It was a tough and dramatic week at the bourses and the timing, right in the middle of Diwali added to the excitement and colorful fireworks. Markets began the week on expected lines with a relief rally and by the time we ended normal trading on Thursday, which also happened to be the last trading day of the month and the October series, we had given up almost all the gains. Friday was ‘Muhurat’ day where volumes are low and the mood different. This was the seventh consecutive Samvat where markets have gained on Muhurat day. BSESENSEX gained 321.83 points or 0.41% to close at 79,724.12 points while NIFTY gained 123.55 points or 0.51% to close at 24,304.35 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.67%, 0.85% and 1.39% respectively. BSEMIDCAP was up 1.83% while BSESMALLCAP gained a massive 6.28%. Our markets gained on two of the five trading sessions. 

The Indian Rupee lost 2 paisa or 0.02% to close at Rs 84.08 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on three. It was down 62.21 points or 0.15% to close at 42,052.19 points. US goes to vote for a new President tomorrow and if it is not a close race, we should have early indication by Tuesday night our time about the outcome. If it becomes close, probably Wednesday morning would tell us the outcome. Global markets would be on tenterhook awaiting the outcome as interest rates could move sharply depending on who ultimately wins. It might be a good idea to take a breather and await the final outcome of the elections before taking a big plunge. 

The relief rally saw BSESENSEX touch a intraday high of 80,539 points and 24,492 points on NIFTY. The intraday gain was 1,134 points on BSESENSEX and 312 points on NIFTY. The closing was significantly lower with gains being reduced to 603 points on BSESENSEX and 159 points on NIFTY. At the end of the four day period it was virtually flat. 

Thursday the 31st of October saw October futures expire. The series lost a massive 2,010.70 points or 7.67% to close at 24,205.35 points. This is the biggest monthly fall since the advent of covid-19 or March 2020. While the benchmark indices were flattish at the end of Thursday, one saw the BSESMALLCAP index gain at a staggering pace. The rise was ‘FRIGHTENING’ and one wonders what to read from it. It could be positive or the Pied Piper charming his prey. Only time will tell. 

Results continue to be disappointing on a broad front and it appears that India Inc has failed to live up to expectations. On the other hand, FPIs aggression in sales continues unabated. They have in the month of October sold on every single trading session and cumulatively sold 1,14,445.89 crores. It’s a big number by all means and has been equally matched by DIIs who bought Rs 1,07,254.68 crores. In the process they have used up their kitty built with the help of monthly SIPs and is now less than half the monthly purchases made last month. What next? Will have to wait and US elections certainly hold a major part of what would happen going forward. 

Promoters and merchant bankers do not seem to have learnt the fine art of pricing upcoming IPOs. The pressure to tap the markets is mounting and it seems no one wants to leave anything on the table. Two companies had roadshows in the week gone by. 

The first issue was from  Swiggy Limited which consists of a fresh issue of Rs 4,499 crores and an offer for sale of 17,50,87,863 shares in a price band of Rs 371-390. The issue would open on Wednesday the 6th of November and close on Friday the 8th of November. The company is into the business of offering an easy-to-use convenience platform, accessible through a unified app. The object is to browse, select, order and pay for food, grocery and household goods.  It can also bee used to make restaurant bookings (Discount) and for events bookings (Stepping Out). Access to all of this is available through membership program.

Currently the company is loss making and while it hopes to become profitable in the near foreseeable future, one is not sure of the timeframe. 

Its larger competitor had gone public during July 21 and it had tried to create a buzz of the strong anchor investment it was receiving through the subscription. It had leaked newspaper stories that the anchor portion was subscribed some 35-37 times. The final number was 100 entities were allotted shares and the total subscription was made by 186 entities. The final bid of all 186 entities was a mere 1.04 times of the anchor portion. The entire news story was done by the newspaper popularly known at that time as “ZOMATO TIMES”. This time the company seems to have leaked a source based story in two or more publications which includes the statutory newspaper and claimed that with the anchor to be allotted on Tuesday the 5th of November they have already received bids which are about 25 times the anchor size. Is this a way to create artificial demand or a way to induce investment. Either way its not good or correct. Reflects on the team of the issuer and its large number of seven seasoned bankers. It’s a matter of time when the source of leak is detected and the food delivery platform pays for it. 

The company is loss making and therefore has an infinite PE. Trying to evaluate such a companies fundamentals are indeed difficult and with the amount of paper available for SWIGGY in the unlisted market which would be available at every rise in price, applying for the shares in the short to medium term or for listing pop is not viable or profitable. 

The second issue to tap the markets is Sagility India Limited which is tapping the markets with its offer for sale of 70,21,99,262 shares in a price band of Rs 28-30. The issue opens on Tuesday the 5th of November and closes on Thursday the 7th of November. The company is into the business of providing technology-enabled business solutions and services to clients in the US Healthcare Industry. The company is a pure-play healthcare focused services provider and clients include Payers (US health insurance companies), which finance and reimburse the cost of health services) and Providers (primarily hospitals, physicians, and diagnostic and medical devices companies). 

The company reported revenues of Rs 4,753.55 crores for the year ended March 24. It reported a profit after tax of Rs 589.55 crores and a PAT margin of 12.40%. The fully diluted EPS was Rs 0.53. The PE for the issue based on March 24 financials is 52.83-56.60. Expensive valuations at current times. There is not much that the company offers in terms of listing pop. In the long term we need to look at coming two quarters before taking a call. 

There are two other issues which would be having roadshows on Monday. The first is Acme Solar Holdings Limited which is a fresh issue of Rs 2,395 crores and an offer for sale of Rs 505 crores. The issue would open on Wednesday the 6th of November and close on Friday the 8th of November.  

The second issue 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 1,400 crores. The issue would open on Thursday the 7th of November and close on Monday the 11th of November. Details of the two issues price band would be available on Monday in the newspapers. 

Shares of Afcons Infrastructure Limited which had issued shares in a price band of Rs 440-463 would list on Monday the 4th of November. The issue was subscribed 2.77 times. The listing is expected to be flattish.

It was a tough week for the markets and what one saw was red all over the street. One had to struggle to see some green. The unfortunate part is that it has come on the eve of Diwali. There would however be hope that things would improve post Diwali which takes place during the current week. BSESENSEX lost 1,822.46 points or 2.24% to close at 79,402.29 points while NIFTY lost 673.25 points 2.71% to close at 24,180.80 points. The broader markets saw BSE100, BSE200 and BSE500 experience greater degree of pain and lose 3.15%, 3.53% and 3.98%. BSEMIDCAP lost 5.20% while BSESMALLCAP was down a massive 7.37%. Markets lost on all five trading sessions. This would put pressure on markets going forward as retail investors have the bulk of their investments in the small and midcap space. 

We had a large number of investors coming to the markets post the onset of Covid-19 in March 2020 when markets had hit a rock bottom of 25,638 points on BSESENSEX and 7,511 points on NIFTY during the month of March. In February 2020, the indices were at around 40,000 and 11,200 points respectively. Since then, it has been more or less a secular uptrend over the last four and a half years and the investor base which more than trebled since this period, enjoying what could be termed as a dream run. This is probably for the first time since this period began that we have a benchmark index down so sharply. NIFTY for the current month of October is down 2,035.25 points or 7.76% for the series so far. Global cues are not the best and we would have a new President in the USA in a week’s time with the race being too close to call. Results for the July-September quarter are certainly not the best and we seem to be under pressure on that count. 

There were no sectoral gainers in the last week and the one to fall the least was BSEIT, which was down 1.57%. The one to fall the most was BSEOIL&GAS which was down 7.34%. The primary markets have suddenly seen a sharp jump in issues coming and one is getting an uncanny feeling that merchant bankers and promoters are trying to push through their issues before the markets take any further beating. This comes on top of the Rs 1,00,242 crores sales so far in the month of October by FIIs which has been very well matched by the SIP fed domestic institutions who have invested almost an equal 97,090 crores so far. 

The Indian rupee lost 2 paisa or 0.02% to close at Rs 84.08 to the US Dollar. Dow Jones had a poor week and lost on all five trading sessions. Dow lost 1,161.51 points or 2.68% to close at 42,114.40 points. 

In primary markets we saw the listing of Hyundai Motor India Limited on Tuesday the 19th of October. The listing was tepid on expected lines. Against the issue price of Rs 1,960, the discovered price was Rs 1,931, a loss of Rs 29. It made a low of Rs 1,807.05 and closed at Rs 1,820.40, a loss of Rs 139.60 or 7.12%. By the end of the week, the share had recovered some lost ground and closed at Rs 1,843.85, a loss of Rs 116.35 or 5.93%. 

We had a bumper subscription to the issue of Waaree Energies Limited which was subscribed 79.44 times. There was record subscription in terms of number of applications which hit 97.34 lakhs. The issue which was priced at Rs 1,503 would list on Monday the 28th of October. 

The issue from Afcons Infrastructure Limited is open and would close on Tuesday the 29th of October. 

Coming to the markets in the week ahead, we have October futures expiring on Thursday the 31st of October. The present value of NIFTY at 24,180.80 points is down 2,035.25 points or 7.76% compared to the series opening at 26,216.05 points. At best, the bulls may pull back some points, but the series is lost by a long way. 

Geo political news flow is not the best and we could see a measured escalation of the Israel-Iran conflict. Hopefully the election of the new US President by the 4th/5th of November could bring about some thawing of relations, but not sure. As mentioned earlier, the results emerging are not what one hoped for and they could be termed as disappointing. In such a scenario to expect any sharp recovery in the markets would be unlikely. 

Markets made a low at 79,137.98 points on BSESENSEX and at 24,073.90 points on NIFTY on Friday. Support exists at levels around these and slightly lower at around 78,300 on BSESENSEX. This was the low made in August 2024. On NIFTY, we have support at 23,900 levels which is the low of August at the same time. There could be a bounce in the short term from around these levels, but I believe this would be only a technical bounce. The pain in the market would continue and for some time, it would be a “Sell on Rally” situation. Diwali Muhurat trading would take place on Friday the 1st of November, which means the week would be effectively of four days with just an hour’s trading on Friday which is more symbolic in nature. Muhurat trading time is 6pm to 7pm. 

The strategy for the week ahead would be to sell on rally and look at select buying on large dips, but only in the large cap stocks. Pain would continue in the mid and small cap space for some more time as new investors who have joined over the last 50-54 months experience what ‘Mandi’ means. 

Trade cautiously.

Wishing all a Happy and Prosperous Diwali and New Year (SAMVAT 2081)