Shares of Angel Broking Limited debuted on the bourses and had a poor showing with losses recorded on day one. The company which had issued shares at Rs 306, saw its shares close at Rs 275.85 on BSE, a loss of Rs 30.15 or 9.85%. This is the first primary offering since the market revival which began with Rossari Biotech in July 2020 which has closed with losses on day one.

Earlier Angel Broking Limited which had tapping the capital markets with its fresh issue for Rs 300 cr and an offer for sale of Rs 300 crs completed allocation to anchor investors. The issue had opened on Tuesday the 22nd of September and closed on Thursday the 24th of September.

The company allotted 58,82,252 equity shares to 12 anchor investors comprising of 29 entities. The highest allocation was made to ICICI Prudential who was allotted 11,43,758 equity shares or 19.45% of the anchor portion. The next highest allocation was made to Nippon India of 14.22%. Thereafter the allocation of 11.11% or 6,53,562 shares was made equally to HDFC, Goldman Sachs and Aditya Birla Sun Life. In short, 5 anchor investors comprising of 9 entities were allotted 67.22% of the total anchor book.

The issue saw QIB portion subscribed 5.74 times, HNI portion subscribed 0.69 times and Retail portion subscribed 4.31 times. Overall, the issue was subscribed 3.94 times. There were just about 4.53 lac applications.

The discovered price on BSE and NSE was Rs 275. At the discovered price, 37,938 shares were traded at BSE and 3,06,762 shares were traded at NSE. The high of the day was Rs 296.45 on BSE and Rs 296.70 on NSE. The low was Rs 256.60 and Rs 257 respectively. The close was Rs 275.85 on BSE, a loss of Rs 30.15 or 9.85%. On the NSE, the close was Rs 275.80, a loss of Rs 30.20 or 9.87%. The weighted average of the days trade was Rs 279.81 on BSE and Rs 280.42 on NSE.

In terms of institutional trades there was just on reported on NSE where BNP Paribas Arbitrage sold 5,24,649 shares at Rs 280.13.

The traded volume combined was 94.40 lac shares which was 0.48 times the IPO size of 196.52 lac shares and 0.69 times the non-anchor size of 137.70 lac shares. Delivery volume was 23.34 lac shares which was 24.73% of the traded volume. It was 11.88% of the IPO size and 16.95% of the non-anchor portion. With a lacklustre performance and significantly lower volumes than witnessed in previous primary market issuances on listing day, expect the stock price to drift downwards in the coming days.

This was certainly an unsatisfactory listing and has dampened the euphoria witnessed in primary markets over the last couple of months.

The week gone by had mere four trading days but had plenty of action in it. It had two days of super gains on Monday and Thursday and two flat days. It gained 1,308.39 points or 3.50% to close at 38,697.05 points. NIFTY gained 366.70 points or 3.32% to close at 11,416.95 points. The broader markets saw BSE100, BSE200 and BSE500 gain 3.31%, 3.31% and 3.30% respectively. BSEMIDCAP gained 3.32% while BSESMALLCAP gained 3.28%. Markets gaining almost identical between 3.28% to 3.32% is a rare event and I do not recall having seen such an event in a very long time. I am not sure what to make out of it but am sure that time will make us wiser.

The Indian rupee gained 47 paisa or 0.64% to close at Rs 73.14 to the US dollar. Dow Jones gained 545.85 points or 2.01% to close at 27,682.81 points. President Donald Trump, seeking re-election for the US Presidency has been diagnosed with covid-19 and it makes the 2nd November election that much closer and interesting.

The week was focused on the primary markets with three new issues and two listings. The first new issue from Mazagon Dock Shipbuilders Limited, saw overwhelming response and was oversubscribed 157.41 times. QIB portion was subscribed 89.78 times, HNI portion 678.88 times, Retail portion 35.63 times and Employee portion 3.86 times. There were 26.31 lac forms. The issue garnered subscription of Rs 69,838 crs against an issue size of just Rs 443.68 crs.

The second primary issue was from UTI Asset Management Company Limited which was subscribed 2.31 times overall. The QIB portion was subscribed 3.34 times. HNI portion subscribed 0.93 times, Retail portion subscribed 2.32 times and Employee portion subscribed 1.34 times. There were 8.80 lac applications.

The third primary issue from Likhitha Infrastructure Limited was undersubscribed in the QIB category and was hence extended. The issue was subscribed overall 8.43 times but received bids for just 0.45 times the QIB portion. The QB portion which was 50% of the issue size of 51 lac shares has now been changed to 1% of the issue size and the HNI portion which was earlier 15% been changed to 64%. What is interesting to note is the interpretation being taken in the issue by the regulator that upto50% can be anything up to a maximum of 50%. This will change the popular perception that issuers of capital, merchant bankers and investors had earlier that every issue had to have a compulsory allocation of 50% reserved for institutional investors. This can now be flexible and can be just about anything from 1% to 50%. This would make fund raising that much easier as many more companies would tap the markets going forward. There is another category where 75% of the issue is reserved for QIB’s in case there is lack of profits or some other conditions.

So, in future, the bogey of 50% QIB and the fact that the undersubscription in this category was not interchangeable is effectively gone. If a promoter or more so the merchant banker feels that he may have difficulty in getting QIB’s because of the size of the issue, all he has to do is lower the percentage of QIB and all is well. Great time for fund raising going ahead.

The first listing was from Computer Management Services Limited or (CAMS) which had issued shares at Rs 1,230. Shares were traded on the BSE only, as the offer for sale was from NSE Investments, an associate company of NSE and hence trading was not allowed there. Since they no longer own shares in CAMS, trading in CAMS share would be allowed from Monday on the NSE as well. Shares debuted at Rs 1,518, touched a high of Rs 1,550, made a low of Rs 1,306.20 and finally settled to close at Rs 1,401.60, a gain of Rs 171.60 or 13.95%. The delivery of 71 lac shares on listing day was 55.28% of the non-anchor IPO size of 128.27 lac shares. There were institutional purchases on day one of 32.48 lac shares at an average price of Rs 1,482.37. This indicates ample interest in the share going forward. At the current closing price, leveraged HNI’s would be losing money as the funding cost was in the range of Rs 185-198.

The second listing was from Chemcon Speciality Chemicals Limited which had issued shares at Rs 340 and was subscribed 149.33 times. The discovered price was Rs 730.95 on BSE and Rs 731 on NSE. The share after touching a high of Rs 743.80 on BSE and Rs 731.25 on NSE, fell to the low and lower circuit of Rs 584.80 on both exchanges, where the share also closed. The gains registered were 72%. The cost of interest for the leveraged HNI was between Rs 205-220. If the share slips another Rs 25, then there would be losses for the leveraged HNI. Delivery percentage on non-anchor issue size is 88.55%. This implies that the share could be under pressure in the coming days.

Covid-19 saw the number pf patients globally go up to 3,53,96,479 people with 10,41,800 deaths and 2,66,19,998 people having recovered. In India the number of affected people is 66,22,180 patients with 1,02,714 deaths and 55,83,453 people having recovered. Compared to the previous week the number of new patients globally is 20,91,813 with 39,411 deaths and 19,85,700 people having recovered. In India there were 5,48,832 new patients, 7,140 deaths and 5,70,086 people having recovered. This is the second consecutive week when we have seen larger number of patients recovering then new patients which is certainly a welcome sign.

Coming to the markets, we have shares of Angel Broking Limited to list on Monday. The listing is expected to be lacklustre. While markets have rallied strongly in the previous week with BFSI sector leading the pack, expect markets to be choppy and volatile. While there could be some more upside left on expectations of yet another stimulus being announced in the US and liquidity from there flowing through global markets into India as well, there could be delays in the same. Continue to sell on strong rallies and buy on sharp dips for the time being.