Markets were on a roll last week and even though there was extreme volatility, they continued their upward march. NIFTY made a new high on Monday, Tuesday, Wednesday, Thursday and Friday, effectively on every trading session. BSESENSEX has yet to cross the high of 73,427.59 points which was made on 16th January. The new high made on Friday on NIFTY was at 22,297.50 points while BSESENSEX reached 73,413.93 points, short of previous high by a mere 14 points. This gives one to believe that sooner than later this would be breached and also confirming that NIFTY is yet to make another high on Monday or Tuesday. At the end of the week, BSESENSEX gained 716.16 points or 0.99% to close at 73,142.80 points while NIFTY gained 172 points or 0.78% to close at 22,212.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.70%, 0.76% and 0.74% respectively. BSEMIDCAP gained 0.01% while BSESMALLCAP was up 0.82%. Markets gained on three of the five trading sessions and lost on two. It maybe mentioned that on Thursday, markets opened in the red but rallied smartly to close in the positive. The intraday movement on Thursday between the low and the close was 1,076 points on BSESENSEX and 342 points on NIFTY. If one compares this to the weekly gains, it’s almost 1.5 times on BSESENSEX and double on NIFTY. The markets had probably a sharp intraday correction.

The Indian Rupee gained 8 paisa or 0.10% to close at Rs 82.94 to the US Dollar. Dow Jones gained on three of the four sessions and lost on one session. Dow gained 503.54 points or 1.30% to close at 39,131.53 points. 

Shares of Vibhor Steel Tubes Limited which had issued shares at Rs 151, listed at the bourses on Tuesday the 20th of February. The primary issue from the company was of a very small size with a fresh issue of Rs 72 crs in a price band of Rs 141-151. Normally such size issues come on the SME exchange but this was on the main board. The issue was oversubscribed 320 times overall and there were 28 lac applications in all. The issue debuted at Rs 421, a gain of Rs 270 or 178.80%. The share closed at upper circuit of Rs 442, a gain of Rs 291 or 192.71%. Every day thereafter, the share has been closing at lower circuit. On Friday, the share closed at the lower circuit of Rs 379.05, a gain of Rs 228.05 or 151.03%. Expect more circuits to follow till the ten days of trade-to-trade mechanism to get over. Friday was the fourth such session. 

The primary issue from Juniper Hotels Limited which had tapped the markets with its fresh issue of Rs 1,800 crs in a price band of Rs 342-360, managed to get subscribed. Considering the mood and the liquidity in the markets currently, it could be described as a lackluster response. Overall, the issue was subscribed 2.07 times. QIB portion was subscribed 2.96 times, HNI portion undersubscribed at 0.84 times and Retail portion subscribed 1.24 times. There were 1.21 lac applications. 

The week ahead sees the issue from Exicom Tele-Systems Limited tap the markets. The issue which opens on Tuesday the 27th of February would close on Thursday the 29th February. The issue consists of a fresh issue of Rs 329 crs and an offer for sale of 70,42,200 shares in a price band of Rs 135-142. The company is a power management solutions provider, operating under two business verticals, wherein the first is critical power solutions and the second is into manufacture and supply of Electric Vehicle supply equipment which includes EV Chargers for residential, business and public charging. 

The company reported revenues of Rs 723.39 crs for the year ended March 23. About 2/3rd of the revenue comes from the power business while 1/3rd comes from the EV business. Needless to say, the margins and the growth in the EV business vertical are significantly higher than the power business which is competitive. The company reported an EPS of Rs 3.38 for the year ended March 23. The PE multiple of the company is at 39.9-42.01. The price band is attractive considering the business opportunity and the sustained demand of EV chargers going forward. The issue would do well and be oversubscribed many times. Apply and hope that allotment happens. 

For the fixed income category of investors there is an issue from Bharat Highways Invit which opens in the week ahead. The issue consists of units which would be issued in a band of Rs 98-100. The issue would be of Rs 2,500 crs and the issue would open on Wednesday the 28th of February and close on Friday the 1st of March. 

The INVIT would have an initial portfolio of seven assets which are HAM assets from G R Infraprojects Limited. The HAM model consists of semi-annual annuities which are given by NHAI. The INVIT also has the right of first offer or ‘ROFO’ for the remining 23 assets owned by G R Infraprojects. There is also a ROFO right for any assets that would be made by G R Infraprojects for the next five years. 

The expected payout from this instrument is expected to be at 400 basis points higher than the current G sec rate. This would translate into an effective yield of between 11-25%-11.75%, making it attractive for investors with a fixed income return. As the assets are based on HAM model, there is no risk involved linked to traffic or toll collection whatsoever. Decent offer for investors looking at a fixed income as this would also take care of interest rates as and when the fall or rise as the project has been designed accordingly. 

The week ahead sees February futures expire on the last day of the month, 29th February. This is a leap year and the last time something like this happened was in 1996, 28 years ago. The current value of NIFTY is higher by 860.10 points or 4.03%. February series had begun at a level of 21,352.60 points. Currently, the bulls have complete control of the series and there is no way that they would allow the series to slip out of their hands. At best, the bears may attempt to pull something back, but that too looks difficult in light of what happened last Thursday. Expect bulls to rule the roost and press the pedal over the next few days riding into expiry. 

The markets are continuously making new highs and are in a bull grip. The breadth of the markets has become vulnerable and different stocks are moving on different days. Very clearly many of the stocks in this segment are seeing distribution and strong hands exiting the stocks and ownership moving into weaker hands. This phenomenon would continue for some time and it therefore makes sense to move into large cap stocks where there is safety. This has been advocated for a few weeks by me in my articles each time. 

Coming to the strategy in the week ahead, expect volatility and sharp intraday moves in both directions to be the order of the day. Trade with a positive mindset but keep on booking profits in sharp rallies. At the same time use sharp dips to buy and refrain from having large overnight positions. Sector rotation is on and would continue. The lows made on Thursday the 22nd of February at 72,081 on BSESENSEX and at 21,875 on NIFTY would act as strong supports. On the upside we have steam left as BSESENSEX is yet to make a new high.

Trade with a long mindset but cautiously.

Markets in the week gone by were volatile and choppy. On more than one occasion during the week one saw opening losses being wiped out and similarly profits too being wiped out. At the end of the week, we saw markets gaining on four of the five trading sessions and losing on one. BSESENSEX gained 831.15 points or 1.16% to close at 72,426.64 points while NIFTY gained 258.20 points or 1.19% to close at 22,040.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.26%, 1.23% and 1.08% respectively. BSEMIDCAP gained 0.91% while BSESMALLCAP was up 0.02%. The top sectoral gainer was BSEAUTO which outperformed the broad markets and was up almost 5%. 

The Indian Rupee gained 2 paisa or 0.02% to close at Rs 83.02. Dow Jones was choppy and gained on three of the five trading sessions, losing on two. At the end of the volatile week, Dow was marginally negative, losing 43.70 points or 0.11% to close at 38,627.99 points. 

The week gone by was full of listings and we had as many as five listings during the week. The first was from Apeejay Surrendra Park Hotels Limited which had issued shares at Rs 155. Shares of the company listed on Monday the 12th of February and closed day one at Rs 203.45, a gain of Rs 48.45 or 31.25%. By Friday, the shares lost some ground and closed at Rs 194.70, a gain of Rs 39.70 or 25.61%. 

Wednesday the 14th of February saw three listings and they were certainly not the best that one has seen in a very long time. The first was from RP Tech Limited which had issued shares at Rs 311. The discovered price was Rs 335, a gain of Rs 24 or 7.71%. At the end of the day, the share closed substantially lower at levels of Rs 320.10, a gain of Rs 9.10 or 2.92%. By the end of the week, the share gained substantially and closed at Rs 345.65, a gain of Rs 34.65 or 11.14%. 

The second of Wednesday’s listings was from Capital Small Finance Bank Limited which had issued shares at Rs 468. The discovered price was Rs 435, a loss of Rs 33 or 7.05%. The share slipped further during the day and made a low of Rs 421.10. It recovered from here to close around the open at Rs 436.05, a loss of Rs 31.95 or 6.82%. At the end of the week, the share regained some ground and closed at Rs 449.25, a loss of Rs 18.75 or 4.01%. 

The third of Wednesday’s listings was from Jana Small Finance Bank Limited which had issued shares at Rs 414. The listing price was Rs 396, a loss of Rs 18 or 4.34%. The share lost sharply as the day progressed and made a low of Rs 365. The share closed marginally higher than the low at Rs 366.80, a loss of Rs 47.20 or 11.40%.  During the remaining two days of the week the share regained lost ground and closed at Rs 419.5, a gain of Rs 5.05 or 1.22%.

The fifth and final listing of the week was from Entero Healthcare services Limited which had issued shares at Rs 1,258. The discovered price was Rs 1,245, a loss of Rs 13 or just about 1%. The share closed day one at Rs 1,149.50, a loss of Rs 108.50 or 8.62%.

These four listings show one thing clearly that primary markets are overheated and the valuations which are being asked for are unrealistic in most cases. There is no comfort in the valuations and one bad day at the bourses can knock the company off its pedestal. Time for promoters and merchant bankers to pull up their socks and ensure that they and their clients do not become greedy or it would become a case of the chicken that lays the golden egg being killed. 

There is one IPO from Juniper hotels Limited which is tapping the capital markets. The issue consists of a fresh issue of Rs 1,800 crs in a price band of Rs 342-360. The issue would open on Wednesday the 21st of February and close on Friday the 23rd of February. The company is the only hotel developer which has a 50:50 Joint venture or partnership with a leading global hotel operator and is the only one of its kind in India. Further, there is no investment made by any global hotel operator in a hotel company in India. 

The issue has 75% reservation for QIBs, 15% for HNIs and 10% for retail as the company has not reported profits over the last three years. In terms of revenues, the company reported revenues of Rs 717.3 crs for the year ended March 23 and EBITDA of Rs 327.4 crs. EBITDA margin was at 45%.  The company has earned a negative EPS of Rs 13.88 in FY21, Rs 13.08 in FY22 and a much-improved negative Rs 0.10 for the year ended March 23. The objects of the issue are to repay Rs 1,500 crs towards the company’s debt. This would lead to a profit in the next financial year simply because of interest costs on the retired debt being saved. The company is currently paying about 11% on its debt. Post this payment, one would expect the debt rating of the company to also improve which would lead to savings and hence higher profits. The company is comparable to its peers which include the Chalet Hotels, Indian Hotels, Lemon Tree and East India Hotels. Juniper Hotels is an asset heavy company and owns all the hotels which are currently managed by Hyatt. It would continue this model and remain an asset owned hotel company. It is in the midst of expanding its hotel, Grand Hyatt at Kalina, Mumbai which would become the largest hotel in the country post the expansion. 

Currently the company has 1,836 keys in 7 operating hotels, has a MICE area of 1.27 lac sq ft and commercial space of 1.44 lac sq feet. The company merits subscription looking at the opportunity that exists and the single largest benefits of becoming almost a debt free company post IPO and which has had a global hotel operator as its equal partner for 25 years.   

Coming to the markets in the week ahead, expect markets to remain choppy and volatile. What has happened in the week gone by is the fact that markets have weathered the storm and have made a setup from where the all-time high can be challenged. Whether they will be crossed or not is another question. The setup has become positive and there are possibilities that if the momentum continues, they could be crossed. As is expected in markets when a new high is made, markets become even more volatile and choppy. Already markets are in a choppy condition and with possibilities of new highs they would be choppier and even more volatile. Time therefore to become cautious. Trade with stop losses and refrain from taking large positions. 

The strategy for the week would be to keep one eye on the indices and the other on traded volumes. At around new highs, volumes tend to increase sharply. The direction or trend of markets gives an indication of where they are then headed. Use sharp rallies to sell into the market what you own and refrain from shorting the markets. At the same time use only sharp dips to buy and that too from the large cap space only. 

Trade cautiously.