How do you see the stock markets on Monday 28th February, the last day of the month?

Friday offered some reprieve as the Nifty bounced back about 2.5% but that could only partially recoup losses as the Nifty still ended 4% in the red for the week. The selling was universal as mid-cap index lost 3% and small caps 5%. On Friday, Coal India and Tata Motors saw heavy short covering on Friday. The underlying theme was short covering on Friday.

On Friday, the advance decline ratio was firmly positive at 47:3 as the VIX fell back from 32 levels to the 26.77 levels, but this could be a temporary phenomenon. The geopolitical situation remains fluid and oil may have had just a temporary reprieve. Russia has been still advancing into Ukraine and most of the Western sanctions are unlikely to really work.

FPIs sold Rs.4,471 crore of equities on Friday while domestic funds and LIC bought stocks worth Rs.4,318 crore. At least, with respect to global investors, the sentiments are still very bearish. Friday was a day of gains for global markets with Dow up 835 points, NASDAQ up 221 points and all of Europe up 3.5% to 4%. SGX Nifty is up just about 10 bps on Monday.

After the covering bounce on Friday, it is going to be a reality check on Monday. With Russia refusing to relent or cow down to the pressures applied by the West, the situation could just get more tense. NATO is already worried about Russia moving its nuclear arsenal and one can expect sudden bouts of selling in the markets on Monday. Tuesday is a trading holiday.