Markets continued remaining super volatile and maintaining one eye on the Strait of Hormuz and the other eye on election results of the five states which were declared on Monday. Markets gained on three of the five trading sessions with Wednesday seeing sharp gains. BSESENSEX gained 414.69 points or 0.54% to close at 77,328.19 points while NIFTY gained 178.60 points or 0.74% to close at 24,176.15 points. BANKNIFTY gained 447.20 points or 0.82% to close at 55,310.55 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.20%, 1.51% and 1.89% respectively. BSEMIDCAP gained 3.11% while BSESMALLCAP was up 4.49%. The top sectorial gainer was BSEAUTO which was up 4.88% while the top loser was BSE OIL & GAS which was down 0.97%. 

The Indian Rupee gained 62 paisa or 0.65% to close at Rs 94.30 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. It gained 109.89 points or 0.22% to close at 49,609.16 points. 

There was one listing which happened on the mainboard on Friday. Shares of OnEMI Technology Solutions Limited which had issued shares at Rs 171, had a decent debut. Shares closed at Rs 208.40, a gain of Rs 37.40 or 21.87%. There are no IPO’s on the main board during this week. 

Election results threw up plenty of surprises with three states out of five seeing the incumbent lose. The ruling TMC lost West Bengal and was replaced by BJP which secured its first ever mandate and secured a 2/3rd majority. The same happened in Keralam where the ruling LDF lost to UDF with a similar landslide. In Tamil Nadu both the Dravidian parties DMK and AIADMK lost and the winner was Tamil film star Vijay who had launched his own party TVK. In Assam, the ruling NDA gained further and one saw the Congress and other opposition parties lose. In Puducherry the ruling NDA won. 

How would this impact markets. While Tamil Nadu which is a highly pragmatic and industrialized state, one would see how things shape up. In West Bengal with growth and development missing over the last 15 years, one would expect large scale development to now happen. Even the border is expected to be fenced which would help in roping in infiltrators from across the border. All of this will take time but expectations will start building up. 

The war front seems to have no clarity. The only thing for sure is that Iran is getting greater support than what USA is able to garner. Settlement would happen only on terms of Iran as USA is getting into a corner every day. To make matters worse, USA seems to be saying different things every other day.

Markets are in a broad trading zone and need to breakout for a meaningful upside. BSEMIDCAP and BSESMALLCAP have been consistently performing and the same is something which is beyond expectation. One needs to look for stock ideas of companies which are performing and do not have any great FII influence in them. If that be the case, one can look at buying such stocks and investing in them for some time rather than looking at mere trading opportunities. 

The upside resistance is at levels of 24,400 and then around 24,600 on NIFTY. It is only if this level is breached and sustained that one should get bullish on large cap. On the support side, levels of 23,800 would act as solid support and if that were to break, level of 23, 300 points. Therefore the broad trading range is 23,300-23,800 and then 24,400-24,600 points. 

Trade cautiously.

It was a four day week but it was volatile as usual. Markets gained on two of the four sessions and lost on two. At the end of it all, we remained as unclear about the trend as we were before the week started. BSESENSEX gained 249.29 points or 0.33% to close at 76,913.50 points while NIFTY gained 99.60 points or 0.42% to close at 23,997.55 points. BANKNIFTY lost 1,226.40 points or 2.19% to close at 54,863.35 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.36%, 0.29% and 0.48% respectively. BSEMIDCAP gained 0.39% while BSESMALLCAP gained 2.03%. The sharp rally in Small cap stocks in particular over the last 3-5 weeks is a cause for concern as fundamentals are not in sync. One finds that the stock moves up on very high volumes over a few days and then volumes just dry up and slowly the share then begins to fall. A typical ‘pump and dump’ operation. Investors need to be vary of such stock movement and not get carried away. 

The Indian Rupee has been under pressure with rising crude oil prices and also relentless FPI selling. The Indian Rupee lost 67 paisa or 0.71% to close at Rs 94.92 to the US Dollar. Dow Jones gained 268.56 points or 0.55% to close at 49,499.27 points. Dow gained on one of the five trading sessions and lost on four. 

Election results will have begun by the time you read this article. Of the five states which went to polls namely Tamil Nadu, Puducherry, Assam, Keralam and West Bengal, If exit polls are to be believed, while Assam and Puducherry will see the ruling parties win comfortably, the other three are in a neck-to-neck contest and there could be upheavals as well. Less than a couple of hours before clarity emerges as counting would have begun by the time you read through this article. 

On the primary market front, we have one IPO from Onemi Technology Solutions Limited which has opened on Thursday the 30th April and would close on Tuesday the 5th of May. The price band is Rs 162-171. The issue consists of a fresh issue of Rs 850 crores and an offer for sale of Rs 76 crores. The company is an NBFC and is better known as ‘KISSHT’ or instalment. The PE of the issue is an attractive 4.90-5.17 times its earnings per share of Rs 12.79 for the year ended March 25. The book value or NAV is at Rs 231.84. Based on fundamentals, this share offers an upside for medium term investors. At the end of day one, the issue was subscribed 0.25 times. 

The second issue is from Bagmane Prime Office which is a REIT offering. The size of the issue is Rs 3,405 crores which includes a fresh issue of Rs 2,390 crores and an offer for sale of 1,015 crores. The price band is Rs 95-100. The issue would open on Tuesday the 5th of May and close on Thursday the 7th of May. Between 2/3rd and 3/4th of the income distribution of the REIT would be by way of dividend which would be tax-free in the hands of the recipient as the company is in the old tax dispensation. This would increase the yield from the 6.15% payout that the trust talks about. This is meant for investors looking for long term fixed income and steady appreciation. 

Coming to the war front, sixty day period is over and the present administration says that the rule does not apply to them as there is a ceasefire on. A close ally of the USA, UAE has left OPEC and would start producing more oil and selling in the open market. This will help the country as tourism which was their main stay has come to a grinding halt. This will allow them to make a killing and help restore their economic revival. USA is rejecting every offer proposed by Iran and the message is that they will continue with the blockade and not negotiate. This stage will lead to a blow-off at some point of time and serious repercussions for all, particularly for oil which is already boiling. China and Russia on the sidelines are also itching to get into the fray.

April futures expired on Tuesday the 28th of April at 23,995.70 points. The series gained a credible 1,176.10 points or 5.15%. Considering the volatility it was a decent gain.

Coming to our markets, the level of 24,300 points and thereabouts is acting as a strong resistance. While the high during the week was at 24,334 points which was higher than the 24,310 points in the previous week and lower than the 24,515 points, there is strong resistance at around 24,300 points and further on around 24,600 points. On the support side we have strong support at 23,800 points and thereabout. Lower down, support exists around 23,300-23,400 points. Expect volatility to continue with swings. Election results on Monday could add to the volatility. Any fresh long positions should only be initiated if 24,500-600 is breached and sustained.

The strategy would be to refrain from large overnight positions as oil around $115-120 and Rupee around Rs 95, don’t augur well for the economy. While GST collections in April at 2.43 lac crores were higher by 8.7%, they were helped by a robust growth in imports of 26% at Rs 57,580 crores. This may not happen next month. Building a portfolio in a small way and adding to the scrips in quantity as time passes could be a good way of going ahead. 

Trade cautiously.