Markets last week seemed to just melt and gave way. They lost on four of the five trading sessions and managed to gain on one. While it may not sound nice, Friday the 13th, spooked markets once again. The loss on Friday was 1,470 points on BSESENSEX and 488 points on NIFTY. The weekly losses were even higher with BSESENSEX losing 4,354.98 points or 5.52% to close at 74,563.92 points while NIFTY lost 1,299.35 points or 5.31% to close at 23,151.10 points. BANKNIFTY lost 4,025.40 points or 6.97% to close at 53,757.85 points. The broader indices saw BSE100, BSE200 and BSE500 lose 5.21%, 5.06% and 4.87% respectively. BSEMIDCAP lost 4.48% while BSESMALLCAP lost 3.66%. While IT stocks took a breather this time around, the top loser was BSEAUTO which was down 9.95%. 

The Indian Rupee weakened and lost 78 paisa or 0.85% to close at Rs 92.58 to the US Dollar. Dow Jones lost on four of the five trading sessions and gained on one. It was down 943.08 points or 1.99% to close at 46,558.47 points. 

The primary markets saw one listing during the week. Shares of Sedemac Mechatronics Limited which were issued at Rs 1,352 listed on Wednesday the 11th of March. They debuted at Rs 1,510 and closed at Rs 1,432.10, a gain of Rs 80.10 for the day. At the end of the week, the share price gained marginally to close at Rs 1,462.80, a gain of Rs 130.80 or 8.20%. 

There are two issues currently open but they are struggling. The first is from Innovision Limited. The issue was open from 10th of March to 12th of March. On not receiving adequate response, the issue was extended to now close on 17th of March. The issue continues to struggle.

The second was from Rajputana Stainless Limited and was open from 9th of March to 11th of March. The issue was struggling but managed to get subscribed. SEBI has come down hard on the company for two violations. Firstly, there anchor allocation was wrong as there was only one anchor against the mandatory minimum two required. Hence that has been cancelled. This involves 8,19,720 shares which would be added back to the subscription size. Secondly, they have solicited subscription for which they now have to give a withdrawal option for three days until Monday the 16th of March. There has been withdrawal of 2.22 lac shares so far and this has brought the subscription to below the minimum required. What would happen will be known only on close of the issue on Monday. Very clearly bad signs for the markets and worsens the poor sentiment prevailing in the market place. 

The INVIT from NHAI, Raajmarg Infra Investment Trust Limited received excellent response and was well subscribed. The issue was oversubscribed 12.65 times. 

The Israel-US war against Iran has entered the third week and seems there is no resolution so far. While Iran has offered to talk, US is not ready as they believe that Iran is already ‘CRIPPLED’. A new statement has come from Trump which says that countries moving oil from the Strait of Hormuz should send there own ships to protect the crude. Iran on the other hand is willing to allow movement of crude if payment of same is made in Yuan. Reminds one of how the USA and the US Dollar came on the global front in 1974 with Saudi oil pricing in USD. Tough times ahead and the whole world will pay for what Trump is doing. 

Coming to markets, key support levels have been broken mercilessly and we are looking at tough times ahead. New support levels exist at 23,000 and further down around 22,800 points. On the resistance side we have levels of 23,800 and higher up at 24,300-24,500 points. In the current scenario selling at these levels may not be a good strategy. Similarly buying is also fraught with high degree of risk. The fact that FPIs have already sold over Rs 50,000 crores of shares in the current month, makes market liquidity that much more worrisome. The best strategy would be to lie low till the end of the month by which time there would be clarity on a number of issues. 

Trade cautiously.

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.