Market direction to be guided by geopolitical developments
Marketswere choppy and volatile. Geopolitical news seems to be dominating the world theatre currently. Whether Donald Trump is in the midst of beginning World War III or he believes no one takes him seriously has become a talking point. In the midst of all this turmoil, our markets gained on two of the four trading sessions and lost on two. At the end of the week while BSE-SENSEX lost 5.89 points or 0.01 per cent to close at 83,570.35 points while NIFTY gained 11.05 points or 0.04 per cent to close at 25,694.35 points. BANK-NIFTY gained 843.60 points or 1.42 per cent to close at 60,095.15 points. The broader markets saw BSE-100, BSE-200 and BSE-500 gain 0.20 per cent, 0.08 per cent and 0.06 per cent respectively. BSE-MIDCAP lost 0.26 per cent while BSE-SMALLCAP lost 0.42 per cent. The top sectorial gainers were BSE-METAL which gained 4.52 points. The PSU banks fine performance helped the BSE-BANKEX gain 2.02 per cent. Similarly BSE-IT chipped in with gains of 2.66 per cent. The top loser was BSE-CAPITALGOODS which was down 2.49 per cent. One very interesting facet of trading last week was the intraweek lows and highs made on the benchmark indices. The lows were made on Monday when markets broke the level of 25,500 points. They went down to record a low at 25,473.40 points. From there they rose in just one day to hit the intraweek high on Tuesday itself at 25,899.80 points and then corrected. Friday was a smart movement day, yet the high was 25,873.50 points and the close at 25,694.35 points. Similar levels on BSE-SENSEX were at 82.861.07 low made on Monday, intraweek high made on Tuesday at 84,258.03 points and high on Friday at 84,134.97 points.
The Indian Rupee was under pressure and lost 61paisa or 0.68 per cent to close at Rs90.77 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on three. It was down 144.74 points or 0.29 per cent to close at 49,359.33 points.
The PSU offering from Coal India’s subsidiary, Bharat Coking Coal Limited was a runaway success. It created a new record for receiving the highest number of applications ever by a PSU company. The record would now stand at 90.45 lakh forms, a feat which would need some beating. The earlier PSU record was held by LIC of India. In all issues, the record continues to be held by Waaree Energies Limited with a tad over 97 lakh applications. The issue would list on Monday the 19th of January. The allotment price is Rs 23 per share.
The US has proposed to levy additional tariffs of 10 per centon 7 countries of Europe over their ‘dangerous game’ of sending military to Greenland. The behavior of the US President seems to be like that of the spoilt brat who wants every toy that his friends have. Here, toy is territory. Next in line following Trump would be Putin in Ukraine and China in Taiwan. So much so for trade pacts and UN and so forth. Enough is enough. This has to stop sooner than later. Things just cannot go on like this.
Markets are in a trading zone. We managed to take support at 25,500 points after going down last week. This area would act as support. Further at these levels there could always be downward pressure before a rebound. Similarly levels of 25,900 would act as short resistance and higher up at 26,200 points. Upward movement beyond that looks difficult and highly unlikely this month.
The Union Budget would be presented on Sunday the 1st of February and trading on that day would be a normal day from 9 am to 3.30 pm. The same has been notified by exchanges already. Traders and investors could and should keep this in mind as there could be pleasant surprises in store considering the geo-political situation currently.
The trading strategy would be to lie low and allow the big bully make statements on a daily basis. At some point of time there would be revolt from within that nation as things take a turn for the worse.
Till that happens we would have to tolerate this person. The time to be extra cautious in the markets in now and one would have to be on guard over the next 9 days before Budget day. Trade cautiously.
(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)
