The week gone by had a mid-week holiday on Wednesday followed by Thursday’s futures monthly expiry for August series which led to markets being volatile and on tenterhooks. As expected they ended the week with losses and lost on three of the four trading sessions and gained on one session. BSESENSEX lost 1,497.20 points or 1.84% to close at 79,809.65 points while NIFTY lost 443.25 points or 1.78% to close at 24,426.85 points. BANK NIFTY lost 1,483.75 points or 2.69% to close at 53,665.65 points. BSEMIDCAP lost 2.72% while BSESMALLCAP was down 2.93%. All in all, it was a bad four days at the markets and they were down across the board. The mood is depressing and in the coming week while there could always be a technical bounce because we are oversold, the news flow is missing. 

The Indian Rupee lost 68 paisa or 0.78% to close at Rs 88.19 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. It lost 87.26 points or 0.19% to close at 45,544.48 points. Trump continues to remain piqued about the fact that India did not support or nominate him for the Nobel Peace prize for a war in which he did not mediate. The tariffs that he has imposed on India are due to this fact and he being cheated off the award by India not supporting. Now even the Supreme Court in the USA has upheld the lower courts order on declaring these tariffs as wrong. While they have not been struck down, Trump has to do something out of the ordinary to salvage a lot of prestige, as every act of his is being questioned. The people who voted for him will get what they deserve for sure but ‘MAGA’ (make America great again) his pet theme has taken a big beating. One other thing that common citizens are realizing is that tariffs are to be paid by them. 

There were four listings last week and all of them happened on Tuesday the 26th of August. While they all managed to close in the green on listing day, one of them slipped into the red over the remaining two days of the week, while the remaining three pruned their gains substantially. Vikram Solar gained Rs 4.45 or 1.34% to close at Rs 336.45, Shreeji Shipping Global gained Rs 0.45 or 0.18% to close at Rs 252.45, and Patel Retail gained Rs 7.05 or 2.76% to close at Rs 262.05 while Gem Aromatics lost Rs 48.90 or 15.05% to close at Rs 276.10. Very clearly there is fatigue in the primary markets with investors not making money by and large. To add to their woes is the fact that even the secondary market is not doing well and corporate India results for QI left a lot to be desired. 

August futures expired on a weak note with the series losing 267.45 points or 1.08% to close at 24,500.90 points. Readers would recall that the week had begun with the series up at 101.75 points or 0.41%. Bears have clawed their way back into the series and won it quite decisively. 

In economic news, GDP for the first quarter has come in a positive manner at 7.8%. While there are some adjustments which have to be factored in, it still remains impressive. 

Coming to the markets in the week ahead, there is a possibility that on technical factors we could bounce to around 24,800 points at best. On the downside we have strong support between 24,200-24,250 points. If this were to break we could go down all the way to 23,600-23,700 points. These are important levels on both support and resistance side and not levels for the week. They could take longer than just a week to happen. Further, with fast developing changes on the global front, it’s a fluid state with just too many moving parts. The SCO meet in China could see important announcements happening and strong reactions coming in from the US. Ukraine and Russia war is just going on for too long and it’s high time that the two countries met face to face to resolve this never ending war. 

The strategy for the week would be to continue with intra-day trading and refrain from large overnight positions. The week ahead could also see the GST council announcing changes in the categories which are moved out from the 12% and 28% and where they would now be placed. Also the new rates applicable for ‘Sin’ category products. Therefore makes sense to refrain from large overnight positions. 

Trade cautiously.

The week was led by gains made on Monday when we saw a strong gap up opening on account of the GST rejig that was announced during the extended weekend of the previous week. While markets rallied strongly through the week, a minor sell-off on Friday, erased almost all the gains made between Tuesday to Thursday. The week closed marginally higher than Monday’s close. This indicates that the big positive news of GST has been digested by the market. They gained on four of the five trading sessions and lost on one, Friday. BSESENSEX gained 709.19 points or 0.88% to close at 81,306.85 points while NIFTY gained 238.80 points or 0.97% to close at 24,870.10 points. BANKNIFTY lost 192.45 points or 0.35% to close at 55,149.40 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.13%, 1.22% and 1.36% respectively. BSEMIDCAP gained 2.03% while BSESMALLCAP gained 2.34%. The top sectorial gainer was BSEAUTO which gained a massive 5.06%. 

The Indian Rupee was volatile and closed virtually unchanged, gaining 2 paisa or 0.02% to close at Rs 87.51 to the US Dollar. Dow Jones was flat to negative for the first four days of the week and then on Friday, it sky rocketed gaining a massive 846 points. This propelled Dow to a new all-time high. For the week in which Dow gained on three of the five trading sessions and lost on two, Dow was up 685.65 points or 1.53% to close at 45,631.74 points. 

The main reason for the rally was the minutes of the FED meeting held July 29-30 were released. These indicate that FED could cut interest rates as early as in the meeting to be held in September, led to the sharp rally.

The primary markets would see as many as four listings on the main board happening this week. These are Vikram Solar, Patel Retail, Gem Aromatics and Shreeji Global. These issues would all list on Tuesday the 26th of August. For quick reference purposes, the allotted price of these issues would be Rs 332 for Vikram Solar, Rs 325 for Gem Aromatics, Rs 255 for Patel Retail and Rs 252 for Shreeji Global. 

The week ahead has a trading holiday on Wednesday the 27th of August for Ganesh Chaturthi, the day Lord Ganesh is brought home to millions of Indians. He will be prayed, revered, pampered for a period of 1 to 11 days before he would be immersed in the sea, river or even makeshift pond with full fanfare. It is an event which began in Mumbai but is now celebrated across the country. 

The mid-week holiday would upset trading for the week, particularly because the next day after the Ganpati holiday would be expiry day on Thursday the 28th of August. NIFTY in the August series has not done much and is up a mere 101.75 points or 0.41% at 24,870.10 points. The series had begun at a level of 24,768.35 points. With three days to go for expiry, the series is well and truly open and both the bulls and bears have an equal chance to take the series. It would be a close finish for sure. 

In global news, a lot is happening with Trump continuing to feel that India has cheated him of winning the Nobel Peace prize which seems to have become an obsession with him. This is translating into irrational comments and actions as far as trade with India is concerned. While a cursory miffed comment would be in place, continuing his tirade and expressing displeasure on something which he never did, has upset a relationship made over five different presidents of the US. He has achieved what would have been impossible for others to achieve, of breaking trust of being a reliable and trustworthy ally. He has also pushed India to aligning much closer with Russia and getting closer to China as well. Something that the US certainly did not foresee or desire. Anyway, the tongue is something which is difficult to control when you are as old as Trump is. It tends to slip.

Key levels for the markets on the upside are at 25,150-25,200 and higher up at 25,500 points around. One needs big news to break 25,200 and move to higher level. GST which could be a trigger is happening in the following week and the Russia-Ukraine settlement is moving further away with Ukraine attacking on Sunday (24th August) a nuclear power plant on the border with drones. There will be retaliation for sure and that would be bigger than what Ukraine did. On the support side, levels of 24,800 around would act as a pivot and level of 24,500 would act as support. 

The trading strategy would be to keep positions light in view of the mid-week holiday on Wednesday followed by Thursday’s expiry. There would be plenty of intra-day volatility to allow money making opportunities. It is also a good time to look at portfolio building. 

Trade cautiously.