The week gone by began trading on a very strong note and markets were up for the first two days, followed by profit taking and August futures expiry over the next two. Friday was another classic day and followed the previous Friday’s pattern. Markets opened strong, turned negative and then had a very strong rally to close positive for the day. BSESENSEX ended the week with gains of 631.63 points or 1.72% to close at 37,332.79 points. NIFTY gained 193.90 points or 1.79% to close at 11,023.25 points. The broader indices saw BSE100, BSE200 and BSE500 gain 2.06%, 2.11% and 2.16% respectively. BSEMIDCAP was up 2.01% while BSESMALLCAP gained 2.16%.
It would be interesting to note that the low made on Friday was 36,829.81 points on BSESENSEX and 10,874.80 points on NIFTY. These lows were higher than the close made on Friday the 23rd of August. Also, the rally from intraday low on Friday to close on Friday was over 500 points on the BSESENSEX and almost 150 points on NIFTY. Significantly, markets were marginally positive on a weekly basis at the low of Friday and then rallied on announcement of the press conference by the FM in the evening. This was similar to the previous Friday as well.
Nifty futures for August expired on a negative note and were down 303.85 points or 2.70% to close at 10,948.30 points. Dow Jones had a volatile week and gained 687.92 points or 2.68% to close at 26,316.82 points. Trump tweets about China trade war continued to keep the US markets on its toes. The Indian Rupee gained 26 paisa or 0.36% to close at Rs 71.40 to the US Dollar.
Friday evening saw the FM announcing steps about the PSU banking space. Ten banks would be merged into 4 entities. These would be Oriental Bank and United Bank merging into Punjab National Bank, Syndicate Bank merging into Canara Bank, Andhra Bank and Corporation Bank merging into Union Bank of India and Allahabad Bank merging into Indian Bank. With the earlier merger of Dena Bank and Vijaya Bank into Bank of Baroda has already fructified, the number of PSU banks with this round would shrink by six. The FM also announced that an approximate amount of Rs 55,250 crs would be infused into the PSU banks in the current year.
C G Power board sacked its Chairman, Gautam Thapar in lieu of recent developments of wrong doing in the company. A day later the CFO of the company was terminated on grave nature of the misconduct and breach of trust and having knowingly undertaken actions which were detrimental to the interests of the company and its stakeholders. Company after company in the Gautam Thapar group is either being sold or is sinking and it appears, he has no interest in the legacy built by his forefathers.
Earlier during the week, the government announced several measures which would help in reviving manufacturing and economic activity in the country by revising FDI rules. The government allowed 100% FDI in single brand retail, coal mining, contract manufacturing and digital media.
GDP for the quarter April to June 2019 was at 5%, its slowest level of growth since 2013. There is concern and hence the measures being taken to revive demand and kickstart growth.
The FM has made two sets of announcements on consecutive Fridays and has helped in keeping the markets positive. Will the third announcement expected about the realty sector in the coming week be again on a Friday and have a similar impact?
The week ahead has a trading holiday on Monday on account of Ganesh Chaturthi, the day Lord Ganesh idols are brought home. Markets would be choppy and take cues from the global markets where there seems to be no concrete resolution happening anytime soon on the trade wars. India will also look at the auto numbers which are certainly not going to be encouraging. Further the measures on the real estate sector would be certainly very keenly watched.
Play the market as it unfolds in the four-day week ahead. Announcements from the FM would be very keenly watched and tracked. While markets would be choppy, carrying short positions forward may be a dangerous thing, as there is every possibility that FPI’s may revert to their buying ways in the immediate near future.
