Markets fell on all five trading days last week and were volatile on expected lines. BSESENSEX lost 737.53 points or 2.02% to close at 35,808.95 points. NIFTY was down 219.20 points or 2.00% at 10,724.40 points. The broader market lost a little more with BSE100, BSE200 and BSE500 down 2.33%, 2.26% and 2.30% down respectively. The bigger pain continues to be in the mid and small cap which were down 2.71% and 2.96%.

BSEMIDCAP is less than 3% away from making a new 52 week low while BSESMALLCAP is at a 52-week low. The problem with these small shares is that there seems to be no level at which they would stop. They seem to be just falling non-stop and there are no levels for support for these stocks. In sharp contrast, the BSESENSEX is about 8% higher than its 52-week low.

Dow Jones had a positive week and gained 776.92 points or 3.09% to close at 25,883.25 points. The Indian Rupee gained 8 paisa or 0.11% to close at Rs 71.22.

Results season is over and there have been some positive takeaways from them. Many of the companies have posted positive results and the leaders are back in focus. Clearly the auto sector and the ancillary makers have been under pressure with the largest auto maker Maruti seeing a slowdown. The impact of this is likely to remain for a couple of quarters. Even this week the auto majors barring Tata Motors were down sharply.

The terror attack on the CRPF by a suicide bomber who blew up his vehicle against an oncoming convoy was indeed most unfortunate and has raised spontaneous protests from the common man against such attacks. The world unitedly has condemned the attack and asked Pakistan to take immediate action. It has added to the political tension with elections due in about two months.

The window of new announcements and projects to be launched in the run-up to the election being notified is about three weeks away. Expect a slew of them as we get ready for the other of all election which will be a watershed one. Many parties would be fighting this election for their survival and a poor showing this time around could be disastrous for their future. This situation would make this election dirty and rhetoric would be at an all time high. Expect drama and unexpected developments to take place which would be more eventful than some of the soap operas for their twists.

The knack with which market finds its weekly bogey stocks simply continues. This week it was the turn of Apollo Hospital and Emami which has a large portion of promoter shares being pledged. Emami lost Rs 24.90 during the week or 6.90% after losing Rs 27.25 in the previous week to close at Rs 360.85. Apollo Hospital lost Rs 118 or 10.34% to close at Rs 1,141. With promoter pledge becoming such a big concern, one is finding that shares seem to just tumble.

The broader issue is that a large portion of this financing has been done by mutual funds and some of it by NBFC’s. The golden run of mutual funds which saw huge inflows through SIP post demonetisation seems to have run its course and come to a complete halt. Live SIP accounts have fallen to 1.87 lakh accounts in December 2018 from 4.81 lakh accounts in April 2018. With the current state of the market being what it is, this situation is likely to worsen as returns are negative from the stock market.

Markets in the week ahead would continue to be under pressure and would look to find their level of support and make a base. They would continue to be volatile in this process. New revelations of promoter pledge would keep trigger happy market traders in a gleeful mood. Simple strategy would be to look to develop a portfolio from the current valuations which are compelling in many cases. Be choosy and greedy in stock selection and timing. Final advice, don’t buy everything at one time.

Markets began the week on expected lines and were going along merrily until Friday hit them. Tata Motors provided notional impairment on their investments into JLR and the company reported a loss of Rs 27,000 crs. Markets were badly affected and lost substantial ground yet managed to remain positive. They however gave up the gains of the previous four days. BSESENSEX gained 77.05 points or 0.21% at 36,546.48 points. NIFTY was up 49.95 points or 0.46% at 10,943.60 points.

Dow Jones gained 42.44 points or 0.17% to close at 25,106.33 points. Donald Trump is also battling several issues simultaneously. Firstly the China-US trade wars seem to be making no progress. Secondly the Mexican wall seems to be stuck between the Democrats and the Republicans and thirdly it appears that Trumps businesses are under investigation.

RBI reduced repo rates unexpectedly by 25 basis points to 6.25%. This rate cut is after 17 months. It also changed its stance to neutral from calibrated tightening, indicating that they are comfortable with the current level of inflation and do not expect the same to rise in the near term.

The market mood continues to remain bearish and yet they end with weekly gains. This can be borne out from the fact that with even an unexpected rate cut from RBI, markets could not hold on to the intra day gains and ended virtually flat on Thursday.

Every week the market comes up with some stock or the other which has bad news and the stock gets butchered and hammered mercilessly. Last week it was the ADAG stocks and of course Tata Motors on Friday which lost 30.45 or 16.75% to close at Rs 151.30. Readers would recall that in previous weeks it was Sun Pharma, Zee, DHFL and many others. Probably it is this opportunity which is making market minds bearish. Food for thought.

There were two listings last week. The first was Xelpmoc Technology and Design Limited which had raised Rs 23 crs at Rs 66. Shares listed weak and gained thereafter to close at Rs 71.30, a gain of Rs 5.30 or 8.03%. The other issue was from Chalet Hotels Limited which had raised Rs 950 crs through a fresh issue and an offer for sale of 2.4685 cr shares at Rs 280. The share listed on Thursday and closed at Rs 292.15, a gain of Rs 12.15 or 4.34%.

Elections are likely to be notified around the 5th to the 10th of March. The pending bills passed by Lok Sabha and pending in Rajya Sabha are likely to be proclaimed as ordinances. This would set the pace for a no holds barred election. The kind of noise that has already begun about the elections gives a feeling it would be a fight to the finish with no quarter given or asked for.

Scepticism and pessimism are the best two words to describe the state of the market. It makes sense to stick to the strategy of the previous weeks and use sharp dips to buy and rallies to sell.