It was a topsy-turvy week at the bourses with markets under pressure through the week. The positive news was from RBI governor who on Friday cut repo rates by 25 basis points from 5.5% to 5.25%, which boosted the markets and saw them end virtually flat. Had it not been for this, markets would have ended with cuts for the week. BSESENSEX gained 5.70 points or 0.01% to close at 85,712.37 points while NIFTY lost 16.50 points or 0.06% to close at 26,186.45 points. BANKNIFTY gained 24.50 points or 0.04% to close at 59,777.20 points. The broader markets were marginally lower with BSE100, BSE200 and BSE500 down 0.08%, 0.24% and 0.38% respectively. BSEMIDCAP was down 1.26% while BSESMALLCAP was down 1.85%. Very clearly it’s the large cap stocks which are moving while the breadth of the markets comprising midcap and small cap continue to bear the brunt of selling. Markets gained on two of the five trading sessions and lost on three.
The Indian Rupee has been under pressure and lost further ground, slipping 59 paisa or 0.66% to close at Rs 90.08 to the US dollar. Dow Jones gained 238.57 points or 0.50% to close at 47,954.99 points. Dow gained on three of the five trading sessions and lost on two.
RBI in its monetary policy review meet held during 3-5 December, cut repo rates by 25 basis points to 5.25%. This will reduce home rates and already PSU banks have announced cut in home loan rates. This incidentally is the lowest repo rates over the last three years. The lowering of EMI will be helpful undoubtedly and may see some increase in purchase of rate sensitive items like homes and autos.
ICICI Prudential AMC has filed its RHP for its issue which would open on Friday the 12th of December and close on Tuesday the 16th of December. The issue consists of entirely an Offer for sale of 4.89,72,994 crore equity shares in a price band of Rs 2,061-2,165. The issue size at the top end of the price band would be Rs 10,602.65 crores.
Primary market deluge continues and one wonders when merchant bankers and promoters would take a realistic view about valuations. It’s time to introspect about the state of the midcap and small cap sectors in the secondary markets. Markets are just not recovering and they seem to be under terrific pressure. Yet issue after issue gets subscribed and post listing seems to head in only one direction- downhill. So much so that one of the last issues to list, Excel Soft Technologies Limited which had issued shares at Rs 120, managed to hold on to its issue price for the first three days closing at Rs 120, and then last week tanked. It lost Rs 26.65 or 22.21% to close at Rs 93.35.
One hopes sanity in prices comes quickly or with a pipeline of over 200 IPOs, things could turn awry for the primary markets.
President Putin paid a two day visit to India and a lot of action took place. None of the outcome has been made public and it has got the US worried as they were hoping to sign big defense deals. It now appears that a high level US trade team would be visiting India to take the tariff issue forward. Taking things for granted doesn’t work and this is a classic example of the same.
Coming to the markets in the week ahead, not much has changed since last week. Resistance continues to tease the markets at levels of 26,500 or thereabouts while support exists around 26,000 points and lower down around 25,700. News flow is what the markets need. Take last week for example, repo rate cut of 25 basis points took markets up and salvaged the week or it was gone. Whether we have the steam to survive without any news for another week, doubtful.
Strategy would be to lie low and allow markets to play their own. Wait for triggers from news flow. They could continue to test your nerves and patience.
