Markets had extra drama last week and things ended on a weekly basis as expected, on a positive note. The consecutive eight week losing streak ended as expected and predicted with markets gaining. What the week ahead holds for us, only time will tell. BSESENSEX gained 534.53 points or 0.74% to close at 72,544.66 points while NIFTY gained 89.65 points or 0.40% to close at 22,535.65 points. BANKNIFTY gained 805.90 points or 1.48% to close at 55,256.65 points. The broader markets saw BSE100 gain 0.20%, while BSE200 AND BSE500 lost 0.02% and 0.08%. BSEMIDCAP lost 1.38% while BSESMALLCAP lost 1.18%. The top sectorial gainer was BSETECH which gained 1.84% while the top loser was BSEREALTY which was down 4.19%. Markets gained on three of the five trading sessions and lost on two.

The Indian Rupee lost 54 paisa or 0.56% to close at Rs 96.95 to the US Dollar. Dow Jones gained on four of the five trading sessions and was up 477.99 points or 0.93% to close at 51,654.95 points.

RBI in its MPC meeting held between the 5th and 7th of October decided to raise Repo rate by 25 basis points to 5.50%. This rate hike has happened after February 23, when rates were last revised.

The highs and lows made intraweek on BSESENSEX and NIFTY were at 73,018.82 points and 22,731.85 points which were made on Wednesday. The lows which were made on Thursday were at 71,327.75 points and 22,179.90 points. Lows were made on Thursday when BSESENSEX lost a massive 1,177 points and 387 points on NIFTY. The tables were turned more or less completely on Friday when markets gained 1,083 points and 319 points respectively. There are no substantial reasons for either the fall on Thursday or the rise on Friday, just the usual FPI selling and weak global cues.

Donald Trump has tweeted that the USA has signed a deal to buy Russian Diesel. This signals that there will be no sanctions on countries dealing with Russia and the Ukraine-Russia conflict is over. This clearly shows what diplomacy and global politics the USA and in particular its President is indulging in. India’s stand is vindicated on crude purchases. With the Nobel Peace prize having been announced, Trump’s frustration has once again come to the fore. He believes he should have been awarded eight peace awards as he has ended eight wars. Less said about Donald Trump the better.

The mother of all IPO’s from Jio is finally here. The issue would open from Wednesday the 21st of October to Friday the 23rd of October. The price band is Rs 1.065 to 1,119 and the issue size would be under Rs 31,000 crores, making it the largest IPO ever, beating the one from Hyundai Motors.

Coming to the markets in the week ahead, we have bounced yet again from levels of 22,200 points and this becomes a strong support for markets. The level of 22,200 would be a support and if this were to break a level of 21,700 would act as support. On the upside, levels of 22,800 would act as an immediate resistance. If the level was breached upwards, we have room to move up to 23,200-23,300 points. Global scenario seems to be improving with Trump realizing that things are not going his way and the 3rd of November election is just round the corner. Not sure how things would unfold, but USA could see dramatic events unfolding.

The trading strategy would be to play long with a strict stop loss at 22,200 points and buy on dips. Things should improve for the markets in the immediate short term. There is yet another silver lining for Indian IT companies as more and more people are realizing that India not committing heavy expenditure for AI is actually a blessing in disguise as Chinese companies are able to offer products substantially cheaper than the Americans. This situation could actually spur investments in Indian IT stocks all over again.

Trade cautiously. 

Arun Kejriwal (Market Veteran Investor & Opinion Maker)