Markets continued their volatile movement in the week gone by and managed to close with gains for the week. BSESENSEX gained 433.68 points or 1.15% to close at 38,040.57 points while NIFTY gained 140.60 points or 1.27% to close at 11,214.05 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.42%, 162% and 1.83% respectively. BSEMIDCAP was up 3.34% while BSESMALLCAP gained 4.97%. The midcap and Smallcap indices were helped in no small way by the relaxation in circuit filters by the exchanges on Friday where over 600 stocks were positively impacted. This would increase the volatility in this segment. The benchmark indices in the last week gained on two days, lost on one and were sideways on the remaining two days.

The Indian Rupee ended lower by 12 paisa or 0.16% to close at Rs 74.93 to the US Dollar. Dow Jones had a stellar week and gained a massive 1005.16 points or 3.80% to close at 27443.48 points.

RBI in its monetary policy review meet kept interest rates unchanged and stopped the series of rate cuts that it had been doing. The meeting also ended speculation on extending the moratorium which would end in August. It has however announced that lenders would be allowed to implement a one-time loan restructuring plan without any change in ownership, while classifying such exposure as standard assets. This would provide relief to borrowers whose cash flows have been strained due to the pandemic and the resultant lockdown effect.

Shares/units of Mindspace Business Parks listed on the bourses on Friday and gained 10.50%. REITS were issued at Rs 275 and closed the day at Rs 303.87. The issue had received excellent response and was subscribed 13 times. On listing day, the delivery percentage was as high as 88%, indicating that only delivery trades were initiated. This is an investment instrument and would attract investors looking to diversify from liquid investments including fixed deposits as the yield is better and they are currently largely tax free in nature.

Shares of Yes Bank were big gainers during the week and gained Rs 2.19 or 18.33% to close at Rs 14.14. Readers would recall that the bank had raised Rs 15,000 crs through a follow-on offer at Rs 12. There could be more movement possible in the stock but going forward it would become an actively traded stock simply because it would have such a large floating stock available.

There has been an announcement that 101 items of defence equipment will not be imported by India going forward. While this would give a big boost to the domestic manufacturers in the medium to long term, there would be no immediate impact as it takes time for approvals and production to be put in place. The stock market would however react immediately and a knee jerk rally in the manufacturers of such equipment is likely to see a sharp jump. Do not get carried away with the movement.

On the covid-19 front, the number of affected people globally has crossed the 20 million mark and increased to 200.24 lac people with 7.34 lac deaths and 128.98 lac people having recovered. In India we have 22.14 lac affected people with 44,466 deaths and 15.34 lac people having recovered. Compared to the previous week, the world has seen 17.89 lac new patients, 41,201 deaths and 14.53 lac people having recovered. In India we had 4.09 lac new patients, 6,305 deaths and 3.47 lac people recovering. The number of new patients in India has been increasing quite significantly and it is a cause of worry. It can be attributed to the increased testing that is happening in many places and also the increased unlocking of restrictions.

Markets are seeing a spate of fund raising where corporates and promoters are increasing their stake in the companies through fund raising and also improving the balance sheet. Rights issue or QIP issues are happening literally dime a dozen and issues get subscribed almost instantaneously. In the last week for example we saw Axis Bank and HDFC Limited raise large amounts of money. This highlights the fact that investment is happening in the market not only through secondary market but also through primary markets. Fund raising has become relatively easier and is happening in all earnestness. Liquidity is available and the system is flush with money. FPI’s with liquidity from the US are more than willing to invest in India even though markets worldwide are back to pre-covid-19 levels of March 2020.

Markets are poised at levels which are marginally lower than the highs made in the previous week of 38,617 on BSESENSEX and 11,341 on NIFTY. While these levels would act as strong resistances until they are crossed and taken out, the present levels could see volatile and sharp two-sided moves resulting in trading opportunities. A 500-600 point downwards on BSESENSEX and 150-200 points on NIFTY could act as strong supports on the downside. This could be a trading range for the week ahead. Having seen a strong rally over the last three to four months, its high time that markets consolidate before deciding on the next leg of its journey. Use sharp movement to your advantage and refrain from keeping overnight positions.

Mindspace Business Parks Reit had a great day on listing and gained 10.5%. The company had tapped the capital markets with its fresh issue for Rs 1,000 crs and an offer for sale of Rs 3,500 crs and received excellent response and being subscribed 13 times. Earlier the company had allotted to 54 investors a total of 552.27 lac units for a total of 1,518.75 crs by way of anchor allotment. The highest allocation was made to Government of Singapore who was allotted 66,75,200 units worth Rs 183.57 crs. This formed 12.09% of the anchor allocation. The price band was Rs 274-275.

This being an issue under REIT there was a strategic investor quota of Rs 1,125 crs which was earlier allotted. The original issue size of the Rs 4,500 crs was reduced to Rs 1,576.25 crs. This part of the issue was divided into institution and non-institution with no distinction for retail and HNI. The issue was subscribed 13 times with QIB portion subscribed 10.61 times and Non-institution portion subscribed 15.83 times. There were 51,749 applications which makes the average ticket size Rs 25.81 lacs.

The price discovery saw a price of Rs 302 on both the exchanges. The volume traded at this price on price discovery was 5.22 lacs on BSE and 57.86 lacs on NSE, making a total of 63.09 lac shares. The unit made a high of Rs 308.90 on BSE and Rs 307.20 on NSE. The low was Rs 299 on BSE and Rs 300 on NSE. The closing price was Rs 303.87 on BSE, a gain of Rs 28.87 or 10.50%. On NSE. The closing price was Rs 303, a gain of Rs 28 or 10.18%.

The traded volume on the two exchanges combined was 288.59 lac units which was 0.17 times the IPO size. If one were to consider the non-strategic investor and non-anchor investor, this would be 0.43 times the size. The delivery volume was 252.25 lacs which was 87.41% of the traded volume. It was 0.17% of the issue size and 37.24% of the non-strategic investor and non -anchor investors. If one were to compare with the year ago issue of REIT from Embassy office park this issue has seen significantly higher volumes, higher delivery volumes and more significantly higher gains on listing day. The weighted average of the day’s trade was Rs 303.73 on BSE and Rs 302.81 on NSE.

In the case of Embassy office Reits, the company saw a volume of 31.82 lacs which was 2.01% of the IPO size. The delivery volume was 27,49,200 units which was 86.40% of the traded volume and 1.74% of the IPO size. If one were to consider the non-anchor and non-strategic investor portion, the traded volume was 4.48% of the IPO size and delivery volume was 3.87%. Comparing it with today’s issue of Mindspace, the numbers are not comparable whatsoever. Trading was significantly higher and so was delivery. It is clearly borne out that the instrument is being better understood now.

There were two buyers on day one on the NSE as per date. Nomura Investment bought 62,63,200 units at Rs 302.45 while Capital Income builder bought 51,81,400 units at Rs 303.44. These purchases were quite similar to the weighted average and indicates the interest on day one. Going forward the trading volumes would fall and so also the delivery volumes. The sae would pick up when corporate action in the form of dividend is to be announced.

When the concept of INVITS and the REITS were introduced the ticket size for minimum application was Rs 10 lacs which has been reduced in a phased manner to Rs 50,000 now, with a understanding that could become a retail product and means of investment going forward. Keeping this in mind there were as many as 30,061 applicants in the one, two and three lot category of the total 49,989 valid applications. This effectively means that 60% of the issue by number of applications were subscribed in the notional category by retail investors as the lot size in this issue was Rs 55,000. In the proportionate allotment method followed, these applicants numbering 30,000, there were just 2,000 successful applicants and they got 200 units each. If the idea is to encourage investment from retail investors there must be a separate bucket for them ot the allotment must first be for one lot and then proportionate. It is unfair that retail investors are at the receiving end of the allotment.