The week gone by got of to a rollicking start on Monday with the BSESENSEX gaining 331 points. This helped the markets as it gained marginally on Tuesday and Thursday and saw profit taking on Friday, end with gains of 303.92 points or 0.79% at 38,251.80 points. NIFTY gained 86.35 points or 0.75% to close at 11,557.10 points. BSEMIDCAP was up 1.49% but BSESMALLCAP lost 0.01%.

Dow Jones closed with gains of 87.75 points or 0.34% to close at 25,790.35 points. Trade wars and the after effects continue to dog global markets and now one is hearing talks of impeachment of the US President.

In primary market news, the issue from Credit Access Grameen Limited managed to close the listing day at just around the issue price of Rs 422. It lost some ground the next day and closed, at Rs 406.65, a loss of Rs 15.35 or 3.64%.

The week ahead would see August Futures expire on Thursday the 30th of August. NIFTY is currently higher by 389.80 points or 3.37% and clearly bulls have an upper hand. Holding on to the lead with some minor losses should not be an issue for the bulls. Knowing the way, they move the market, expecting a strong gap up opening on Monday should be the order of the day.

Larsen and Toubro announced an unexpected share buyback at a significant premium to the market. There was an announcement that the board would meet to consider the buyback. The price then was Rs 1245. The announcement at Rs 1,500 saw the markets rallying further and they closed at Rs 1,343 at weekend, a premium of Rs 157 or close to 11%. The surprise element of the buyback was apparently to dilute ugly events at the AGM of the company where one saw employee shareholders raise issues about use of company land for making a hospital at Powai in the name of the granddaughter of Mr Naik. One is not sure whether the employees are continuing or are ex-employees. The curt reply given was that the matter is sub judice. This gives rise to speculation that there could be more revelations as time passes. Also, that the timing of the buyback was diversionary in nature and could be to act as a sweetener for the market.

SEBI has come out with a discussion paper on ‘Fair Market Conduct’. The report is a voluminous one running into 116 pages. It has widened the scope of many terms used in the financial market like intermediaries, insider trading and unfair practices. It has also questioned the lending of funds to HNI’s for trading beyond the known resources of these individuals. While it is a discussion paper, if comments are not offered it’s a matter of time before it would become law. To access the full report, Click Here.

Markets have had a long rally and seem to be coming to an end. Normally rallies end on euphoria and this time around there is no such feeling. One wonders what we have in store for this end or putting it differently how it would all end. Simple advice stay light, and use rallies to sell. Similarly, sharp dips could be used to buy into, but stock selection should be based only on fundamentals.

Shares of Credit Access Grameen Limited listed on the bourses and had a poor opening. Shares were issued at Rs 422 and debuted at Rs 385 on the BSE and Rs 390 on the NSE. They did recover from there and manage to close around the issue price.

The company had launched its simultaneous offer for sale and fresh offer. The issue consisted of a fresh issue of Rs 630 crs and an offer for sale of 1,18,76,485 shares in a price band of Rs 418 to 422. The company had raised Rs 1,131.18 crs at the top end of the band.

The company had allotted 80,41,617 shares to 20 anchor investors comprising of 23 entities. The top allocation was made to Neuberger Berman Emerging Markets Equity Fund who was allotted 10,66,345 equity shares or 13.26% of the equity.

The issue was subscribed 2.22 times with QIB portion subscribed 5.52 times, HNI 0.98 times and retail 0.88 times. The issue was under pressure during subscription and the fact that this company though being a microfinance company yet not into a small finance bank, was not understood and not appreciated either. The costs involved with converting a micro finance company business into a bank are tremendous and have a telling impact on the initial three to four years of a company’s performance.

Coming to the listing itself, post the discovered price the share began its climb towards the issue price and made a high of Rs 423.30 on the BSE and Rs 426.90 on the NSE. The traded volume was 135.83 lacs combined on the two exchanges. Weighted average of the day was Rs 412.92 on the BSE and Rs 412.42 on the NSE, signifying that the recovery from the opening discovered price was swift and the bulk of the day’s trade happened at higher prices.

Delivery was 43.57 lac shares which was 32.08% of the traded volume. If one considers the traded volume as a percentage of the IPO size it was 50.68%. The delivery as a percentage of the IPO size was 16.25% and based on non-anchor portion was 23.22%. This is a low percentage and because there were no names reported on the institutional side either as buyers or sellers, indicates that the share would need to consolidate at current levels before any up move could be expected.

For the record, the share closed at Rs 420.80, down Rs 1.20 or 0.28% on the BSE and at Rs 422.05, up Rs 0.05 or 0.01% on the NSE. The share effectively did nothing and at best could be classified as an average listing. One needs to se how the share fares in the coming days and what its June results have in store for the market.