The markets registered weekly gains after four consecutive losses and showed signs of some stability. The fall which was triggered by the Chinese market collapse and then the devaluation of the Chinese currency had a cascading effect globally. Our markets saw the BSESENSEX gain 1.62% while the NIFTY gained 1.75%. Dow Jones too gained 2.05% to close at 16,433.09 points. Indian markets along with the US markets are negative in the current calendar year and have surrendered all their gains.
The week ahead has plenty of drama with the FED to meet on Tuesday and Wednesday the 15th and 16th September 2015. India has a holiday on Thursday the 17th of September 2015 and the following day could be a big movement day depending on what the FED does. The street is divided on whether rates would be raised this time or not. Two weeks later RBI meets for its credit policy and there seems a greater possibility than ever before of rates being cut in India.
The Prime Minister earlier in the week met captains of Industry and the clamour for rate cut was across the board. At the same meeting the RBI Governor stressed the fact that earlier rate cuts were not passed on by banks and therefore it becomes infructuous. Immediately after the meeting banks have cut rates and therefore it now seems a possibility that we could have a rate cut on the 29th of September.
Three IPO’s listed last week and the feeling was mixed. Navkar Corporation listed and closed the week with gains of 5.16%. This was a hyped issue and it was expected that the HNI portion would be subscribed over 200 times. As fate would have it the HNI portion remained under subscribed and managed subscription of a mere 0.90 times. At the time of allotment this reduced even further and was a mere 0.30 times. One fails to understand when withdrawal of forms is not permitted and all HNI’s have to compulsorily apply through ASBA how did this happen. It is simply too much to expect that all these people withdrew the money from the bank account so that when the application was presented for blocking of funds there were none. This is like issuing a cheque knowing fully well that there is no money in the account.
This matter cannot have happened without the knowing and tacit understanding of the merchant bankers. This incident needs investigation and one hopes that the regulator looks into the same right away. One must understand that E-IPO is just about four months away and in case the syndicate/sub-syndicate members are found wanting, then HNI’s must only be allowed to bid through banks where the money is first blocked and then bid. Anyone who misuses the system must be penalised and the loophole plugged.
One sinscerely hopes that the regulator takes action against the merchant bankers and concerned errant HNI’s who bid and then withdrew in Navkar. Unless stopped right away this would become a nuisance and the sanctity of bidding in the capital markets would be lost.
Coming to the second issue of Shree Pushkar Chemicals and Fertilisers Limited, the share on listing day had a discovered price of Rs 60 and Rs 60.05 on the teo exchanges compared to the issue price of Rs 65. Though the share closed at the upper circuit, the price remained below issue price. By the end of the week the share had crossed the issue price and logged weekly gains of 1.69%.
The third issue was from Pennar Engineered Building Systems Limited which had issued shares at Rs 178. Here the discovered price was completely different on both exchanges. The gap has narrowed but the share continues to trade below the issue price. The share closed at Rs 165.35, a loss of 7.11%.
The week ahead would see the listing of the two remaining IPO’s of Sadbhav and Prabhat Dairy. It would be interesting to see how these fare and also what lessons the merchant bankers, promoters and Private equity investors take away from these issues which have proved the fact that pricing continues to remain very aggressive.
With a major event (FED meeting) and followed immediately by a holiday would make markets volatile. The possibility of a gap up or down opening on Friday seems distinctly possible and also the fact that there would be position unwinding on Wednesday. It makes sense to keep one’s position light by Wednesday and look to buy on dips.
