Markets continued their volatile way and after almost two months of war between USA and Israel against Iran, we have no clarity what will happen. The second meeting scheduled for the weekend turned out to be a disaster on expected lines as Iran had made it clear that they would not discuss with the US face to face. Iran met Pakistan, put forward their views and moved on to meet Oman and then Russia. In this war, USA has ensured that Iran has realized that they have not one but two strangleholds and bargaining tools. The first is enriched uranium and the second which is even bigger, Strait of Hormuz. Someone who has been brutally attacked with missiles, bombs and blown to smithereens as claimed by USA, has every right to fight and believe me they have fought and not just given up. 

Now here comes the interesting twist. 1st of May, if the war is not over, President Donald Trump has to go back to the US House to seek permission to continue the war, something which Trump believes and also knows, the house will not allow. Therefore the oil blockade on Iran and its ships not only in the Hormuz strait but now extending all over is his last ditch effort. Trump believes he can cripple Iran virtually permanently if they run out of storage space for crude oil and are forced to start shuttering down their oil wells. Will this happen? Time will tell. The coming five days will be very crucial and one will hear the media being used to spread all sorts of propaganda. Markets will be super volatile for sure and therefore dangerous as well. 

Coming to the markets, we gained on the first two days and then lost on the remaining three. BSESENSEX lost 1,829.33 points or 2.33% to close at 76,664.21 points while NIFTY lost 456.60 points or 1.87% to close at 23,897.95 points. BANKNIFTY lost 475.95 points or 0.84% to close at 56,089.75 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.76%, 1.46% and 1.31% respectively. BSEMIDCAP gained 0.87% while BSESMALLCAP gained 1.14%. The top sectorial loser was BSEIT which was down a massive 9.93%, while the top gained was BSEPOWER which gained 3.69%.

The Indian Rupee lost Rs 1.49 or 1.61% to close at Rs 94.25 to the US Dollar. The Dow lost on three of the five trading sessions, was flat on one day and gained on one. It was down 216.72 points or 0.44% to close at 49,230.71 points.  

The highs of the week were at 79,367.08 points on BSESENSEX and at 24,601.70 points while the lows were at 76,403.87 points on BSESENSEX and at 23,813.65 points. Highs were made on Tuesday and lows made on Friday. It is significant that though the crucial resistance level mentioned was touched, it actually turned out to be the turning point. This would in the coming week become a stronger resistance on any upside move. 

Results season is on and one is not getting enthused by the same. While they are not disappointing they are a cause of concern because the ongoing quarter is one of struggle, inflationary and one which will be subdued in almost all ways. Simply put Quarter one April-June 26-27 will be a near write off by and large. With an average Q4 and prospective Q1 nothing good, there is nothing to drive the markets. While the government has entirely borne the brunt of higher fuel prices by keeping the same unchanged, one is not sure of how long this war and government doing what they are will last. Supply routes will take a long time to stabilize and one is not sure what state will the Strait of Hormuz be in by the time it’s all over. Everybody has started talking of toll for passing such natural land and sea bodies and this is across the globe. 

There were no primary issues which opened or listed during the last week. There is however good news with a couple of issues likely to have their roadshows in the coming week. Hopefully while the markets may not provide good news, if new issues are attractively priced, they could see good subscription and provide some cheer in bad times. Keep fingers crossed. 

April NIFTY futures expire on Tuesday the 28th of April. The current level of NIFTY at 23,897.95 points is a good 1,078.35 points or 4.73% higher than the series open. With just Monday and Tuesday to go, it’s virtually impossible for the bears to manage to level the series. They may at best, pull something back and reduce the lead that bulls have. The trading week ends one day earlier with Thursday 30th April being the last trading day. May 1st is a holiday and coincides with Trump’s D-Day as well. This would make markets choppy and volatile through all four days. 

Markets will face very strong resistance around the 24,600 points level on NIFTY and would be a turning point on any upward move. On the downside, strong support exists at levels of 23,200-23,300 points. If this were to break we would have support around 23,000 levels, but being a four day week, markets should trade in this range. The strategy would be to look at intraday trades as they would provide trading opportunities and avoid any trading exposure when extended wee-end comes up at end of Thursday. 

The week will have fast paced developments as Trump deadline approaches. Things would be interesting with China and Russia watching developments closely.

Trade super cautiously.

The week gone by saw markets gain as geo-political tensions eased into the weekend. Would this continue as we enter into the working week, is a million dollar question. Markets in India gained on two of the four trading sessions. BSESENSEX gained 943.29 points or 1.22% while NIFTY gained 302.95 points or 1.26% to close at 24,353.55 points. BANKNIFTY gained 652.95 points or 1.17% to close at 56,565.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.71%, 1.97% and 2.33% respectively. BSEMIDCAP gained 2.23% while BSESMALLCAP gained 3.41%. After a long time one saw no ‘Friday effect’ on markets where we typically see selling in the second half of Friday’s trade with positions being unwound. This time around, one saw markets rising and shorts being covered as geo-political news indicated that second round of talks would likely happen when trading for the coming week begins. Unfortunately, events during the weekend have been different and a great feeling has left people more confused than ever before.

The Indian Rupee lost 19 paisa or 0.21% to close at Rs 92.67 to the US Dollar. Dow Jones gained on four of the five trading sessions. It was up 1,530.86 points or 3.19% to close at 49,447.43 points. 

There was one mainboard IPO which listed on Friday the 18th of April. Shares of Om Power Transmission Limited which had issued shares at Rs 175 saw shares gain and close at Rs 190.15 on BSE. Shares were up Rs 15.15 or 8.66%. 

The Invit from Citius Transnet Investment Trust Limited has opened for subscription on Friday the 17th of April and would close on 21st of April. The price band is Rs 99-100. The issue is for 11.05 crore shares and the issue size is Rs 1,105 crores. The company manages 10 project SPV’s and has 11 projects identified and available under ‘ROFO’ with it. The combined 21 projects which would be a combination of toll and annuity projects would ensure a steady inflow into the company. At the end of the 1st day, the issue is 70% subscribed. The issue is being brought by EAAA as the promoters. 

Coming to the geo-political situation which is fast evolving. The contentious Strait of Hormuz which was opened to all by Iran, has seen a blockade by United States and there is a flip-flop on this causing utter confusion. Qatar an ally of the United States has said that there would be no more attacks on Iran from their soil. The European Union is debating whether they should depend on USA as an ally in NATO. For all practical purposes one should assume that USA is out of NATO. 

One last critical point which is going to lead the next round of contention in Iran-USA war is the handover of enriched uranium. USA is insisting that Iran hand it over to them. The quantity includes 441 kg of enriched uranium which is close to 90%, suitable for weapon grade and 5% enriched 9,000 kg. Against this handover, USA may consider releasing 20 Billion of Iran’s payments frozen in various accounts globally. 

Coming to what would happen next week, the next round of war is likely to happen as it is becoming increasingly apparent that USA doesn’t want peace. This would lead to oil spiking, global markets crashing and further uncertainty. Already impact of war has affected economic activity across the world with slowdown, increased and high inflation setting in and causing widespread disruption. An interesting observation is that there are protests in Israel and USA, but none in Iran. Wonder who speaks the truth. 

Our markets would be under pressure next week. The rally makes immediate resistance at 24,600-24,700 points on NIFTY. Only if this is taken out and sustained should we think of going long or we could get rapped hard on the knuckles. On the downside strong support exists at 23,800-23,900 points. If this were to break, support exists lower down at 23,400-23,450 points. 

Tough week ahead and one will have to get used to digital media and learn to follow and interpret tweets and social media. 

Trade cautiously.