The week gone by was short and truncated with a mere three trading sessions. There were holidays on Monday and Friday making it extended weekends both sides. The rally that happened made people forget the holiday and we saw an unprecedented rally once again. BSESESEX gained a massive 3,395.94 points or 4.52% to close at 78,553.20 points. NIFTY gained 1,023.10 points or 4.48% to close at 23,851.65 points. The broader markets saw BSE100, BSE200 and BSE500 gain 4.37%, 4.46% and 4.42% respectively. BSEMIDCAP gained 4.24% while BSESMALLCAP was up 4.69%. Markets gained on all the three sessions and gains were different on the three days with Tuesday being the outperformer and Wednesday being the laggard.
The Indian Rupee gained 68 paisa or 0.79% to close at Rs 85.37 to the US Dollar. The US Dollar has been under pressure ever since the beginning of Trump’s tariff war. Dow Jones had a torrid time losing on three of the four trading sessions and gaining on one. Dow lost 1,070.48 points or 2.66% to close at 39,142.23 points. Incidentally, nothing new has been said by Trump on tariffs over the last 72 hours, which looks surprising.
There have been three sharp moves over the last 28 trading sessions with the first being up followed by down and then up once again. Let me enumerate the same for you. The first was the rally which began on the 4th of March and terminated on the 25th of March. The BSESENSEX rose 6,108.15 points in 14 trading sessions while NIFTY gained 1,905 points. The correction to this began from 25th March and lasted till 7th April, a period of 8 trading sessions which saw BSESENSEX lose 7,316.68 points and NIFTY 2,135.95 points. The third session began from 7th April and is currently ongoing till 17th April. This has taken six trading sessions and the gains have been 7,191.76 points on BSESENSEX and 2,128.70 points on NIFTY.
If one were to describe what has happened in these 28 sessions; IT’s UNPRECENDENTED. In my over three and a half decades in the markets, I do not remember something like this ever happening. A total movement of over 20,600 points on BSESENSEX or a daily average of 725 points per session. On NIFTY, the number is 6,250 points or 223 points per day. We are talking of close to 1% movement on a daily basis and this does not include intra-day moves which would add to the same. Are the events which have led to this volatility over? Are things normalized or are they on the way to normalizing? The answer to both the questions is a clear no.
Trump tariff has only been announced, the final contours are yet to take shape. To the second question, results season has started but has not yet picked steam. Early indications are that while banking and BFSI seem to be the outperformer, IT seems to have buckled under. This mind you have no impact of tariffs whatsoever. As far as our markets are concerned the front-line banks are at new lifetime highs or around new lifetime highs and BANK NIFTY less than a percent away from it.
The week ahead has a full week of trading and many more results would be declared giving clarity about India Inc’s performance across sectors. Currently the key event to watch would be whether the buoyancy in banking can cover-up the weakness in IT or would the IT weakness overshadow the smart banking sector performance.
Coming to the week ahead one would by force have to wait for clarity if any on Trump’s tariff and how global countries respond. Any unwarranted statement can have an immediate impact on markets. Results would be the biggest driver and we need to see whether the growth momentum witnessed in banking continues in other sectors. FPIs turned buyers after a long time and their buying over the last three days of Rs 14,500 crores has certainly helped. For the month of April, the figure including this purchase is still net sales of Rs 20,000 crores. Domestic institutions in the three days of last week sold equity worth Rs 6,500 crores and for the month of April so far have been net buyers of Rs 21,000 crores. Encouraging data but not conclusive. One cannot be sure that FPIs have changed their stand on India or not. Still need to watch.
One thing is however certain that inflows into America are likely to see tapering as those markets do not offer a safe haven and the present tariff war has led to uncertain times. The biggest fear is the country slipping into recession, a word no one likes.
The week ahead sees April futures expire on Thursday the 24th of April. The current value of NIFTY at 23,851.65 points is 259.70 points or 1.10% higher for the series. Nothing significant and if one looks at the data over 28 days provided above is one day’s movement. The series is wide open and would have the bulls and the bears fighting to take control. Who the winner would be, would be decided on Thursday alone and it could be a bloody four trading sessions hereon.
It makes sense to play in the large cap space and a very select group of midcap and Smallcap stocks. In terms of sectors, banking and to some extent the FMCG is showing interesting trends. A new list of market favorites would be coming up once the tariff is final. Until then it is fluid water and one that is changing daily. Does IT offer bottom fishing opportunities, in my mind not yet as it is future guidance which is low.
In terms of supports and resistances, pivot for the markets is at current levels of 23,800-850 on NIFTY and at 78,450-78,650 on BSESENSEX. Support exists at levels of 23,400-23,500 and at levels of 77,200-77,500 respectively. On the resistance side we have it at levels of 24,050-24,100 and at 79,150-79,300.
Tough volatile times ahead. Trade cautiously.