The week gone by was full of Trump and his way of dominating center stage globally. He imposed the penalty tariff of doubling the existing 25% on India to 50% because we import crude from Russia. Incidentally Europe imports its energy needs from Russia while the USA imports chemicals and many other products but in value significantly larger amounts than India. Suffice to say, that logic has taken a back seat and currently it’s all about ‘bullying’ and seeing who stands up or buckles under. For the records, Switzerland has invited the wrath of Donald Trump by cancelling their order of F-35 and attracted huge tariff, at 39%, the highest amongst European nations. Spain too has cancelled the fighter aircraft order. India has an order of about 80 billion USD with Boeing for passenger aircraft. Our total exports to the US in fiscal 2024 were at 87.3 billion USD. If India decides to review orders of Boeing considering safety issues with the crash of Dreamliner, things could change dramatically. Let’s just leave tariff and Trump at that with a final comment that Trump and Putin are expected to meet in Alaska on the 15th of August over Ukraine. 

Markets in India fell on three of the five sessions and gained on two. BSESENSEX lost 742.12 points or 0.92% to close at 79,857.79 points. NIFTY lost 202.05 points or 0.82% to close at 24,363.30 points while BANK NIFTY lost 612.70 points or 1.10% to close at 55,004.90 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.88%, 0.95% and 1.04% respectively. BSEMIDCAP was down 1.29% while BSESMALLCAP lost 1.86%. Markets are nervous and worried about the continuous supply of paper which is coming from IPOs, secondary paper sold by PE investors and promoters. FPIs have sold Rs 47,666 crores in July 25 and sold another Rs 14,000 crores in the first eight days of August.

The Indian Rupee lost 19 paisa or 0.22% to close at Rs 87.70 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. It was up 587.03 points or 1.35% to close at 43,588.58 points. The entire world is focused on what tantrums, tariffs and statements Trump makes. If Ukraine-Russia issue does get settled over the weekend in Alaska, one should be rest assured that demands for Trump to be nominated for Nobel Peace Prize would begin all over again. I am sure no one will bother as long as he does work in the White House rather than put global economy at such risk as is currently happening. 

Coming to our markets, this was the sixth consecutive week of losses. Sooner or later there would be a technical bounce, but that would be just that, a technical bounce. It could be for a day, a couple of days or could also be a weekly positive, to break the negative trend. I t would not indicate that things have turned around. New global normal are yet to be made and established. Very clearly, USA is turning out to be a fair weather friend only and it has no long-term relationships as is evident. With India playing its cards well and looking to strengthen ‘BRICS’ with the first four partners, Brazil, Russia, India and China, coming closer and willing to counter USA and its bullying tactics, new long term relationships are likely to emerge. In such a scenario, one needs to be patient with markets, absorb short term pain, and wait to build a portfolio all over again. Things are work in progress and many new scenarios would emerge. Who would have thought that ‘BRAMOS’ missile would become such a big super success and India would receive orders and enquiries from so many countries. Things are changing and we need to understand that when a nation rises in ranks, there is resentment at the top. 

The primary markets are in full bloom and we have IPOs galore. Besides the issues from JSW Cement Limited and All Time Plastics Limited which have opened and would close today, i.e. 11th August, we have issues from Blue Stone Jewellery and Lifestyle Limited and Regaal Resources Limited which are opening during the week. While Bluestone opens on Monday the 11th of August and closes on Wednesday the 13th of August, Regaal would open on Tuesday the 12th of August and close on Thursday the 14th of August. There would be a few road shows happening as well, with their IPOs opening in the week of 18th of August. 

Expect markets to trade in range bound fashion. Support exists at levels of 24,200 points where we are almost there. If this were to break we could see levels of 23,800-23,850 points. On the upside we could see levels of 24,800 or thereabouts. The week has an extended weekend with a holiday on Friday, the 15th August when we celebrate our 78th Independence Day. This would make markets nervous on Thursday, with what could happen in Alaska and also what PM Modi speaks from the ramparts of Red Fort on 15th August. Incidentally both events happen on Friday the 15th of August. 

The strategy in such troubled times would be to lie low and allow markets to seek their own levels. Things are tough, but by being adventurous nothing much is likely to be achieved. Let some clarity emerge before taking any decisions. 

Trade cautiously.

It was a tough week for markets in India and globally. Trump and his tariffs coupled with his tantrums and demand for the Nobel Peace Prize continued unabated. One wonders whether an award can ever be obtained in this manner. Let’s move on to markets. Our markets lost on three of the five trading sessions and gained on two. BSESENSEX lost 863.18 points or 1.06% to close at 80,599.91 points while NIFTY lost 271.65 points or 1.09% to close at 24,565.35 points. BANK NIFTY lost 911.30 points or 1.61% to close at 55,617.60 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.16%, 1.29% and 1.47% respectively. BSEMIDCAP was down 1.79% while BSESMALLCAP was down 2.47%. 

The Indian Rupee lost 92 paisa or 1.06% to close at Rs 87.51 to the US Dollar. Dow Jones had a torrid week and lost on all five trading sessions of the week. It was down 1,313.24 points or 2.92% to close at 43,588.58 points. 

July futures expired on a weak note. The series closed with losses of 780.65 points or 3.06% at 24,768.35 points. The series has been very volatile and choppy. A large part of the fall during the series could be attributed to the overall poor quarterly results which have come and the concerns on Trump Tariffs. 

Markets are under pressure and results are probably the main reason for the same. India Inc. has not been able to grow sales in the manner that they were expected to happen. While rate cuts have helped in finance costs been kept under check, operating efficiencies have not apparently kicked in. Some leeway could be given to companies who have exports to USA and have been impacted because of the tariff uncertainty, but concerns remain. 

There is a new debate which is unfolding on the street where investors who are at the bottom of the pyramid and the most affected when top officials of the company commit acts which lead to the company being downgraded or taking a beating. Such officials then use the ‘CONSENT’ mechanism, pay a fine and scoot off. The fine goes into the coffers of the regulator and the poor investor is left twiddling his thumb. I believe this entire system needs to be relooked and such officials need to be made to pay more financially and also under criminal law.. Secondly there should be a mechanism where investors and shareholders who suffer are compensated from such penalties and fines and not that the same goes into the coffers of SEBI. The current case which brings this thought out, is the one involving Indusind Bank and its current MD and CEO, Sumant Kathpalia. He has offered to pay a sum of about 5.2 crores to settle a case without admitting guilt. This kind of amount raises eyebrows straight away. We must also note that a number of people including the CFO of the bank were sacked/relieved with immediate effect under doubt raising circumstances. More on this at a later time. 

While USA has threatened India to impose penalties and higher unspecified tariffs if we continue to import crude oil from Russia, India would do so and is sending NSA, Ajit Doval and Foreign Minister EAM Jaishankar, to Russia in the coming weeks. Very clearly the stand-off and bullying tactics of Donald Trump have been called out as a bluff. 

Levels of 24,200-24,300 are sacrosanct for the markets currently. If they were to break, we could see some panic and also a sell-off in the markets. This could probably be one of the reasons why primary markets activity currently is at an elevated level and issuers who were taking it easy till a week or two ago, have suddenly pressed the accelerator and want to launch their issue right away. 

If as mentioned above, support at 24,200-24,300 were to break, we could go down all the way to levels of 23,500 or thereabouts. On the upside, levels of even 25,000 look difficult currently. From a strategy perspective, it makes sense to lie low and allow markets to take their own course. It’s time to rebuild the portfolio looking at results which have been declared. 

Trade cautiously.