The past week was dramatic in more ways than one. Markets declined during the first four days of the week, extending losses for five consecutive days before a complete turnaround occurred on Friday, marking the start of the August futures series.
The Union Budget was declared on Tuesday, and markets continued their losing streak both before and after the announcement. However, the losses from the first four days were more than compensated for by substantial gains on Friday. The BSE Sensex surged by 1,292 points, and the Nifty by 429 points. By the end of the week, the BSE Sensex had gained 728.07 points or 0.90%, closing at 24,834.35 points, while the Nifty gained 303.45 points or 1.24%.
Broader markets also performed well, with the BSE 100, BSE 200, and BSE 500 gaining 1.65%, 1.83%, and 1.92%, respectively. The BSE Midcap rose by 3.13%, and the BSE Smallcap by 3.45%. The week ended with gains in one trading session and losses in four. Notably, FPIs bought on Monday and Friday but sold on the other three days.
The Indian Rupee lost seven paise, closing at 83.73 to the US Dollar. The Dow gained in three out of five sessions, rising by 301.79 points or 0.75% to close at 40,589.34 points. There seems to be a correlation between the US and Indian markets, with both showing a sharp rally on Friday.
Tuesday, July 23rd, saw the presentation of the Union Budget for the financial year 2024-2025. The budget included provisions for the stock markets, raising the long-term capital gains tax to 12.5% and the short-term capital gains tax to 20%. The Securities Transaction Tax (STT) on F&O was doubled. Additionally, the tax on buybacks was shifted from companies to individual taxpayers.
The budget addressed various stakeholders, including farmers, employment, infrastructure, industry, and the salaried class. Relief was provided for the bottom-of-the-pyramid taxpayers, and customs duty on gold and silver was reduced to 6%, which could curb gold smuggling.
One broad theme post-budget is the affordable housing sector, which could see significant activity. Companies involved in affordable housing, housing finance, and NBFCs and banks in this segment may benefit.
Despite popular belief, this budget was not populist, which brought relief to the markets. Freebies were not announced in abundance.
Thursday, July 25th, saw the July futures expire with gains of 361.70 points or 1.50%, ending at 24,406.10 points. The series saw new highs, culminating with the budget presentation.
In primary market news, Sanstar Limited’s IPO listed on Friday, July 26th. It issued shares at Rs 95, reaching a high of Rs 127.68 and closing at Rs 115.09, a gain of 21.15%.
Akums Drugs and Pharmaceuticals Limited’s IPO is opening on Tuesday, July 30th, and closing on Thursday, August 1st. The issue includes a fresh issue of Rs 680 crores and an offer for sale of 1,73,30,435 equity shares in a price band of Rs 646-679.
Upcoming IPOs include Ceigall India Limited, opening on Thursday, August 1st, and closing on Monday, August 5th, and Ola Electric Mobility Limited, opening on Friday, August 2nd, and closing on Tuesday, August 6th.
Looking ahead, markets are expected to consolidate after Friday’s gains. Valuations are high, and quarterly results have been mixed. The US FED meeting next week will be crucial, with no rate cut expected given the strong US economy.
The strategy for the coming week is to book profits and remain cautious, as the risk-reward ratio currently favors caution. Look for investment opportunities selectively and avoid being fully invested at these elevated levels.
