasefire being called from across the border and being violated in less than four hours. There was drama thereafter where first Donald Trump talked about the ceasefire a day earlier and then China stepped in. Very clearly everyone wants to take credit even where it is not due. Status as of day is that things have been quiet and today detailed terms of the ceasefire would be spelled out. How long will it last? Your guess is as good as mine. 

Coming to the markets, momentum was broken on expected lines. BSESENSEX lost 1,047.52 points or 1.30% to close at 79,454.47 points while NIFTY lost 338.70 points or 1.39% to close at 24,008.00 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.48%, 1.55% and 1.50% respectively. BSEMIDCAP lost 1.40% while BSESMALLCAP was down 1.32%. Markets lost on three of the five trading sessions and gained on two. 

The Indian Rupee lost 84 paisa or 0.99% to close at Rs 85.37 to the US Dollar. Dow Jones was fairly range bound and lost on three of the five trading sessions and gained on two. It was down 68.05 points or 0.16% to close at 41,249.38 points. 

On the global trade front, India and UK have come to an agreement on the trade front. One of the big gainers post the same were shares of Tata Motors which incidentally was the top gainer in the week. Shares gained Rs 57 or 8.74% to close at Rs 709. 

Mitsubishi Corporation of Japan has acquired a 20% stake in Yes Bank at Rs 21.50 per share. The bulk of this stake has been sold by SBI while the balance has been sold by the remaining banks who had invested when the deal of Yes Bank was done at the time of bail-out. This share has been active and with an event having taken place this would become even more active than before. Closing price was Rs 20 on Friday.

Markets are still eyeing the trade agreements that the US would be doing. Incidentally it is having trade discussion with China in Geneva. The tariff issue is still a global matter which would affect markets in the short term and be a big news item to decide the market trend for the future. Closer home events on the border would be at the back of everyone’s mind as we have past experience, where depending on the neighbor is not reliable. This will keep markets on the boil and always under pressure. 

Levels of 24,500-600 have been strong resistance in the immediate short term and would continue to remain so. There could be a sharp uptick when markets open on Monday morning but the day would be volatile. Further with terms of ceasefire to be agreed upon, there could always be that proverbial slip between the cup and lip. On the support side levels of 23,800-850 would act as strong supports. Suffice to say we are in a broad trading range waiting for political developments to spell out and the results season to end. The icing on the cake could be the trade deal. 

The strategy for the week ahead would be to keep eyes and ears to the ground and take things in stride as they come. Keep positions light and allow events to unfold. A lot has happened but is not yet over. A troubled neighbor is a dangerous neighbor and we know that the public there has to be kept fed with a lot of false propaganda at all times. A note of caution, do not believe rumors and wait for verification. Trade cautiously and wisely.

The week gone by had four trading sessions and markets were in a buoyant mood, notwithstanding border and cross border tensions. Markets gained on three of the four sessions and lost on one. Friday was the surprise package where after the initial euphoria, all thought that markets would slip or give way. They held on resolutely and ended with small gains and off their intraday highs. BSESENSEX gained 1,289.46 points or 1.63% to close at 80,501.99 points while NIFTY gained 307.35 points or 1.28% to close at 24,346.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.10%, 1.01% and 0.77% respectively. BSEMIDCAP gained 0.42% while BSESMALLCAP lost 1.33%. The benchmark indices were helped in a great way by the gains made by Reliance Industries which gained Rs 122 or 9.38% to close at Rs 1,422. 

The Indian Rupee gained sharply and was up 91 paisa or 1.07% to close at Rs 84.53 to the US Dollar. Dow Jones gained on all four trading sessions of the week and was up 1,203.93 points or 3.00% to close at 41,317.43 points. New jobs data fueled the fire. No clarity on Trump’s tariff has emerged so far and we are a month into the announcements made on 2nd April. 

Its been a very long time since one saw Reliance gain close to double digit percentage gains in the week. It gained a massive 9.38% for the week and closed at Rs 1,422 and helped the benchmark indices gain momentum. The move past 24,500 on Friday which was retraced could also be on the back of Reliance’s strong uptick. The highs made by BSESENSEX were at 81,177.93 points while on NIFTY it was at 24,589.15 points. These would be first resistances that the market would have to surmount on its way upwards. 

Results season continues to be a mixed bag with a few decent results and a large number of average and not so good results mixed together. Suffice to say that the big jump from results which is expected every quarter from results season is missing so far. Whether there would be a change in the remaining period of May, till results are to be announced is yet to be seen. 

India’s negotiations on the tariffs are set to happen shortly. Some of the areas would remain contentious particularly agriculture and that would be something which the US would have to look into seriously on a couple of fronts. Firstly, land holdings in India are miniscule when compared to the US and to compare subsidies and benefits are just not possible. The use of genetically modified seeds is permitted in the US while largely restricted in India. Similarly in the dairy segment India has grown in leaps and bounds and state cooperatives have been able to provide marketing and processing platforms to the large number of small farmers. I believe that the broad contours of the trade pact would get resolved in May and some pain points remain for further discussion. This would have a long term impact on our economy and also the markets. New companies and sectors would come on the radar based on these discussions. 

Coming to the markets in the week ahead, expect volatility to continue as rumor mongers create war hysteria across the border. Key levels to watch out for would be 24,500 on NIFTY which would act as a pivot and the highs made on Friday act as immediate resistances. Thereafter the next level would be 24,800-24,850 on NIFTY and 82,000-82,200 on BSESENSEX respectively. On the support side levels made on the previous Friday (25th April) at 78,605 and 23,847 would act as strong supports. On a broader note, the trading range until violated on either side would be between 24,000-24,500 on NIFTY. Keep in mind that the reserves and strength of Reliance, ICICI Bank, HDFC Bank and the entire IT pack have been used up in this rally so far. For any further rally we need numbers or news to fire up markets. 

The strategy would be to continue to look at large caps and only a select few from the midcap and Smallcap space. Keep overnight trading positions on the lighter side unless they are properly hedged and weekend positions should be avoided. Investment bets should be encouraged in view of trade talks which would happen sooner than later. 

Trade cautiously.