The week gone by behaved on expected lines and made an intraday low on Thursday before bouncing from there and registering very sharp gains in the remaining less than two days of the week. BSESENSEX gained 429.10 points or 1.38% to close at 31,588.72 points while NIFTY gained 154.85 points or 1.70% to close at 9,266.75 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.98%, 2.15% and 2.38% respectively. BSEMIDCAP was up 3.95% while BSESMALLCAP was up 4.93%.

The intraweek low made on Thursday on the BSESENSEX was at 30,016 points, which was a loss of 1,140 points till then, while it was 8,821.90 points on NIFTY, a loss of 290 points. The recovery from the intra week lows in less than two days was 1,570 points on BSESENSEX and 445 points on NIFTY. This momentum has steam and would carry the markets higher in the coming week and it would be worth watching how far this rally can go before profit taking steps in.

One must remember that the markets are like a patient and are yet to recover fully. What we are witnessing is relief rally, oversold rally or a rally by any other name that you can think of. Fundamentals of the market are yet to kick in and they would do so only when covid-19 is under full control and one can say that life has normalised.

The Indian Rupee after being extremely volatile settled with a marginal gain of 4 paisa or 0.03% to close at Rs 76.39 to the US Dollar. Dow Jones had a good week and gained 523.12 points or 2.21% to close at 24,242.49 points.

RBI cut reverse repo rates by 25 basis points to 3.75% from the earlier 4%, signalling to the market that banks should lend and that the system is full of liquidity. Whether banks will lend is a million-dollar question as the 90-day moratorium is a contentious issue going forward and complete clarity on provisioning norms post the 90 day are yet to emerge.

New guidelines have been announced for reopening of factories with stringent conditions. It has been specified about the number of people in the workplace maintaining social distancing etc have to be strictly followed. Public places like malls, theatres, eating places are not covered under these guidelines and will not open.

Being Mumbaikars, let us talk about Mumbai. Local trains which are Mumbai’s lifeline will not be opened and this would effectively keep the city closed. Mumbai’s officegoers typically eat outside food and a reasonable number of them get their lunch through the ‘Dabbawalla’ which unfortunately is shut. There would be a lot of hardship in the initial stages and it would take quite some time for things to become normal.

HDFC Bank reported an excellent set of numbers even considering the fact that it was only the last fortnight of March 2020 that was impacted by covid-19. The net profit for the 4th quarter rose 18% to Rs 6,928 crs.

The government has restricted the investment by neighbouring countries in Indian companies under the automatic route and they would have to now invest under government route and not under the FDI policy. This has been issued after PBOC, raised its stake in HDFC Bank from the earlier 0.8% to over 1%. SEBI raised queries on such investments and this was followed by the government release.

SBI Card which was an extremely hyped and controversial issue, completed thirty days of being listed on the bourses. This 30-day period is significant because the allocation to anchor investors comes with a 30-day lock-in. On completion of the same, anchor investors are free to sell. The share which was issued at Rs 755 and had created huge hype and demand and was oversubscribed 26.49 times overall saw its share touch a low of Rs 501.10. This means that the share has lost a third in value and the issue was oversubscribed 56.66 times by QIB’s and they have a reasonable time frame view on the share unlike the HNI, whose investment horizon is less than 48 hours. This loss is without considering the grey market premium which varied between 225-275 for about three months prior to the issue and touched a peak of just short of Rs 400. Understandable that covid-19 has impacted the business of SBI Card as well but to what extent? The share did recover from the lows to close at Rs 530.70, a weekly loss of Rs 64.15 or 10.78%.

Coming to covid-19, the total number of cases globally have risen to 24.07 lac cases with there being 1,65,069 deaths and over 6.25 lac patients recovering. In India the number of affected persons has increased to 17,615 cases with 559 deaths and 2,854 patients having recovered. There seems to be a larger number of patients recovering than before which is a positive sign. The battle would be won when patients recovering is larger than new cases. This of course is a long way off.

Coming to the markets in the week ahead, the momentum of the last two trading sessions will keep the market going in the initial part of the week after which there would be profit taking as well. This does not mean that this would signal the end of the rally but then markets would look to the expiry of April futures and how the relaxation of lock-down and reopening of factories happens. The rally should be more than what was gained on a weekly basis in the previous week before the profit taking.

In conclusion, a rally followed by profit taking and then cues from the lockdown to determine the flow of the market in the week ahead.

The week at the markets consisted of a mere three days as there were religious holidays on Monday and Friday. It was a great time at the bourses as they registered big gains and improved the sentiment. BSESENSEX gained 3,568.87 points or 12.94% to close at 31,159.62 points while NIFTY gained 1,028.10 points or 12.72% to close at 9,111.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 12.73%, 12.41% and 12.14% respectively. BSEMIDCAP was up 11.31% while BSESMALLCAP was up 9.40%.

BSEHEALTHCARE index made a 52-week high on Friday of 14,820.13 points. It gained 2,158.37 points or 17.41% to close at 14,553.34 points. Clearly progress on medication for covid-19 and the change in expected behaviour from US FDA as discussed between the two heads of states of India and USA did the trick. India would begin its export of drugs to US to combat covid-19 in that country.

The top sectoral gainer was BSEAUTO which was up 23.05% while the sector to gain the least was BSECAPGOOD which rose 6%. In individual stocks the top gainer was Mahindra and Mahindra which gained 35.71% while the one to rise the least was Coal India, up 2.25%.

Dow Jones staged a spectacular rally and gained 2,666.84 points or 12.67% to close at 23,719.37 points. The Indian Rupee lost 20 paisa or 0.26% to close at Rs 76.42.

In the meeting between the Chief Ministers and the Prime Minister it has been decided to extend the lockdown by a fortnight with strict norms to prevent the spread of covid-19. The details of the same are yet to be announced but they are expected to be quite stringent and work towards the next phase where there would be a gradual phased lifting of the lockdown.

Simultaneously, towards restoring normalcy on the industrial front, guidelines have been issued on reopening of factories and industrial establishments. A lot of power to monitor on the ground realities would be with the local authorities. In a phased manner, things would return to normal over the next thirty to sixty days.

No mention is made in the guidelines about local offices, public transport and eating establishments, and it is expected that action on this is taken only when the government has the comfort from community spread of covid-19 not being there.

The number of covid-19 patients globally has moved up to 18.53 lac with 1,14,247 deaths. The really heartening figure is that of 4.23 lac patients who have recovered so far. The true test would be when the curve flattens out and there are more patients recovering than new cases being added. In India the number of patients is 9,205 with 331 deaths and 1,080 patients having recovered. The lockdown has certainly helped in containing the spread and it is a trade-off between health and the economy.

Markets when they open on Monday and have a full five-day week could be under pressure on two counts. Firstly, after a 12-13% rally there could be profit taking and secondly there could be a knee jerk reaction to the extension of the lockdown. Whatever be the reason for the correction if it happens, it would be for the good of the market and would make the rally of last week sustainable. FPI’s have over the course of the last three to four days invested about a billion dollars in the market and their confidence seems to be returning.

On the results front, TCS would be announcing their quarter and year end results on Thursday the 16th of April. This would give an insight to the happenings on a global platform as they have a presence in various geographies. This quarter could see results getting delayed by a fortnight to a month as many corporates grapple to complete their books and also the audit of the same.

Considering the fluid situation in the markets it makes sense to sell into the rally and book profits and wait for the imminent correction to buy back. Movements would be swift either side and the markets are bound to provide opportunities to one who has cash available. Volatility will continue and this will provide the opportunities to both buy and sell. Stock selection will be of paramount importance and it makes good business sense to buy those stocks in which one has the knowledge and comfort, rather than choosing those which have fallen the most. Almost every stock has bounced and rallied but fundamentally sound companies rally would be sustainable while that of momentum stocks and speculative stocks may not be sustainable.

In conclusion, markets will give opportunities on both sides and it would be prudent to use rallies to book some profit so that they could be reinvested on dips.