The Diwali mood continued post ‘Muhurat’ trading which happened on Sunday 27th October and markets went from strength to strength. They gained on all four trading days and BSESENSEX hit a new lifetime high as well. BSESENSEX gained 1,106.97 points or 2.83% to close at 40,165.03 points. NIFTY gained 306.70 points or 2.65%. The broader indices saw BSE100, BSE200 and BSE500 gain 2.84%, 2.88% and 2.96% respectively. BSEMIDCAP gained 3.83% while BSESMALLCAP gained 3.40%.
BSESENSEX lifetime high was made on 4th June 2019 at 40,312.07 points. This was crossed on Thursday the 31st of October when the BSESENSEX touched 40,392.22 points. NIFTY lifetime high was made on 3rd June 2019 at a value of 12,103.05 points. It is yet to cross the lifetime high. Historically it has been seen that the SENSEX and NIFTY make new landmarks within a couple of days of each other and worst about five trading days apart. The closing value of NIFTY on Friday at 11,890.60 points, indicates that NIFTY needs to gain 213 points to make a new high. This translates into another 550-600 points on BSESENSEX. This is just to give an indication that we should in all probability see the BSESENSEX touch or almost touch 41,000 in the week ahead if NIFTY has to make a new high. Quarter.
Markets discount the future and it is widely believed that the current slowdown in the economy on various fronts has probably bottom out and the worst is over. The turnaround would be visible in the January-March 2020. It is this period that the markets are looking forward to and the buoyancy in the marketplace.
Results for the quarter July to September 2019 continue to show some green shoots and there is reason to be cheerful. Tata Motors and SBI were two large companies which enthused the markets post their results. Shares of Tata Motors rose Rs 47.95 or 37.77% to close at Rs 174.90 while SBI shares rose Rs 31.90 or 11.33% to close at Rs 313.50. The better performance by larger companies would bring confidence back to the markets.
October futures expired on a positive note gaining 306.25 points or 2.65% to expire at 11,877.45 points. An interesting feature on expiry day was the huge activity one saw in options of Yes Bank in the last couple of hours. The stock price was Rs 56-57 and Rs 60 strike, call was trading at Rs 0.10-0.25. The stock price started moving and touched a high of over Rs 78 before closing at Rs 70.40 resulting in windfall gains for people who bought the call. What was even more interesting was the fact that you saw sellers of call running around to square of the same as in the money calls have to be squared off or would result in compulsory physical settlement which nether buyers or sellers wanted.
US Fed has cut interest rates by 25 basis points and the interest rate band is now 1.50%-1.75%. Dow Jones gained 389.30 points or 1.44% to close at 27,347.36 points. The Indian Rupee gained 7 paisa or 0.10% to close at Rs 70.81 to the US Dollar.
The week ahead should trade with a positive bias and if history has to complete its expected objective of NIFTY making a new high. Considering the fact that FPI’s have also turned bullish in October after being net sellers for about five months, expect markets to see bouts of correction but remain positive. The mood on the street has also changed and all of these factors would ensure a positive performance for markets in the week ahead. Post a new life time high there could always be profit booking but that would only be profit taking and not the end of the up move. Use corrections to add to positions and with market breadth improving look to add stocks from the midcap and Smallcap space with proper fundamentals as they are the ones which would give sharp returns.
