Markets were fairly wild in the short four-day trading week. Sentiment had become very bullish on Tuesday when markets opened, but the bullishness disappeared as the week progressed. BSESENSEX closed in the red, down 95.21 points or 0.28% to close at 34,046.94 points. NIFTY lost 32.70 points or 0.31% to close at 10,458.35 points. In global markets. DOW too took a beating and lost 424.42 points or 1.75% to close at 24,538.06 points.
The week had plenty of news flow which could impact markets in the coming week. Political news saw BJP wresting the state of Tripura from the CPIM after a rein of 25 years. In the state of Nagaland, they would form a coalition government and in Meghalaya which saw a close election they would be part of the winning coalition. Three more states added to the kitty. Karti Chidambaram, the son of the former Finance Minister was arrested and is being questioned. Why the Congress would raise questions on the arrest when Parliament begins, the impact would be reduced as a consequence of the electoral wins in the three North East states.
As a fall out of the PNB scam, the government has promulgated an ordinance to seize the assets of proclaimed defaulters. The bill will be hotly debated but would see the light of day as no political party would like to be seen as obstructing the same. Non bailable warrants have been issued against Nirav Modi and his uncle Mehul Choksi. Further the number of arrests in the PNB scam continue to mount with the government determined to book the people involved.
Punjab National Bank shares seem to have bottomed out and closed at Rs 101 at the end of the week but not before touching a low of Rs 92. The shares lost Rs 12.40 or 10.93% during the week. Gitanjali Gems, the listed entity of Mehul Choksi lost Rs 4.50 or 18.15% to close at Rs 20.30. Vakrangee shares continued to be under pressure and lost Rs 35.15 or 18.50% to close at Rs 154.85. Shares are down from Rs 515.40 on the 24th of January. As a damage control exercise the company had announced a share buyback on the 12th of February. There is no update on the same so far. Any company seen as not being clean or transparent is targeted mercilessly by the market. Market simply hammers the price down, the one thing in their control. Vakrangee shares have fallen from Rs 515.40 on the 24th of January to Rs 154.85 currently in a little over 6 weeks.
India clocked a GDP of 7.2% for the quarter ended December 2017 and is back at being the fastest growing economy, overtaking China. A big news at all times, yet it did not impact the market as they are uncertain about the trend currently.
The Dow seems to be having problems of its own and its no coincidence that our markets and the Dow, both have peaked for the time being on identical days, that is the 29th of January. How significant this event is would be known only subsequently? The one fact that is well known is that both markets had risen too fast too soon and needed to correct. The correction is on and would also need a healthy time correction. In this phase one would get strong short-lived rallies and markets would remain largely range bound.
Markets are directionless and are witnessing huge volatility. Use the same to your advantage by buying in sharp dips and selling in rallies. Traders would be well advised not to have large short overnight positions as every new day would be completely different.
