The week gone by was volatile and had an early weekend because of a holiday on account of Holi on Friday. This signals the onset of spring. One hoes that this would bring about a change in trend in the markets which have been on the losing side for about six months or so since September 24. BSESENSEX lost on all four trading sessions and was down 503.67 points or 0.68% to close at 73,828.91 points. NIFTY lost on three of the four trading sessions and gained on one. It was down a similar 155.30 points or 0.69% to close at 22,397.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.85%, 1.00% and 1.28% respectively. BSEMIDCAP lost 2.07% while BSESMALLCAP was down 3.86%.
The Indian Rupee lost 13 paisa or 0.15% to close at Rs 87.00 to the US Dollar. Dow Jones had a torrid week and lost on four of the five trading sessions and gained on one. It lost 1,313.53 points or 3.07% to close at 41,488.19 points. Incidentally, Friday was a big recovery day as Dow gained a massive 674 points otherwise the weekly losses would have been about 2,000 points. This kind of figure does not come to mind in a very long time. After the fall in the Dollar Index the next concern for US markets is the 2nd April when tariffs are set to be announced and begin. At this point of time no one is sure how global trade would react to new rules and what the new rules would be. There would be a state of flux and residents and business men in the US are more worried than anyone else. It’s a mere fortnight away, but one that would be endless as time ticks away.
Donald Trump is a very busy man these days. Besides the trade war, he is also busy brokering peace in Gaza, Ukraine -Russia and has taken on a new front in Yemen against the Houthi rebels. It sure is a terrific pace at which he is going. However, this keeps markets on edge and that has all of us worried.
Indusind Bank was in the thick of news because of some discrepancies in its derivative earnings which is likely to eat into its earnings. The share lost a massive Rs 265 or 28.28% to close at Rs 672. The share has been falling since the previous week when it was around Rs 1,000. In what is glaring information and could be termed as dereliction of duty, is the resignation of the CFO on 17th of January and his last day of duty being 20th of January. Such senior positioned people are not relieved in three days’ time, and I strongly believe that RBI should look into this matter closely. To expect that the CFO was not aware is not acceptable and such a key KMP is relieved in three days defies logic. Shareholders and investors need to know the truth and accountability taken to task.
On the mutual fund front, there is some interesting data points available. The first is the SIP figure for February remained steady at Rs 26,400 crores which was similar to the previous month. Another piece of news which was not positive was the fact that lumpsum investments in mutual funds during February dropped to Rs 7,000 crores against Rs 18,800 crores in the previous month. One can look at these two bits of information in many ways. Depends on whether you are optimist, pessimist or neutral. What is the redeeming feature is the fact that mutual fund flows have not turned negative.
Gold has crossed a key phycological level of $3000 mark for the first time. This is on the back of many Central Banks buying gold over the previous months. Further, many investors think gold is a safe haven in times of conflict. What next, only Trump knows.
While expiry is still some time away and this would be the last time that NIFTY monthly futures expire on a Thursday, it would be an important one. Year end, volatile and one where markets have made an attempt to turn around. The present level of the series is lower by 147.85 points or 0.66% at 33,397.20 points. The series began at 22,545.05 points.
There are no mainboard IPOs lined up as yet. Hopefully we should see some at the beginning of the new financial year in April 25. One also hopes and prays that the new year brings sanity in terms of pricing and valuation for these issues.
Valuation had become absurd and at many a times it could be termed as bizarre. All stages of the market through which we have to pass.
Coming to the markets in the week ahead, expect them to be tentative and volatile. While we seem to have made some short-term bottom temporarily, we are yet to get out of the woods. Markets are looking for direction and some sort of trend going forward. Neither seems to be confirmed as yet. Lows of the previous week at 72,633 points and 21,964 points would act as strong supports while the highs at 74,741 points and 22,675 points would act as resistances. While this range is big, it supports the fact that when the temporary bottom was made, we had a sell-off of sorts. Hence the range needs to be big. For any bullish move the resistances have to be taken out and sustained.
In light of the uncertainty of the trade tariff front and Trump fronts which have opened, it makes sense to allow markets to settle and get into a trend of some sort. Till then lie low and trade cautiously. Comfort lies in large cap stocks.