Battle lines drawn

CRPF personnel carry the mortal remains of inspector Pintu Kumar Singh in Patna, killed in an encounter with militants in Kupwara district. Pic/PTI

It was a very eventful week at the bourses and markets came out on top of the action-packed week. BSESENSEX gained 192.33 points or 0.54 per cent to close at 36,063.81 points while NIFTY gained 71.85 points 0.67 per cent to close at 10,863.50 points. Broader markets saw BSE100, BSE200 and BSE500 gain 0.92 per cent, 1.08 per cent and 1.29 per cent respectively.

The top sectoral gainer was BSECAP GOOD up 3.43 per cent followed by BSEMETAL 2.49 per cent, BSEHEALTH CARE 2.22 per cent and BSEOIL&GAS 2.22 per cent. There was just one loser in BSEREALTY down 1.19 per cent. In individual stocks, the top gainer was ZEE Entertainment up 8.46 per cent followed by Indian Oil 8.44 per cent and Coal India 7.97 per cent. The top loser was Bharti Infratel down 6.92 per cent followed by Adani Ports 5.83 per cent and Eicher Motors 2.93 per cent. The Indian Rupee gained 23 paisa or 0.32 per cent to close at Rs 70.91. Dow Jones was down 5.49 points or 0.02 per cent to close at 26,026.32 points.

Strike force
We come to the events of last week which began with the pre-emptive strike by the Indian Air Force (IAF) into Pakistan territory. This was followed by an aerial attack by Pakistan on the following day which was thwarted and an F-16 fighter jet of the Pakistan Air Force (PAF) brought down by a MIG21 Bison aircraft. India refused to allow the release of Wing Commander Abhinandan V to be used as a bargaining chip. He had to be released without conditions under the Geneva Convention.

Then, there was the sale of F-16 aircrafts to Pakistan was for use against terrorism and not for aggression. They are now fighting a battle with the US and the plane manufacture for violations. Thirdly in the 50th year of its foundation of Organization of Islamic Countries (OIC) the world has come full circle for India and Pakistan. When it was founded, Pakistan opposed India and the same was upheld. The Indian representative was sent back, and the meeting held in secret. Now, 50 years later, India was invited as the guest of honour and Pakistan boycotted the meeting. The foreign minister spoke about the need to tackle terror and did not name the neighbour even once.

Action call
In the midst of this, markets turned positive and were helped by FIIs buying regularly. The world is calling upon Pakistan to take cognisable action against terrorists based on their soil. The response from India has been strong and is a precedent. Somewhere, the market is also sensing that election battle lines have been drawn with this answer. The ruling party is likely to have an edge in the same.

Coming back to markets, it was the week where midcap and smallcap stocks were at the forefront. They rallied very strongly and have done so after a very long time. Last week indicates major movement in the coming days. February futures expired on a flattish note with a small loss of 38.45 points or 0.36 per cent at 10,792.50 points.

A holiday
The week ahead begins with a trading holiday on Monday. All action would be focused on the international border with our neighbour and how the Pak PM Imran Khan faces the pressure being piled on him. While skirmishes and firing across the border is routine, the way the Indian forces are now replying to the firing indicates a change in orders. It is no longer just reply but retaliate. Markets will have a strong showing in the four-day week led by midcap and smallcap stocks. The strong opening, if sustained, could also lead to short covering going forward. Your strategy should be to buy into beaten down stocks. These are stocks that have had decent results and ride the ensuing rally.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.
Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only.

Catch up on all the latest Mumbai news, crime news, current affairs, and also a complete guide on Mumbai from food to things to do and events across the city here. Also download the new mid-day Android and iOS apps to get latest updates