Markets gained on three of the five trading days last week but registered very strong gains on the last two days of the week to end with gains of almost 2.8%. BSESENSEX was up 950.84 points or 2.81% to close at 34,731.73 points while NIFTYY gained 271.50 points or 2.72% to close at 10,244.40 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.44%, 2.45% and 2.53% respectively. BSEMIDCAP was up 1.62% while BSESMALLCAP was up 3.65%.

The Indian Rupee lost 34 paisa or 0.45% to close at Rs 76.18 to the US Dollar. Dow Jones at the end of a volatile week manged to end in positive territory gaining 265.92 points or 1.04% to close at 25,871.46 points.

Ever since the introducing of weekly settlements on futures in NIFTY and Bank Nifty, the markets have become significantly more volatile and trading on Thursday in the second half of the day is fraught with risk and huge uncertainty. Last Thursday was no exception and the shorts in the market were squeezed out.

Thursday the 25th of June will see June futures expire. The current value of NIFTY at 10,244.40 points is higher by 754.30 points or 7.95%. It’s a huge lead and bulls are unlikely to squander it away. As mentioned earlier there is a short build-up in the market considering the spate of negative news flow globally and nationally whether it be the Indo-China conflict, ‘Black lives matter’ protest in the US and now having a symbolic protest worldwide with respect to racism and of course the pandemic covid19. In normal circumstances, one would expect in such a scenario, markets to be subdued if not under severe pressure. Here we see markets not only doing well but moving up.

The current level of BSESENSEX of 34,731 is lower than the opening level of 1st January 2020 of 41,253 points by 15.8%. The low of the year so far has been 25,638 points which meant at that point the BSESENSEX was down 60% from the beginning of the year. From the low we have recovered and made up more than half the losses. This shows the resilience and belief that all that is happening will be surmounted.

Reliance claims that it has become a net debt free company well ahead of its commitment. There are various views on this as the amount that is to be received from the rights issue of about Rs 53,000 crs would be in two tranches of 12 months and 18 months from now. The company has received just a fourth of this amount so far and would receive another fourth in May 2021 and the balance half in November 2021. Shares of the company gained Rs 171 or 10.76% during the week to close at Rs 1,760.

The uncertainty on landlords and tenants with regards to rent during the lockdown period saw some clarity with regard to DLF writing to its customers in the NCR region. The company has proposed a scheme where it is willing to write of the rent for the lockdown period and offered a discount for the period from June to March 2021 in a staggered manner linked to sales. They have offered different terms to malls and to people who have offices in their complexes. This should set the path to some sort of reconciliation on a very contentious issue.

Glenmark has become the first Indian Pharmaceutical company to receive regulatory approval for oral antiviral ‘Favipiravir’ for mild to moderate covid-19 treatment. Shares of Glenmark have risen from Rs 354.90 on the last day of May to Rs 409.10 as of Friday 19th June, gaining Rs 54.20 or 15.27%. There could be more steam in the counter but almost everything is in the price. Remember the saying, buy the rumour and sell the fact.

In very significant news particularly considering the hostile nature of India China relations currently, the Chinese Communist Party (CCP) tried to force the European Union to recognize it as a market economy, a case it had already lost last year by a provisional decision, and now stands firm. This will see the United States and EU imposing high anti-dumping duties on imports from China. This would be good news in India as well for commodity manufacturers.

Coming to the covid-19 front, the number of affected people globally has moved up to 90.46 lac people with 4,70,703 deaths and 48.38 lac people having recovered. In India the number of patients is 4,26,910 people with 13,703 deaths and 2.37 lac people having recovered. Mumbai with over 66,488 patients and Delhi with 59,746 people lead the tally in India. Compared to a week ago, the number of new patients globally has increased by 10.8 lacs with 35,200 deaths while 7.30 lac people have recovered. In India the number of new patients has increased by 94,000 while there have been 4,183 deaths and almost 67,500 people having recovered.

Ridiculous comments coming from a leader of the largest opposition party in India questioning the army action is detrimental to the morale of the army. What vested interests warranted such comments may take some time for detailsto emerge. However, the demand that the MOU between the Congress Party and the CCP be investigated could lead to sensational revelations. An important point to remember is that the MOU was done when the UPA was in power in 2008.

Coming to the markets and the week ahead, there would be volatility and sharp two-sided moves. The bulls would like to press home their advantage and carry the series with a decent 8% gain as of date. There are shorts in the market with all the negativity around. Further with the breath of the market improving significantly, a section of the market men has used their longs in the midcap and Smallcap space and as a hedge shorted the benchmark indices. Come Thursday all of this would get squared off or rolled over. Either way volatility is imminent. The best possible strategy would be to book profits as the markets continue to rise. Remember there is always that bad day when nobody wants to buy.

Markets are witnessing extreme volatility and while day traders may be happy with the kind of movement, it is unnerving investors. BSESENSEX lost 506.35 points or 1.48% to close at 33,780.89 points, while NIFTY lost 169.25 points or 1.67% to close at 9,972.90 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.52%, 1.35% and 1.27% respectively. BSEMIDCAP however gained 0.37% while BSESMALLCAP lost a mere 0.08%. The week gone by wasn’t without its share of drama where on Friday markets opened with a big gap down on the back of 1,861 points fall in Dow Jones on Thursday. BSESENSEX after being down 1,190 points closed for the day with gains of 242 points. A huge intraday swing of almost 1,450 points.

The Indian Rupee lost 26 paisa or 0.34% to close at Rs 75.84 to the US Dollar. Dow Jones had a terrible week and lost 1,505.44 points or 5.55% to close at 25,605.54 points. All of a sudden one felt at the end of the previous week that all negative factors were discounted and there were only positive factors left for the market. This week what one saw on Thursday was a reality check and brought investors to the ground with a big thud.

Reliance Industries has completed its record-breaking rights issue in terms of size and time with a great amount of help from the regulators who allowed a lot of flexibility in terms of compliance in covid-19 affected times. The company has given additional shares to the extent of 2.06cr shares to the 5,45,925 shareholders whose applications were successful. There were 8,958 people who applied as renounces and were allotted 2.46 cr shares. Two key takeaways from this mammoth issue was the fact that of the 25 lac odd shareholders of Reliance Industries just over a fifth participated in the rights offer. To make it more convenient for this bottom of the pyramid shareholders in these difficult times who missed out, the one-page application form could have been printed in the numerous advertisements that the company released. Shareholders could have cut out the same, filled in and submitted to the bank for ASBA. The second takeaway is that the issue has seen the promoters increase their stake in the company from 48.87% to 49.14%. This demonstrates their confidence in the company and its business going forward.

Reliance Industries had tapped the capital markets in 1977, when it was a textile company manufacturing textile. Its logo was ‘Only Vimal’ at that time. In 43 years, the company has evolved into a yarn manufacturer, PTA player, petrochemicals with upstream and downstream capabilities, retail and now telecom. Its latest venture is Jio Platform where it has raised over a trillion rupees by selling 22.38% stake to nine investors in about six weeks’ time. The company Jio Platform is valued at 4.91 trillion Rupees. In today’s time, one fails to recall the last time ‘only Vimal’ fabric was bought by someone. Very clearly there is a transformation where Reliance has shifted tracks and is now focusing on digital and telecom or data and voice for its next stage of growth coupled with retail.

Covid-19 is not good news in India. We have been moving up the ladder for most affected persons and are currently 4th after the USA, Brazil and Russia. The number of affected persons globally has increased to 79.90 lac patients with 4.35 lac deaths and 41.08 lac patients having recovered. In India the number of affected persons is 3,33,008 people with 9,520 deaths and 1,69,689 people having recovered. Compared to the previous week, the world has seen 9.00 lac new patients with 29,300 deaths and 6.47 lac patients recovering. In India, new patients have increased by 76,000, with 2,300 deaths and 46,000 patients recovering. The three worst affected cities in India are Mumbai, Delhi and Chennai. In what can be termed as relief to profiteering by private companies in the name of covid-19, Maharashtra has cut the price of covid-19 test from Rs 4,500 to Rs 2,800. One hopes that the quality of test is now not compromised and safeguards are put in place to ensure that patients are not given a raw deal.

Coming to the markets, they will continue to remain volatile and see sharp intraday rallies and falls, unnerving edgy investors. While the longer term looks better and promising, the immediate short term will remain volatile and full of sharp two-sided moves. Use rallies to sell and sharp dips to buy, but be nimble footed and take profits when available. A bird in hand is always better than what is in the bush. Expect global cues to be even more volatile and hence expect gap-up and gap-down openings on the benchmark indices. Midcap and Smallcap will outperform the benchmark indices. Look for fundamental stocks in this space to take positions.