It was a four day week but it was volatile as usual. Markets gained on two of the four sessions and lost on two. At the end of it all, we remained as unclear about the trend as we were before the week started. BSESENSEX gained 249.29 points or 0.33% to close at 76,913.50 points while NIFTY gained 99.60 points or 0.42% to close at 23,997.55 points. BANKNIFTY lost 1,226.40 points or 2.19% to close at 54,863.35 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.36%, 0.29% and 0.48% respectively. BSEMIDCAP gained 0.39% while BSESMALLCAP gained 2.03%. The sharp rally in Small cap stocks in particular over the last 3-5 weeks is a cause for concern as fundamentals are not in sync. One finds that the stock moves up on very high volumes over a few days and then volumes just dry up and slowly the share then begins to fall. A typical ‘pump and dump’ operation. Investors need to be vary of such stock movement and not get carried away. 

The Indian Rupee has been under pressure with rising crude oil prices and also relentless FPI selling. The Indian Rupee lost 67 paisa or 0.71% to close at Rs 94.92 to the US Dollar. Dow Jones gained 268.56 points or 0.55% to close at 49,499.27 points. Dow gained on one of the five trading sessions and lost on four. 

Election results will have begun by the time you read this article. Of the five states which went to polls namely Tamil Nadu, Puducherry, Assam, Keralam and West Bengal, If exit polls are to be believed, while Assam and Puducherry will see the ruling parties win comfortably, the other three are in a neck-to-neck contest and there could be upheavals as well. Less than a couple of hours before clarity emerges as counting would have begun by the time you read through this article. 

On the primary market front, we have one IPO from Onemi Technology Solutions Limited which has opened on Thursday the 30th April and would close on Tuesday the 5th of May. The price band is Rs 162-171. The issue consists of a fresh issue of Rs 850 crores and an offer for sale of Rs 76 crores. The company is an NBFC and is better known as ‘KISSHT’ or instalment. The PE of the issue is an attractive 4.90-5.17 times its earnings per share of Rs 12.79 for the year ended March 25. The book value or NAV is at Rs 231.84. Based on fundamentals, this share offers an upside for medium term investors. At the end of day one, the issue was subscribed 0.25 times. 

The second issue is from Bagmane Prime Office which is a REIT offering. The size of the issue is Rs 3,405 crores which includes a fresh issue of Rs 2,390 crores and an offer for sale of 1,015 crores. The price band is Rs 95-100. The issue would open on Tuesday the 5th of May and close on Thursday the 7th of May. Between 2/3rd and 3/4th of the income distribution of the REIT would be by way of dividend which would be tax-free in the hands of the recipient as the company is in the old tax dispensation. This would increase the yield from the 6.15% payout that the trust talks about. This is meant for investors looking for long term fixed income and steady appreciation. 

Coming to the war front, sixty day period is over and the present administration says that the rule does not apply to them as there is a ceasefire on. A close ally of the USA, UAE has left OPEC and would start producing more oil and selling in the open market. This will help the country as tourism which was their main stay has come to a grinding halt. This will allow them to make a killing and help restore their economic revival. USA is rejecting every offer proposed by Iran and the message is that they will continue with the blockade and not negotiate. This stage will lead to a blow-off at some point of time and serious repercussions for all, particularly for oil which is already boiling. China and Russia on the sidelines are also itching to get into the fray.

April futures expired on Tuesday the 28th of April at 23,995.70 points. The series gained a credible 1,176.10 points or 5.15%. Considering the volatility it was a decent gain.

Coming to our markets, the level of 24,300 points and thereabouts is acting as a strong resistance. While the high during the week was at 24,334 points which was higher than the 24,310 points in the previous week and lower than the 24,515 points, there is strong resistance at around 24,300 points and further on around 24,600 points. On the support side we have strong support at 23,800 points and thereabout. Lower down, support exists around 23,300-23,400 points. Expect volatility to continue with swings. Election results on Monday could add to the volatility. Any fresh long positions should only be initiated if 24,500-600 is breached and sustained.

The strategy would be to refrain from large overnight positions as oil around $115-120 and Rupee around Rs 95, don’t augur well for the economy. While GST collections in April at 2.43 lac crores were higher by 8.7%, they were helped by a robust growth in imports of 26% at Rs 57,580 crores. This may not happen next month. Building a portfolio in a small way and adding to the scrips in quantity as time passes could be a good way of going ahead. 

Trade cautiously.

Markets continued their volatile way and after almost two months of war between USA and Israel against Iran, we have no clarity what will happen. The second meeting scheduled for the weekend turned out to be a disaster on expected lines as Iran had made it clear that they would not discuss with the US face to face. Iran met Pakistan, put forward their views and moved on to meet Oman and then Russia. In this war, USA has ensured that Iran has realized that they have not one but two strangleholds and bargaining tools. The first is enriched uranium and the second which is even bigger, Strait of Hormuz. Someone who has been brutally attacked with missiles, bombs and blown to smithereens as claimed by USA, has every right to fight and believe me they have fought and not just given up. 

Now here comes the interesting twist. 1st of May, if the war is not over, President Donald Trump has to go back to the US House to seek permission to continue the war, something which Trump believes and also knows, the house will not allow. Therefore the oil blockade on Iran and its ships not only in the Hormuz strait but now extending all over is his last ditch effort. Trump believes he can cripple Iran virtually permanently if they run out of storage space for crude oil and are forced to start shuttering down their oil wells. Will this happen? Time will tell. The coming five days will be very crucial and one will hear the media being used to spread all sorts of propaganda. Markets will be super volatile for sure and therefore dangerous as well. 

Coming to the markets, we gained on the first two days and then lost on the remaining three. BSESENSEX lost 1,829.33 points or 2.33% to close at 76,664.21 points while NIFTY lost 456.60 points or 1.87% to close at 23,897.95 points. BANKNIFTY lost 475.95 points or 0.84% to close at 56,089.75 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.76%, 1.46% and 1.31% respectively. BSEMIDCAP gained 0.87% while BSESMALLCAP gained 1.14%. The top sectorial loser was BSEIT which was down a massive 9.93%, while the top gained was BSEPOWER which gained 3.69%.

The Indian Rupee lost Rs 1.49 or 1.61% to close at Rs 94.25 to the US Dollar. The Dow lost on three of the five trading sessions, was flat on one day and gained on one. It was down 216.72 points or 0.44% to close at 49,230.71 points.  

The highs of the week were at 79,367.08 points on BSESENSEX and at 24,601.70 points while the lows were at 76,403.87 points on BSESENSEX and at 23,813.65 points. Highs were made on Tuesday and lows made on Friday. It is significant that though the crucial resistance level mentioned was touched, it actually turned out to be the turning point. This would in the coming week become a stronger resistance on any upside move. 

Results season is on and one is not getting enthused by the same. While they are not disappointing they are a cause of concern because the ongoing quarter is one of struggle, inflationary and one which will be subdued in almost all ways. Simply put Quarter one April-June 26-27 will be a near write off by and large. With an average Q4 and prospective Q1 nothing good, there is nothing to drive the markets. While the government has entirely borne the brunt of higher fuel prices by keeping the same unchanged, one is not sure of how long this war and government doing what they are will last. Supply routes will take a long time to stabilize and one is not sure what state will the Strait of Hormuz be in by the time it’s all over. Everybody has started talking of toll for passing such natural land and sea bodies and this is across the globe. 

There were no primary issues which opened or listed during the last week. There is however good news with a couple of issues likely to have their roadshows in the coming week. Hopefully while the markets may not provide good news, if new issues are attractively priced, they could see good subscription and provide some cheer in bad times. Keep fingers crossed. 

April NIFTY futures expire on Tuesday the 28th of April. The current level of NIFTY at 23,897.95 points is a good 1,078.35 points or 4.73% higher than the series open. With just Monday and Tuesday to go, it’s virtually impossible for the bears to manage to level the series. They may at best, pull something back and reduce the lead that bulls have. The trading week ends one day earlier with Thursday 30th April being the last trading day. May 1st is a holiday and coincides with Trump’s D-Day as well. This would make markets choppy and volatile through all four days. 

Markets will face very strong resistance around the 24,600 points level on NIFTY and would be a turning point on any upward move. On the downside, strong support exists at levels of 23,200-23,300 points. If this were to break we would have support around 23,000 levels, but being a four day week, markets should trade in this range. The strategy would be to look at intraday trades as they would provide trading opportunities and avoid any trading exposure when extended wee-end comes up at end of Thursday. 

The week will have fast paced developments as Trump deadline approaches. Things would be interesting with China and Russia watching developments closely.

Trade super cautiously.