Markets continued their upward march through the week but a downgrade of the sovereign outlook by Moody’s caused a break in the momentum. This was further compounded by it being Friday and looming weekend and also the fact that four important judgments were to be pronounced by the Supreme court in the latter half of the coming week.

BSESENSEX gained 158.58 points or 0.39% to close at 40,323.61 points. The intra-week high was made on Friday at a level of 40,749.33 points. NIFTY gained 17.55 points or 0.15% to close at 11,908.15 points. The intra-week high was 12,034.15 points, making the all-time high roughly 80 points away. BSESENSEX is trading at an all-time high.

The broader indices saw BSE100, BSE200 and BSE500 lose 0.08%, 0.15% and 0.24% respectively. BSEMIDCAP was down 1.07% while BSESMALLCAP lost 0.93%. FPI’s have been bullish and have been buyers on 75-80% of the days and are investing about Rs 850-1000 crs on a daily basis.

Dow Jones has also made a new lifetime high and gained 333.88 points or 1.22% to close at 27,681.24 points.

The over 150 years old Ayodhya- Babri Masjid dispute judgement was announced on Saturday the 9th of November. The litigation began almost immediately after independence and becomes a seventy year plus dispute, there has been controversy much before that. The idea of choosing Saturday was that it is a half-holiday and would be easier to monitor law and order in case of any untoward incidents. Till the time of writing this article things have been under control across the country. The Supreme Court judgement was unanimous and it has asked the Central government to form a trust to construct the temple while also directing it to allot 5 acres of suitable land for making a mosque.

Three judgements, namely the Sabarimala case, Rafael case and RTI are to be announced between the 13th and 15th of November.

Moody’s has downgraded the sovereign outlook from stable to negative. This saw markets lose significant ground on Friday with BSESENSEX down 330 points and NIFTY 104 points. The Indian Rupee too lost significantly and was down 33 paisa for the day.

With Ayodhya behind us it would be fair that the markets would get back to their previous ways. The development of the region and construction of the temple itself would propel the economic wellbeing of the region. Going forward it would become a large temple town and have benefits associated with what Tirupati, Vaishnodevi or Shirdi and Nasik have. The expected new high on NIFTY last week may happen in the coming week or fortnight.

While Maharashtra had a clear mandate in the recent elections for the BJP-Shiv Sena combine, we are seeing drama in the state which could only be seen in Bollywood. BJP has refused the first offer of forming the government on being invited as it was the largest party. Shiv Sena has been invited to form the government and has time till today 7.30 pm. It needs the support of NCP and Congress to do so. The price that would have to be paid to get the Chief Minister’s post is anybody’s guess. Deputy Chief Minister to both parties, speaker to the partners and equal number of cabinet berths to go along. This is without the claim of the independents who have supported the Sena. Not sure whether this alliance if formed within the next 12 hours will last 5 years or we will see more drama. Having given the state update, this is not to suggest that this would have a bearing on the markets but could alter BJP’s policy and approach to alliances in the future.

The week ahead would be the last week for results reporting season and it is widely expected that overall the season has been decent with the tax break helping in a large way. If one were to exclude the gains on account of the tax changes, results are still positive to a large extent and give rise to expectations that by the time the fourth quarter results of 2019-2020 are announced the slowdown pangs would have been resolved.

In conclusion, with a major socio-political issue hanging fire for decades resolved, markets should settle down. Moody’s downgrade apart, India continues to be that ray of hope which could not only be the place for growth but probably the fastest growing economy with some base size. The breadth of the market increasing and newer stocks participating in the rally gives comfort and reason to believe that the momentum would continue. Use sharp dips to build positions and a new NIFTY is on the cards in the current month if not earlier.

The Diwali mood continued post ‘Muhurat’ trading which happened on Sunday 27th October and markets went from strength to strength. They gained on all four trading days and BSESENSEX hit a new lifetime high as well. BSESENSEX gained 1,106.97 points or 2.83% to close at 40,165.03 points. NIFTY gained 306.70 points or 2.65%. The broader indices saw BSE100, BSE200 and BSE500 gain 2.84%, 2.88% and 2.96% respectively. BSEMIDCAP gained 3.83% while BSESMALLCAP gained 3.40%.

BSESENSEX lifetime high was made on 4th June 2019 at 40,312.07 points. This was crossed on Thursday the 31st of October when the BSESENSEX touched 40,392.22 points. NIFTY lifetime high was made on 3rd June 2019 at a value of 12,103.05 points. It is yet to cross the lifetime high. Historically it has been seen that the SENSEX and NIFTY make new landmarks within a couple of days of each other and worst about five trading days apart. The closing value of NIFTY on Friday at 11,890.60 points, indicates that NIFTY needs to gain 213 points to make a new high. This translates into another 550-600 points on BSESENSEX. This is just to give an indication that we should in all probability see the BSESENSEX touch or almost touch 41,000 in the week ahead if NIFTY has to make a new high. Quarter.

Markets discount the future and it is widely believed that the current slowdown in the economy on various fronts has probably bottom out and the worst is over. The turnaround would be visible in the January-March 2020. It is this period that the markets are looking forward to and the buoyancy in the marketplace.

Results for the quarter July to September 2019 continue to show some green shoots and there is reason to be cheerful. Tata Motors and SBI were two large companies which enthused the markets post their results. Shares of Tata Motors rose Rs 47.95 or 37.77% to close at Rs 174.90 while SBI shares rose Rs 31.90 or 11.33% to close at Rs 313.50. The better performance by larger companies would bring confidence back to the markets.

October futures expired on a positive note gaining 306.25 points or 2.65% to expire at 11,877.45 points. An interesting feature on expiry day was the huge activity one saw in options of Yes Bank in the last couple of hours. The stock price was Rs 56-57 and Rs 60 strike, call was trading at Rs 0.10-0.25. The stock price started moving and touched a high of over Rs 78 before closing at Rs 70.40 resulting in windfall gains for people who bought the call. What was even more interesting was the fact that you saw sellers of call running around to square of the same as in the money calls have to be squared off or would result in compulsory physical settlement which nether buyers or sellers wanted.

US Fed has cut interest rates by 25 basis points and the interest rate band is now 1.50%-1.75%. Dow Jones gained 389.30 points or 1.44% to close at 27,347.36 points. The Indian Rupee gained 7 paisa or 0.10% to close at Rs 70.81 to the US Dollar.

The week ahead should trade with a positive bias and if history has to complete its expected objective of NIFTY making a new high. Considering the fact that FPI’s have also turned bullish in October after being net sellers for about five months, expect markets to see bouts of correction but remain positive. The mood on the street has also changed and all of these factors would ensure a positive performance for markets in the week ahead. Post a new life time high there could always be profit booking but that would only be profit taking and not the end of the up move. Use corrections to add to positions and with market breadth improving look to add stocks from the midcap and Smallcap space with proper fundamentals as they are the ones which would give sharp returns.