Markets continued their see-saw movement and gained and lost on virtually alternate days. They seem in a state of flux and trying to find their levels. They gained on three of the five trading sessions and lost on two. BSESENSEX was up 685.68 points or 0.87% to close at 79,802.79 points while NIFTY gained 223.85 points or 0.94% to close at 24,131.10 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.34%, 1.70% and 2.05% respectively. BSEMIDCAP gained 2.31% while BSESMALLCAP was up 4.92%.
The Indian Rupee has been under pressure and lost 4 paisa or 0.05% to close at Rs 84.48 to the US Dollar. Dow Jones continued to gain and was up on three of the four trading sessions and lost on one. Dow gained 614.14 points or 1.39% to close at 44,910.65 points.
In primary market news we had two listings during the week. The first which happened on Wednesday the 27th of November was from NTPC Green Energy Limited which had issued shares at Rs 108. The share closed day one at Rs 122.10, a gain of Rs 14.10 or 13.05%. By the end of the week, the share had gained further and closed at Rs 124.85, a gain of Rs 16.85 or 15.60%.
The second share to list was from Enviro Infra Engineers Limited which had issued shares at Rs 148. The share closed day one at Rs 207, a gain of Rs 59 or 39.86%.
There is on e main board issue currently open from Suraksha Diagnostics Limited. The issue has opened on Friday the 29th of November and would close on Tuesday the 3rd of December. The price band of the issue is Rs 420-441. The issue is entirely an offer for sale of 1,91,89,330 equity shares. The issue would raise Rs 846.25 crores at the top end of the price band. The company as the name suggests is into the business of diagnostics and is the largest chain in Eastern India offering 9 labs, 49 diagnostic centers and 166 collection centers across the states of West Bengal, Assam, Bihar and Meghalaya.
It has a fair mix of revenue from pathology and radiology as compared to its competitors. The only other chain that has a fair mix is Vijaya Diagnostics from Hyderabad. The company has set up quite a few clinics in the last couple of years which are yet to mature. Benefits of this would be visible in the coming 12 to 18 months when these clinics mature and add to the revenues of the company. The current valuations with the PE multiple almost a 100 looks expensive without doubt. However, if we were to extrapolate the anticipated growth based on past records looking at the clinic life-cycle it is fair to assume that there would be rapid growth in the less than three year old clinics which would mature.
Based on current valuations the company is expensive and one may skip the same if looking for listing gains. If however, the view is long term and one has a 12 month holding period it looks like taking a punt post listing when available at a discount of around 15-20% would offer returns .
Nifty November futures expired on Thursday the 28th of November on a weak note. The series lost 291.20 points or 1.20% to close at 23,914.15 points. Over the last couple of weeks, the bulls have clawed back and reclaimed lost ground. It maybe mentioned that a day before expiry, the series was positive and in favor of the bulls.
Coming to GDP data for the second quarter ended September 2024, it would have been well researched by now. The clear fact is that the economy has not performed well and this was borne out in advance when results for the September quarter were below the mark and did not offer any comfort to the elevated valuations that the markets are suffering from. This data is likely to give the bears ammunition to hurt the rally that the bulls have been trying to build on. Secondly, the out performance of the midcap and small cap sector in the previous week when compared to the large cap is a cause for worry.
Coming to the markets, the volatility being witnessed will continue. As mentioned earlier, markets are still trying to find their own levels. The immediate resistance for the markets is at levels of around 24,500 points on NIFTY and at 80,900 points on BSESENSEX. If this is crossed, the next very strong resistance would be at levels of 24,850 and around 82,000 points. On the support side there is very strong support at the lows made on 21st of November of 23,263 on NIFTY and at 76,802 points on BSESENSEX. These levels appear rock solid as of now and would need a super herculean effort to break in the coming week.
The strategy for the week would be to shift to safety in the large cap space and avoid investments in small cap and midcap space. There could always be pockets of interest and value available, but across the board in the smaller segments is fraught with danger.
Trade cautiously.
