Vijay L Bhambwani's Ticker: Bulls appear to be on the ropes

Subscribe to enjoy similar stories. Ticker is a weekly newsletter by Vijay L Bhambwani. Subscribe to Mint's newsletters to get them directly in your email inbox. Dear reader, Happy Republic Day! Last week, I wrote that the near-term market outlook would be determined by the banking and financial sector stocks.

That was due to the 36.56% weightage given to banking and financial stocks in the broad-based Nifty 50. Sure enough, the Bank Nifty dragged the markets lower. Read last week's piece here.

In the prior week's article, I had advocated prioritising capital preservation over day trading profits. Markets validated that viewpoint. The near future is characterised by volatility, uncertainty, complexity, and ambiguity (VUCA).

Geopolitics, economics, modern money-market theory, and realpolitik are keeping financial markets on edge. I have been trading these markets since 1986, and the statistical ßeta (pure price volatility) that exists today is extremely rare, based on my experience. Retail traders risk punitive capital losses if they take markets lightly.

Trump’s moves on Iran and Cuba will occupy top-of-the-mind shelf space in every trader's mind this week. The US seems to want regime changes in Cuba and Iran and is using its forces to make its point. That is unnerving markets and triggering volatility.

Last week, oil flared up in late trade as military action appeared imminent in Iran and possibly some intervention in Cuba, too. Gas prices spiked due to a polar vortex (an extreme cold event that occurs during winter). While the flare-up was temporary (the second-month futures trade at a massive discount to the first month), the inflation hawks were spooked enough to sell equity holdings.