It was a tough week for the markets and they began the very first day on a bad note, losing more than 1,200 points on BSESENSEX and just under 400 points on NIFTY. This weak start did not allow the markets to recover during the week with FPIs continuing their relentless selling on the bourses. At the end of the week, in which markets lost on four of the five trading sessions, BSESENSEX lost 1,844.20 points or 2.33% to close at 77,378.91 points. NIFTY lost 573.25 points or 2.39% to close at 23,431.50 points. The broader indices saw BSE100, BSE200 and BSE500 lose 3.26%, 3.60% and 3.96% respectively. BSEMIDCAP lost 5.74% while BSESMALLCAP was down 6.05%. It was a week where the midcap and small cap stocks were under terrific pressure.
The Indian Rupee lost 20 paisa or 0.23% to close at Rs 85.97 to the US Dollar. Job data released in the US on Friday was very strong and nonfarm payrolls surged by 2,56,000 for the month, up from 2,12,000 in the previous month. This number caused the Dow to fall very sharply and it lost a little over 600 points. This would delay the next US FED rate cut and also the number of rate cuts expected in 2025. To add to the woes of the markets in US, the current bond yields are higher than the interest rates. This is bringing more money to the US than ever before. Dow lost on two of the four trading sessions and gained on two. Dow lost 793.68 points or 1.86% to close at 41,938.45 points.
In primary market news we saw the listing of Indo Farm Equipment Limited happen on Tuesday the 7th of January. The company had issued shares at Rs 215. The discovered price was Rs 258.40, while the share closed at Rs 272.70 on listing day. By the end of the week the share lost ground and closed at Rs 253.75, a gain of Rs 38.75 or 18.02%.
Two issues closed during the week. The first was the issue from Standard Glass Lining Technology Limited which had issued shares at Rs 140. The issue was subscribed 186.11 times overall with QIB portion subscribed 327.76 times, HNI portion subscribed 275.74 times and Retail portion subscribed 66.74 times. The issue would be listing on Monday the 13th of January.
The second issue was from Quadrant Future Tek Limited which had issued shares at Rs 290. The issue was subscribed 196.84 times with QIB portion subscribed 139.77 times, HNI portion subscribed 268.61 times and Retail portion subscribed 260.41 times. The share would be listing on Tuesday the 14th of January.
There is one issue opening for subscription in the week ahead. It is from Laxmi Dental Limited. The issue consists of a fresh issue of Rs 138 crores and an offer for sale of 1,30,85,467 equity shares in a price band of Rs 407-428. The company is into manufacturing various products used by dentists for dental care and is a B to B to C company. The issue is at a PE multiple of 79.65-83.76. Looking at the small size of the company and an extremely fragmented market, the expectations of the promoter and more so of the selling PE investor are very high. This leaves nothing on the table for even risk-taking investors. While the present mood in the markets would ensure over subscription and probably listing games, one wonders what would happen thereafter.
Markets are currently placed at key support levels of 23,430 points on NIFTY which has acted as support and is now in the process of giving way. The next level is at 23,200 points. On the resistance side we have levels of 23,700-23,800 points which in the current scenario is like Mount Everest. Looking at Dow on Friday, it appears that the best scenario for the markets could be a weak opening on Monday followed by some fall and then a recovery over a couple of days. This could be followed by yet another fall.
The continued selling by FPIs is hurting our markets and the fact that a rate cut in the US may no longer be on expected lines is leading to funds moving to the US. The best an investor could do is to move to large cap stocks and stay away from small cap and large cap stocks as they face the brunt of selling.
Trade cautiously.
