It was an eventful week and yet another example where it is not advisable to carry forward positions on a weekend. USA attacked Iran on Saturday led by precision attacks by Israel which killed the Iran Supreme leader, Ayatollah Ali Khamenei. With the man who was defiant, out of the way it would be fair to assume that the US-Iran war will not be a long one but would fizzle out faster than it began. Of course there would be knee jerk reactions and we are seeing them with Iran attacks on neighboring countries in the Middle East, but they are nothing more than bravado. Expect this to die a natural death. 

Coming to the markets, we had a bad Friday and markets fell sharply, so much so that a flattish or sideways week became a bad week. BSESENSEX lost 1,527.52 points or 1.84% to close at 81,287.19 points while NIFTY lost 392.60 points or 1.54% to close at 25,178.65 points. BANKNIFTY lost 643.00 points or 1.05% to close at 60,529 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.29%, 1.04% and 0.96% respectively. BSEMIDCAP was down 0.52% while BSESMALLCAP lost 1.11%. It is important to note that BSESENSEX lost 961 points while NIFTY lost 318 points on Friday. BSESENSEX gained on two of the five trading sessions while NIFTY gained on three of the five trading sessions. 

The Indian Rupee lost 5 paisa or 0.05% to close at Rs 91.05 to the US Dollar. Dow Jones lost 648.05 points or 1.31% to close at 48,977.92 points. Dow gained on three of the five trading sessions and lost on one.

February futures expiry ended on a positive series gain for the bulls but not before a scare on expiry day where there was a sell off. The series gained 249 .25 points or 0.99% to end the series at 25,424.65 points. 

In primary markets we had one listing on Friday when shares of Gaudium IVF and Women Health Limited listed. Shares which were issued at Rs 79 debuted at Rs 83 and after hitting a high of Rs 87.15, fell to close at Rs 80.48, a gain of Rs 1.48 or 1.87%. There are some issues which would get listed in the coming week as well as some which would be opening for subscription. The stance mentioned last week where it makes sense to look at IPOs on listing only and not subscribe, continues. 

Coming to FPIs current mood in the markets, it appeared that they were slowly turning buyers and stopping their aggressive selling. All was going well until Friday when suddenly they sold big. As much as Rs 7,500 crores was sold in a single day. For the month they were net sellers of Rs 11,000 crores which means prior to Friday they were sellers of a mere Rs 3,500 crores. DIIs were net buyers of Rs 17,300 crores for the month. 

The week ahead has a trading holiday on Tuesday the 3rd of March on account of ‘Holi’. Any midweek holiday upsets market momentum. This should be kept in mind in the coming week. 

Coming to the week ahead, expect markets to remain choppy and volatile. While the US-Iran conflict will die a natural death with Ayatollah dead, expect some knee jerk reaction. On the negative side we have broken 25,300 and closed at 25,178 points. This opens the possibility of markets going down all the way to 24,700 points where solid support exists. On the positive side, there is resistance at 25,700 points and higher up at 26,000 points. Any fresh up move past these levels need really big news which seems unlikely at this time. 

Readers would recall that I had highlighted that with Trump losing through the Supreme Court on tariffs, he would use diversionary tactics and he did exactly that. The unfortunate part is that his ally Israel, knocked out the Ayatollah in the very first attack. This will embolden Trump even further and he may try it some other place. God help us. 

The strategy for the week would be to look for weakness to initiate longs and use sharp rallies to sell into. While markets would be volatile on a daily basis they must not do much on a weekly basis. 

Trade cautiously and avoid weekend positions.

STOP PRESS

Since writing this article which was yesterday morning, the situation has changed dramatically. It has changed from an attack to oust Iran head to much more. Iran has attacked 27 military bases of the US in the Middle East while Israel has targeted Hezbollah in a big way with Lebanon under attack. Oil movement would become difficult as Iran has closed the Hormuz strait for ships, effectively cutting off movement of crude. This will force crude oil prices upwards in the coming days. India has 74 days of crude oil currently as part of its strategic reserves. 

Expect markets to react sharply as this is likely to become another longer than expected war and it will bring a number of countries in the Middle East under its fold. Air traffic has come to disarray and flights have been cancelled, diverted and put on hold across countries and airlines. The strategy would be to stay away from any bottom fishing as the next target of support would be only around 24,300 points, a good 850 points on the NIFTY. 

BRACE FOR TROUBLE, TURBULENCE AND TOUGH TIMES.

It was a topsy-turvy week with extreme volatility. Last week instead of Friday jitters we had Thursday jitters and the reason for the same was Iran-US tensions. For next week we have one more cause for volatility with the US Supreme Court striking down the global tariffs increased and levied by Trump as being beyond his authority and stated that Trump exceeded his authority. However, Trump being Trump and refusing to let go and remain on Page three and Page one of every newspaper globally and also television channels, introduced a 10% tariff on all countries with whom US has struck a trade deal. This was on Friday after the Supreme Court order. The same has already been amended in less than 24 hours to become 15%. One thing is for sure, he wants to be the Numero Uno person and in the thick of things every time whether rightly or wrongly. 

BSESENSEX gained on three of the five sessions and lost on two sessions. It was up 188.01 points or 0.23% to close at 82,814.71 points while NIFTY gained 100.15 points or 0.39% to close at 25,571.25 points. BANKNIFTY gained 985.35 points or 1.64% to close at 61,172.00 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.36%, 0.44% and 0.39% respectively. BSEMIDCAP lost 1.32% while BSESMALLCAP was down 2.03%. Very clearly markets were choppy. On the one hand banking stocks kept the markets going while AI saw to it that IT was down in the dumps. 

The Indian Rupee was under pressure and lost 36 paisa or 0.40% to close at Rs 91.00 to the US Dollar. Dow Jones gained on three of the four trading sessions and lost on one. It gained 125.04 points or 0.25% to close at 49,625.97 points. 

There were two main board listings on Monday last week. Both of them closed in the negative on opening day and at the end of the week as well. The first was AI Company, Fractal Analytics Limited which had issued shares at Rs 900 per share. On day one it closed at Rs 847.40, a loss of Rs 52.60. By weekend, it gained marginally and narrowed the loss to close at Rs 858.95, a loss of Rs 41.05 or 4.56%. 

The second company to list was Aye Finance Limited which had issued shares at Rs 129. The share closed a tad lower on listing day at Rs 128.90 and the loss increased at weekend to Rs 125.50. The weekly loss was Rs 3.50 or 2.71%. 

There are four main board issues in the week ahead. These include Gaudium IVF and Women Health Limited, Shree Ram Twistex Limited, Clean Max Enviro Energy Solutions Limited and PNGS Reva Diamond Jewellery Limited. None of them are a clear outstanding listing gain candidate which can be recommended as a blind buy. With so much of volatility and Donald Trump creating trading opportunities every single day, it makes better sense to look at secondary markets rather than primary markets. Further there is a six day window between the issue opening and listing which could create a whale of difference in market sentiment.

The week ahead has February futures expiring on Tuesday the 24th of February. Current series is up 395.85 points or 1.57% at 25,571.25 points. The February series had begun at 25,175.00 points. With just two days to go, the bulls have a clear advantage and should take the series. 

Markets are unable to cross levels of 26,300 points on NIFTY and that has clearly become a stumbling block. On support side we seem to be bouncing off levels at 25,300 points. The trading zone is even narrower at 25,500 and 26,000 points. These become the outlier points and for any meaningful movement these levels have to be breached decisively. Will it happen, is a million dollar question. However, Trump will certainly know as he is the only person who is currently aware of his next move. The setback on tariff front on account of the Supreme Court judgment could force him to use diversionary tactics by actually doing something on the Iran front which is currently highly inflammable situation. God forbid, if something were to happen, the repercussions would be beyond prediction and guessing. 

The current market situation is so fluid that if you were to dip your hands into a swimming pool to feel the temperature before diving in and then went up to dive, the temperature could have changed to very hot or very cold. What you need to do, is feel the water and then just jump in. Don’t attempt to dive. In short quick entry and exit. Take quick trading calls and avoid any weekend positions as a Friday overnight position into Monday morning could be a major disaster. 

Tricky situation in markets currently but fortune favors the brave. Trade with stop losses and as per your risk appetite. Volatility is in favor of the risk taker.

Trade cautiously.