Q4 Results To Set The Tone For Markets

The April 3-9 period was super volatile and it was the diktat of one man who shook markets across the globe. US President Donald Trump held sway on global markets from the US to Europe and Asia to Japan. Not one market was able to withstand either the volatility or the sell-off those markets witnessed. At the end of the period, markets in India saw BSE Sensex lose 2,770.29 points or 3.62 per cent to close at 73,847.15 points. Nifty lost 933.90 points or 4.00 per cent to close at 22,399.15 points. Markets lost on four of the five trading sessions and gained on just one.

Dow Jones gained on two of the six trading sessions and lost on four. It lost 1,381.51 points or 3.29 per cent to close at 40,608.45 points. Dow during the period under review made a low of 36,611.78 pointsand rebounded over the next two days quite sharply. On Wednesday night, one saw US markets gainhandsomely with Dow gaining 7.87 per cent, S&P-500 gaining 9.52 per cent and Nasdaq gaining 12.16 per cent. Thishappened because Trump has issued a moratorium of 90 days on the tariffs imposed on all nationsexcept China.

The tariff on China began with 34 per cent plus a punitive 20 per cent, plus 50 per cent and then 21 per cent to total a staggering125 per cent. At the same time China has levied a tariff of 84 per cent on US. While for the rest of the world thereis a temporary pause and 90 day relief period to sit back and discuss, no such relief has been given to China. During this period, currencies, gold, crude, yields on bonds and equity markets were in a state of turmoil. On Thursday markets across Asia continued to rally on the gains witnessed in Europe and US the previous day. Markets in Europe and US are expected to continue to rally in the coming days.

Last week, I had highlighted the 14-session rally in March where Nifty gained 1,900 points, while BSE Sensex gained 6,100 points. This rally turned turtle and in 8-sessions lost even more at 2,120 on Nifty and 7,300 points on BSE Sensex. The intensity of fall is always more than the rise and the samewas very clearly visible. A shade over half the time and the fall 1.2 times the rise.

Going forward, what should one expect? Stocks which took a beating on account of the tariff would rebound. As pharmaceuticals clarity is still not there, they would be laggards in the rally and wouldbe under pressure. Automobiles and metals where the tariff continues, will see sentiment improving with the markets and nothing more. While what we see is a correction to the fall and could also betermed as a pull-back rally, it is important to note that the volatility in markets would now abate.

Quarterly results for the January-March quarter and annual results for April 2024-March 2025 financial year would start to get declared from the coming week. The results would be a fair test of the markets andwherever the performance is good, gains made in the market would sustain and where results arepoor, the temporary gains would vanish.

The April 11-16 period has trading holidays on Monday (April 14) and Friday (April 18), this would mean a truncated week. Effectively it means that in the next ten days, there are only four trading sessions and sixdays of holidays. Unfortunately, Trump is working and subject to his keeping quiet, things would befine. The Pharmaceutical tariff is yet to be announced and the impact of the same is debatable.

The strategy for the period ahead would be to dabble in those stocks which have been affected inthe tariff war as there would be fresh buying and short covering as well. Safety continues to lie inlarge cap space. Keep a close eye on results and with leading company results on the sector as well.Immediate resistance would be at levels of 22,900-22,950 on NIFTY and higher up at levels of23,450-23,500. The band of 21,750-21,950 would act as support. It appears that the lows would notviolate and after a gap-up opening on Friday, we could see a narrow movement for the rest of theday. Trade in large cap as mentioned earlier and keep a very close eye on results.Trade cautiously.

(The author is the founder of Kejriwal Research and Investment Services,

an advisory firm)