Markets were choppy and volatile in the week gone by. They did recover from the previous week’s lows ands staged some sort of a rally, but are yet to get out of the woods completely. The super sharp rally in the US was not enough to change the sentiment completely in our markets. BSESESENSEX gained 580.98 points or 0.91% to close at 64,363.78 points while NIFTY gained 183.35 points or 0.96% to close at 19,230.60 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.27%, 1.33% and 1.39% respectively. BSEMIDCAP was up 2.00% while BSESMALLCAP was up 1.90%. Markets gained on three of the five sessions and lost on two. 

The Indian Rupee lost 4 paisa or 0.05% to close at Rs 83.28 to the US Dollar. Dow Jones had a stellar week and gained on all five sessions of the week. Dow Jones gained 1,643.73 points or 5.07% to close at 34,061.32 points. The Fed in its meeting during the last week decided to keep interest rates unchanged. The possibility of there being another rate hike during the remaining part of the calendar year still remains, and could yet happen. 

On the Israel-Hamas conflict, Israeli forces are encircling Gaza and the conflict is showing no signs of abating or slowing down. Hostages have not been released and therefore the possibility of a slowdown in the war is virtually ruled out. The world is watching very carefully the situation and one hopes the escalation does not become a widespread event encompassing neighbouring countries as well. 

The primary markets saw a lot of action in the week gone by. We saw two issues open for subscription and close while yet another has opened for subscription. There was also one issue which listed during the week gone by. In the week ahead we have two issues opening for subscription. One other issue has opened for subscription and would be closing in the coming week. Two issues which had closed in the previous week would be listing as well. 

The first issue to open and close was from Cello World Limited. The issue was subscribed 38.90 times overall with QIB portion subscribed 108.57 times, HNI portion subscribed 24.42 times and Retail subscribed 3.06 times. This is the most subscribed issue on the main board in recent times and has created new records of subscription and amount garnered. The issue was for Rs 1,900 crs.. 

The second issue to open and close for subscription was Honasa Consumer Limited which was subscribed 7.61 times overall with QIB portion subscribed 11.50 times, HNI portion subscribed 4.02 times, and Retail portion subscribed 1.34 times. There were 1.19 lac forms in all. 

The issue from Blue Jet Healthcare Limited listed on Wednesday the 1st of November. The company had allotted shares at Rs 346. The share debuted at Rs 359.80 on BSE on the opening day and closed at Rs 395.45, a gain of Rs 49.45 or 14.29%. At the end of the week, the share lost some ground and closed at Rs 390.70, a gain of Rs 44.70 or 12.92%. 

The issue from ESAF Small Finance Bank Limited which is tapping the capital markets with its fresh issue of Rs 390.70 crs and an offer for sale of 72.30 crs in a price band of Rs 57-60. The issue has opened on Friday the 3rd of November and would close on Tuesday the 7th of November. 

The company as the name suggests is a small finance bank and reported an EPS of Rs 6.71 on a fully diluted basis for the year ended March 23. The PE band for the share is 8.49-8.94. The share is reasonably valued and offers scope for appreciation in the short to medium term as well. The issue is over subscribed 1.95 times on the very first day itself. 

The second issue is from Protean EGOV Technologies Limited, who is the pioneer and market leader in universal, citizen-centric and population scale e-governance solutions. It has 25 years’ experience in creating digital public infrastructure. The company is tapping the capital markets with its offer for sale of 61.91 lac shares in a price band of Rs 752-792. The issue would open on Monday the 6th of November and closes on Wednesday the 8th of November. The company had earned an EPS of Rs 26.48 on a fully diluted basis for the year ended March 23. The PE ratio for the issue is 28.40-29.91. One of the selling shareholders is IIFL Special Opportunities Fund who had invested at a price of Rs 950.10 some 6-7 years ago. The fact that this fund has not made money and is partly exiting the company at this price making a loss is comforting for investors, as it gives the signal that the company has been revalued based on its present business and performance. Looking at the pace of digitisation in India and the widespread use of the same, there is scope for appreciation. 

The third company to tap the markets is ASK Automotive Limited which is tapping the markets with its offer for sale of 295.71 lac shares in a price band of Rs 268-282. The issue opens on Tuesday the 7th of November and closes on Thursday the 9th of November. 

The company is into the business of making auto components which consist of advanced braking systems and aluminium die casting engineered products for 2 and three wheelers, passenger and commercial vehicles and non-automotive sector. The company reported revenues of Rs 2,555.16 crs for the year ended March 23 and a profit after tax of Rs 122.95 crs. The company’s performance is comparable with its peers like Endurance Technologies, Uno Minda, Suprajit Engineering and Bharat Forge Limited. The EPS on a fully diluted basis for March 23 was Rs 6.18. The PE band at these earnings is 43.37-45.63. The company is expanding its facilities as capacity utilisation is quite high even though this issue is entirely an offer for sale. Investment in the company is warranted for the medium to long term. 

Shares of Cello World Limited would list on Monday the 6th of November while those of Honasa Consumer Limited would list on Tuesday the 7th of November. While Cello World is expected to deliver strong gains and have a good listing, the market is divided on how Honasa would fare. 

Coming to the markets in the week ahead, expect volatile and two-sided sharp movements. While the strong showing of Dow Jones which registered over 5% gains in the previous week would hopefully have some bearing, it has not done so. The high that NIFTY has made in the present up move is 19,276 points. For the uptrend to become meaningful and sharp, we need to cross the previous low of 19,333 points made a month ago and sustain that. The situation in the Israel-Hamas conflict is just not conducive at the moment to see such an event happening. It therefore makes sense to take things one step at a time. At current levels the markets have support at levels of 18,900-18,950 and they have some resistance at 19,333. If the above level is violated and sustained, we could see levels of 19,600-19,650 as well. 

The week ahead sees ‘Muhurat’ trading for Vikram Samvat year 2080 taking place on Sunday the 12th of November. Markets would have a special session between 6pm and 7.15 pm on Sunday. 

Wishing all my readers a Happy Diwali and a prosperous Samvat 2080. 

Trade cautiously and profitably.

Markets have a mind of their own and they do give advance indication and warning if they plan to do the unexpected. Last week we saw markets take a severe beating and but for the recovery on Friday, the first day of November futures series registering a sharp rise, things could have been really different. Probably it would now be clear to many of the readers why I took a U-turn from being bullish to becoming bearish at the beginning of last week. BSESENSEX lost on three of the four trading sessions and gained on just Friday. BSESENSEX lost 1,614.82 points or 2.47% to close at 63,782.80 points while NIFTY lost 495.40 points or 2.53% to close at 19,047.25 points. The broader markets saw BSE100, BSE200 and BSE500 lose 2.46%, 2.51% and 2.62% respectively. BSEMIDCAP lost 2.41% while BSESMALLCAP lost significantly more at 3.43%. 

The Indian Rupee lost 12 paisa or 0.14% to close at Rs 83.24 to the US Dollar. Doe Jones had a bad week once again and lost 709.69 points or 2.14% to close at 32,417.59 points. Dow was down on four of the five trading sessions. Significantly, Dow has entered negative territory on a year-to-date basis and is down 2.20% so far. 

In primary market news, there was one listing and one issue which opened and closed during the week. In the week ahead we have two issues which would open and close for subscription. 

Shares of IRM Energy Limited which were issued at Rs 505 listed on Thursday the 26th of October. The discovered price was Rs 479 on the BSE and the share closed at Rs 472.95 on debut day, a loss of Rs and 32.05 or 6.34%. Friday saw the share recovering and closed at Rs 482.25, a loss of Rs 22.75 or 4.50%. The share performance has been impacted after the announcement of the Electric Vehicle policy in Delhi and NCR regions. This saw IGL AND MGL share prices getting impacted. For the records, it may be stated that IRM is not in close proximity to Delhi NCR and there would be no impact of this policy.

The issue from Blue Jet Healthcare Limited saw the issue open between Wednesday the 25th of October and Friday the 27th of October. The issue price band was Rs 329-346. The issue was overall subscribed 7.94 times with QIB portion subscribed 13.72 times, HNI portion subscribed 13.59 times and Retail portion subscribed 9.46 times. There were 3.91 lac applications. 

The first issue in the week ahead is from Cello World Limited which is tapping the markets with its offer for sale of 2.93 cr shares in a price band of Rs 617-648. The issue would open on Monday the 30th of August and close on Wednesday the 1st of November. 

The company Cello World Limited is into three broad verticals of manufacturing. The first is Consumer ware, the second is writing instruments and the third is moulded furniture. The company reported revenues of Rs 1,796.69 crs for the year ended March 23. It reported a net profit of Rs 285 crs. The fully diluted EPS for the period was Rs 13.17, and the PE Price band for the issue is 46.85-49.20 times its March 23 earnings. The company enjoys robust growth and healthy margins which make the company a respected brand and choice for investment. As the issue is an offer for sale there are no objects of the issue. The company has detailed an expansion plan in its various verticals and would be setting up a third hub in Falana, Rajasthan after hubs in Daman and Uttarakhand. Investment is warranted looking at the growth prospects of the business. 

The second issue is from the consumer company, Honasa Consumer Limited. The company is tapping the markets with its fresh issue of Rs 365 crs and an offer for sale of 4.12 cr shares in a price band of Rs 308-324. The company is a retailer of baby care, face care, body care, hair care, colour, cosmetics and fragrances segment. The issue opens on Tuesday the 31st of October and closes on Thursday the 2nd of November. The company reported revenues of Rs 1,492 crs for the year ended March 23 and a restated net loss of Rs 11.52 crs. As the EPS is negative, the issue has no PE band as the same is infinite. 

The issue is one from the new age companies and is primarily an exit for existing investors. 78.55% of the proceeds at the top end of the price band would go to selling investors while a mere 21.45% would go to the company. This company has a long way to go to establish its credentials as three of its six brands are acquisitions and need to establish the growth trajectory. The company has a long way ahead and needs to perform. The issue is 75% reserved for QIBs and would get subscribed, it would need a few quarters of consistency and performance before the share is actively traded and established. Investors with a high risk reward ratio alone should look at the above issue. 

October futures expired on an extremely weak note. There was sharp selling on expiry day itself and NIFTY lost 265 points on Thursday alone. The series lost 666.30 points or 3.41% to close at 18,857.25 points. 

Coming to the markets in the week ahead, expect volatility with sharp intraday moves to dominate markets. Intraday lows made on Thursday would act as strong support in the short term. These were at 63,092.98 points on BSESENSEX and at 18,837.85 points on NIFTY. The upside is currently capped at levels of 19,200-250 points on NIFTY and at 63,175-63,350 points. For markets to move up meaningfully, these levels have to be crossed and sustained over the next couple of days. Results season is on and while we have a few points of outperformance in them, there is no broad trend to confirm that India Inc has had a stellar performance. 

If one is to look at the news on the Israel-Hamas conflict, it’s not too good with the kind of preparations that Hamas had made at Gaza under the ground. It looks like this event is going to turn bloody and life taking before any meaningful settlement or solution is found. This indicates that market rallies in the short to medium term are going to be short lived and markets will spend time consolidating and adjusting to new levels on the lower side. 

The continued selling by FPIs remains a matter of concern and also the supply of fresh paper through primary market offerings ensures that liquidity in the market place gets absorbed before one can say ‘Hey Presto’. Suffice to say that we have tough times ahead with markets being volatile and choppy. It could be a good time for intraday traders who square up at the end of the day and avoid overnight exposure. 

Trade cautiously.