The week gone by had four trading sessions and markets were in a buoyant mood, notwithstanding border and cross border tensions. Markets gained on three of the four sessions and lost on one. Friday was the surprise package where after the initial euphoria, all thought that markets would slip or give way. They held on resolutely and ended with small gains and off their intraday highs. BSESENSEX gained 1,289.46 points or 1.63% to close at 80,501.99 points while NIFTY gained 307.35 points or 1.28% to close at 24,346.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.10%, 1.01% and 0.77% respectively. BSEMIDCAP gained 0.42% while BSESMALLCAP lost 1.33%. The benchmark indices were helped in a great way by the gains made by Reliance Industries which gained Rs 122 or 9.38% to close at Rs 1,422.
The Indian Rupee gained sharply and was up 91 paisa or 1.07% to close at Rs 84.53 to the US Dollar. Dow Jones gained on all four trading sessions of the week and was up 1,203.93 points or 3.00% to close at 41,317.43 points. New jobs data fueled the fire. No clarity on Trump’s tariff has emerged so far and we are a month into the announcements made on 2nd April.
Its been a very long time since one saw Reliance gain close to double digit percentage gains in the week. It gained a massive 9.38% for the week and closed at Rs 1,422 and helped the benchmark indices gain momentum. The move past 24,500 on Friday which was retraced could also be on the back of Reliance’s strong uptick. The highs made by BSESENSEX were at 81,177.93 points while on NIFTY it was at 24,589.15 points. These would be first resistances that the market would have to surmount on its way upwards.
Results season continues to be a mixed bag with a few decent results and a large number of average and not so good results mixed together. Suffice to say that the big jump from results which is expected every quarter from results season is missing so far. Whether there would be a change in the remaining period of May, till results are to be announced is yet to be seen.
India’s negotiations on the tariffs are set to happen shortly. Some of the areas would remain contentious particularly agriculture and that would be something which the US would have to look into seriously on a couple of fronts. Firstly, land holdings in India are miniscule when compared to the US and to compare subsidies and benefits are just not possible. The use of genetically modified seeds is permitted in the US while largely restricted in India. Similarly in the dairy segment India has grown in leaps and bounds and state cooperatives have been able to provide marketing and processing platforms to the large number of small farmers. I believe that the broad contours of the trade pact would get resolved in May and some pain points remain for further discussion. This would have a long term impact on our economy and also the markets. New companies and sectors would come on the radar based on these discussions.
Coming to the markets in the week ahead, expect volatility to continue as rumor mongers create war hysteria across the border. Key levels to watch out for would be 24,500 on NIFTY which would act as a pivot and the highs made on Friday act as immediate resistances. Thereafter the next level would be 24,800-24,850 on NIFTY and 82,000-82,200 on BSESENSEX respectively. On the support side levels made on the previous Friday (25th April) at 78,605 and 23,847 would act as strong supports. On a broader note, the trading range until violated on either side would be between 24,000-24,500 on NIFTY. Keep in mind that the reserves and strength of Reliance, ICICI Bank, HDFC Bank and the entire IT pack have been used up in this rally so far. For any further rally we need numbers or news to fire up markets.
The strategy would be to continue to look at large caps and only a select few from the midcap and Smallcap space. Keep overnight trading positions on the lighter side unless they are properly hedged and weekend positions should be avoided. Investment bets should be encouraged in view of trade talks which would happen sooner than later.
Trade cautiously.