Markets had extra drama last week and things ended on a weekly basis as expected, on a positive note. The consecutive eight week losing streak ended as expected and predicted with markets gaining. What the week ahead holds for us, only time will tell. BSESENSEX gained 534.53 points or 0.74% to close at 72,544.66 points while NIFTY gained 89.65 points or 0.40% to close at 22,535.65 points. BANKNIFTY gained 805.90 points or 1.48% to close at 55,256.65 points. The broader markets saw BSE100 gain 0.20%, while BSE200 AND BSE500 lost 0.02% and 0.08%. BSEMIDCAP lost 1.38% while BSESMALLCAP lost 1.18%. The top sectorial gainer was BSETECH which gained 1.84% while the top loser was BSEREALTY which was down 4.19%. Markets gained on three of the five trading sessions and lost on two.

The Indian Rupee lost 54 paisa or 0.56% to close at Rs 96.95 to the US Dollar. Dow Jones gained on four of the five trading sessions and was up 477.99 points or 0.93% to close at 51,654.95 points.

RBI in its MPC meeting held between the 5th and 7th of October decided to raise Repo rate by 25 basis points to 5.50%. This rate hike has happened after February 23, when rates were last revised.

The highs and lows made intraweek on BSESENSEX and NIFTY were at 73,018.82 points and 22,731.85 points which were made on Wednesday. The lows which were made on Thursday were at 71,327.75 points and 22,179.90 points. Lows were made on Thursday when BSESENSEX lost a massive 1,177 points and 387 points on NIFTY. The tables were turned more or less completely on Friday when markets gained 1,083 points and 319 points respectively. There are no substantial reasons for either the fall on Thursday or the rise on Friday, just the usual FPI selling and weak global cues.

Donald Trump has tweeted that the USA has signed a deal to buy Russian Diesel. This signals that there will be no sanctions on countries dealing with Russia and the Ukraine-Russia conflict is over. This clearly shows what diplomacy and global politics the USA and in particular its President is indulging in. India’s stand is vindicated on crude purchases. With the Nobel Peace prize having been announced, Trump’s frustration has once again come to the fore. He believes he should have been awarded eight peace awards as he has ended eight wars. Less said about Donald Trump the better.

The mother of all IPO’s from Jio is finally here. The issue would open from Wednesday the 21st of October to Friday the 23rd of October. The price band is Rs 1,065 to 1,119 and the issue size would be under Rs 31,000 crores, making it the largest IPO ever, beating the one from Hyundai Motors.

Coming to the markets in the week ahead, we have bounced yet again from levels of 22,200 points and this becomes a strong support for markets. The level of 22,200 would be a support and if this were to break a level of 21,700 would act as support. On the upside, levels of 22,800 would act as an immediate resistance. If the level was breached upwards, we have room to move up to 23,200-23,300 points. Global scenario seems to be improving with Trump realizing that things are not going his way and the 3rd of November election is just round the corner. Not sure how things would unfold, but USA could see dramatic events unfolding.

The trading strategy would be to play long with a strict stop loss at 22,200 points and buy on dips. Things should improve for the markets in the immediate short term. There is yet another silver lining for Indian IT companies as more and more people are realizing that India not committing heavy expenditure for AI is actually a blessing in disguise as Chinese companies are able to offer products substantially cheaper than the Americans. This situation could actually spur investments in Indian IT stocks all over again.

Trade cautiously.

Markets continued to fall and the only saving grace was that it was a shortened four day week. They fell on all four days of the week. This was the eight consecutive weekly loss for the benchmark indices. The last positive week was 3rd to 7th August, which means two months. BSESENSEX lost 1,871.31 points or 2.53% to close at 72,010.13 points while NIFTY lost 682.10 points or 2.95% to close at 22,446 points. BANKNIFTY lost 1,129.65 points or 2.03% to close at 54,450.75 points. The broader markets saw BSE100, BSE200 and BSE500 lose 3.08%, 3.14% and 3.20% respectively. BSEMIDCAP lost 3.65% while BSESMALLCAP was down 2.64%. BSEIT was the sole sectorial gainer up a tad at 0.20%. The top loser was BSEAUTO down 5.51%. Sensex and NIFTY highs were made on Monday while the lows were made on Thursday. The levels were at 73,740.85 and 23,080.25 points for the highs while the lows were at 71,292.88 and 22,217.30 points respectively.
The Indian Rupee lost 43 paisa or 0.45% to close at Rs 96.41 to the US Dollar. Dow Jones lost on three of the five trading sessions and gained on two. Dow Jones lost 651.66 points or 1.26% to close at 51,176.96 points.

September NIFTY futures expired on a weak note. The series loss was a massive 1,576.30 points or 6.5%. The series closed at 22,683.75 points. By all standards this was a big losing series.

Primary markets continue unabated. We had seven mainboard listings last week. With this number we have now seen as many as 30 listings in September which is a record by itself. Further the new documents that are now being filed on the main board have a fair number of IPOs where the combined size of fresh issue and offer for sale are in the Rs 100-200 crore mark. Readers would recall that last year we had seen a trend where companies were trying to raise Rs 150-200 crores from the SME platform. Why this change? Time and SEBI regulations will answer. On the point of main board IPOs, 8 out of 10 documents have repayment of debt as the primary objective. Wonder if capacity expansion has stopped in the country or companies do capex with borrowed money and then do an IPO for repayment. Or, is it that SEBI asks for too many details in capex.

The week ahead sees RBI meet for its policy review meeting between the 5th and 7th of October. It is widely believed that at its meeting repo rates would be raised by a minimum of 25 basis points to 5.50% from the present 5.25%. Global central banks have been raising rates and inflation has become a cause for concern. Rising inflation in the US is also a cause for concern and it is believed that the FED may raise rates again at its next meeting to be held on 28th of October. How the markets in India take the expected rate hike would depend on the commentary as well.

Markets broke through 22,800 points on NIFTY and took support at 22,200 points or slightly higher at 22,217 points, low made on Thursday. This level would continue to act as support for the coming week. If this were to break, the next support is at levels of 21,650-21,750 points. On the upside, resistance is at 22,800 points. In Fibonacci, the number 8 is a crucial number and trends change on this number more often than not. With eight weekly losses having already happened, I would bet on a turnaround this time, even if it is only to break the trend. What could lead to that, one would have to wait for the week to unfold.

The trading strategy would be to buy on any sharp dips as the Fibonacci number is a very strong indicator of a turnaround however short, happening this week. Sell on any strong rallies. Geo-politically as we get closer to Election Day in USA, Trump may like to call of the war suddenly as well to seek a positive mandate. Too many ponderable and a possibility of a turnaround. Play for the event with a stop loss.
Trade cautiously.