The week gone by had plenty of action and it was from the battleground of Ukraine and the election results of five states in India. As expected, markets tend to react to each of such news in the manner, they feel apt. Markets fell sharply on Monday losing 1,500 points on BSESENSEX and almost 385 on NIFTY. They recovered more than their losses on Tuesday and Wednesday and gained 1,800 points and 480 points respectively. Thursday saw markets open at the high of the day and then lose between 35-40% of the gains still closing with handsome gains for the day. Friday was a day for resting and recuperation with markets gaining 0.2% for the day. With gains on four of the five trading sessions, BSESENSEX gained 1,216.52 points or 2.24% to close at 55,550.33 points while NIFTY gained 385.10 points or 2.37% to close at 16,630.45 points. The broader market saw BSE100, BSE200 and BSE500 gain 2.29%, 2.39% and 2.43% respectively. BSEMIDCAP was up 3.06% while BSESMALLCAP gained 3.25%. The top sectoral gainer was Healthcare with Cipla gaining 12.02% while Banking sector though closed with minor gainers was under pressure.

The Indian Rupee was under pressure and lost 43 paisa or 0.56% to close at Rs 76.59 to the US Dollar. Dow Jones lost 670.61 points or 1.99% to close at 32,944.19 points. Dow Jones lost on four of the five trading days. The US Fed is meeting on the 15th and 16th of March and is expected to increase interest rates. Inflation in the US has touched a 40plus year high and has become a major cause of concern. How much is the rate hike and the stance on announcing the same would be a key for markets not only in the US but globally.

Election results to the five states saw the ruling party BJP win in four states of UP, Uttarakhand, Goa and Manipur. The fifth state of Punjab, saw Congress the ruling party being badly beaten by AAP who won a 3/4th majority. The gains on account of the election results were distributed on Tuesday and Thursday as first exit poll and then results flowed.

On the Ukraine front, war has now entered the 18th day and it is unlikely to end in a jiffy with Russia having begun the attack and encirclement of the capital, Kyiv. While we also hear that Ukraine President Zelensky is likely to have conversation and negotiation with Russian President Putin, one can never be sure of such meetings or the outcome. To add to the current mess there is confusion on the biological labs supposed to be present in Ukraine. Very clearly, the Ukraine issue seems to have stretched beyond expected timelines and settlement may also take that much longer.

The IPO or primary market front seems to be getting hotter with just a fortnight left for the financial year 2021-22 to end. Ruchi Soya, has informed the exchanges that they have filed their RHP with ROC and that the FPO for Rs 4,300 crs would open on Thursday the 24th of March and close on Monday the 28th of March. The closing price of Ruchi Soya was Rs 803.70 on BSE on Friday, 11th March. As this is an FPO of a fairly large size, one may expect the price band to be closer to a discount of about 10% to the current close. One must also keep in mind that the current price band has to have a difference of 5% between the higher and lower price which is about Rs 35-40 in this case.

Besides the above issue, one is hearing some other names of issues which may hit the market as well but they are more of a speculative nature and none have made such final announcements as yet.

LIC is yet to take a call on its IPO timing. It however has announced results for the quarter, October to December21, which saw its net profit rise very sharply from Rs 90 lacs to Rs 234.90 crs.

Coming to the markets in the week ahead which has a holiday on Friday the 18th of March for Holi, would see markets continuing to remain choppy and volatile. During the course of trading last week, markets have made lower bottoms and that makes the upside limited while keeping the possibility of falling further open. With global cues from the Ukraine front and market news from US, quite volatile, its not the best time to be in the markets currently. It may also be borne in mind that with just a fortnight to go for the year to end, markets during the year have retained gains of just about half of what they had gained at their peak. The high point was about 26% on the benchmark indices which is down to about 12% currently. It is interesting to note that of this 12% annual gains, almost half have come in the last four days of the previous week. The idea is to show where markets are currently and in the next two weeks, global uncertainty may cause markets to swing wildly.

The strategy for the coming four days should be to sell on any rallies that happen and wait for clarity from the US Fed on their meeting slated for Tuesday-Wednesday. This outcome would give us one day to respond, as Friday is a holiday in our markets. In any case, even traders should restrict themselves to large cap stocks as safety lies in them only. The healthcare sector looks a better one as it has been under pressure and in current times may outperform with NAV of mutual funds coming up in about 10 days from now. Trade cautiously.

Markets were nervous and highly volatile on the back of global tensions between Ukraine and Russia. There has been an unprecedented rise in prices of crude and gas prices and many other commodities. Some of the Middle East countries are worried about food supplies as they import wheat from these two countries. They fear that they would run out of stock in the next two months if nothing is done.

BSESENSEX lost 1,524.71 points or 2.73% to close at 54,333.81 points. NIFTY lost 413.05 points or 2.48% to close at 16,245.35 points. In the process both benchmark indices made new lows, breaking those made on the previous Thursday (24th February) when hostilities broke out. The new lows were 53,887.72 points on BSESENSEX and 16,133.80 points on NIFTY. The broader markets saw BSE100, BSE200 and BSE500 lose 2.27%, 2.22% and 2.06% respectively. BSEMIDCAP lost 2.35% while BSESMALLCAP lost 0.62%.

The Indian Rupee was volatile and under pressure and lost 87 paisa or 1.16% to close at Rs 76.16 to the US Dollar. Dow Jones ended the week with losses of 443.95 points or 1.30% to close at 33,614.80 points.

Markets have seen many of the leading stocks register 52-week lows in last weeks trading. The top losers in the week were stocks from the auto sector with Maruti losing Rs 1,111 or 13.30% to close at Rs 7,244. On the gaining side were the metal sector and the metal stocks whether they were from steel or others. Many of the PSU stocks also gained as it is expected that they would declare hefty dividends in the remaining period of the financial year and help some of the deficit to be covered from the delayed sale of LIC stake.

The DIPAM secretary had highlighted that the stake sale of 5% could get delayed as global conditions are not the best. Its not just a delay of a few weeks as the DRHP would have to be updated as the same is currently reflecting numbers for the half year ended September 2021. One should expect the company to come with numbers for the period ended December 2021 so that they get a couple of months to bring the issue. This should probably also include a new valuation report of the ‘embedded value’ as on 31st December 2021.

While this should give IPO bound companies and waiting on the side-lines to tap the markets some relief, the fall in markets has hit their valuations equally badly as well. Further new rules on IPO subscription would kick in from 1st April which would make IPO’s a little more difficult to subscribe in the HNI segment. The new rules would ensure that for the first fortnight of April, everybody would wait for the first brave heart who taps the market under the new rules.

The conflict between Ukraine and Russia has entered the 11th day and one is not sure how long it would continue. Assuming that things quieten down on this front hopefully in the next couple of days, are we to assume that global markets would be on the rampage? Knee jerk reaction maybe, beyond that not sure. The US is seeing new jobs being created and the number of people getting employed is rising rapidly. This is also fuelling inflation quite rapidly and one is not sure what kind of interest hike the FED would do later this month. As far as inflation is concerned its not just a matter with US but global. The war is not helping matters either and the rise in global fuel prices whether it be crude or natural gas is another cause of concern.

The resolution of matters post Ukraine and Russia settling down will be a tricky affair and need a lot of diplomacy and time to resolve. Further, FII’s continue to remain sellers and have been selling aggressively even on days when the markets make new lows. While domestic institutions have been aggressive buyers and seem to be matching to some extent the selling of FII’s, one wonders why? When one knows the intent of the seller, allow him to sell and when it appears that he is more or less done, start buying. I am not a fund manager but trying to give my two bits. Some data point, FII’s sold on a net basis Rs 45,720 crs in the month of February while DIIs bought Rs 42,084 crs. In the current month, FII’s sold Rs 18,614 crs while DIIs bought Rs 12,599 crs. Allow them to sell for a couple of days or maybe a week without matching their sales, and probably they will have completed their sale or get tired selling at such low levels.

Besides the global tension we have national news where elections to the five states will have exit polls being announced on Monday evening. Results will begin from Thursday the 10th March morning onwards. If the results favour the ruling government of the day, there would be some movement in the benchmark indices on the positive side. This event could provide some relief to our markets from global cues.

Coming to what should an investor do in the markets currently. We are overshadowed by global cues and they do not seem to be disappearing in a hurry. While there will be volatile moves based on the events of the day, markets have their hands full with concerns on a variety of fronts. In such a scenario it is best to remain largely on the side lines. Safety would remain by trading only in the large cap stocks where the volatility is less and the comfort much higher. While FII’s have been selling and on their selling a particular stock, prices do fall, there is a tendency for the stock to move up once the selling subsides. In other words, buy large cap stocks on large dips and continue to sell on rallies. The financial year ending in just about three weeks away and towards the year-end, expect domestic funds to indulge in NAV propping. In short, trade light and more importantly trade cautiously.