Markets last week traded post the temporary ceasefire announced between India and Pakistan. It appears that this was the trigger that markets needed. An event was over and retaliation in a fit and proper manner took place. On a lighter note, it appears that one of the missiles took markets in an upward trajectory and many stocks have recorded their best weekly gains ever. BSESENSEX gained 2,876.12 points or 3.62% to close at 82,330.59 points while NIFTY gained 1,011.80 points or 4.21% to close at 25,019.80 points. The broader markets saw BSE100, BSE200 and BSE500 gain 4.64%, 5.00% and 5.43% respectively. BSEMIDCAP gained 6.87% while BSESMALLCAP was up 9.21%. Markets gained on three of the five trading sessions and lost on two.
The Indian Rupee lost 14 paisa or 0.16% to close at Rs 85.51 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two. Dow was up 1,405.36 points or 3.41% to close at 42,654.74 points. Moody’s, post market close on Friday evening has downgraded the US credit rating due to rising debt and political discord. The current level of US debt exceeds 35 trillion. Post this announcement, Dow futures were down 280 points late on Sunday evening US time. It would be important to see how markets behave today when they open.
On the political front, India has decided to make an outreach to many countries across the globe on the issue with Pakistan. It has made 7 groups consisting of members of parliament, some former MPs and senior diplomats and former diplomats to present evidence and facts and figures of the entire incidents. The terrorism angle would be the highlight and the fact that the state of Pakistan has decided to rebuild the establishment of UN proclaimed terrorist and also compensate him for the loss of family members would help in linking state sponsorship of terrorism. To add to India’s point. Last night a terrorist killed in Pakistan by the Taliban was given a funeral draped in the Pakistani flag. IMF has put 11 conditions before disbursing the next leg of aid to Pakistan, making their relief that much more difficult.
Coming to the markets, we have the primary markets bouncing back from a three month hiatus. There would be two main board IPOs in the current week. The first issue would be from Belrise Industries Limited which is tapping the capital markets with its fresh issue for Rs 2,150 crores in a price band of Rs 85-90. The issue opens on Wednesday the 21st of May and closes on Friday the 23rd of May. Even though this is a large issue, there is no offer for sale component. The primary object of the issue is to repay debt of Rs 1,618.12 crores. This will reduce the debt of the company significantly.
The company is an automotive component manufacturing company, offering a diverse range of safety critical systems and other engineering solutions for two-wheelers, three-wheelers, four-wheelers, commercial vehicles and agri-vehicles. The product portfolio includes, metal chassis systems, polymer components, suspension systems, body-in-white components and exhaust systems amongst others.
The company reported consolidated revenues based on March 24 numbers is 17.78-18.83. of Rs 6,064.76 crores for the nine months ended December 24. The profit after tax for the period was Rs 245.46 crores. The revenues for the year ended March 24 were at Rs 7,555.67 crores and the profit 1after tax was Rs 310.87 crs. The PE for the issue on a fully diluted basis is 17.78-18.83 times. The price looks decent and the issue can be subscribed with a medium-term perspective.
The second issue is from Borana Weaves Limited which is raising Rs 144.89 crores at the top end of the price band of Rs 205-216. The issue is for 67.08 lac shares and would open on Tuesday the 20th of May and close on Thursday the 22nd of May. The company is a textile manufacturer based in Surat, engaged in production of unbleached synthetic grey fabric and polyester texturized yarn.
The company reported revenues of Rs 211.61 crores for the nine months ended December 2024 and a profit after tax of Rs 29.30 crores. For the year ended March 24, the revenues were at Rs 199.60 crores and the profit after tax was Rs 23.58 crores. The PE multiple for the company is 17.33-18.36 times based on March 24.
The objects of the issue are to increase the present weaving capacity from 700 water jet looms by another 348 looms. This would add to the size of operations and bring benefits of scale as the capacity increase is almost 50%, Investment is warranted for the medium to long term.
Coming to the markets in the period ahead, expect markets to build on the quantum leap that they took last week. While there could always be a healthy correction which would be much in place, the mood of investors particularly FPI’s who have accelerated their purchases is fueling the rally. Against a total net purchase of Rs 2,735 crores in the month of April, they have already bought Rs 23,782 crores so far and we have two weeks to go in May. Domestic institutions who had bought Rs 28,200 crores in April, have so far invested Rs 23,300 crores.
Support for the markets exist at 24,800 points on NIFTY and lower down at 24,400 points. On the resistance side, it is at levels of 25,200 points. One needs to keep in mind that we need to digest gains made during last week. Monday gains were what we played with throughout the week.
Trade cautiously and expect the unexpected.
