The markets had a great week and did quite well for themselves. The BSESENSEX and NIFTY gained just under 3% while the Dow Jones gained a little over 3.15%. June futures expired with gains of 2.70% and almost all of it came in the last four days of trading. The monsoon has advanced into larger parts of the country and parts of Maharashtra which about two months ago were under severe drought could face a problem now of floods. Such is the fury of nature. The Indian cabinet approved the pay hike of central government employees and this would also act as a kick starter to more demand and therefore growth.
The primary markets seem to be having a whale of a time. The shares of Mahanagar Gas Limited (MGL) listed on Friday and gained 23.5%. Shares were allotted at Rs 421 and closed with gains of just under Rs 100 at 519.90. The IPO from Quess Corp Limited closed for subscription on Friday and received a tumultuous response being subscribed 144.50 times. The QIB portion was subscribed 59.03 times, HNI 92.21 times and retail 34.08 times. Total applications received were 7.30 lacs which implied that on the basis of applications the retail portion was subscribed 26.04 times. Effectively there would be one lucky allotment from 26 applicants. The key takeaway from these two IPO’s is everything sells at a price.
The demand generated from HNI’s in Quess Corp was Rs 23,520 crs or 58.8 times the issue size of Rs 400 crs. Almost all of this money was from leveraged funds and the only category really making money would be the financers. The rate of interest which began in the issue and the previous one at 8% was reduced to 6.5%, indicating the huge spreads available to the financers and their ability to reprice.
The US celebrates their independence day and markets would therefore be closed. We have had a great run in the last few weeks barring the one day of BREXIT and some consolidation is overdue. Take some money of the table to redeploy when things cool off and that readers could be as quickly as the latter half of the week. Volatility would continue to dominate price movements.
