Markets in the week gone by were driven by fear, war mongering and panic. Of course, all of this leads to extreme volatility and sharp two-sided moves. At the end of the four-day week which had a mid-week holiday on Wednesday, markets lost on three sessions and gained on just one. BSESENSEX lost 1,156.57 points or 1.57% to close at 73,088.33 points while NIFTY lost 372.40 points or 1.65% to close at 22,147.00 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.74%, 1.82% and 1.75% respectively. BSEMIDCAP was down 2.21% while BSESMALLCAP lost 0.96%. 

The Indian Rupee lost 6 paisa or 0.07% to close at Rs 83.47 to the US Dollar. Dow Jones lost on two of the five trading sessions and gained on three. At the end of the week, Dow ended as flat as a doormat and was up 3.16 points or 0.01% to close at 37,986.40 points. 

Information on the Israel Iran conflict took its toll on markets. On Monday, markets opened week and remained weak throughout the day. Tuesday, saw yet another gap down opening and markets closing slightly higher than the opening, but negative. Wednesday was a holiday. Thursday, was a swing day where we opened higher than the previous day’s close and then closed sharply lower. Friday was what could be described as a massive swing day where markets opened with a sharp downside gap and then gained throughout the day to close with substantial gains. 

Thursday, the 18th of April saw BSESENSEX open at 73,183 points against the previous day’s close of 72,943 points. It then made an intraday high of 73,473 points and a low of 72,365 points before closing at 72,488  points. Similar levels on NIFTY were, open at 22,212 points against previous day’s close of 22,148 points. It then made an intraday high of 22,326 points and an intraday low of 21,961 points before closing at21,995 points. Friday the 19th of April was the opposite of Thursday. Markets opened lower, went down marginally and then recovered sharply. The numbers are: BSESENSEX opened at 71,999 points, low 71,816 points , high 73,210 points and close 73,088 points. NIFTY opened on Friday at 21,861 points, made a low at 21,777 points, high at 22,179 points and closed at 22,147 points. 

The above would give good indications about the increase in volatility and sharp intraday movement being witnessed. 

IT companies have declared results and the little optimism generated by the declaration of TCS results last Friday has turned into disappointment post results from Wipro and Infosys. There is pain in the segment and currently there is a struggle going on to maintain margins. I believe there is still a couple of quarters of pain left. 

In primary market news, the follow-on offer from Vodafone Idea Limited is currently on and would close on Monday the 22nd of April. At the end of two of the three days that the FPO is open, the issue is subscribed 54% at the top end of the price band of Rs 10-11, with the QIB and HNI portion subscribed. Expect subscription levels to pick up on the last day as we get closer to closing time. The anchor portion of the issue saw keen interest and there were marquee names in the list. In what would be an interesting listing for the shares being offered through the FPO is the fact that they would list on Thursday the 25th of April, which also happens to be the expiry day for April futures. The opening price of Vodafone when the series began was Rs 13.67. The share has also been in the ban status for futures and options over the last few days on account of the exposure limits being crossed. 

The issue from JNK India Limited would open on Tuesday April 23 and close on Thursday April 25. The issue consists of a fresh issue of Rs 300 crores and an offer for sale of 84,21,052 shares. The price band is Rs 395-415. 

The company is into the manufacturing and assembling of process fired heaters, reformers and cracking furnaces. (Together known as heating equipment). The company has capabilities in thermal designing, engineering, manufacturing, supplying, installing and commissioning. This equipment is required in refineries, petrochemicals and fertiliser plants. 

The company reported revenues of Rs 407.30 crores for the year ended March 23 and a profit after tax of Rs 46.36 crores. The EPS for the year was Rs 9.51. For the nine months ended December 23, the revenues were Rs 253.39 crores and the profit after tax was Rs 46.21 crores. The EPS was Rs 9.49. Based on the EPS for the full year ended March 23, the PE multiple for the issue is 41.54-43.64. The comparable peers on a limited basis for the company are Thermax and BHEL, but limited to the supply of heat exchangers and not the balance business that these companies do. The company is into an interesting business and offers an investment opportunity for the medium to long term. 

The week ahead sees April futures expire on Thursday. The current value of NIFTY is 22,147.00 points which is lower by 179.90 points or 0.81% compared to the opening level of 22,326.90 points at the beginning of the series. The bulls have in the last week squandered away their hold on the series and over the next four days it would be difficult for them to regain lost ground. The geo-political situation makes things worse for the bulls and it appears with reasonable certainty that bears would take this series. 

Coming to the markets in the week ahead, expect sharp volatility and two-sided market movement to be the order of the day. Recent lower tops made last week at 73,905 points on BSESENSEX and at 22,427 points on NIFTY would act as strong resistances in the immediate short term. If these do get violated, previous tops at 75,124 points and 22,775 would be very strong resistances. On the support side, lows made last week at 71,816 points and 21,777 points would act as strong supports. If these are violated, then one could see markets slipping to 71,100 and to 21,550 points respectively.

The strategy for the week would be to keep positions light overnight as the situation in the Gulf or the Middle-East is very fluid. There can always be breaking news on a daily basis. Action would continue in the large cap and select midcap space only. Buy on sharp dips and sell on rallies and one saw plenty of such opportunities last week itself. 

Trade cautiously.  

The week gone by had four trading sessions in which markets gained on two and lost on two. At the end of it all, benchmark indices ended virtually flat but gave loud indications that all is not well. As one reads the news, Iran has attacked Israel with suicide drones and missiles and also declared that as far as they are concerned this was in retaliation to the attack on their embassy, and it’s all over. While the UN security council has called for an emergency session which would be held late in the night, the outcome would be known only when one reads the newspapers tomorrow or the internet. BSESENSEX lost 3.32 points or 0.00% to close at 74,244.90 points while NIFTY lost 5.70 points or 0.03% to close at 22,519.40 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.22%, 0.12% and 0.15%. BSEMIDCAP gained 0.19% while BSESMALLCAP lost 0.35%. 

What is significant is the fact that new highs were made on the first two days of the week. The high on BSESENSEX was at 75,124.28 points while it was at 22,775.70 points on NIFTY. Looking at the developments which would be discussed later, for the immediate week, these highs look too far away and unlikely to be crossed in a jiffy. 

The Indian Rupee lost 11 paisa or 0.13% to close at Rs 83.41 to the US Dollar. Dow Jones too had a torrid week and lost on four of the five trading sessions and was flat on one. Suffice to say that at the present moment, the high of 39,887 points made on 21st of March looks like a distant dream. Rate cuts, an expectation which was driving markets has been dashed to the ground. This has happened because the economy is in fine fettle and inflation which has been a key concern, is refusing to moderate. In such a scenario, rate cuts in the immediate short term should be ruled out. 

Our markets began their upward journey with expectation of results for the five state assemblies which were to be declared in the first week of December23. The benchmark indices on Friday, the 24th of November 23, were at 65,970.04 points on the BSESENSEX and at 19,794.70 points on NIFTY. At the end of the next week on 1st of December, they had moved to 67,481.19 points and 20,267.90 points. Exit polls were announced post market closing on Friday the 1st of December and results were declared on Sunday, 3rd December. In the week ended Friday the 8th of December, markets had moved to 69,825.60 points and 20,969.40 points respectively. Gains in the two week period were 3,855.56 points or 5.84% in BSESENSEX and at 1,174.70 points or 5.93% on NIFTY. Since then we have moved up much further, discounting the outcome of the general elections and gained another 6.3% on the BSESENSEX and 7.39% on NIFTY. Call it by any name, markets need a correction as there is virtually no space for further upside right away.

Shares of Bharti Hexacom Limited who had issued shares at Rs 570, listed on Friday the 12th of April. Shares ended day one with a fantastic appreciation and closed at Rs 813.75, a gain of Rs 243.75 or 42.76%. The issue was an OFS of 15% of the equity capital which was offered by the Government of India. The remaining 15% of the equity or 7.5 crore shares are locked in for six months from the date of listing. One could be sure that looking at the share performance, the government would look to sell these shares when the opportunity arose. 

In what could be termed as sheer coincidence, Vodafone Idea Limited, yet another telecom player is tapping the capital markets with its follow on offer for Rs 18,000 crores in a price band of Rs 10-11. The issue would open on Thursday the 18th of April and close on Monday the 22nd of April. The share price on BSE closed at Rs 12.96. The top end of the band offers an arbitrage of Rs 1.96 or 17.8% while at the lower end of the band, the arbitrage is Rs 2.96 or an attractive 29.6%. 

The company has allotted shares worth Rs 1,200 crs to a vendor, ATC, a tower company towards pending dues at Rs 10. This has been done about three weeks ago and I strongly believe this should be the price at which the company would allot shares to all applicants. The present shareholding of the company is 32.3% for the Vodafone group, 18.1% for the Aditya Birla group and 33.1% for the government of India. Public shareholders hold 16.5%. This issue would keep the markets engrossed and there would be various arbitrage opportunities available. While the share is traded in futures and options, it is currently in the banned stage as overall exposure has crossed limits of the exchange for the scrip. 

The Mauritius double tax treaty has seen a change being introduced where the PPT (principal purpose test) has been made a key for the purpose of lower tax being applicable or not. While the ramifications are yet to be known, on the very first day itself there was large selling by FPIs who sold shares worth Rs 8,000 crores on a net basis. Details of the policy have begun to trickle in on Friday.

The current global scenario, US FED and expectations of interest rates being cut being dashed, geo-political news being disturbed with first Ukraine-Russia, then Israel and Gaza and now Israel and Iran with the Houthis thrown in as bonus, is keeping the pot boiling. Crude is once again threatening to move towards the three digit mark with gold having made a new high. All of this points to uncertain times and the fact that global markets cannot make new highs in such times. We need stability and a period of consolidation.

TCS has declared results for the 4th quarter and year ended March 24. There is improvement and order flows have certainly improved. Looking at the large size of TCS, one cannot take this as indicative of the entire IT space and one certainly needs to know how the mid-tier and small IT companies would fare. One would have to wait for results from some more companies before coming to a decision. 

Coming to the markets, expect them to remain volatile and under pressure. As of the time of writing this article, all indications are towards a gap-down opening on Monday. One will have to burn the midnight oil or have an early rise tomorrow to see the outcome of the UN security council special session outcome. Irrespective of anything, there is escalation of tension and this leads to uncertainty. Uncertainty is bad for markets. 

The strategy for the week ahead, which has four trading sessions with a festival holiday on Wednesday, is to sell on sharp rallies and buy only on sharp dips. The focus should be on large cap and select midcap stocks. As markets are overdue for a correction and consolidation, allow markets to find their own levels. There is no need to push the pedal in buying. Trading and buying opportunities would be available. In terms of resistances, the highs made on Tuesday at 75,124 and 22,775 points acting as strong resistance. Similarly the previous lows made at  21,900 points and around 72,000 points would act as strong supports.

Trade cautiously.