It was a tough week for markets in India and globally. Trump and his tariffs coupled with his tantrums and demand for the Nobel Peace Prize continued unabated. One wonders whether an award can ever be obtained in this manner. Let’s move on to markets. Our markets lost on three of the five trading sessions and gained on two. BSESENSEX lost 863.18 points or 1.06% to close at 80,599.91 points while NIFTY lost 271.65 points or 1.09% to close at 24,565.35 points. BANK NIFTY lost 911.30 points or 1.61% to close at 55,617.60 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.16%, 1.29% and 1.47% respectively. BSEMIDCAP was down 1.79% while BSESMALLCAP was down 2.47%.

The Indian Rupee lost 92 paisa or 1.06% to close at Rs 87.51 to the US Dollar. Dow Jones had a torrid week and lost on all five trading sessions of the week. It was down 1,313.24 points or 2.92% to close at 43,588.58 points.

July futures expired on a weak note. The series closed with losses of 780.65 points or 3.06% at 24,768.35 points. The series has been very volatile and choppy. A large part of the fall during the series could be attributed to the overall poor quarterly results which have come and the concerns on Trump Tariffs.

Markets are under pressure and results are probably the main reason for the same. India Inc. has not been able to grow sales in the manner that they were expected to happen. While rate cuts have helped in finance costs been kept under check, operating efficiencies have not apparently kicked in. Some leeway could be given to companies who have exports to USA and have been impacted because of the tariff uncertainty, but concerns remain.

There is a new debate which is unfolding on the street where investors who are at the bottom of the pyramid and the most affected when top officials of the company commit acts which lead to the company being downgraded or taking a beating. Such officials then use the ‘CONSENT’ mechanism, pay a fine and scoot off. The fine goes into the coffers of the regulator and the poor investor is left twiddling his thumb. I believe this entire system needs to be relooked and such officials need to be made to pay more financially and also under criminal law.. Secondly there should be a mechanism where investors and shareholders who suffer are compensated from such penalties and fines and not that the same goes into the coffers of SEBI. The current case which brings this thought out, is the one involving Indusind Bank and its current MD and CEO, Sumant Kathpalia. He has offered to pay a sum of about 5.2 crores to settle a case without admitting guilt. This kind of amount raises eyebrows straight away. We must also note that a number of people including the CFO of the bank were sacked/relieved with immediate effect under doubt raising circumstances. More on this at a later time.

While USA has threatened India to impose penalties and higher unspecified tariffs if we continue to import crude oil from Russia, India would do so and is sending NSA, Ajit Doval and Foreign Minister EAM Jaishankar, to Russia in the coming weeks. Very clearly the stand-off and bullying tactics of Donald Trump have been called out as a bluff.

Levels of 24,200-24,300 are sacrosanct for the markets currently. If they were to break, we could see some panic and also a sell-off in the markets. This could probably be one of the reasons why primary markets activity currently is at an elevated level and issuers who were taking it easy till a week or two ago, have suddenly pressed the accelerator and want to launch their issue right away.

If as mentioned above, support at 24,200-24,300 were to break, we could go down all the way to levels of 23,500 or thereabouts. On the upside, levels of even 25,000 look difficult currently. From a strategy perspective, it makes sense to lie low and allow markets to take their own course. It’s time to rebuild the portfolio looking at results which have been declared.

Trade cautiously.

Arun Kejriwal (Market Veteran Investor & Opinion Maker)