The week gone by began trading on a very strong note and markets were up for the first two days, followed by profit taking and August futures expiry over the next two. Friday was another classic day and followed the previous Friday’s pattern. Markets opened strong, turned negative and then had a very strong rally to close positive for the day. BSESENSEX ended the week with gains of 631.63 points or 1.72% to close at 37,332.79 points. NIFTY gained 193.90 points or 1.79% to close at 11,023.25 points. The broader indices saw BSE100, BSE200 and BSE500 gain 2.06%, 2.11% and 2.16% respectively. BSEMIDCAP was up 2.01% while BSESMALLCAP gained 2.16%.

It would be interesting to note that the low made on Friday was 36,829.81 points on BSESENSEX and 10,874.80 points on NIFTY. These lows were higher than the close made on Friday the 23rd of August. Also, the rally from intraday low on Friday to close on Friday was over 500 points on the BSESENSEX and almost 150 points on NIFTY. Significantly, markets were marginally positive on a weekly basis at the low of Friday and then rallied on announcement of the press conference by the FM in the evening. This was similar to the previous Friday as well.

Nifty futures for August expired on a negative note and were down 303.85 points or 2.70% to close at 10,948.30 points. Dow Jones had a volatile week and gained 687.92 points or 2.68% to close at 26,316.82 points. Trump tweets about China trade war continued to keep the US markets on its toes. The Indian Rupee gained 26 paisa or 0.36% to close at Rs 71.40 to the US Dollar.

Friday evening saw the FM announcing steps about the PSU banking space. Ten banks would be merged into 4 entities. These would be Oriental Bank and United Bank merging into Punjab National Bank, Syndicate Bank merging into Canara Bank, Andhra Bank and Corporation Bank merging into Union Bank of India and Allahabad Bank merging into Indian Bank. With the earlier merger of Dena Bank and Vijaya Bank into Bank of Baroda has already fructified, the number of PSU banks with this round would shrink by six. The FM also announced that an approximate amount of Rs 55,250 crs would be infused into the PSU banks in the current year.

C G Power board sacked its Chairman, Gautam Thapar in lieu of recent developments of wrong doing in the company. A day later the CFO of the company was terminated on grave nature of the misconduct and breach of trust and having knowingly undertaken actions which were detrimental to the interests of the company and its stakeholders. Company after company in the Gautam Thapar group is either being sold or is sinking and it appears, he has no interest in the legacy built by his forefathers.

Earlier during the week, the government announced several measures which would help in reviving manufacturing and economic activity in the country by revising FDI rules. The government allowed 100% FDI in single brand retail, coal mining, contract manufacturing and digital media.

GDP for the quarter April to June 2019 was at 5%, its slowest level of growth since 2013. There is concern and hence the measures being taken to revive demand and kickstart growth.

The FM has made two sets of announcements on consecutive Fridays and has helped in keeping the markets positive. Will the third announcement expected about the realty sector in the coming week be again on a Friday and have a similar impact?

The week ahead has a trading holiday on Monday on account of Ganesh Chaturthi, the day Lord Ganesh idols are brought home. Markets would be choppy and take cues from the global markets where there seems to be no concrete resolution happening anytime soon on the trade wars. India will also look at the auto numbers which are certainly not going to be encouraging. Further the measures on the real estate sector would be certainly very keenly watched.

Play the market as it unfolds in the four-day week ahead. Announcements from the FM would be very keenly watched and tracked. While markets would be choppy, carrying short positions forward may be a dangerous thing, as there is every possibility that FPI’s may revert to their buying ways in the immediate near future.

It was a dramatic week that just went by. I began with markets gaining on Monday and then losing for the next three days. Friday began badly and markets were down sharply before there was a sharp recovery. BSESENSEX lost 649.17 points or 1.74% in the previous week to close at 36,701.16 points. What is of even greater significance is the fact that the low of the day on Friday was six hundred points lower at 36,102.35 points. NIFTY lost 218.45 points or 1.98% to close at 10,829.35 points. The low on Friday was 10,637.15 points, a recovery intraday of 194 points. The broader indices saw BSE100, BSE200 and BSE500 lose 2.01%, 2.03% and 2.12% respectively. BSEMIDCAP was down 2.14% while BSESMALLCAP lost 3.17%.

The Indian Rupee continued to be under pressure and lost 51 paisa or 0.72% at Rs 71.66 to the US Dollar. Dow Jones continued its wild swings and was down 257.11 points or 0.72% at 25,628.90 points. President Donald Trump seems to be losing his cool in this one-upmanship war with his Chinese counterpart. He has now asked American companies to stop using Chinese locations for their business not realising that a large part of so-called American goods is actually manufactured in China. China has imposed further increase of duties on 75 billion of US exports to China. One hopes at the G-7 meeting being held in France over the weekend some sense dawns on Trump or it could be yet another terrible week for global markets.

In the last seven weeks since the Budget was presented, markets have lost 10% on an intra-day basis and over 8% on a closing basis. FPI’s have withdrawn close to 3 billion dollars of money in the same. The recovery on Friday was just not enough, nor was it the end of the story. We had the Finance Minister applying balm to soothe the nerves of investors and other sections of society. The sore point has been addressed and some more also announced for them during the course of last week. First SEBI announced further simplification of registration for FPI’s. Secondly it gave them a tax holiday of 10 years if they registered and did business from Gift City in Ahmedabad. To make things even sweeter for them while the FM rolled back the surcharge imposed on them in the budget, she also extended the same benefit from trading in derivatives which was earlier treated as business income.

Besides covering the FPI’s, FM also announced measures for a number of sectors. These included the auto sector where additional depreciation has been provided for purchase made in the period ending between now and 31st March 2020. This deprecation is being doubled from the present 15% to 30%. Further the freeze on government departments for replacing old cars would be lifted. As far as BS-IV vehicles are concerned, the FM made it clear that they would be allowed to remain registered as long as the validity of the registration is issued when purchased.

A number of measures which would help in ease of business were also announced which concerned the IT department, refund of GST pending, SME and MSME and also that banks would pass the benefit of any rate cuts in totality. She also announced that another so called ‘package’ would be announced mid-week in the coming week and the third and final one sometime next week.

The two primary issues which listed during the week gone by did not have a very successful debut. Shares of Spandana Sphoorty Financial Limited which had issued shares at Rs 856 ended the week with losses of 39.60 or 4.63% to close at Rs 816.40. The other issue from EPC contractor Sterling & Wilson Solar Limited which had issued shares at Rs 780 saw its price fall to Rs 625.15, a loss of Rs 154.85 or 19.85%.

The former Finance Minister and home minister Mr P Chidambaram was arrested last week after his anticipatory bail application was turned down. The spectacle that was created on national television with his chief lawyers being present at his residence and the press conference at AICC headquarters was unbecoming of such a tall leader and senior advocate of the Supreme Court. The outcome of this arrest is going to be long and sordid.

Speaking of former finance ministers, yet another former finance minister Shri Arun Jaitley passed away on Saturday. He was ailing for quite some time.

It would be fair to assume that with such a carrot dangling; marketmen would dare not short any rally which sets in motion beginning Monday morning. It would be important to see how much of the 3 billion of sales is bought back. If FPI’s buy even half of that amount in the coming weeks, markets would regain almost entire lost ground as confidence would have been boosted and the rupee would also have gained.

Markets would in all probability open with a big gap on Monday morning. Whether short covering takes it further up or fresh buying, is the moot question. Fresh buying would lead to spurt in volumes and also help the currency to stabilise while just short covering, would lead to just recovery in prices for a day or two with virtually no effect on the currency.

G-7 is on in France and one hopes some sanity dawns on the US president and the present standoff between China and US does see some pause. Currently the same is hurting not only the two countries but virtually the whole world. The present set of products on which China has increased tariffs are primarily farm produce and automobiles. The farm products would hurt Trump dearly in the presidential elections and that is getting him worried. Whether he would react or continue in his own manner, even God would not know.

The rally would happen on Monday morning. The moot question thereafter would be whether it is a pullback or beyond that? This would be answered by the FM when the second set of announcements are made. Till then hope that FPI’s come back and Trump does not tweet something else.