The week gone by behaved on expected lines for the first four days and then all hell let loose on Friday the 13th of December. We had an unexpected movement on the indices first downwards and then equally sharp upwards which had people wondering what happened even after the day and the weekend passed. I believe clarity of the sequence of events still eludes most people even though Friday is now three days old. Your writer is also one of those who is not sure as to what happened on Friday the 13th. Suffice to say that till the mystery is resolved we may assume that the volatility was as a result of the date. 

BSESENSEX gained on two of the four trading sessions, lost on two and was flat on one. BSESENSEX gained 424 points or 0.52% to close at 82,133.12 points while NIFTY gained 90.50 points or 0.37% to close at 24,768.20 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.30%, 0.25% and 0.18% respectively. BSEMIDCAP gained 0.22% while BSESMALLCAP lost 0.16%. More on Friday the 13th in subsequent paragraphs. 

The Indian Rupee continues to be under pressure and we lost 10 paisa or 0.12% to Rs 84.79 in the week gone by. Global currencies are under pressure against the dollar awaiting executive actions once Trump takes oer on the 21st of January in 2025 for his second stint at the US Presidency. Dow Jones was under pressure and lost on all five days of the week. Dow Jones lost 814.46 points or 1.82% to close at 43,828.06 points. 

Coming to Friday the 13th of December. The previous day saw BSESENSEX close at 81,299.96 points and NIFTY at 24,548.70 points. At this point markets after four days of trading were negative for the week. The intraday lows registered were at 80,082.82 points and 24,180.80 points, a loss of 1,217.14 points and 367.9 points. Thereafter came the rally which saw markets hit a high of 82,213.92 points and 24,792.30 points. Thus, the intraday gains were at 2,131.10 points and 611.50 points. If one were to compute the intraday volatility which includes the losses and then the gains it would be a staggering 3,348.24 points on BSESENSEX and 978.40 points on NIFTY. The net change for the day was at 843.16 points on BSESENSEX and at 219.60 points on NIFTY which is not anything out of the unusual. It’s the intraday which caused the tremors and due to there being no event or series of events to justify the same, could be attributed to Friday the 13th of December. 

It appears something is cooking in the primary markets which is yet to unfold and of which promoters and merchant bankers are aware but not investors. Last week we saw three issues opening and closing on the same day and yet another three issues lined up. This week we will see four issues opening and closing on the same dates. Further it appears that there is an IPO sale in the primary markets with four road shows to happen on Monday, and another four to five during the course of the week on a minimum. Why this maddening rush where all conventions have been thrown to the wind? One remembers that the regulator had asked merchant bankers not to club issues at the same time. Is not the three on same dates last week and four in the coming week, an apt case of bunching? Is someone looking? Going by the pace of IPOs, it appears there is a sale in the primary market. The unfortunate part however is that in a sale one gets a discount. Here, that is not the case and one continues to pay for absurd valuations which at times border on the bizarre.  

Discussion and analysis on the issues which are happening during the week would be discussed separately through a newsletter, post there roadshows. 

Coming to the markets in the week ahead, we did on Friday the 13th, manage to cross and close above the 24,750 mark, on the NIFTY. While the milestone was achieved the intraday volatility has shaken the markets and it would be safer to wait for confirmation of higher high and higher lows on the indices before jumping to conclusions. In terms of resistance the next levels are at around 25,050-25,100 points on NIFTY and at 82,900-83,100 points on BSESENSEX. Once this is taken out, the next resistance would be around 25,250 points or 83,550 points. These would be much tougher to break and sustain. On the downside we have support at 24,250 points and 80,500 points respectively. If these levels are broken, we have the next support zone at 23,850 and 79,300 points respectively. 

In conclusion, we have seen a mixed reaction from FPIs where they have turned buyers and sellers on different dates and very clearly the continuous selling of the previous months has stopped. While its comforting we are not yet out of the woods. We need to be watchful and careful. It appears the world is waiting for action around the last ten days of January 25. One needs to be watchful and from a safety perspective look at large cap stocks rather than small cap and midcap. 

Trade cautiously.

Markets were on a roll in the week gone by and they gained quite sharply in the first four days of the week. Friday saw a small dip to make the week a bit balanced with gains on four of the five trading days. FPIs bought on three of the five trading sessions and helped in the recovery witnessed by the markets. Domestic institutions did the opposite, buying on two of the five trading sessions and buying when FPIs sold and vice versa. BSESENSEX gained 1,906.33 points or 2.39% to close at 81,709.12 points while NIFTY gained 546.70 points or 2.27% to close at 24,677.80 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.55%, 2.61% and 2.67% respectively. BSEMIDCAP was up 3.47% while BSESMALLCAP gained 3.35%. One may say that there was a sense of relief that markets gained and the breadth of the markets was impressive. Momentum stocks also participated in the rally. 

The Indian Rupee was under pressure and lost 21 paisa or 0.25% to close at Rs 84.69 to the US dollar. Dow Jones lost on four of the five trading sessions and gained on one session. It was down 268.13 points or 0.60% to close at 44,642.52 points. 

RBI in its bi-monthly MPC meeting kept repo rates unchanged on expected lines. It however cut CRR by 50 basis points to make cost of funds for the banks cheaper than the current rates. This would give liquidity to the banking industry and simultaneously make the cost of funds cheaper as well. 

In primary market news, we had one listing in the week gone by. Shares of Suraksha Diagnostics Limited which had received a muted response during subscription, listed on Friday the 6th of December. The shares which were issued at Rs 441 debuted at Rs 437 and closed at Rs 417.95, a loss of Rs 23.05 or 5.23%. In the coming week one will get a better idea how the share fares as the PE multiple of the issue was at 100. 

The week ahead has three IPOs with all three issues opening on Wednesday the 11th of December and closing on Friday the 13th of December. The first of the lot is from Vishal Mega Mart Limited which is tapping the markets with its offer for sale of Rs 8,000 crores in a price band of Rs 74-78. The company reported revenues of about Rs 8,900 crores for the year ended March 24. Its PAT was Rs 82.80 crores and the EPS was Rs 1.01. The PE for the issue is in a band of 73.27-77.23. In comparison to Avenue Supermarts Limited, the company which runs D Mart, the revenues are at Rs 50,788 crores and the PE much higher at 98 times. While Vishal has a larger store count, its revenue per store and profitability is significantly lower. The two businesses are not comparable as in the case of Vishal, garment and fashion are roughly half while this is less than a quarter for D Mart. The issue is likely to offer listing pop and could be applied for the same. 

The second issue is from One MobiKwik Systems Limited.  The issue is for a fresh issue of Rs 572 crores in a price band of Rs 265-279. The company is a platform business with a two sided payments network, consisting of consumers and merchants. The key business consists of payment services and financial services. It is a platform which offers BNPL (Buy now pay later) facilities as well. The company has turned profitable in FY24. It earned an EPS of Rs 2.38 on a fully diluted basis for the year ended March 24. The PE for the issue is in a band of 111.34-117.23. The business being platform driven and a new age company offers rapid scalability. There is likely to be listing gains in the share. 

The third issue is from Sai Life Sciences Limited which is tapping the markets with its fresh issue of Rs 950 crores and an offer for sale of 3,81,16,934 shares in a price band of Rs 522-549. The company reported revenues of Rs 1,468 crores and a PAT of Rs 82.80 crores for the year ended March 24. The issue would raise Rs 3,043 crores at the upper end of the price band. The PE for the issue is 115.23-121.19 times. Not cheap by any standard. The company is a CRDMO player and there is plenty of competition in this segment. Further the life cycle of research and then the production or commercialization of the product takes a long time. The issue can be skipped currently and looked at post listing. 

Markets have had a good week and have surmounted resistances on the way up during the week. The next resistance is around 24,950-25,000 points on NIFTY and at 82,600-82,800 points on BSESENSEX. Once this is taken out, the next resistance would be around 25,250 points or 83,550 points. These would be much tougher to break and sustain. On the downside we have support at 24,250 points and 80,500 points respectively. If these levels are broken, we have the next support zone at 23,850 and 79,300 points respectively. 

The strategy for the week would be to look at the large cap stocks for comfort as they have the momentum with them. Secondly look at a select group of midcap and small cap stocks which have been moving up and are now close to their 52-week highs. Though FPIs have been buyers during a few days over the last week, it is not yet comfortable that they are back. It therefore is imperative to have a safety backup and not go all out. In a fortnight’s time the year would come to an end and we would be looking at December quarter results which one cannot be sure would be all that great. 

Time to be watchful and trade cautiously.