It was a three day trading week and markets were battered. The reason which is not palatable was the minutes of the Fed meeting that rate increase is almost likely in the next meeting. How does it matter if rates which are at unsustainable base of a mere 25 basis points are doubled? If India and its markets have the potential to grow would a 25 basis points really matter?
The BSESENSEX lost 387.54 points or 1.38% to close at 27,673.60 points while NIFTY lost 114.20 points or 1.31% to close at 8,583.40 points. Results from TCS and Infosys saw TCS margins improving and revenue dipping while Infosys reduced guidance for the remaining half of the year. In an otherwise weak markets these shares held themselves and BSEIT actually gained 0.72%.
The long awaited deal of Essar Oil has finally been done. The Essar group has sold almost all of the refinery and Vadinar Port to a group of three investors led by Rosenoft. The entire deal is worth about Rs 86,000 crs and includes taking over of existing debt as well. Two good things would happen as a result of this deal. Firstly the Indian banking system starved of funds would get about Rs 50,000 as repayment and second the shareholders of Essar Oil would get some more money for the shares held in Essar Oil.
Results season has begun and companies declaring results would be in focus going forward. Markets have lost their momentum in the crack last week and would need to consolidate before the next up move could begin.
One should use rallies to exit na d wait for better opportunities to re-enter the market post Diwali and result season.

Markets began the week on a strong note and gained over 350 points on Monday. The rally was helped in no small manner by short covering as in the sentiment had turned bearish over the last few trading sessions. Tuesday saw the new RBI Governor chairing the first MPC (monetary policy committee) and the decision to cut repo rates was unanimous. Markets corrected thereafter and the BSESENSEX ended with gains of 195.18 points or 0.70% to close at 28,061.14 points. NIFTY gained 86.45 points or 1% to close at 8,697.60 points.
Markets are moving in both directions but seem to have lost the momentum. The rally has been long and strong and is now over seven months old ever since the day the budgets were presented on the 28th of February. The focus has shifted to midcap and smallcap and they gained 2.86% and 3.46% respectively. While BSEMIDCAP is trading at an all-time high, the BSESMALLCAP is trading at a multiyear high. This is a dangerous situation and one needs to watch this carefully as in every reversal this space gets knocked out of shape and there are large casualties.
In primary market news, shares of HPL Electric & Power Limited listed during the week and had a poor start. Share prices closed at Rs 177.90, a weekly loss of Rs 24.10 or 11.93%. The issue from Endurance Technologies Limited saw good response and was subscribed 43.84 times. The QIB portion was subscribed 53.43 times, HNI 127.07 times and Retail 2.69 times. Retail subscription was muted on account of some of the poor listings in recent times which has caused the retail investor holding on to stock. This blocking of funds is responsible for the muted response and merchant bankers and promoters would be well advised to ensure that something is left on the table for investors.
Some banks have effected rate cuts of 10 basis points post the 25 basis points cut done by RBI to be seen as being on the right side of the new Governor. Symbolic cut by member banks without prodding by RBI is a welcome sign but nothing more than that as far as business is concerned.
The week ahead is a truncated one as we have two consecutive trading holidays on account of religious events on Tuesday and Wednesday. Volumes would be muted ahead of these holidays as global markets would be open. Further when trading resumes there would be just two trading days for the week to end. Result season for the quarterly results of the period July to September would kick in as well and not much is expected on the positive side. When one looks at valuations clearly there is no scope for appreciation and there is just one way for the markets to go. Correction, consolidation and allowing valuations to return to sanity. The biggest casualty would be midcap and smallcap space.
I would therefore advice investors to take money of the table and wait for corrections.