Friday the 22nd of January was a delayed Christmas gift in the form of a strong rally globally. Markets across the world recovered substantial ground and ended the week virtually flat. India was no exception where we had close to a 2% gain on Friday and ended the week with losses of 0.08% on the BSESENSEX and 0.21% on the NIFTY. Dow Jones was up 0.66% for the same period.
The week ahead has a holiday on Tuesday when India celebrates its Republic day with the French President being the chief guest. Thursday sees January futures expire whereas of date the bears are enjoying complete domination with the NIFTY series down 524 points or 6.59%.
In primary market news there is an issue from camshaft maker Precision Camshafts Limited which is making a simultaneous offer opening on Wednesday and closing on Friday. The issue which is priced in a band of Rs 180-186 comprises of a fresh issue for Rs 240 crs and an offer for sale of 91.5 lakh shares. The issue would raise Rs 410 crs at the top end of the band. Precision Camshafts is one of 4 global players in the camshaft business and supplies to global brands like GM and Ford across regions and geographies.This issue would be the first under the new rules where all retail applications too would have to apply under ASBA. It would be interesting to see how the retail investors react to this new situation and the way the banking system responds to this new demand.
With the midweek Tuesday holiday confined to India, players would like to keep their positions light in the wake of heightened global volatility. This could see some selling pressure in the latter half of trading today. Investors would be advised to keep positions light as FII’s are still sellers. Even on Friday when markets across the world were rallying including India, they were sellers.
Some people never learn and clearly the management of Interglobe Aviation the company which runs Indigo Airlines is one such glaring example. At the time of the IPO they created news with the highest ever dividend and reducing the net worth of the company to negative to effect pay out. The promoters of the company chose not to go on the domestic roadshow against convention and on being criticised for the same did a post roadshow visit to meet select Mumbai press. They had an analyst concall post declaration of results on Thursday the 21st of January where the participants were most unhappy at the non-transparent manner in which the management gave replies. The delay in delivery of new aircraft and the new timeline was just not answered satisfactorily. Broking houses post the results and concall have downgraded the stock across the board. Speaks volumes for such a major company and its management. The net result was that the share in trading on Friday was locked down at the circuit filter of 20% before recovering marginally but ended with losses of over 19%. It’s time that the management realised that they are a listed entity and no longer a private company. Investors, analysts and prospective investors will ask questions and are entitled to them. One hopes that this management realises this at the earliest before arrogance and complacency overtake this booming airline company.
Volatility to continue and certainly the markets are not yet out of the woods. One needs to allow the market to settle down and find its base at current levels. The pre-budget rally is still a fortnight or thereabout away. Trade cautiously.
