The markets were choppy last week and opened gap down on expected lines. The reversal too happened on Friday on account of very heavy short covering. Friday saw the indices enter the gapped area but could not sustain and gave up half of the intraday gains. Fundamentals do not justify the valuations currently and we have another set of quarterly numbers coming up in starting three weeks from now. This would be the acid test for valuations. The mood however indicates that we may make yet another attempt to cross Mount Everest which is roughly 4-5% away. All we need is three days of sustained upward movement and we would be there. It’s a different thing thereafter that euphoria would take over. One another point indicating that we have a move on hand followed by a sharp correction is the fact that we have the largest issue in recent years after Coal India opening on Monday the 19th September and closing two days later.
The setting is in place and markets which are at cross roads could go either way. The BSESENSEX lost 0.69% while NIFTY lost 0.98% last week. The surprise last week was Reliance Industries being the top gainer up 3.07%. It’s been quite a while since we have seen this performance from Reliance. It indicates that the move could not be a day wonder and being a heavyweight it would give a pair of fresh legs to the rally.
Last week we saw two IPO’s close and both were fully subscribed. The first was from L&T Technology Services Limited which was to raise Rs 894 crs at the top end of the band managed to get subscribed 2.53 times. The QIB portion was subscribed 5.01 times, HNI just about subscribed at 1.03 times and Retail 1.75 times. The number of applications was 3.10 lacs, a far cry from the 10.93 lac applications in the earlier issue of L&T Info in July 2016.
The second issue was from GNA axles which raised Rs 130 crs from 63 lac shares in a price band of Rs 205-207. The issue was subscribed a massive 54.88 times with the QIB portion subscribed 17.18 times, HNI 217.47 times and Retail 11.84 times. There were 2.93 lac applications received and it must be a record for the size of issue.
The two issue were is complete contrast of each other. There listing would be another learning experience. Trade cautiously in the market as we are at crossroads and things would move swiftly.
