Markets seem to be under a severe bear grip with virtually no onslaught from bears and selling pressure. They lost ground on four of the five trading days last week. The BSESENSEX lost 614.46 points or 1.70% to close at 36,227.14 points. NIFTY lost 212.65 points or 1.95% to close at 10,930.45 points. BSEMIDCAP was down 5.64% and BSESMALLCAP down 9.23%.
Dow Jones lost 285.19 points or 1.08% to close at 26,458.31 points. Indian Rupee was under pressure but held itself losing 28 paisa or 0.39% to close at Rs72.48.
September futures expired on a negative note at 10,977.55 points, losing 699.25 points or 6.37% for the series. October series too began on a weak note and were down 47.10 points.
The current value of BSEMIDCAP is at 14,763.20 points which is down 3,059.20 points or 20.72% on a year to date basis. BSESMALLCAP is at 14,430.68 points which is down 4,800.04 points or 33.26% on a similar basis. From the highs made on 29th January 2018, these indices are down 24.10% and 39.86% respectively. This when compared to the BSESENSEX which is up 5.99% for the year to date and NIFTY which is up 3.66%. The pain lies entirely in the midcap and Smallcap space while the bench mark indices are fairly well placed. Very clearly the pain doesn’t seem to be subsiding in the immediate short term and probably the quarter results for July-September may offer some respite.
The big casualty during the week was Infibeam which lost Rs 138.75 or 70.23% to close at Rs 58.80. The traded volume on the BSE was 1.90 cr shares and 15.77 cr shares on the NSE. The futures saw a traded volume of Rs 1209 crs. Incidentally the market cap of the company post this fall is Rs 3,900 crs and the free float market cap is Rs 2,100 crs. What went wrong is anybody’s guess but it reflects the state of the market.
The fresh issue and offer for sale from housing finance company Aavas Financers Limited had a great anchor book but the issue fizzled out and just about scraped through on the back of institutional support. The overall issue was subscribed 0.97 times with QIB portion subscribed 2.77 times. HNI and Retail remained undersubscribed at 0.26 and 0.25 times respectively. What is intriguing is that an issue which received anchor bids for a billion dollars which was four times the issue size was struggling for subscription on the last day. Clearly the size of anchor was not realistic and was meant as a measure to reassure the market more than anything else. In the end the move back-fired and an extremely aggressively priced issue was left struggling.
The railway company, Ircon International Limited and had an unpleasant outing on debut day with the share losing ground. The company had tapped the capital markets with its offer for sale of 99.05 lac shares in a price band of Rs 470-475 and was oversubscribed 9.90 times. The share had a discovered price of Rs 410.30 on the BSE and Rs 412 on the NSE. From these levels the price rose quite sharply to around Rs 465, to again fall and close at Rs 416.65, a loss of Rs 58.35 or 12.28%.
The next casualty in the market has been identified in the form of Bandhan Bank. Reserve Bank of India has frozen the salary of the MD and CEO because the bank has not reduced the holding as ordained when the license was given by 23rd August. Further the bank would not be allowed to open new branches and would need specific permission each time they desire to open a branch. This order was announced post market closing on Friday and would ensure a gap down opening when markets resume trading on Monday. This action against Bandhan Bank would impact Kotak Bank as well as they have been delaying the reduction in promoter holding on some pretext or the other for quite some time. Effectively the bears will have two new kids to play with on Monday.
One of my favourite punching bag stock, Vakrangee is in serious trouble with the ministry of corporate affairs ordering a probe into the accounts of the company for the last three years. The company also had its AGM on Saturday the 29th of September and one wonders what happened to the plan of opening 45,000 ATM’s. This number should be looked at in context of the fact that three large private banks namely ICICI Bank, HDFC Bank and Axis Bank combined have similar number of ATM’s. At whose cost this money would be spent is anybody’s guess.
Markets are yet to find their correct balance and equilibrium and will continue to remain volatile. Use sharp dips to buy fundamentally strong shares. Many opportunities would emerge in the coming days.
