We had another week of gains on the benchmark indices and saw BSESENSEX make a new lifetime high closing, yet fail to hit a lifetime intraday high. BSESENSEX gained 677.17 points or 1.32% to close at 52,100.05 points while NIFTY gained 234.60 points or 1.52% to close at 15,670.25 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.76%, 2.09% and 2.14% respectively. BSEMIDCAP was up 3.92% while BSESMALLCAP gained 3.34%.

The Indian Rupee was under pressure and lost 56 paisa or 0.77% to close at Rs 73 to the US Dollar. Dow Jones even after gaining on four of the five trading days managed gains of just 226.94 points or 0.66% to close at 35,429.45 points. Incidentally most of the weekly gains were recorded on Friday when Dow Jones gained 179.35 points.

RBI announced its bimonthly credit policy and kept policy rates unchanged on expected lines. It would continue with its accommodative stance and has highlighted that there is a risk of inflation rising to 5.1%. It has also corrected downwards the GDP for FY 2021-2022.

GST collection for May 2021 was Rs 1 lac crs and is significantly lower than the April 21 number of 1.41 lac crs on expected lines. The impact on account of covid-19 second wave and the resultant lockdown in many states took its toll on the numbers.

Shares of PNB Housing are rocking after the PE investor Carlyle decided to infuse further capital of Rs 4,000 crs into the company at a price of Rs 390 per share. The open offer to acquire shares from the public to the extent of 26% of the equity is at Rs 403.22. This open offer price is now well below the market price as the share has gained sharply and closed at Rs 838.75, a gain of Rs 401.05 or 91.62% for the week. With marquee names including Aditya Puri, the erstwhile MD of HDFC Bank being an advisor to Carlyle, there is no way this share can fall to anywhere near the open offer price. For record purposes, the 52-week high and low of the share is Rs 838.75 and Rs 190.20. The price to book value is at 1.59 times after the share price has almost doubled in a week’s time. The share has been hitting upper circuits on every day of the week since the announcement. This capital infusion will bring about a renewed thrust in the affordable housing space as well.

Shares of Spandana Sphoorty had a great speculative run on the bourses after unconfirmed news reports about Axis Bank expressing its desire to strengthen its priority sector lending by acquiring a company with a microfinance background. Three names cropped up which included yet to be listed, Arohan Financial Services from Kolkata, Satin Creditcare Network Limited and Spandana Sphoorty Limited. While nothing has been confirmed or denied, shares of Spandana were the one chosen by the market to speculate. The share saw the price move from Rs 577.65 on Friday 28th May to Rs 570.45 on Wednesday. It hit the upper circuit on Thursday at Rs 684.50 and did the same on Friday at Rs 820, but closed significantly lower at Rs 743.60. Volumes on the counter were manifold, with traded volumes being about 85 lac shares and delivery volumes of just 11.77% at 10 lac shares. It is significant to note that the share closed lower than the weighted average of the day of Rs 758.51 as well. This clearly indicates the mood of the market and the temptation to buy or trade on just any news.

The markets have been in an uptrend for the last three weeks and seem to be indicating their tiredness from the reducing level of rise each week. Over the last three weeks, BSESENSEX has gained 677 points, 882 points and 1,808 points in reverse order with the current week gains being mentioned first. On the NIFTY similar gains have been 234, 260 and 497 points respectively. The week ahead therefore becomes the best chance for BSESENSEX to complete the target of registering the lifetime high on intraday basis of 52,516.76 points. There is every possibility that if it does not happen in the earlier part of the week, we could go into a correction and then may take longer to consolidate and make another attempt at breaking the top. Normally BSESENSEX and NIFTY move in tandem, and this time we are already a week apart with some distance still to go.

On the covid-19 front, the world saw 17,40,48,559 patients, 37,43,935 deaths and 15,70,52,945 patients who had recovered. In India we saw 2,89,09,604 patients, 3,49,229 deaths and 2,71,50,727 patients who recovered. Compared to the previous week the world saw 30,18,942 new patients, 1,87,258 deaths and 39,34,182 patients who recovered. In India we saw 8,62,647 new patients, 20,102 deaths and 14,66,198 patients who recovered. The number of new patients in India has consistently been dropping to below the 1.30 lac per day mark and the number of patients recovering averaging 1.5 patients compared to new patients. This augurs well. We need to bring down the death rate significantly lower, to say with surety that wave 2 of covid-19 is fully under control.

Coming to the markets, it is our best chance to hit a new lifetime intraday high on BSESENSEX when trading resumes on Monday or maybe on Tuesday. If we are unable to do so in the earlier part of the week, the fatigue and tiredness may delay the inevitable to say after a correction and consolidation which may take 7-10 calendar days. The strategy should be to continue to trade the markets with buying on sharp dips and selling on rallies. Book profits and if in doubt remain on the side-lines. Final advice, do not buy stocks on the basis of market rumours.

Markets continued their upward momentum and gained on all the five trading days last week. It was a slow start in the initial part of the week and ended with a flourish on Friday when NIFTY made a new lifetime high. BSESENSEX gained 882.08 points or 1.75% to close at 51,422.88 points while NIFTY gained 260.35 points or 1.72% to close at 15,435.65 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.63%, 1.50% and 1.51% respectively. BSEMIDCAP gained 0.82% while BSESMALLCAP was up 1.51%.

The Indian Rupee gained 39 paisa or 0.54% to close at Rs 72.44 to the US Dollar. Dow Jones gained 442.95 points or 0.94% to close at 34,529.45 points.

May series NIFTY futures expired at 15,337.85 points, a gain of 442.95 points or 2.97%. The series gained 162 points during the last four days of expiry. The new series began with a bang and saw NIFTY make a lifetime high at 14,469.65 points, surpassing the 16th February high of 14,431.75 points. Incidentally NIFTY closed higher than this level on Friday as well. BSESENSEX high made on the same date was 52,516.65 points and is currently a good 1,100 points away. It would take another rally for benchmark indices to cross this milestone as the present rally is getting over and seems fatigued. An interesting development is the rally in Reliance industries which is one of the heavyweight stocks in the benchmark indices and hasn’t moved over the last three months. The stock gained Rs 116.70 on Friday and added 345 points to the BSESENSEX. The benchmark index had gained a total of 307.66 points, which means that Reliance alone gained more than what the index gained. The gains and losses by all other stocks put together were compensated as well.

The point being emphasised here is that we would see a period in the markets where they gather their breath once again, consolidate at these levels and allow the rest of the markets to catch up. With Reliance in a dominant position, it would give you a feel that all is well in the markets even though they are correcting.

The covid-19 front saw the world have 17,10,29,617 patients, 35,56,677 deaths and 15,31,18,763 patients recovering. In India we saw 2,80,46,957 patients, 3,29,127 deaths and 2,56,84,529 patients recovering. Compared to the previous week, the world saw 35,01,655 new patients, 78,322 deaths and 45,74,619 patients recovering. In India we saw 12,94,510 new patients, 25,376 deaths and 19,56,518 patients recovering. The average of daily new patients has come down significantly from 4.25 lac patients per day to below 1.75 lac patients per day. Further the patients recovering per day is significantly higher than new patients for now over the last 17 consecutive days. It is hovering around 1.5 times. Thirdly the production of covid-19 drug, remdesivir has increased by over ten times per day from the 33k level to 350k level. The Central government has proposed an inventory of 50 lacs as an emergency build-up. Serum institute would be producing 10 cr vaccines for India in June. Things are looking up on the covid-19 front from an India perspective.

The week ahead sees RBI meet between the 2nd and 4th of June for its bi-monthly monetary policy meet. While there is consensus on rates remaining unchanged, the markets would like to read the commentary post the meeting. This is particularly important where RBI in its annual report for 2020-21 released during the earlier part of the week, mentioned that they are worried about the rise in stock market prices which have doubled and warns of a stock market bubble.

Coming to the markets in the week ahead, NIFTY has reached a new milestone and has given indications of fatigue setting in. While fatigue does not necessarily mean that markets would go down sharply with Reliance stepping in to do the balancing act, it certainly means a period of consolidation. The BSESENSEX needs to move about 1,100 points to make a new high and that corresponds to roughly 350 points on the NIFTY. Significant headway needs to be made. Hence expect markets to be choppy, sideways, consolidating and regaining its breath and momentum before the next rally.

Trading strategy should be to accumulate stocks on decline and sell on rallies. Shorting the market would not be a good idea at all and could be counterproductive. Trade cautiously and await the next up move.