It was a tough and depressing week at the markets. The heat in May, unseasonal rains due to extreme heat, rising tension in the Middle-East, all added to the hot, humid and sweaty conditions that this time of the year one witnesses. President Donald Trump visited China and thought the cowboy that he is, would with a swirl of his hat would capture China. Alas! He was dealing with a super shrewd politician and statesman who cut him to size and sent back with orders for some Boeing aircraft to talk about.

Lets gat back to the markets. BSESENSEX lost 2,090.20 points or 2.70% to close at 75,237.99 points while NIFTY lost 532.66 points or 2.20% to close at 23,643.50 points. The broader indices like BSE100, BSE200 and BSE500 lost 2.51%, 2.55% and 2.63% respectively. BSEMIDCAP was down 3.29% while BSESMALLCAP lost 3.47%. The top sectorial gainer was BSEHEALTHCARE while the top loser was BSEREALTY. Markets lost on three of the five trading sessions and gained on two. The intraweek highs were 76,678 points and 23,997 points, on BSESENSEX and NIFTY, both made on Monday while the lows were at 74,134 points and 23,262 points, made on Wednesday. 

The Indian Rupee lost Rs 1.57 or1.66% to close at Rs 95.87 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. It lost 82.99 points or 0.17% to close at 49,526.17 points. !0 year yield in the US has touched 4.57% signaling inflation and rising expectations on yields. 

There was one listing of office space REIT during the week. Bagmane Prime office Reit listed on Thursday the 14th of May. The company had issued units at Rs 100 and on opening day they closed at Rs 103.66, a gain of Rs 3.66 or 3.66%. They gained on Friday to close at Rs 104.10, a gain of Rs 4.10 or 4.10%. 

There are no IPO’s announced so far for the coming week. 

Russian President Putin is to visit China in the coming days. Following the visit of US President, this appears to be an alliance coming up with China, Russia and Iran to take on USA and Israel. Already China has asked Israel to stop its attacks on Iran or they would take part in the Middle East security. The toughening of stand indicates that this war cannot continue in its present format. Either it would peter out or take on a harder stand with ground war breaking out. If one reads between the lines, Donald Trump on board Air Force One was talking of Cuba. Maybe that would be of more importance to him now that he has seen what China has to say. 

India has increased prices of petrol, diesel and CNG. One should brace for inflation rising in the coming weeks as the chain reaction plays out. While Covid-19 was a black swan event, the Middle East crisis is a manmade disaster and only the almighty nation has to be held responsible. However, unfortunately the consequences would be borne by the entire world. 

Coming to markets in the week ahead, they will continue to be dominated by geo-political tensions. There is a silver lining that FPI’s bought some equity in the previous week. Whether it was a one off event or could be a change in trend, time will tell. Austerity measures being announced in a number of countries is making the local people aware of the current tough conditions prevailing. The support levels in the week ahead would be at 23,200-23,300 levels and we bounced last week from 23,262 points. If were to break and sustain the same we could see levels of around 22,900 points. Resistance is at 22,800-23,000 levels. The high made last week was 23,997 points. Clearly shows that we have a really tough week ahead of us. 

Trade cautiously. 

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.