It was a week with two different halves on Dalal Street. While in the first half the market was on a correction and lost ground, in the second it was on a recovery mode and gained ground. It was aided by the upgrade from Moody’s which happened on Friday early morning. Net result was that markets ended virtually flat with the BSESENSEX gaining 28.24 points or 0.08% to end at 33,342.80 points. NIFTY lost 38.15 points or 0.37% to close at 10,283.60 points.

Coming to the two halves in more detail one can see that in three sessions the BSESENSEX lost 554 points and gained in the next two 582 points. NIFTY on the other hand lost 203 points and gained 165 points. What is even more interesting is the intraday movement on Friday when upgrade announcement happened. BSESENSEX at its high had gained 414 points, it could retain just 236 points or 57% of the gains. In the case of NIFTY, the intraday high was 129 points, while the gain retained was 69 points or 53.4%. This was on the back of a huge news like Moody’s which upgraded India’s sovereign rating by one notch from Baa3 to Baa2. The outlook has been changed from positive to stable. This upgrade has happened after 14 years and the last time it happened was in the fag end of Vajpayee’s government.

The above point is being highlighted is that markets recovered technically as there was a correction on for quite some days and had become oversold. A positive news item accentuated the rally and helped the sentiment but could not retain the gains. There is lack of conviction in the results and growth is lagging valuations. With liquidity too now no longer as freely available with the overkill of IPO’s and particularly from insurance companies, one needs to relook and take a dispassionate look at valuations.

There were two listings last week. The first was from Khadim India, the shoe maker from Kolkata which listed on Monday and had a poor showing. The shares at weekend were down 10.70% at Rs 669.75 against an issue price of Rs 750. The other listing from HDFC Standard Life saw the shares gain 18.71% at Rs 344.25 against an issue price of Rs 290. This performance when viewed against similar insurance IPO’s from PSU and private is in stark contrast. Very clearly the brand HDFC stood out and gave comfort to institutional investors who subscribed the issue in large numbers.

Primary markets have taken a breather and would in all likelihood resume in the second fortnight of January. There could however be an isolated issue or two which comes in this period as well.

The markets saw the beginning of the correction, a small pullback and in all probability the correction to continue this week. Trade cautiously and wait patiently for opportunities to arise.

Shares of HDFC Standard Life Insurance Company Limited listed on the bourses and had a stellar debut gaining 18.71% on the BSE. The company had tapped the capital markets through an offer for sale of 29.98 cr shares in a price band of Rs 275-290. The valuations were expensive compared to listed peers and even more expensive than the recently listed SBI Life which has been trading at a discount since listing and as of last Friday’s close was down 5.75%.

Earlier the company had allotted 8 cr shares to 89 Anchor investors comprising of 126 entities. The public issue saw excellent support from institutional investors who subscribed their book 16.6 times. The HNI portion was subscribed 2.28 times, Retail 0.94 times and shareholder reservation subscribed 0.30 times. Overall the public issue was subscribed 4.9 times.

Shares opened at Rs 311 on the BSE and Rs 310 on the NSE, against the issue price of Rs 295. The low of the day was Rs 307.65 and Rs 307 respectively. The high of the day was Rs 369 on both the exchanges. This happened to a large extent on account of short covering. A data point to this effect is the fact that NSE witnessed a volume of 352.93 lakh shares at the discovered price of Rs 310. In the next half hour, the volume was 665.35 lakh shares at a weighted average price of Rs 317.71 and high of Rs 329.90. Between 10.30 am and 11 am the high was Rs 369 and the weighted average of 347.57 lakh shares was Rs 347.40. The volume thereafter reduced significantly. It was 322.50 lakh shares in the remaining 4 and a half hours which means all the action was over by 11 am itself. The average traded price kept on climbing as the share traded between Rs 438-446 thereafter.

The total traded volume on the two exchanges combined was 1902.53 lakh shares which was 63.45% of the IPO size of 2998.27 lakh shares. Delivery volume was 916.28 lakh shares which was 48.16% of traded volume and 30.56% of IPO size. If one were to exclude the anchor portion, delivery percentage was 41.69%. The weighted average of the day’s trade was a healthy Rs 329.23 on the BSE and Rs 327.25 on the NSE. There was one institutional trade which was reported in the form of Nomura which bought 192.62 lakh shares at an average cost of Rs 325.13 and invested Rs 626 crs.

The share closed at Rs 344.25 on the BSE, a gain of Rs 54.25 or 18.71%. On the NSE the closing price was Rs 344.60, a gain of Rs 54.60 or 18.83%. The share had a great debut and it was all about the brand HDFC.