The week gone by was super volatile and ended just about flat. The BSESENSEX gained 42.03 points or 0.15% to close at 28,152.40 points while NIFTY lost 11 points or 0.13% to close at 8,672.15 points. The monsoon session of Parliament ended with the most productive session in recent times. GST was passed amongst other bills. Monsson has been surplus and in some places God has been more than merciful resulting in floods.
Results season is not over as companies have been given time to adjust to the new reporting formats and more results will follow in the coming weeks as well. Markets were completely mixed and as of Wednesday had become quite weak and but for a pullback on Thursday and Friday would have been negative for the week.
The PSU banks have more or less completed declaring their results and it appears that the worst is more or less over. This does not therefore mean that all is well and they will be back to reporting normal results from the next quarter. What it does mean is that things are better and if the economy revives they will be better off and there would be recoveries in the non-performing assets.
The Kumar Mangalam Birla group announced a merger of its two flagship companies Grasim and AB Nuvo, which was not liked by the markets. The prices of both companies fell quite sharply with Grasim down 13.36% and AB Nuvo down 16.72%. The management did host a concall post the announcement but concerns still remain. Expect more volatility in the coming week and some more clarifications by way of broker reports on the merger. One more observation is that pessimism lasts for not more than 72 hours and news of this merger were officially communicated to the exchanges on Thursday the 11th of August. This means that the shares should begin to consolidate on Tuesday or latest on Wednesday.
In primary market news the issue from Ratnakar Bank Limited would open on Friday the 19th of August and close on Tuesday the 23rd of August. The issue would consist of a fresh issue of Rs 832.5 crs and an offer for sale of 1.69 cr shares in a price band of Rs 224-225. This is the second issue after Equitas Holdings which has a difference in price band of a mere one rupee.
Two issues listed during the week with shares of Dilip Buildcon gaining 11.51%. These shares were issued at Rs 219 and the issue had received excellent response with the issue subscribed 20.95 times with HNI’s subscribing their bucket 79.64 times. The other issue to list was S P Apparels which had issued shares at Rs 268. The share gained 10.07% on day one. The issue was subscribed 2.66 times.
This would be a short four day trading week with Monday already having been a holiday on account of Independence Day. Going forward we have the Parsi New Tear coming up which would be a bank holiday but markets would be trading. In a short four day week markets tend to be more volatile than normal.
With markets trading at new calendar year highs, it appears all news has been discounted. Going forward we need to consolidate at these new heights before moving on or moving down. I believe we need to rebuild at a lower base before we attempt to go higher. Take your call and decide which way markets will move.
