NIFTY made a new lifetime high on Tuesday the 26th of November and did so again two days later. Friday saw a sharp correction on expected weak GDP numbers. The week ended with BSESENSEX gaining 434.40 points or 1.08% to close at 40,793.81 points while NIFTY gained 141.65 points or 1.19% to close at 12,056.05 points. The new lifetime highs made during the week were 41,163.79 points on BSESENSEX and 12,158.80 points on NIFTY.
The broader market saw BSE100, BSE200 and BSE500 gain 1.23%, 1.36% and 1.38% respectively. BSEMIDCAP was up 2.35% while BSESMALLCAP was up 1.55%. The Indian Rupee lost 3 paisa or 0.04% to close at Rs 71.74. Dow Jones gained 175.79 points or 0.63% to close at 28,051.41 points.
November futures expired on a positive note gaining 273.70 points or 2.30% to close at 12,151.15 points. The bulls held on to the lead that they had last week and saw markets gaining on three of the five trading sessions.
GDP for the second quarter, July to September came in at 4.5%. This is the slowest growth in about six years. While the number is poor it is likely to be the bottom and should rebound in the coming two quarters. This slowdown would also put pressure on RBI when they meet during the period 3rd to 5th December for their bi-monthly monetary policy review meet. While a rate cut is expected and the street believes that 25 basis point would be cut from the present 5.15%, I strongly believe that it could be more and may be in the region of 35-40 basis points. The government and RBI are both interested that the economy revives.
Good confirmation of the fact that this could be the bottom came from GST collections for the month of November which were announced yesterday. They crossed the one lac crore mark, a number achieved only after July 2019. GST collected was 1.03 lac crores which comes after negative growth in the previous two months of September and October. Just for comparison purposes, the collection in September was just under 0.92 lac crs.
The primary market issue from CSB Bank Limited received excellent response and the issue was subscribed 86.93 times with QIB portion subscribed 62.18 times, HNI 164.68 times and Retail portion subscribed 44.53 times. There were 10 lac applications.
Ujjivan Small Finance Bank Limited would be open for subscription from Monday the 2nd of December to Wednesday the 4th of December. The company had done a pre-IPO of Rs 250 crs and is now tapping the capital markets with its primary offering of Rs 750 crs. This comprises of a shareholder reservation of Rs 75 crs for shareholders of Ujjivan Financial Services Limited. The price band is Rs 35-37. The company has allotted 8.21 cr shares to 18 anchor investors comprising of 33 entities.
Of the 750 cr issue, there is a reservation of Rs 75 crs for shareholder investors of Ujjivan Financial Services Limited, the listed company. There is also a shareholder discount of Rs 2 per share for them.
The company had begun its operations as a small finance bank a little over 2 years ago. It reported an EPS of Rs 1.20 for the year ended March 2019 against an EPS of Rs 0.05 for the year ended March 2018. The EPS for the six months ended September 2019 has doubled to Rs 1.21 compared to the previous 12 months. The NAV or book value of the share is at Rs 13.84 as at 30th September 2019. The holding company Ujjivan Financial Services Limited shares gained Rs 35.35 or 11.65% to close at Rs 338.85 for the week. The share looks poised to receive huge response and would do well on listing. Grey market premium is more than 50% of the issue price.
Readers would recall that while granting license for small finance bank (SFB), it had stipulated that the SFB would have to list separately. Equitas on completing the threshold period did not do so and offered a scheme of arrangement which was turned down by regulators SEBI and RBI. While the USFB issue is happening, Equitas would follow suit.
Yes Bank, is to receive capital infusion of 2 billion dollars from a group of investors. The board would meet on 10th December to allot shares to a group of investors led by Erwin Singh Braich who would be investing 1.2 billion dollars.
The same investor had earlier this year in January 2019 bid for Reid and Taylor through SGPG holdings and failed to deposit Rs 2 crs. While I am not doubting the credentials of either Yes Bank or Mr Braich, one needs to consider the same.
MCA or ministry of corporate affairs has found no wrong doings in the dealing of the India bulls’ group. Post this announcement, shares of the flagship company India Bulls Housing rose Rs 53.35 or 22.51% to close at Rs 290.35.
Bulls have had reasonable amount of success and have been able to post new lifetime highs on the benchmark indices. The broader markets have also begun to participate in the rally. The fact that they corrected in advance to the expected slowdown in GDP numbers indicates that this rally has legs. Expect markets to continue their upward march in the coming week and weeks as well. There will always be bouts of selling and buying and it will not be a one-way movement. With the government taking measures to help ease the slowdown expect things to move back to being on the track. Trade cautiously with a positive bias.
