Will election results in two states give markets the momentum to change trend

Market fall and FPI selling which is now over 45 days old continued but seems to have slowed down. How long? Not sure. Markets were flat on one day and lost on three sessions. The only difference this week was that BSESENSEX closed flat with minor gains on one day while NIFTY closed flat with minor losses on one day. Otherwise, it was a normal week with correction continuing. BSESENSEX lost 1,906.01 points or 2.40% to close at 77,580.31 points while NIFTY lost 615.50 points or 2.55% to close at 23,532.70 points. The broader markets saw BSE100, BSE200 and BSE500 lose 2.64%, 2.75% and 2.98% respectively. BSEMIDCAP was down 3.89% while BSESMALLCAP lost 4.61%. The lows made last week on the bourses were at 77,424.81 points on BSESENSEX and at 23,484.15 on NIFTY.

The Indian Rupee lost 1 paisa or 0.01% to close at Rs 84.39 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on three. Dow Jones lost 544 points or 1.24% to close at 43,444.99 points. 

It was a week of listings on the bourses and suffice to say, it was not the best one could have hoped for. The first to list was Sagility India Limited which listed on Tuesday the 12th of November. The company had issued shares at Rs 30. The discovered price was Rs 31.06. the closing price on listing day was Rs 29.36, a loss of Rs 0.64 or 2.01%. Over the next two days the share lost further ground to close at Rs 28.51. a loss of Rs 1.49 or 4.97%. 

The second share to list was Swiggy Limitred which had issued shares at Rs 390. The share listed on Wednesday the 13th of November. The discovered price was Rs 412. The closing price on day one was Rs 455.95, a gain of Rs 65.95 or 16.9%. The share lost some ground on Thursday and closed at Rs 429.65, a gain of Rs 39.65 or 10.22%. 

The third share to list was Acme Solar Holdings Limited which had issued shares at Rs 289. This share too listed on Wednesday the 13th of November. The discovered price was Rs 259. The share closed at Rs 253.50 on listing day, a loss of Rs 35.50 or 12.28%. It lost further ground on Thursday to close at Rs 229.00, a loss of Rs 60 or 20.76%. 

The fourth and final share to list was Niva Bupa Health Insurance Company Limited which listed on Thursday the 14th of November. The issued price was Rs 74. The discovered price was Rs 78.50 while the closing price was Rs 74, flat. 

The current lot of IPOs have been struggling and subscription levels for the issues are not as before, simple reason being that post listing they are not making returns to investors, or are lower than normal. To compound matters, there is also a fatigue factor affecting them. 

Markets seem to be drifting downwards. A couple of important supports have broken and we have two more important supports coming up. If these were to get violated we could see round two of correction on the bourses. The first major support would be in the band of 23,100-23,200 points and the second would be in the region of 22,500-22,600 points. These would correspond to 76,400-76,600 as the first level and 74,600-74,900 on BSESENSEX. On the resistance side, first levels are at 23,800-850 and then at 24,100-24,200 points on NIFTY. These would correspond to 78,400-78,500 and 79,300-79,550 on BSESENSEX. 

Markets have a trading holiday on Wednesday as Mumbai and Maharashtra vote on Wednesday the 20th of November. This would break the momentum and could see positions being reduced on Tuesday. The good part is that exit polls for Jharkhand and Maharashtra would be announced on the evening of 20th November post the polls. If the BJP led NDA were to do well in these elections, this could be the short term trigger that the markets are looking for. Otherwise, poor results, FPI selling, Dow having run ahead of realty and now likely to correct till the administration starts delivering, are enough reasons to keep the markets under pressure. 

The strategy in this four-day week would be to keep positions light and await election results on Saturday the 23rd of November. While exit polls are an indication, we have seen in the recent past how misleading they could be. 

Trade cautiously.

Performance of Newly Listed Shares as on 14th November 2024

 

Name Date of Listing Issue Price Closing Price Closing Price % Gain Loss % Change Over
141124 81124 Over Week lssue Price
Gala Precision Engineering Limited 9th September 529.00 1075.80 1218.70 -11.73 103.36
Shree Tirupati Balaji Agro Trading Co Ltd 12th September 83.00 71.66 71.88 -0.31 -13.66
Bajaj Housing Finance Limited 16th September 70.00 129.55 135.55 -4.43 85.07
Tolins Tyres Limited 16th September 226.00 166.25 169.90 -2.15 -26.44
Kross Limited 16th September 240.00 177.90 199.55 -10.85 -25.88
P N Gadgil Jewellers Limited 17th September 480.00 690.30 720.65 -4.21 43.81
Manba Finance Limited 30th September 120.00 143.60 158.05 -9.14 19.67
KRN Heat Exchangers Limited 3rd October 220.00 651.40 588.25 10.74 196.09
Diffusion Engineers Limited 4th October 168.00 295.50 329.40 -10.29 75.89
Garuda Construction & engineering Ltd 15th October 95.00 82.80 87.18 -5.02 -12.84
Hyundai Motor India Limited 22nd October 1960.00 1765.70 1839.90 -4.03 -9.91
Waaree Energies Limited 28th October 1503.00 2916.90 3133.85 94.07 94.07
Deepak Buiders & Engineers Limited 28th October 203.00 148.25 156.60 -26.97 -26.97
Afcons Infrastructure Limited 4th November 463.00 474.60 492.00 2.51 2.51
Sagility India Limited 12th Novembwer 30.00 28.51 N A -4.97 -4.97
Swiggy Limited 13th November 390.00 429.85 N A 10.22 10.22
Acme Solar holdings Limited 13th November 289.00 229.00 N A -20.76 -20.76
Niva Bupa Health Insurance Co Ltd 14th November 74.00 74.00 N A 0.00 0.00

Markets continue in broad trading zone, waiting for breakout or breakdown

It was a volatile week with markets moving in both directions. There were wild swings and though the US has elected a new President, it moved markets globally. At the end of the week, in which we lost on three of the five trading sessions, there was no clarity for the trend of markets in the immediate short term. BSESENSEX lost 237.80 points or 0.30% to close at 79,486.32 points while NIFTY lost 156.15 points or 0.64% to close at 24,148.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.58%, 0.62% and 0.80% respectively. BSEMIDCAP was down 0.44% while BSESMALLCAP was a larger loser at 1.27%. %

The Indian Rupee was under pressure and made a new low to close at Rs 84.38. It lost 30 paisa or 0.38%. The US has a new President in Donald Trump. At the end of a long campaign which saw Joe Biden the present President stepping down in favor of the running mate, Kamala Harris, was a tough campaign with abuses of all types being flung against women and so on. At the end of it all, the Republicans have control of the White House, Senate and almost the House, a feat that would be accomplished after 142 years. Donald Trump has won the election with 312 electoral votes against 226 won by Kamala Harris. In the Senate the Republicans have 52 seats against the Democrats 46. In the house currently the Republicans have 213 seats with 5 more needed for control with 19 seats yet to be decided. Clearly they have the edge and are set to have full control. It may be added that Donald Trump has won all the seven swing states this time around. Dow Jones had a spectacular week and gained on three of the five trading sessions and lost on one. The fifth session saw markets change by a mere fraction of a point, 0.59 points. It gained a massive 1,936.80 points or 4.61% to close at 43,988.99 points, a lifetime high closing. On an intraday basis the high was 44,157.29 points.

The IPO market though buzzing with new issues week after week seems to have been hit by the fatigue factor. Subscription levels are falling, interest seems to be diminishing and of course listing gains seem to be vanishing. Last week we saw three issues close for subscription. The first of the list was Swiggy Limited which was subscribed 3.59 times, helped in no small means by QIBs who subscribed the issue 6.02 times. HNI portion was undersubscribed at 0.41 times while Retail was subscribed 1.14 times. There were 7.16 lakh applications. It would be interesting to see what was the response in the anchor portion where newspaper articles indicated a couple of days before the issue actually opened that the response saw a demand of between 25-35 times the anchor portion. If this was a reality, one wonders why the QIB response was in just single digit. 

The second issue was from Sagility India Limited which was subscribed 3.2 times with QIB portion subscribed 3.52 times, HNI portion subscribed 1.93 times and Retail portion subscribed 4.16 times. There were 5.73 lakh applications.

The Third issue was from Acme Solar Holdings Limited which was subscribed 2.89 times overall. The QIB portion was subscribed 3.72 times, HNI portion was subscribed 1.02 times and Retail portion was subscribed 3.26 times. There were 6.01 lac applications. 

The fourth issue which is currently open and would close on Monday the 11th of November is from Niva Bupa Health Insurance Company Limited. The issue consists of a fresh issue of Rs 800 crores and an offer for sale of Rs 1,400 crores in a price band of Rs 70-74. At the end of the second day of subscription, the issue was subscribed 1.24 times with QIB portion subscribed 1.59 times, HNI portion subscribed 0.42 times and Retail portion subscribed 1.43 times. There are 1.84 lakh applications in all. 

The issue from Afcons Infrastructure listed on Monday the 4th of November. The company had issued shares at Rs 463. After a tepid listing at Rs 430.05 the share gained on institutional buying and closed at Rs 474.55, a gain of Rs 11.55 or 2.49%. By the end of the week the share had gained further to close at Rs 492, a gain of Rs 29 or 6.26%. 

Zinka Logistics Solution Limited is tapping the capital markets with its fresh issue for Rs 550 crores and an offer for sale of 2,06,85,800 equity shares in a price band of Rs 259-273. The issue would open on Wednesday the 13th of November and close on Monday the 18th of November. The company is into the business of providing tolling and refueling recharges and services through its app. Its income consists of commission and subscription for its app service. It has a 27% market share currently and reported revenues of just under Rs 300crs. The biggest concern in this kind of a business is the fact that they already have a market share which is large at 27% and they are not making money. When and at what market share would they do so? Secondly, they have formed an NBFC for financing trucks. While there is a natural affinity considering that they have a a connect with the customer, the truck financing business is large, well organized and highly competitive. It needs large finance and deep pockets. One is not sure how this company would compete in this space. Considering the markets and response to IPOs, it makes sense to skip the current issue. 

Markets are trading in a broad band of 23,800-24,500 on NIFTY and at levels of 78,200-80,600 on BSESENSEX. Currently these are sacrosanct levels and we are likely to spend a good amount of time between these levels. What is needed is a break out or breakdown from these levels for any new trend to emerge. Global news will take a back seat in the coming days as the US elections are over. The President would assume office only in January and its only then when we would know what would be repercussions on global cues, current wars and impact on China. Talking of China, they have announced a stimulus and not sure whether it would have any great impact on markets in China or globally. 

Coming to our markets, we are in the last week of quarterly results declaration, suffice to say that they have been by and large below expectations. Not good enough to revise guidance upwards. The negative performance after 10 quarters is now becoming a cause for concern and doesn’t help the cause of rich valuations. While large cap stocks have born the brunt of FPI selling which has now reached 1.35 lakh crores since the beginning of October and matched with 1.21 lakh crores of buying by local domestic institutions, what next? The kitty that mutual funds were flush with is now on its last leg. If this selling does not subside, we could be in spot of bother. Retail investors are not yet worried and the new ones who have joined the markets over the last four and a half years post covid, are experiencing a meaningful correction for the first time.  The barrage of IPOs is reducing liquidity in the system in no small manner and we are caught between the devil and the deep sea. 

Something has to happen or give way. The present state of flux cannot continue. Will the state elections give a new twist or what. The week ahead has a trading holiday on Friday and is therefore of a mere four days. Trade cautiously and make a conscious effort to take some money of the table. It would act as a kitty and hold you in good stead in any deep correction in the short term. 

Finally, trade cautiously and allow markets to find their own levels.

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