Markets had a great Thursday after the Fed decided to keep interest rates unchanged for the time being. That sharp rally of 266 points on the BSESENSEX and 90 points on NIFTY saw the week ending with gains. BSESENSEX gained 69 points or 0.24% and NIFTY gained 51.70 points or 0.59%. What is significant is that the rally on account of Fed was far bigger than what we finally gained during the week implying that markets have begun a correction.
Market seems to be tired and each time it slips and people go short, there is a sharp rally coupled with short covering which pulls the market up. This week on Thursday we have the September series expiring and currently the bulls have an upper hand with gains of 239.35 points or 2.79% on the current series. So far so good but four days could be a long way.
The market has not yet given up hope on making a new lifetime high, but time is running short. We now have just about a fortnight to go before results for the next season kick in. It’s now or never for the markets. The interesting thing is that technically the markets have not yet been able to break out of the down gap with which they opened on Monday the 12th of September. They need to go past 28,755 first and then cross 29,100 on the BSESENSEX. It’s not Mount Everest, but you need to do it and do it quickly. Once the results season begin people would start looking at valuations and they are currently expensive.
The primary market continues to see plenty of action and we have within the same week an issue open for subscription while another lists. Last week we saw the mega IPO from ICICI Prudential Insurance Company Limited raise Rs 6,057 crs successfully. The issue was subscribed across segments and garnered a total collection of 47,984.56 crs including anchor against the market cap at the top end of the band of Rs 47,939.82 crs. The leveraged HNI was a big contributor to this subscription as he applied in the HNI category as well as the shareholder category.
The issue from L&T Technology Services Limited listed on Friday and just about managed to trade above the issue price. The company through an offer for sale had sold 1.04 cr shares in a price band of Rs 850-860. The issue was oversubscribed 2.53 times with QIB portion 5.01, HNI 1.03 and Retail 1.75 times. There were a total of 3.10 lac applications against 10.93 lakhs in the issue of L&T Infotech Limited. The apathy of investors was primarily because investors have lost money in the earlier two offerings from L&T in L&T Finance and L&T Infotech. It took a few years for L&T Finance to trade above par while L&T Infotech which listed in July is currently trading at Rs 637.10, a loss of 10.37% from its issue price of Rs 710.
The issue from HPL Electric & Power Limited. The company is making a fresh issue for Rs 361 crs in a price band of Rs 175-202. The company is into four verticals namely metering, Switchgear, Lighting Equipment and Wires and Cables. The objects of the issue are to repay existing debt and for working capital purposes. The company has a stretched working capital cycle of roughly 144 days and proceeds of the issue would be deployed for the same thus giving relief. The debt would reduce the interest cost and help improve the bottom line. The debt was taken to increase the capacity and they have no capacity constraint going forward as plenty of the same is available.
The issue has been subscribed 29% with Monday being the last day. QIB portion 36%, HNI 1% and Retail 37%. The system has always been that the subscription from HNI’s and QIB’s come on the last day and then retail chips in. The company is in a niche segment and has different competitors in different segments. While the opportunity going forward is huge the key is managing working capital cycle. There are mixed views about this issue and though issue being subscribed is not in doubt, whether the issue would perform well and reward shareholders/investors or not there are mixed views.
The issue from GNA Axles Limited which was open for subscription around the same time as L&T Technology Services Limited lists on Monday the 26th of September. This issue was subscribed around 55 times and created a stir on the bourses with a small Rs 130 cr issue from Hoshiarpur in Punjab garnering subscription of Rs 5,400 crs while L&T Technology raising Rs 894 crs could manage just under Rs 1,900 crs. Strange are the ways of the market. This share would list and trade under trade to trade for the next ten trading sessions.

Shares of L&T Technology Services Limited (LTTS) which had tapped the capital markets with its offer for sale of 1.04 cr shares in a price band of Rs 850-860 was hanging on by the skin of its teeth on its debut. The company hd allotted 31.20 lac shares to 19 anchor investors comprising of 33 entities. The issue was subscribed 2.53 times overall with the QIB portion subscribed 5.01 times, HNI 1.03 times and Retail 1.75 times. There were 3.10 lac application forms this time against 1.93 lacs in the previous issue of L&T Infotech.
The performance of companies launched by L&T has been far from satisfactory and this was reflected in the substantial drop in retail participation. The earliest issue of L&T Finance took a long time to make money for shareholders or investors. The issue from L&T Infotech listed in July and is yet to turn positive. Under these circumstances the discovery price of LTSS at Rs 900 on the BSR and Rs 920 on the NSE was impressive and could be considered as a price better than expected.
Probably the people involved with the issue were aware of the pressure on the stock. They were helped in no small means by the buying of 11 lakh shares by Motilal Oswal Mutual fund who bought at an average of Rs 920. There were no other bulk deals reported on either the buy or sell side.

From the table above one can see that the total traded volume was 99.44 lac shares which is 96% of the issue size. If one looks at the same excluding the anchor portion of 31.20 lac shares which have a 30 day lock-in, then the traded volume is 1.37 times of the balance. The delivery volume is 31.73 lakh shares which is 31.91% of the traded volume and 30.52% of the IPO size. Based on the non-anchor portion the delivery percentage is 43.59, implying that there has been quite a significant portion delivered on day one.
The weighted average of the day’s trade was Rs 895.38 on the BSE and Rs 902.50 on the NSE. If one looks at the intra-day chart of the share, the price held itself till about 12 noon or the first two hours of trade. Thereafter is continuously fell and at the end of the day’s trade was at the issue price. This effectively meant that even without the leveraged investors from the HNI category the share cracked. It may also be looked at whatever support was provided was withdrawn.
The share is precariously poised and any fall would bring it below its issue price. Very clearly the strong brand of L&T is cracking and none except the present management team could be at fault. The investing public is no longer in a mood to accept any losses. Time for a wakeup call. Hope someone is listening.