The benchmark indices saw the BSESENSEX lose 1.88% and NIFTY 2.02%. While global cues were weak, for once marketmen could not blame parliament as it functioned near normal. GST bill has been slated for discussion and the possibility of this mammoth legislation and a key reform is quite likely to get the nod from Rajya Sabha. The market has been sensing this and reacting accordingly. FII’s have continued to be sellers and whether it is year-end realignment or the anticipated rate hike by the FED, one is not sure. Their selling is affecting the large cap stocks which are under pressure and the converse is happening in the midcap and smallcap stocks which are rising. These stocks are being bought by domestic institutions which are receiving money in these funds only.
This is a cautionary signal and investors need to take care of the same. Action is shifting this week to the primary market where two issues are opening. They are from Dr Lal Path Labs Limited and Alkem Laboratories Limited. Both are secondary issues where no money being raised would go to the company and would only go to the selling shareholders.
Dr Lal Path Labs Limited is issuing 1.16 cr shares in a price band of Rs 540 and 550. The issue would raise Rs 626.4 crs to 638 crs and the PE at the upper band is a staggering 47.91 times based on FY15 consolidated basis. The 2 merchant bankers of the issue have handled 10 issues in the last three years of which 6 were below par on listing day. The issue opens on Tuesday the 8th December and closes on Thursday the 10th December.
Alkem Laboratories Limited is issuing 1,28,53,442 shares in a price band of Rs 1,020-1,050. The issue would raise Rs 1,311 crs to Rs 1,349 crs. The PE based on consolidated numbers for year ended March 2015 is between 26.4 to 27.1 times. The 4 merchant bankers of the issue have handled 12 issues in the last three years of which 4 were below issue price on listing day. The issue opens on Tuesday the 8th of December and closes on Thursday the 10th of December.There is a corrigendum to the RHP of Alkem today of a penalty imposed by CCI (Competition Commission of India) of Rs 74.63 crs. The company has a right to appeal for the same but it would have under prudent accounting have to make a contingent liability for the same.
The anchor portion for both issues is slated for Monday the 7th of December. The grey market is quite active with a premium in the range of 20% for both issues.
One or two more issues are expected in the remaining days of the current calendar year as there is apprehension in the minds of promoters and merchant bankers about compulsory ASBA for retail investors being introduced from 1st January 2016. This spurt in primary market activity is primarily on account of this reason.
SEBI chief has put it on record that he is quite happy if retail investors do not come to the primary market or the secondary market directly but came via institutions or mutual funds. The government has launched a massive financial inclusion programme called Jan DhanYojana. One wonders whether people concerned are aware that SEBI which is an institution under the very own Finance ministry is running a programme which is completely the opposite of what the government wants. Strange are the ways things happen in India.
May God save us retail investors?
