It was a tough week for markets in India and globally. Trump and his tariffs coupled with his tantrums and demand for the Nobel Peace Prize continued unabated. One wonders whether an award can ever be obtained in this manner. Let’s move on to markets. Our markets lost on three of the five trading sessions and gained on two. BSESENSEX lost 863.18 points or 1.06% to close at 80,599.91 points while NIFTY lost 271.65 points or 1.09% to close at 24,565.35 points. BANK NIFTY lost 911.30 points or 1.61% to close at 55,617.60 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.16%, 1.29% and 1.47% respectively. BSEMIDCAP was down 1.79% while BSESMALLCAP was down 2.47%. 

The Indian Rupee lost 92 paisa or 1.06% to close at Rs 87.51 to the US Dollar. Dow Jones had a torrid week and lost on all five trading sessions of the week. It was down 1,313.24 points or 2.92% to close at 43,588.58 points. 

July futures expired on a weak note. The series closed with losses of 780.65 points or 3.06% at 24,768.35 points. The series has been very volatile and choppy. A large part of the fall during the series could be attributed to the overall poor quarterly results which have come and the concerns on Trump Tariffs. 

Markets are under pressure and results are probably the main reason for the same. India Inc. has not been able to grow sales in the manner that they were expected to happen. While rate cuts have helped in finance costs been kept under check, operating efficiencies have not apparently kicked in. Some leeway could be given to companies who have exports to USA and have been impacted because of the tariff uncertainty, but concerns remain. 

There is a new debate which is unfolding on the street where investors who are at the bottom of the pyramid and the most affected when top officials of the company commit acts which lead to the company being downgraded or taking a beating. Such officials then use the ‘CONSENT’ mechanism, pay a fine and scoot off. The fine goes into the coffers of the regulator and the poor investor is left twiddling his thumb. I believe this entire system needs to be relooked and such officials need to be made to pay more financially and also under criminal law.. Secondly there should be a mechanism where investors and shareholders who suffer are compensated from such penalties and fines and not that the same goes into the coffers of SEBI. The current case which brings this thought out, is the one involving Indusind Bank and its current MD and CEO, Sumant Kathpalia. He has offered to pay a sum of about 5.2 crores to settle a case without admitting guilt. This kind of amount raises eyebrows straight away. We must also note that a number of people including the CFO of the bank were sacked/relieved with immediate effect under doubt raising circumstances. More on this at a later time. 

While USA has threatened India to impose penalties and higher unspecified tariffs if we continue to import crude oil from Russia, India would do so and is sending NSA, Ajit Doval and Foreign Minister EAM Jaishankar, to Russia in the coming weeks. Very clearly the stand-off and bullying tactics of Donald Trump have been called out as a bluff. 

Levels of 24,200-24,300 are sacrosanct for the markets currently. If they were to break, we could see some panic and also a sell-off in the markets. This could probably be one of the reasons why primary markets activity currently is at an elevated level and issuers who were taking it easy till a week or two ago, have suddenly pressed the accelerator and want to launch their issue right away. 

If as mentioned above, support at 24,200-24,300 were to break, we could go down all the way to levels of 23,500 or thereabouts. On the upside, levels of even 25,000 look difficult currently. From a strategy perspective, it makes sense to lie low and allow markets to take their own course. It’s time to rebuild the portfolio looking at results which have been declared. 

Trade cautiously.

It was a tough week for the markets as substantial gains made during the first three days were wiped out and then converted into a weekly loss. This incidentally is the fourth consecutive weekly loss for the markets. During the week, markets lost on three of the five trading sessions and gained on two. BSESENSEX lost 294.64 points or 0.36% to close at 81,463.09 points while NIFTY lost 131.40 points or 0.53% to close at 24,837 points. BANK NIFTY gained 245.90 points or 0.44% to close at 56,528.90 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.73%, 0.89% and 1.10% respectively. BSEMIDCAP lost 1.71% while BSESMALLCAP was down 2.49% which gives you the sense that market breadth was substantially negative. 

The Indian Rupee lost 44 paisa or 0.51% to close at Rs 86.59 to the US Dollar. Dow Jones gained 559.73 points or 1.26% to close at 44,901.92 points. It gained on three of the five trading sessions and lost on two. 

IPO season is on full throttle. We have one issue closing today. Besides the issue from Brigade Hotel Ventures Limited (closing today), we have six other issues which would open and close in the week ahead. Very clearly, primary markets are in full flow. 

The issues are from NSDL, Aditya InfoTech, M&B Engineering, Shanti Gold International (which has opened on Friday), Sri Lotus Developers and Laxmi India Finance.  

The price band for NSDL which is entirely an offer for sale is Rs 760-800, well below the unlisted price which was traded above 4 digits and hovered in the range of 1100-1275 till a few days back. Post announcement share prices in the unlisted market have crashed and now trade at their low of 1025. The shares are now not transferable and are effectively locked in. After, HDB Financial this is the second share in which IPO prices are way below traded prices on the unlisted market, causing huge losses to new investors. Time for investors to take serious note of this fact and understand that the unlisted platform need not necessarily create money for investors. 

Results season is on and is certainly not one which would make investors happy. Expectation of a steady and improved performance from corporate India has been belied and they could be termed as a tad below average so far. Could things change going forward, seems unlikely? Companies with better results tend to declare them in the earlier period of the 45 day window for declaring results. This is one big disappointment for the markets and responsible in a big manner for the poor state of affairs in the markets. The much awaited India-US trade deal seems to be getting delayed and making markets nervous. The commerce Minister has recently said that the same would be done by 1st August, but one would have to keep fingers crossed. This now seems to be the only big potential news driver for markets. 

The week ahead sees July futures expiring on the last day of the month, 31st July. The current position of the series is even Stevens with gains of a mere 3.40 points or 0.01%. The series had begun at 24,833.60 points and is currently at 24,837 points. It’s anybody’s game over the next four days, but the scales are tilted in favor of the bears. With the present mood and sentiment, markets are likely to continue to remain under pressure. 

Currently there is surfeit of paper in the market with FPIs being aggressive sellers, plenty of IPOs and every other day market offers from PE investors and promoters taking place on the exchange platform. So far in the current month of July, FPIs have been net sellers of Rs 30,500 crores while Domestic institutions have been net buyers of Rs 39,800 crores. More than matched but segments are different. 

Coming to levels, 25,250-25,300 is becoming a strong band of resistance and would need very big and positive news flow to be surmounted. On support side, levels of 24,500 would act as support and lower down at 25,200 around. Looking at it from a trading zone perspective the broad range is currently now 24,500 to 25,200 with a downward bias. The strategy would be to remain light from a trading perspective and look to rebalance the portfolio post the quarterly numbers. Many new investment opportunities would be available after these results. 

Trade cautiously.