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.

It was a very quiet week at the bourses and the trading range of the markets seem to be reducing. However, movement continues to remain in negative territory with FPIs remaining sellers. There is a complete disconnect between valuations in the large cap space which are quite attractive from a medium term investment horizon and the midcap and small cap space which continue to remain more than rich. Yet, retail investors are attracted towards the latter. Primary markets continue to dominate markets and last week saw as many as six new mainboard listings including the much awaited NSE Limited. It’s a big fallacy that investors crib about the valuations in the secondary markets but pay much more when the issue taps the capital market. Wonder why.

Markets gained on three of the five trading sessions and lost on two. BSESENSEX lost 678.13 points or 0.91% to close at 73,881.44 points while NIFTY lost 218.30 points or 0.94% to close at 23,128.10 points. BANKNIFTY lost 778.30 points or 1.38% to close at 55,580.40 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.77%, 0.79% and 0.76% respectively. BSEMIDCAP lost 0.63% while BSESMALLCAP gained 1.50%.

The Indian Rupee remained unchanged at Rs 95.98 to the US Dollar. Dow Jones gained 145.98 points or 0.28% to close at 51,828.62 points. Dow Jones gained on two of the five trading sessions and lost on three. The US goes to vote on the 3rd of November and the belief on the ground in the USA is that Trump would be on the receiving end. His call that he would give 5000 $ to every American who voted for the Republicans is a telling statement. We all know what freebies has done to the elections in India. Imagine what would happen if the same is adopted as standard practice in the USA. I get goose bumps and sleepless nights. Five weeks to the countdown.

There were six listings on the bourses last week. The center of attraction remained NSE Limited which had issued shares at Rs 1,785. The share debuted on Thursday the 24th of September at Rs 1,800 and made a high of Rs 1,878 before closing at Rs 1,818, a gain of Rs 33 or 1.85%. On Friday, the share lost ground and closed at Rs 1,792.65, a gain of Rs 7.65 or 0.43%. The performance could at best be termed as muted and it would be interesting to see how investors react if the share slips below the issue price of Rs 1,785.

The other five listings were from Sona Selection, SS Retail, Jindal Supreme, Hero Motors Limited and Manika Plastech Limited. The outstanding performance was from SS Retail which gained 71.54% while Hero Motors gained 68.87%.
There is a three day bank strike beginning from Monday the 28th of September and ending on Wednesday the 30th of September. One is not sure what would be the fate of issues which are closing during the period. I believe it would be business as usual and SEBI would allow companies to take their own call for extension. Stock exchanges are functioning and online applications are the order of the day. If anyone wishes to extend it would have to be as per SEBI regulations where the price band is to be lowered and then extended.

The week ahead sees September futures expire on Tuesday the 29th of September. The current value of NIFTY futures at 23,128.10 points is very heavily tilted in favor of bears who have a lead of a massive 1,131.95 points or 4.67%. With two days to go, there is no way that they can recover. At best there could be some partial recovery if things improve. Two points that could help the bears are enumerated. Oil continues to trade around 102-103$. However, currently Saudi Arabia is shipping close to 6 million barrels per day, a level which they were doing before the Iran-USA war broke out. This shows things are streamlining and will continue to improve, until Trump does the contrary. Secondly, we are coming to the end of Quarter two (July-September) and markets would look at results in another 10 days. With things remaining largely steady during the period, results could provide some ray of hope. A data point to add would be that the lows on the BSESENSEX and NIFTY were made on Friday while the highs were made on Tuesday.
Markets would continue to wait for geo political news flow to drive them. The lack of them could actually be positive news. Support for the NIFTY exists in the range of 22,650-23,800 points while resistance is at levels of around 23,650-23,800 points.

The strategy would be to look at sharp dips to enter the large cap space and use sharp rallies to exit what you would have purchased recently. In short, it’s a trading market with an eye on portfolio building for the coming two years.

Trade cautiously.