Shares of Rossari Biotech Limited which had tapped the capital markets with its simultaneous fresh issue of Rs 50 crs and an offer for sale of 1.05 shares had a dream debut on listing. The company which had sold its shares at Rs 425 saw its shares touch Rs 804 on BSE and close at Rs 742.35, a gain of Rs 317.35 or 74.67%.

Earlier the company had completed its allocation to anchor investors by allotting 35.02 lac shares to 15 anchor investors comprising of 29 entities. The highest allocation of 3,29,420 shares was made to three individual investors which constituted 9.4% of the anchor allocation and was made to Ashoka India, Nalanda Fund and Nippon India. Besides the above, three mutual funds HDFC, ICICI and SBI were also allotted the similar 9.4% in various schemes. The price band was Rs 423-425. The issue had opened on Monday the 13th of July and closed on Wednesday the 15th of July. The issue was subscribed 79.37 times. The QIB portion was subscribed 85.26 times, HNI portion 239.83 times and Retail portion was subscribed 7.23 times. The cost of funding for the leveraged investor worked out to Rs 127-137.

Shares opened at Rs 670 on BSE and Rs 669.25 on NSE. The high of the day was Rs 804 on BSE and Rs 803.10 on NSE. The low was Rs 663.55 and Rs 664 respectively. The closing price was Rs 742.35, a gain of Rs 317.35 or 74.67% on BSE. It was Rs 316.65 or 74.51% on NSE. The traded volume on the two exchanges combined was 338.68 lacs which was 3.32 times the IPO size of 116.76 lac shares and 4.75 timed the non-anchor size. Delivery volume was 75.74 lac shares which was 19.52% of the traded volume but 64.87% of the IPOsize and an unprecedented 92.68% of the non-anchor portion. The last time we had such a high delivery percentage was in the case of a manipulated stock of Fineotex Chemicals which was listed in March 2011. That time the delivery percentage as a basis of the issue size was more than 100%.

The weighted average of the day’s trade was Rs 723.53 on BSE and Rs 722.81 on NSE. In terms of institutional activity, Plutus Wealth Management Limited LLP bought a net of Rs 4,77637 shares at Rs 669.25, which was the pre-discovery price at NSE. Similarly, Goldman Sachs bought 4,81,443 shares at Rs 692.17. With 92.68% or 75.74 lac shares changing hands, the investors in the company now are all around Rs 700 and this would become a new norm. Investors would make or lose money if price rises or falls from these levels. Making money looks difficult currently and the share is likely to see pressure going forward.

In conclusion share on listing day has fared far better than what was expected. Bring the first virtual issue, virtual listing and issue during covid-19, a new benchmark has been set.

Markets began the week on a quiet note and at the end of Tuesday it appeared as if we would end the week in no man’s land. Market behaved in a completely different manner and over the next three days the BSESENSEX gained almost 1,000 points with NIFTY chipping in 300 points. The week closed with BSESENSEX gaining 425.81 points or 1.16% to close at 37,020.14 points while NIFTY gained 133.65 points or 1.24% to close at 10,768.05 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.24%, 1.14% and 1.04% respectively. BSEMIDCAP was up 1.00% while BSESMALLCAP lost 0.17%.

The Indian Rupee gained 18 paisa or 0.24% to close at Rs 75.02. Dow Jones gained 596.65 points or 2.29% to close at 26,671.95 points.

The primary issue from Rossari Biotech was oversubscribed 79.37 times. QIB portion was subscribed 85.26 times, HNI 239.83 while Retail portion was subscribed 7.23 times. The cost of funding for the leveraged HNI will vary between Rs 127-137 which is 30-32% of the issue price of Rs 425. This effectively means that the share needs to trade above Rs 562 for the HNI to break even and make money if it trades higher.

The follow-on public offer from Yes Bank which is the largest follow on offer remained just about under subscribed. The company received bids for 1189.41 shares and taking the allotted price of Rs 12 would amount to 14,272 crs. There could always be some rejections on technical grounds. There is an underwriting commitment of Rs 3,000 crs made by SBI Capital Markets in the above FPO. The share price of Yes Bank lost Rs 5.70 or 22.35% to close at Rs 19.80. Shares of Yes Bank allotted through the follow-on offer are to list on Monday the 27th of July by which time the market price would be close to Rs 12-14. How they correct in the remaining five trading sessions is a matter of discussion and permutation and. combinations.

Covid-19 has many issues and different people have been impacted in different ways, but one positive impact has been the streamlining and fast track of fund raising by SEBI. We have had India’s largest rights issue from Reliance and now the largest FPO from Yes Bank. There have been rights issue from Arvind Fashion which closed on Friday and Aditya Birla Fashion and Retail which would close in the coming week. Issues go ex-rights and the entire process gets completed in less than four weeks’ time from ex-right to subscription and subsequent listing.

Mahindra and Mahindra Financial Services Limited has announced its rights issue to raise Rs 3,089 crs. The rights price is a steep 75% discount to the last traded price of Rs 207.90 on Friday on the BSE. The rights ratio is one for one at a price of Rs 50. The record date for the right is Thursday 23rd July. The share price would correct to some extent Monday onwards.

The important point here is that the number of rights issue and fund raising by companies is on an advanced pace and many companies are taking advantage of the relaxed conditions by SEBI to do so. The response to these issues has also been encouraging. Even in the primary market the pipeline is full and it would be interesting to see how many issues tap the market finally.

BPCL was the star performer last week with the government having extended the last date for inviting bids to 31st July. The share gained Rs 67.55 or 17.95% to close at Rs 443.90. The market cap of the company is Rs 96,300 crs and the street believes that bids for acquiring 53.29 % stake in the company would come around Rs 1.20 lac crs, implying a further 20-25% upside. Expected bidders include Rosneft, Saudi Aramco, Kuwait Petroleum, Exxon Mobil, Shell, Total and Abu Dhabi National Oil Company. This should be an interesting counter in the week ahead.

The week ahead sees July futures expire on Thursday the 23rd of July. The current value of NIFTY is higher by 612.80 points or 5.96% at 10,901.70 points. Bulls certainly have the upper hand and with disbelief in the market rally gaining further ground, it should be even easier for bulls to push home the advantage.

Coming to covid-19, the number of patients globally has increased to 146.44 lacs with 6.09 lac deaths and 87.35 lac patients recovering. In India the number of people affected by covid-19 has touched 11.18 lac with 27,503 deaths and 7.00 lac people recovering. Compared to the previous week, the world has seen 16.94 lac new patients with 37,400 deaths and 11.54 lac people recovering. In India, we have added 2.38 lac new patients, 4,316 deaths and 1.45 lac people recovering.

The week ahead sees July futures expiring and this would keep markets choppy and volatile. There is complete disbelief in the ongoing rally and markets are in the grip of bulls in India and globally. In this situation the tendency of people to short the market on every rally is natural and therefore acts as fodder for the bulls who are on the rampage. Having made money since markets fell sharply in March 2020, in April, June and July, the bulls are sitting pretty and are likely to squeeze the bears once again in the four remaining days of trade left in the series. While valuations look skewed undoubtedly, it makes sense to ride the rally, avoid shorting and book profits whenever the situation warrants.