Markets were on a roll in the week gone by and they gained quite sharply in the first four days of the week. Friday saw a small dip to make the week a bit balanced with gains on four of the five trading days. FPIs bought on three of the five trading sessions and helped in the recovery witnessed by the markets. Domestic institutions did the opposite, buying on two of the five trading sessions and buying when FPIs sold and vice versa. BSESENSEX gained 1,906.33 points or 2.39% to close at 81,709.12 points while NIFTY gained 546.70 points or 2.27% to close at 24,677.80 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.55%, 2.61% and 2.67% respectively. BSEMIDCAP was up 3.47% while BSESMALLCAP gained 3.35%. One may say that there was a sense of relief that markets gained and the breadth of the markets was impressive. Momentum stocks also participated in the rally. 

The Indian Rupee was under pressure and lost 21 paisa or 0.25% to close at Rs 84.69 to the US dollar. Dow Jones lost on four of the five trading sessions and gained on one session. It was down 268.13 points or 0.60% to close at 44,642.52 points. 

RBI in its bi-monthly MPC meeting kept repo rates unchanged on expected lines. It however cut CRR by 50 basis points to make cost of funds for the banks cheaper than the current rates. This would give liquidity to the banking industry and simultaneously make the cost of funds cheaper as well. 

In primary market news, we had one listing in the week gone by. Shares of Suraksha Diagnostics Limited which had received a muted response during subscription, listed on Friday the 6th of December. The shares which were issued at Rs 441 debuted at Rs 437 and closed at Rs 417.95, a loss of Rs 23.05 or 5.23%. In the coming week one will get a better idea how the share fares as the PE multiple of the issue was at 100. 

The week ahead has three IPOs with all three issues opening on Wednesday the 11th of December and closing on Friday the 13th of December. The first of the lot is from Vishal Mega Mart Limited which is tapping the markets with its offer for sale of Rs 8,000 crores in a price band of Rs 74-78. The company reported revenues of about Rs 8,900 crores for the year ended March 24. Its PAT was Rs 82.80 crores and the EPS was Rs 1.01. The PE for the issue is in a band of 73.27-77.23. In comparison to Avenue Supermarts Limited, the company which runs D Mart, the revenues are at Rs 50,788 crores and the PE much higher at 98 times. While Vishal has a larger store count, its revenue per store and profitability is significantly lower. The two businesses are not comparable as in the case of Vishal, garment and fashion are roughly half while this is less than a quarter for D Mart. The issue is likely to offer listing pop and could be applied for the same. 

The second issue is from One MobiKwik Systems Limited.  The issue is for a fresh issue of Rs 572 crores in a price band of Rs 265-279. The company is a platform business with a two sided payments network, consisting of consumers and merchants. The key business consists of payment services and financial services. It is a platform which offers BNPL (Buy now pay later) facilities as well. The company has turned profitable in FY24. It earned an EPS of Rs 2.38 on a fully diluted basis for the year ended March 24. The PE for the issue is in a band of 111.34-117.23. The business being platform driven and a new age company offers rapid scalability. There is likely to be listing gains in the share. 

The third issue is from Sai Life Sciences Limited which is tapping the markets with its fresh issue of Rs 950 crores and an offer for sale of 3,81,16,934 shares in a price band of Rs 522-549. The company reported revenues of Rs 1,468 crores and a PAT of Rs 82.80 crores for the year ended March 24. The issue would raise Rs 3,043 crores at the upper end of the price band. The PE for the issue is 115.23-121.19 times. Not cheap by any standard. The company is a CRDMO player and there is plenty of competition in this segment. Further the life cycle of research and then the production or commercialization of the product takes a long time. The issue can be skipped currently and looked at post listing. 

Markets have had a good week and have surmounted resistances on the way up during the week. The next resistance is around 24,950-25,000 points on NIFTY and at 82,600-82,800 points on BSESENSEX. Once this is taken out, the next resistance would be around 25,250 points or 83,550 points. These would be much tougher to break and sustain. On the downside we have support at 24,250 points and 80,500 points respectively. If these levels are broken, we have the next support zone at 23,850 and 79,300 points respectively. 

The strategy for the week would be to look at the large cap stocks for comfort as they have the momentum with them. Secondly look at a select group of midcap and small cap stocks which have been moving up and are now close to their 52-week highs. Though FPIs have been buyers during a few days over the last week, it is not yet comfortable that they are back. It therefore is imperative to have a safety backup and not go all out. In a fortnight’s time the year would come to an end and we would be looking at December quarter results which one cannot be sure would be all that great. 

Time to be watchful and trade cautiously.