It was a volatile week and a complete reversal of the previous week. Markets lost on four of the five trading sessions and kept its prestige by gaining on the fifth day, Friday, which happened to be the first day of a new June series. Was the shining star during the week. BSESENSEX lost 1,449.08 points or 1.92% to close at 73,961.31 points while NIFTY lost 426.40 points or 1.86% to close at 22,530.70 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.09%, 1.83% and 1.73% respectively. BSEMIDCAP was down 1.53% and so was BSESMALLCAP a similar 1.53%. It may be mentioned here that in the previous week from 20th May to 24th May, BSESENSEX had gained 1,404.45 points or 1.90% while NIFTY gained 455.10 points or 2.02%. Effectively the two weeks scored out.
The Indian Rupee was under pressure and lost 36 paisa or 0.43% to close at Rs 83.46 to the US Dollar. Dow Jones gained on Friday after a continuous losing streak. For the week it lost 383.27 points or 0.98% to close at 38,686.32 points. Dow lost on three of the four trading sessions and gained on one.
The week saw May futures expire on Thursday. At the end of the previous week the series was up 386.75 points or 1.71%. NIFTY surrendered all of this and closed with losses of 81.70 points or 0.36% to close at 22,488.65 points.
In economic data released over the weekend, there was great news from the GDP front, economic front and GST tax collection front. GDP for the 4th quarter was at 7.8% which brings FY24 GDP at 8.2%. The fiscal deficit at 5.6% of GDP has bettered the government’s estimate. GST collection for May 24 is at 1.71 lac crores and continues the strong showing.
The week ahead has RBI meet for its first policy meeting of FY24-25. It is widely expected that there would be no change in stance or interest rates as inflation is easing off.
Shares of Awfis Space Solutions which had issued shares at Rs 383 listed on the bourses on Thursday the 30th of May. Shares closed day one at Rs 419.10, a gain of Rs 36.10 or 9.42%. On Friday, the share corrected sharply and closed at Rs 402.50, a reduced gain of Rs 19.50 or 5.09%.
The seventh and final phase of voting concluded on Saturday the 1st of June. The exit polls at the end of the same indicate a strong performance of the ruling BJP and NDA led alliance across the country. While numbers suggest that they would have a more than comfortable majority on their own and may touch the magical number of 400 if the exit polls are to be believed. Well Tuesday would be another day and things would become clear. As of now it appears that things favor the incumbent and they should get through comfortably.
Coming to the markets in the week ahead, while exit polls are in favor of NDA, one would like to be cautious for that one more day before celebrating wholeheartedly. By Tuesday midday, results would be clear which way the wind is blowing. What should be the strategy for the week ahead?
Looking at exit polls, a rally on Monday is almost certain. What may also happen is that post this rally there could be some profit taking and volatility. Tuesday would see volatility as the election trend in the morning is sketchy and skewed. Post this initial hiccup if exit polls hold good, markets should see a blast. FPIs have been aggressive sellers and a bout of short covering could give the needed ammunition to bulls to charge the market. It makes sense therefore to hold out your bets till markets stabilize post Tuesday results and allow the euphoria as exit polls indicate to kick in. New highs on NIFTY and BSESENSEX are on the cards and one should not be surprised if we see levels of about 79,000 on BSESENSEX and 23,800 on NIFTY in the coming week. All of this is subject to the fact that exit polls or even better the poll of polls is taken as a benchmark.
The strategy would be to ride the rally and allow markets to savor the victory. Allow the euphoria to kick in and do not be in a hurry to book profits. Exercise caution in buying stocks where one is not comfortable on fundamentals. In conclusion, be cautious and allow exit polls to convert to results.
Trade cautiously.