The last week saw markets gaining on all five trading sessions after a very long time. The last time it happened was almost six months ago in the week of 16th March 20 21st March when the indices gained a massive 3,076 points or 4.17% on BSESENSEX and an impressive 953.20 points or 4.26% on NIFTY. This week the gains were not so impressive but nonetheless it was a clean sweep. BSESENSEX gained 1,193.94 points or 1.48% to close at 81,904.70 points while NIFTY gained 373 points or 1.51% BANK NIFTY was up 694.74 points or 1.28% to close at 54,809.50 points. The broader indices like BSE100, BSE200 and BSE500 saw them gain 1.59%, 1.62% and 1.61% respectively. BSEMIDCAP gained 1.59% while BSESMALLCAP gained 1.51%. The top sectorial gainer was BSECAPITAL GOODS, up 4.25% while the only loser was BSECONSUMER GOODS, down 1.19%.

The Indian rupee was unchanged at Rs 88.27 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. It was up 433.36 points or 0.95% to close at 45,834.22 points.

Infosys announced its largest ever buyback of shares. The price would be at Rs 1,800 per share and the amount kept aside is a staggering Rs 18,000 crores. This effectively means that 10 crore shares would be accepted in the buyback. Shares of the company rose from Rs 1,444 to Rs 1,526 on this count last week. They were up Rs 82 or 5.67% and were a decent contributor to the rally last week. The premium compared to Friday’s close is Rs 274 or 17.95%.

Gold prices are boiling. They are at new all-time highs and closed the week at $ 3,643 per ounce and Rs 1.08,980 for 10 grams of 24K. On a year to date basis gold is up 27% and it appears the present rally has legs. Global turmoil and the way Central Banks the world over are buying gold, is fuelling the rally.

The key factor supporting markets is hope and expectation that the Trump retaliatory tariffs issue would be amicably resolved. While there is hope there is a possibility. The fact also remains that all his claims of resolving the Russia-Ukraine conflict have fallen flat. So much so that its eight months since he became the President of the United States of America and we haven’t moved any closer. Further, the de-dollarization is making things worse for the American economy. Diverse nations seem to be teaming up and making new pacts to remove the dependency on the mighty dollar for their business and economic deals. In such a situation it would be time for the US to think about its ever mounting debt and the fact that it is a currency which is not backed by gold reserves, to the extent of currency in circulation.

The US Fed would be considering an interest rate cut in its upcoming meeting. There is another meeting happening on Tuesday and Wednesday in the coming week of the FED where there would be lot of data coming out. Depending on what the US does, there would be expectation that interest rates in India could see yet another cut post the GST rejig and benign inflation rates. The monsoon has also been good and at many places excess as well.

Coming to the week ahead, support would exist at levels of 24,800 points and lower down at 24,300 points. On resistance front, the immediate target is 25,300 points. If this is taken out and sustained, next level would be at 25,550 points. Is the same doable or not depends on news flow.

The strategy would be to keep positions light on an intraday basis and await clarity before jumping in. Remember that FPIs have been sellers and till date have sold Rs 1.43 lakh crores approximately in eight and a half months. Add to this the spate of public issues, OFS and PE selling that markets is witnessing. There is enough paper available for everyone. With Indian trade delegation visiting the US for trade talks, hopefully by the time Navratri is done and dusted, we should have clarity.

Trade cautiously.

Arun Kejriwal (Market Veteran Investor & Opinion Maker)