Markets were marginally negative after four days of trading but Friday was another day. RBI permitting buying by FII’s in shares of HDFC Bank changed the scenario completely and the markets rebounded to close positive for the week. The BSESENSEX gained 134.50 points or 0.47% to end at 28,468.75 points while NIFTY gained 28.15 points or 0.32% to close at 8,821.70 points.

HDFC Bank made an intraday high of 1,454 before closing at Rs 1,377.15, a weekly gain of RsRs 72.65 or 5.57%.In what could be described as a defining moment for India and all Indians, ISRO the space organisation launched its PSLV with a world record 104 satellites. This is the highest number of satellites in a single vehicle.

Results season for the quarter October to December 2016 has ended on a mixed note. The last mega result to be declared was from Tata Motors which had a disastrous quarter and the share reacted quite strongly losing 11.13% for the week. Overall the results during the quarter appear better than expected. This was despite the fact that the demonetisation of high value notes on 8th November was expected to have a negative impact on corporate India which was not as bad.

With various milestones on GST being cleared it appears to be on track for a July 2017 launch and this would be a real mega reform for India with just this measure adding about 1-1.5% to India’s GDP. Secondly this would be a big boost for the organised players in almost all sectors and deal a body blow to the unorganised sector who would have to turn compliant to survive. In such a scenario, market share of organised players would increase and also tax collections of the states and centre.

The week ahead is a truncated one with holidays on Tuesday and Friday. Tuesday for municipal elections in Mumbai where both exchanges are located and Friday for MahaShivratri. This would be preceded by February series expiry on Thursday where the current level of NIFTY at8,821.70 points is higher by 218.95 points or 2.55% compared to the previous expiry of 8,602.75 points. The gains are not substantial but are good enough for the bulls to hold on. With a holiday in between, the series could go either way.

Kraft- Heinz made a bid to acquire Unilever for 143 billion dollars which has been rejected by Unilever board. However the market cap of Unilever gained about 60% in a single day after the bid was made and rejected. It sure would be interesting to see how developments pan out going forward and the reaction to Hind Unilever shares in the coming week. Also the other entity controlled by Kraft in India is the now delisted Cadbury India.

Technically speaking, the market has entered into a very crucial phase at the current levels. There was an upside gap created with Friday’s trading and this gap has entered the same area where a downward gap was created on the 12th of September 2016. The value of this gap was 28,755-28,251 on the BSESENSEX and 8,858-8,746 on the NIFTY. The markets need to cross the upper limit of the previous gap and remain above that for the bullish momentum to continue. In case they fail there could be weakness setting in. With two holidays and expiry next week either of the two eventualities could happen. At the same time the indices are less than 2% away from the highs made in September 2016.

Markets need triggers going forward. Want of them could make the markets drift and lose some momentum which is currently the key driver for them. Election results would be declared in three weeks’ time which could act as a short term trigger in either direction. The effect would be short lived but would be an important event for the markets.

The week ahead is truncated with a mere three days of trading and both holidays India centric couple with expiry. Markets are likely to be volatile and see sharp movements. Trade cautiously.

It was a week of gains on Dalal Street even though they were significantly less than the previous weeks. The BSESENSEX gained 93.73 points or 0.335 to close at 28,334.25 points while NIFTY gained 52.60 points or 0.60% to close at 8,793.55 points. The biggest sectoral gainer was BSECONDUR up 5.20% while the biggest loser was BSEMETAL down 1.64%. Similarly in individual stocks the biggest gainer was BHEL up 10.37% whilst the biggest loser was SAIL down 5.49%.

The Indian rupee gained 43 paisa or 0.64% to Rs 66.88. Dow Jones rallied smartly to gain 197.91 points or 0.99% to close at 20,269.37 points. The world is struggling to adjust to Donald Trump’s policies and so is the American administration which has turned down some of his acts like travel ban.

Results for the quarter are better than expected especially in light of the ban on high denomination notes which happened on the 8th of November. This effectively chopped off eight weeks in the quarter and affected liquidity in the system. Despite the impact, results are fairly robust and give a sense of confidence about the economy.

Markets are positive and have maintained the momentum on account of positive inflows from domestic investors on the back of inflows into mutual funds. These flows have balanced the outflows of FII’s. The past fortnight has seen that FII’s have turned buyers as well. Going forward if FII’s and domestic institutions both remain positive and inflows continue we could see sharp gains in the market as well.

RBI and the money market committee decided by a 6-0 verdict to keep rates unchanged. The markets reacted as they know best when the unchanged rates were announced. They recovered thereafter and closed with minor losses. The minutes of the meeting show that going forward rate cuts happening seem over. The positive fallout of this would be inflows into debt from foreigners who were pulling that out as well should happen. With interest rates set to rise in the US, it would have become even more difficult as the differential would have narrowed if rates were cut here. With flows likely in equity and debt the currency would also appreciate and become more stable.

All is not well in Infosys. The founders are unhappy with the board. Whether this is because they no longer have control or what one does not know, but what is happening is certainly not good for the company. Precious bandwidth is being wasted in handling non-core issues and is demoralising to the top management. Readers would recall that in the last few years there have been many such issues where top management has left suddenly. The issue currently with board members is hurting the company. They need to focus on the issue of H1-B visa which could impact business in a big manner. One hopes that the doyen of Indian corporate governance and one of the most respected companies would set things in order at the earliest.

Elections in India’s largest state is under way and results for UP and four other states would be declared on the 11th of March. These elections are important for parties at the centre and state and results could have an impact on the market in the short term. With central elections still more than 24 months away structural reforms like GST and the move to become a less cash society would keep markets buoyant and in a general upward trend. It makes sense to look at companies which are delivering performance and invest in quality companies. At current levels many of them would be looking expensive but one must remember in a market which is rising, quality gets more expensive as the market PE rises.

In conclusion look for quality and put your bets there.