The week gone by had a mere three trading days and was volatile even in that. The BSESENSEX closed with losses of 231.58 points or 0.62% at 37,350.33 points while NIFTY lost 61.85 points or 0.56% to close at 11,047.80 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.72%, 0.67% and 0.69% respectively. BSEMIDCAP was down 1.31% while BSESMALLCAP was down 0.90%.

A large part of the damage in the benchmark indices was contained by Reliance Industries which was also the top gainer. Reliance was up Rs 115 or 9.9% at Rs 1,277. This kind of a move has come after a long time. This gain was primarily on account of the company saying at its AGM held on Monday that it was in talks to sell a stake to Saudi Aramco for 15 billion dollars. Over the last month or so the total debt of Reliance had become a matter of concern and the company was downgraded on this count. This news caused the share to gain sharply and, in the process, helped the indices also stabilise.

Dow Jones was all over the place last week. The net result was a weekly loss of 401.43 points or 1.53% at 25,886.01 points. The daily movement was an eye opener and indicates the amount of nervousness. Monday saw a loss of 390points, Tuesday a gain of 382 points, Wednesday sharp fall of 800 points, Thursday and Friday saw gains of 100 and 307 points respectively. Total gains during the week were 789 points while losses were 1,190 points. Total movement during the week was 1,979 points. This is effectively a change of 395 points per day or 1.52% per day. Just to put in perspective while we had a short and volatile week, the total movement in three days on the BSESENSEX was 1,015 points (loss of 623 points and gain of 392 points) or 338 points daily average. This becomes a daily change of 0.90%.

The immediate cause of concern in US was yet another round of duty being imposed on Chinese imports into the US. This seems to have become never ending and is getting markets really worried. To add to this is tension in Hong Kong where civil strife is on and the city has been locked down. China has moved in military might to Shenzhen and there could be large scale violence in the immediate near term. There is a slowdown looming large and this is certainly not good news for the markets.

Back home, after having meetings with various stake holders, the FM had detailed meetings within the ministry and also the PMO. No public outcome is as yet available but is expected once the PM returns from Bhutan. Expect some announcement on this subject on Monday or Tuesday in the coming week.

The week ahead would see the listing of two IPO’s on Monday and Tuesday. Monday would see the issue from Spandana Sphoorty Financial Limited list. The issue was subscribed 1.05 times with the help of QIB portion which was subscribed 3.11 times. HNI and Retail was undersubscribed at 0.55 times and 0.09 times respectively. With little hangover of selling pressure the share should be able to sustain itself but one should not be surprised if the shares trades below its issue price. There was no funding of HNI applications and as a result there was hardly any grey market either.

Tuesday would see the shares of Sterling and Wilson Solar Limited list. The company had tapped the markets with its offer for sale of Rs 3,125 crs which saw the issue manage to be subscribed. The QIB portion ensured that the issue scraped through. HNI portion was subscribed 0.89 times and Retail portion 0.30 times. Looking at market conditions and the response, the share is likely to be under pressure unless some QIB’s decide otherwise. HNI interest seems to be generated from friends and well-wishers of the promoter families. For the Shapoorji Pallonji family this would be their maiden IPO and something to be cherished in their 150-year history.

In this issue as well, there was no funding and no grey market to talk about.

Markets are experiencing turbulence and tough conditions currently globally. The trade wars between China and US have been continuing for almost nine months, civil unrest recently added in Hong Kong, Iran and the middle East and Europe and Brexit. To add to this, we have a slowdown which seems to be gaining momentum. Oil prices which seem to have steadied are again under pressure. Oil price fall is of course good news for India.

Towards the end of June, in India it looked like this would be a monsoon starved year. By beginning of August, the scenario has changed completely and instead of a drought we have floods affecting about a third of the country. It appears the rain gods have rained with a vengeance this time. Effect of global warming and climate change and what it could do in future.

In such a scenario one has to depend on local cues and hope that issues on the domestic front are sorted soon. FPI issue of surcharge, some sort of one-time relief for auto sector and retail sector will go a long way. Expect good tidings on Monday or Tuesday. Trade cautiously and do not expect freebies but tweakings.

It was an action-packed week on dramatic lines last week. It had a political twist, then RBI stepping in and finally hope and expectation with various meetings between industry, capital market and the Finance Minister. It all began with the Rajya Sabha on Monday and then the Lok Sabha on Tuesday scrapping special status under article 370 and 35A for Jammu and Kashmir and making them union territories with legislative assemblies. It also made Ladakh a union territory without a legislative assembly. The divide right across the centre of the principle opposition party, Congress was clear where they lost the chief whip in the Rajya Sabha on the issue of vote on J&K. Further a large number of ex MP’s from Congress from the NextGen who incidentally had all lost this time, voiced their view against the party line. Fearing another split, late last night Congress made Sonia Gandhi the interim Congress party President yet again. This after the party had said that the next president would be a non-Gandhi.

Wednesday saw RBI deliver the expected rate cut and break tradition by reducing rates from the conventional 25 basis points to 35 basis points this time around. Repo rate now stands at 5.40% which is the lowest rate in nine years. All six members voted in favour of a rate cut while four agreed with a 35-basis point cut and two supported a 25 basis points cut.

Thursday and Friday, we heard about the Finance Minister holding consultative meetings with captains of industry, chambers of commerce, automobile association and members of the capital market including FII’s and FPI’s. All of this led to the market believe strongly that the recent surcharge on income tax applicable to FPI’s could be rolled back or done away with. Markets rallied strongly and the mood on Dalal Street seemed significantly different that what it was over the last five weeks since budget was presented. No matter how coincidental it may seem, FPI’s were net buyers on Friday against their constant selling.

BSESENSEX gained 463.69 points or 1.25% to close at 37,581.91 points while NIFTY gained 112.30 points or 1.02% to close at 11,109.65 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.12%, 1.18% and 1.19% respectively. BSEMIDCAP was up 0.91% while BSESMALLCAP gained 1.63%. The benchmark indices gained on three of the five trading days and lost on the remaining two. The low on the BSESENSEX made on Monday was 36,416.79 points while on NIFTY it was 10,782.60 points. These could be significant levels on any negative news flow in the market in the coming weeks and markets again falling.

The top performing sector was BSEAUTO which was up 2.73% whilst the worst performing was BSEMETAL down 3.03%.

The Indian Rupee was under pressure and lost Rs 1.22 or 1.75% to close at Rs 70.80 to the US Dollar. This weakness was partly due to China devaluing its Yuan to trade above the 7 Yuan to the dollar level. Dow Jones lost 197.57 points or 0.75% to close at 26,287.44 points.

In primary market news, shares of Affle (India) Limited listed on Thursday. Trading was very volatile with shares touching a high of Rs 958.37 and a low of Rs 751.05 before closing at Rs 875.10. Shares gained 17.46% from its issue price of Rs 745. Delivery volume on day one was over 87% of the non-anchor portion which is indeed very high. HNI’s who had subscribed their portion by 198 times, lost money as the cost of funding was between Rs 215-220. The share never reached these levels during trading. While on one hand it could be said that a large number of people who were allotted shares sold, on the other hand it could be said that shares have been bought and gone in strong hands. The coming days would tell what happened.

The primary issue from Spandana Sphoorty Financial Limited was just about subscribed. The QIB portion was subscribed 3.11 times while HNI and Retail remained undersubscribed at 0.55 times and 0.09 times respectively. The issue was overall subscribed 1.05 times.

The issue from Sterling and Wilson Solar Limited which was an offer for sale for Rs 3,125 crs was subscribed technically. The offer for sale saw the company allot 1.80 cr shares to anchor investors and then the QIB portion was fully subscribed. This saw the QIB portion which was 75% of the total book receive subscription for 3.03 cr shares which was 75.78% of the overall issue. The HNI portion was subscribed 0.89 times and Retail portion subscribed 0.30 times. The overall book was subscribed 0.9225%. The issue being an offer for sale was subscribed and full allotment would be made to all valid applications.

The week ahead has two trading holidays on Monday and Thursday. This would break any momentum which would have built up last week. There is expectancy post the meetings that various segments of industry and capital markets had with the Finance Minister. While not much is expected to happen immediately, some decision on the surcharge needs to be taken. If nothing is forthcoming there could be yet another round of selling in the markets which seem to have just made some sort of a base. The lows made on Monday seem strong enough to withstand any selling pressure that may emerge during the week on expectations not being met.