It was a super-volatile week on Dalal Street and the net change in the indices are indicative of it. The Sensex lost 554 points in the first three days and then gained 582 points to end the week with a net gain of 28.29 points, or 0.08 per cent at 33,342.80 points. Similarly, the Nifty lost 203 points, gained 165 points for a net weekly loss of 38.15 points, or 0.37 per cent, at 10,283.60 points.

After remaining under pressure for nearly two weeks, the market recovered on Thursday. On Friday, the rally got a leg-up on the back of Moody’s upgrading India’s sovereign rating by a notch from Baa3 to Baa2. It also changed the investment grade outlook from positive to stable.

Shares of HDFC Standard Life Insurance Company listed on Friday and were, no doubt, helped by the change in sentiment from the Moody’s upgrade. While the Group’s chairman Deepak Parekh mentioned at the listing ceremony that they had timed the same to coincide with the event, it could only have been in just, as the American agency has been resisting the upgrade for a long time and it took about 14 years since the last upgrade. The last upgrade had happened at virtually the end of the Vajpayee government’s tenure.

It is important to note that intraday gains from the event could not be retained and the market surrendered a significant portion of the gains. While the intraday gain on the Sensex was 414 points it could retain only 236 points, or 57 per cent of the gains. On the Nifty, the intraday high was 129 points, while the gain retained was 69 points, or 53.4 per cent. The case in point is that the markets were oversold and recovered technically on the back of positive news, which may not have the strength to take them forward in the coming days.

Shares of Khadim India, the shoemaker from Kolkata, listed on Monday and had a poor showing. The shares at weekend were down 10.70 per  cent t Rs 669.75 against an issue price of Rs 750. The other listing, of HDFC Standard Life, saw the shares gain 18.71 per c ent at Rs 344.25 against an issue price of Rs 290. This is in stark contrast to similar insurance IPOs in the recent past.

There was the NFO (new fund offer) of Bharat22, the ETF from the government where 22 shares of the PSU basket, including shares held by Suuti like ITC, Axis Bank and L&T, were offered through the exchange traded fund. The same is managed by ICICI AMC. Details of subscription were not available immediately.

While we have come to the end of the results season, barring those companies which have taken a 30-day extension on account of shifting to the new accounting system, all have announced the results for the quarter ended September 2017. Results clearly indicate that corporate India has missed the growth expected and results are below the factored growth. The market now needs to decide whether it should re-rate or de-rate stocks as per the lower growth or continue to expect that growth would come sooner or later. I believe that the former (lower growth) is likely to happen and that could be the trigger for the anticipated correction.

What we saw last week was the beginning of the correction and then the pullback. Now, in all likelihood, the correction will continue.

The primary market seems to be taking a breather and would begin in full earnest in mid-January. There is also a possibility at that time that valuations may be relooked by exiting PE investors and merchant bankers, as the high valuations have been the subject of a much-needed debate last week.

Not too many triggers remain for the market and we are likely to see high volatility as we approach November futures expiry in about nine trading days. Currently, its even-steven for both bulls and bears and it would be a tough call to say who would win. Looking at last week’s movement I would back the bears to win this battle for November and would expect the series to end on a weaker note.

Trade cautiously and await buying opportunities in sharp market dips.

 (The author is founder, Kejriwal Research and Investment Services)