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.

Geo-politics alone seem to be the driving force behind markets. Israel and the USA took the world to war which no one except they wanted, and now after five weeks, USA has called a fragile truce for negotiations. After 21 hours of negotiations, talks have been called off without any agreement. We should brace for many such rounds before anything definitive does come out. The only good part was that as a result of the cease-fire we had the best week in the markets in over five years. 

BSESENSEX rose on four of the five trading sessions and lost on one. It gained a massive 4,230.70 points or 5.77% to close at 77,550.25 points while NIFTY gained 1,337.50 points or 5.89% to close at 24,050.60 points. BANKNIFTY gained 4364 points or 8.47% to close at 55,912.75 points. The broader markets saw BSE100, BSE200 and BSE500 gain 6.19%, 6.51% and 6.59% respectively. BSEMIDCAP gained 7.64% while BSESMALLCAP gained 7.45%. 

The Indian Rupee gained Rs 2.16 or 2.28% to close at Rs 92.57 to the US Dollar. Dow Jones gained 1,411.90 points or 3.04% to close at 47,916.57 points. Dow gained on three of the five trading sessions and lost on two. 

A strange phenomenon has happened in the markets during March and April. In the week of 9th March-13th March, we had the worst week in Indian markets over six years. We lost 4,354.98 points on BSESENSEX and 1,299.35 points on NIFTY. Three weeks later, in the week of 6th April to 10th April, we had the best week in over five years. BSESENSEX gained 4,230 points while NIFTY gained 1,337 points. Almost similar in points comparison. Such volatility clearly shows how volatile markets have become. They need a faint hope to go up and one piece of bad news to come crashing down. It also reflects market uncertainty and hopes and expectations of a settlement. Well 21 hours of discussion have yielded nothing as finality and we would have to wait for a new date. 

In primary market news we had one small IPO from Om Power Transmission Limited which has opened on 9th of April. The issue would close on Monday the 13th of April. The price band of the issue is Rs 166-175 and the total issue size is Rs 150.06 crores. At the end of two days, the issue is subscribed 0.71 times. 

The week ahead has a holiday on Tuesday the 14th of April. This will make markets volatile and nervous in the second half of the day and would see people reducing positions to carry forward. The peace talks being a non-starter would add to the pressure as markets had risen very sharply into the days leading to the peace talks. 

Levels of 24,400-24,500 would act as resistance on any upside that markets may attempt to make. If for any reason they are successful in breaking these levels, the next stop would be around 24,800 points. On the downside we have support at 23,500-23,600 points and lower down at levels of 23,000-23,100 points. The strategy for the week would be to keep low overnight positions as the current war like situation is far from over. The rally witnessed was led by short covering and expectations that things would get resolved. Nothing of that has happened as yet. Before the next round of hype on resolution, we will have to correct, re-price uncertainty, before yet another rally happens on expectation. 

Tough, turbulent times ahead.