Geopolitical cues likely to trigger volatility

The week gone by had many events rolled into one. It saw the expiry of December futures series, the end of trading for calendar year 2025 and a new all-time high on the benchmark indices. Let us evaluate and discuss each of them later in the article.

BSE-SENSEX gained 720.56 points or 0.85 per cent to close at 85,762.01 points while NIFTY gained 286.25 points or 1.10 per cent to close at 26,328.55 points. BANK-NIFTY gained 1,139.60 points or 1.93 per cent to close at 60,150.95 points. It was a broad based rally and across the board.

BSE-100, BSE-200 and BSE-500 gained 1.25 per cent, 1.38 per cent and 1.35 per cent respectively. BSE-MIDCAP was up 1.75 per cent while BSE-SMALLCAP gained 1.17 per cent. BSE-SENSEX gained on two of the five trading sessions, while NSE-NIFTY gained on three sessions.

The gain or loss on Thursday was quite small and it could actually be termed as sideways. The top sectorial performer was BSE-METAL which gained 5.60 per cent.

The Indian Rupee lost 33 paisa or 0.37 per cent to close at Rs 90.13 to the US Dollar. Dow Jones lost 328.58 points or 0.67 per cent to close at 48,382.39 points. Dow gained on one of the four sessions and lost on three.

Coming first to December futures expiry which happened on Tuesday the 30th of December, it was a quiet affair. For the series, NSE-NIFTY gained 54.05 points or 0.21 per cent to close at 48,382.39 points. It closed at 25,938.85 points. The series had begun at 25,884.80 points.

Friday the 2nd of January saw fresh new all-time high indices being made on the NSE-NIFTY and BANK-NIFTY on an intraday and closing basis while BSE-SENSEX made only a closing high. The intraday high remains at 86,159.02 points which was made on 1st of December. The intraday highs on NIFTY and BANK-NIFTY are at 26,240 and at 60,203.75 respectively.

BSE-SENSEX was impacted by ITC which bore the brunt of selling over the last two days on account of a new central excise announced which would come into effect from 1st of February. This would be over and above the GST which already exists.

ITC lost Rs 54.15 or 13.39 per cent to close at Rs 350.15. The impact of this fall would translate to about 450 points on BSE-SENSEX. If one were to take this into account, even BSE-SENSEX would have made a new intraday high.

There was one mainboard IPO which listed during the week. Shares of Gujarat Kidney Hospital Limited which were issued at Rs 114 listed on Tuesday the 30th of December. The discovered price on BSE was Rs 120.75. They closed at Rs 104.65 on day one and lost marginally to close at Rs 102.90 on Friday, a loss of Rs 11.10 or 9.74 per cent.

The issue from Coal India Limited subsidiary, Bharat Coking Coal Limited would open at the end of the coming week. Price band and roadshow would be held in Mumbai on Friday.

Markets have made a new high finally and this is even though there has been no news on geo-political side or trade deal between US and India. The most important news that can impact markets immediately is the coming to an end of the Russia-Ukraine war.

This would automatically see tariffs on India halving from 50 per cent to 25 per cent. This would take care of a lot of uncertainty present in the markets. How soon can this happen? Your guess is as good as mine.

On a more realistic note, the situation on the ground indicate that hostilities are likely to cease in the next 15 days or so as all the sponsors of Ukraine are now fed up of funding it. This could be a big trigger for the markets. Besides this, Union Budget is around four weeks away.

With last week’s market moves, the trading zone has moved upwards. Support exists at levels of 26,000 and lower down at 25,800 points. Resistance is around 26,800 points and further up at levels of 27,000 points. Markets are not going to run away from these levels but they are going to have a grind upwards.

The strategy would be to build on a portfolio with stocks which have performed on the financial front in the last few quarters. The government has signaled its intent with levying excise duty on tobacco and cigarettes with a one month notice that they would ensure growth post the budget. With the new high on indices, behind us, it’s time to concentrate on stocks in the market place. Trade cautiously.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)