Vijay L. Bhambwani's Ticker: Banking stocks hold the key

Subscribe to enjoy similar stories. Dear Reader, Last week, I wrote that it was time to prioritise capital preservation over capital appreciation due to higher statistical ßeta (pure price volatility) readings. Market price action validated that hypothesis.

Read last week's piece here. The Nifty 50 just managed to hold on to minor gains, with Friday’s trading pattern being an interesting one. While the day began with fire and fury, it ended as a damp squib.

Higher levels are proving unsustainable. Add the rollover costs and the margin-funded trading interest paid, and you know the bulls are under some duress. Markets heaved a sigh of relief as active US intervention in Iran was averted.

Had this event occurred, there would have potentially been a minor blood bath. Last week, I expected public sector undertakings (PSUs) to witness hectic trading activity. That expectation was fulfilled by the markets.

I expect this process to continue this week as well. Market players are expecting some favourable announcements for PSUs in the coming budget. Oil and gas prices traded higher as expected.

I maintain my long-standing view that the global energy markets are adequately supplied. The talk of a supercycle in energy commodities is premature and overly optimistic. Higher levels are likely to get sold into.

Geopolitical events, if any, may trigger a short-term spike, but mean reversion will see equilibrium return to these markets. Industrial (base) metals also saw heavy profit-taking. I wrote in my previous column that I do not subscribe to a supercycle theory in base metals either.