Markets gained on four of the five trading sessions last week with Wednesday being the sole day of correction. They continued to be volatile and saw benchmark indices making an attempt to make new lifetime highs but failing. BSESENSEX gained 1,293.28 points or 2.20% to close at 60,059.06 points while NIFTY gained 363.15 points or 2.07% to close at 17,895.20 points. The broader indices saw BSE100, BSE200 and BSE500 gain 2.05%, 2.19% and 2.35% respectively. BSEMIDCAP gained 2.43% and BSESMALLCAP performed even better gaining 3.95%.

What is clearly visible is that markets are currently finding support at levels of 58,500 followed by 58,200 and finally at 57,865 on the BSESESENSEX, and there is an area of resistance between 60,000 and 60,450 with the lifetime high being 60,412.32 points. Similarly on NIFTY, the areas of support are at 17,550, 17,330 and finally at 17,250 levels. The area of resistance is around the previous top at 17,950 points. Even last week the market came within a whisker of the lifetime high, hitting an intraday level of 17,941.85 points against the lifetime high of 17,947.65 points. Each time markets approach these zones there is support and a tremendous bounce back. Similarly, after approaching the highs, there are global cues, profit taking and markets fall.

Effectively we gained last week what we lost in the previous week and its just a change of sentiment between the last week and the previous one. To give a better picture, the closing levels for the last four weeks are as follows: – 8th October 60,059, 1st October 58,765, 24th September 60,048, 19th September 59,015 points. Similar levels on NIFTY were 8th October 17,895, 1st October 17,532, 24th September 17,853 and 19th September 17,585 points. This clearly explains that markets are now waiting for a big trigger and would move in either direction, but very swiftly and ferociously. It is for this reason that I write regularly requesting readers to buy into sharp dips and sell on rallies.

The Indian rupee was under pressure and lost 86 paisa or 1.16% to close at Rs 74.98 to the US Dollar. Dow Jones gained 419.79 points or 1.22% to close at 34,746.25 points.

In economic news, RBI at its bi-monthly monetary policy review meeting, held interest rates unchanged for the 8th consecutive period by a unanimous vote. Markets cheered the news and were also enthused with the GDP growth numbers that RBI forecasted.

Details of AIR INDIA divestment were announced and Tatas have won the bid. Its like homecoming after 68 years when in 1953, the then PM Jawahar Lal Nehru had nationalised and paid Rs 2.8 crs for the same. Now in 2021, it’s a full circle and Air India is back in the stable of Tatas. They would have a multiple of airline companies under their fold which would include Air India, Air India Express, Alliance Air coming from the government and their own Vistara and AirAsia. While operational details of how the conglomerate would function are yet to emerge, this would be a great fillip to the customer or passenger as he would have better choices and two dominant airlines going forward.

On the flip side, the dispute between the two founders of Interglobe Aviation Limited, the owners of Indigo Airlines, seem to be never ending. Post the final order from the London Court of International Arbitration which did not issue any orders against the company, it now appears that the dispute has moved to the Delhi High Court. This legal battle could turn murky in little or no time and could change the dynamics of aviation in the country. Watch the aviation sector in the coming quarters and how Air India’s rebirth pans out. From a market perspective, Jet Airways is waiting to take to the skies again and Go Air, rechristened as Go First, is waiting to tap the capital markets.

Result season for the quarter July to September have begun. One of the first key results to hit the market were from TCS which posted stellar results. The company reported revenues of Rs 46,867 crs which were higher by 16.77% compared to the Rs 40,135 crs in the 3-month period ended September 2020. EBITDA margin was at 27.97% against 28.47%. Pat margin was at 20.53% versus 18.40%. The EPS for the quarter was at Rs 26.02 versus 19.93% for the comparable quarter. With Infosys and Wipro slated to declare results on Wednesday 13th of October, this sector is likely to see increased action in the coming week.

Covid-19 seems to be coming under control as far as India is concerned and the expected or possible third wave seems to be a long distance away if at all it does happen. In readers interest, I am discontinuing giving information on the same hereafter, but would post information on a need basis. In terms of vaccinations in India, a total of 95.08 cr people have been vaccinated. Roughly 6.1 cr vaccines were administered during the week.

Coming to the week ahead, markets would have an early weekend with Friday being a holiday for Dussehra. The mood as on the last day of trading was extremely buoyant and markets appear set to make new highs in the coming days or weeks. As mentioned earlier, we also seem to be developing cold feet when we enter the previous lifetime high zones and markets slip. This turmoil is likely to be witnessed next week as well and it would be very difficult to predict when and at what level the new high would be. The strategy would continue to remain one of buying on sharp dips and selling on strong rallies. Keep some cash as buying opportunities always present themselves.

In conclusion, choppy and volatile times ahead with a four-day week. There would be a tendency of market players to lighten their exposure on Thursday before the extended week begins.

The week began with a bang with new closing highs recorded on both the BSESENSEX and NIFTY on the very first trading day of the week. Alas! The good news ended there and markets fell on each of the remaining four days to end with losses for the week. BSESENSEX lost 1,282.69 points or 2.14% to close at 58,765.78 points while NIFTY lost 321.15 points or 1.80% to close at 17,532.05 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.65%, 1.38% and 1.19% respectively. BSEMIDCAP gained 0.12% while BSESMALLCAP gained 0.69%. The closing high recorded during the week was 60,077.88 made on Monday the 27th of September while the intraday high made was in the previous week at, 60,412.32 points, also made on Monday. On NIFTY, the closing high made on the same day was 17,855.10 points while the intraday high made was on the previous Friday the 24th of September at 17,947.65 points.

The India Rupee lost 42 paisa or 0.57% to close at Rs 74.12 to the US Dollar. Dow Jones lost 471.54 points or 1.36% to close at 34,326.46 points. A large part of the losses was reversed on Friday when Dow Jones gained 482 points. Had that not happened, loses would have been close to 950 points.

September series expired on the last trading day of the month at 17,618.15 points, a gain of 981.25 points or 5.90% for the month. Markets were under pressure this week and surrendered quite a bit and gave in to the bears.

The opening day of October series began on a weak note and continued with the prevailing weakness of the previous three days. NIFTY on the first day of the series lost 86.10 points and began on a weak note. The last time we saw such a trend was in the May 21 series which began on a weak note, losing 263 points on the opening day, 30th of April. The May series ended with gains of 442.95 points or 2.97%. Using this as empirical evidence would suggest that though we began the first day of a new series on a weak note, we would in all probability end with gains for the series.

During the week we saw, bids for Air India being opened, and in all probability, it appears that the wheel has come a full circle. Air India which was nationalised way back in 1952-53, It is likely to be again owned and operated by the house of Tatas. While full details of the same are yet awaited, Tatas with their interest in newly acquired Air India which includes Air India, erstwhile Alliance Air, Air India Express and Indian Airlines along with their existing JV’s with Vistara and Air Asia would become a key and dominant player in aviation in India going forward.

In primary market news, the issue from Aditya Birla Sun Life AMC Limited closed for subscription and was subscribed 5.25 times. QIB portion was subscribed 10.36 times, HNI portion 4.39 times, Retail portion was subscribed 3.24 times and Shareholder preferential quota was subscribed 1.68 times. There were 15.66 lac applications.

On the side-lines of this issue, Standard Life sold 1.06 cr shares of HDFC AMC while this issue was on and garnered close to Rs 3,000 crs. The size of their sale was more than the amount raised by Aditya Birla AMC through their issue.

Shares of Paras Defence and Space Technologies Limited which is the highest response receiving issue since 2007, debuted on the bourses on Friday and had a lift-off on day one. Shares which were issued at Rs 175 closed at the upper circuit of Rs 498.75 on BSE, a gain of Rs 323.75 or 185%. It’s a great start and the last time one saw anything near this kind of gains was in the case of IRCTC in October 2019.

Reserve Bank of India meets for its bi-monthly monetary policy review between Wednesday to Friday (6th to 8th October) with the announcement on Friday. There may be a minor hardening of repo rates to reduce the excess liquidity in the system, but the expectation is not necessarily a consensus view. Barring this, the consensus is rates are expected to remain status-quo.

Calendar year 2021 has been the year of the primary markets but with one major difference. This year 75% of the funds raised or more have been in the form of divestment by mainly the PE players and some portion of this by promoters. Growth capital or capital infusion into the company has been less than a fourth of the funds raised. PE investors invest money into a company through SPV’s where the name of the entity is different in each company where they invest and it is difficult for an investor to understand who is behind the company. In such a scenario like in the case of merchant bankers who give a track record of three years of their performance in new issues, a similar exercise should be mandated by SEBI for PE investors. This will help in a big way to make investors smarter and benefit in their understanding of value and valuations of a company. This will also give an idea in which PE Investor’s divestment is something left on the table.

On the covid-19 front, the world saw 23,57,23,402 patients, 48,15,965 deaths and 21,25,85,365 patients who had recovered. In India we saw 3,38,34,243 patients, 4,49,029 deaths and 3,31,13,644 patients who had recovered. Compared to the previous week, the world saw 31,25,615 new patients, 54,070 deaths and 33,64,423 patients who had recovered. In India we saw 1,56,000 new patients, 1,804 deaths and 1,89,224 patients who had recovered. In terms of vaccinations, 88.94 cr vaccinations have been administered. This number includes the first and second vaccination combined.

Coming to markets in the week ahead, there should be some upward movement in the early part of the week on the back of sharp correction witnessed during the last week. This is also on account of the weakness in global markets led by Dow and the disturbing news coming from China on many fronts. The sharp rally witnessed on Dow on Friday should influence market opening on Monday but may not be enough for the rest of the week.

Considering the vulnerability and extreme volatility witnessed last week, it makes sense to continue the strategy of buy on sharp dips and sell on strong rallies. Keep some amount of money in cash as opportunities are available as was the case last week. Secondly with results reporting season beginning there would be higher stock specific action visible from next week onwards. On the back of results from the leaders, one would get a fair idea of how the sector is behaving. Use this analysis to play the markets.

Trade cautiously and curb temptation.