The Week gone by began on a positive note and gained on two of the four trading days, while losing on the remaining two. BSESENSEX was up 453.77 points or 1.20% to close at 38,127.08 points while NIFTY gained 130.30 points or 1.17% to close at 11,305.05 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.93%, 0.94% and 0.83% respectively. BSEMIDCAP gained 0.49% while BSESMALLCAP lost 0.29%.

The top sectoral gainer was BSEBANKEX up 1.37% while the top loser was BSEHEATHCARE down 0.99%. In individual stocks the top gainer was Bharti Airtel up 12.64% at Rs 382.65. The top loser was India Bulls Housing Finance down 14.46% at Rs 209.95.

Dow Jones gained 241.87 points or 0.91% to close at 26,815.59 points. The Indian Rupee lost a tad and was down 14 paisa or 0.20% at Rs 71.02.

Shares of IRCTC would be listed on Monday the 14th of October. This would be the fourth Railway company to be listed on the bourses. Shares of the company were issued at Rs 320 and the issue of 2.016 cr shares was oversubscribed 111 times. The premium being quoted on the share is about Rs 240 indicating a 75% gain from the issue price. To welcome the new entrant from the Railway Ministry, the other three railway stocks had a great outing on Friday and did well for the week. Ircon International gained 3.94%, Rites gained 8.64% while RVNL was up 11.96%.

The best listing from the PSU stable till date has been from Power Grid Corporation of India Limited. The company had listed on 5th October 2007 its shares which were offered at Rs 52. The issue was subscribed 64.82 times with QIB portion subscribed 115.90 times, HNI portion subscribed 40.34 times and retail portion 6.77 times. The issue opened at Rs 85, made a high of Rs 109.40 and closed at Rs 100.65, a gain of Rs 48.65 or 93.55%.

Is it possible for IRCTC to better the debut day performance of Power Grid? It needs to close at around Rs 620 or better. Is it possible or impossible? As mentioned earlier the premium being mentioned of around Rs 240 indicates that the price is up to Rs 560 or a gain of 75%. Anyone willing to buy a share at this price would have a higher target for selling the same. I believe history is in the making today and IRCTC would do so as becoming the best listing share on debut in the PSU stable.

The presence of the Railway Minister at the listing ceremony would add to the weight of the performance of IRCTC. This debut will have a rub off effect on the other listed PSU railway stocks and help PSU stocks in general as well. PSU stocks have the fundamentals and have been performing well but the perception needs to change. IRCTC has the potential to do so it appears.

FPI’s have certainly slowed down the quantum of sales that they had been pressing at the bourses if last week is to be taken as any indicator. While this cannot be taken as a trend, in case it is true than the markets have turned for sure. The mood however continues to be bearish on Dalal Street and traders continue to be trigger happy, more than willing to short to make a quick buck. Fortunately, the BFSI sector has been providing plenty of such opportunities in recent times. It began with DHFL, then Yes Bank, India Bulls Group companies and then HDIL. This is not to mention many other companies which have been hammered by the market. The interesting thing to be noted is that the various departments of the government machinery have become efficient in dealing with fraud cases after the likes of Mallya and Modi-Choksi. In the case of HDIL, they were able to attach innumerable properties, aircraft and luxury cars and jewellery within days of the bank fraud of PMC Bank breaking.

US and China trade wars saw some positive signs of thawing out with US suspending a tariff hike on 350 billion dollars of Chinese imports and China agreeing to buy 40-50 billion dollars of US farm produce. While this is the first piece of good news in many months on this front this is certainly not the end of the issue. There are many more milestones to be achieved but at least there is some sanity. Global markets would cheer this news in the coming week.

An Iranian oil tanker was attacked by missiles purportedly fired by Saudi Arabia. There is no confirmation on this front but it led to crude prices rising by 2%. Turkey continues its war with Syria. While these are geo political risks currently on, the US China deal could dominate markets in the week ahead.

The week ahead should continue to trade with volatility but a positive bias. The listing of IRCTC shares on Monday would have a rub off effect on railway stocks for sure, but would have a positive impact on the PSU pack in general as well. There would be sharp two-sided movements but one should use dips to add long positions.

The week gone by saw markets lose on all the four trading days. BSESENSEX lost 1,149.26 points or 2.96% to close at 37,673.31 points while NIFTY lost 337.65 points or 2.93% to close at 11,174.75 points. The broader indices saw BSE100, BSE200 and BSE500 lose even more at 3.19%, 3.20% and 3.25% respectively. BSEMIDCAP was down 3.87% and BSESMALLCAP lost 3.92%.

The worst sectoral index was BSEBANKEX which lost 2,478.13 points or 7.34% to close at 31.303.39 points. While the entire sector was under pressure, the smaller private banks bore the brunt of the selling. RBL Bank, YES Bank and Indus Ind Bank lost considerable ground. The BFSI sector too contributed to the downfall of the market.

We have several groups or companies under the radar. On the one hand we have the Wadhawan group whether it is Sarang and HDIL or Kapil and DHFL on the other side. We have Zee where almost the entire holding has been pledged to a Russian Bank. Incidentally this is the same bank which was involved in the take over of Essar Oil. On yet another front we have the India Bulls group with its companies and its ongoing takeover issue of Lakshmi Vilas Bank. With so many issues keeping the bears well fed, market recovery becomes a little more difficult than if it was just a slowdown.

RBI cut repo rates by 25 basis points to 5.15% on expected lines at its monetary policy meeting where all members unanimously voted for the rate cut. The current Repo rate is at a nine-year low.

Response to the Follow-on fund offer from Bharat-22 was excellent. The base offer of Rs 2,000 crs received support for roughly 24,000 crs. The government has decided to allot a total of Rs 5,742 crs in the scheme. They would give shares worth Rs 4,368 crs and the fund manager would buy shares worth Rs 1,374 crs from the market in the above scheme. These shares would have already been bought in the course of the last few days. As a result of this exercise, the discount would reduce from 3% to roughly 2.28%. The shares which would have been bought are of ITC, REC, Engineers India, National Aluminium and Indian Oil Corporation.

The offer for sale from IRCTC (Indian Railway Catering and Tourism Corporation Limited) was a phenomenal success. The company was looking to raise Rs 645 crs from the sale of 2.016 cr shares in a price band of Rs 315-320. It was oversubscribed 111.95 times and garnered support for Rs 72,222 crs. The issue was subscribed 108.79 times by QIB’s, 354.52 times by HNI’s, 14.94 times by Retail investors and 5.82 times by employees. The issue received 14.64 lac applications which considering the change in bidding where the same is done through UPI is indeed commendable. This clearly shows whatever be the state of the market, there is appetite for primary issues at a price.

The second issue from Vishwaraj Sugar Industries Limited was subscribed 1.12 times. The QIB portion was subscribed 1 time, HNI portion was subscribed 1.76 times and Retail portion was undersubscribed 0.64 times. The company had tapped the capital markets with a combined offer which consisted of a fresh issue of 30 lac shares and an offer for sale of 70 lac shares in a price band of Rs 55-60.

These three issues show that there is appetite for new issues provided the price is right. Promoters and merchant bankers must keep pricing attractive to get the issue through. By keeping the same unrealistic and using unfair and underhand means to subscribe the issue does not help anyone, particularly the entity going public.

Results for the quarter July to September 2019 would kick off in this week with TCS announcing them on Thursday the 10th of October and Infosys on Friday the 11th of October. There would be a market holiday on Tuesday on account of Dussehra. The week would see high volatility and take cues from global developments particularly the long-drawn China US trade war which seems never ending. Any positive drivers from quarterly results would be most welcome as the market is starved of positive news. Trade cautiously as markets after a very sharp fall last week are set for some recovery in the week ahead.