It was an eventful week at the bourses and they demonstrated strength despite the going-on in the Middle East. Markets are looking at more dynamics other than just the immediate geo-political one. It could also be that they have probably understood that for Donald it is yet another day and he would continue making his money without being bothered who is paying for it. Let’s leave politics at that because it gets personal and uncomfortable. BSESENSEX gained 582.05 points or 0.75% to close at 78,151.45 points while NIFTY gained 127.40 points or 0.53% to close at 24,334.30 points. BANKNIFTY gained 475.50 points or 0.82% to close at 58,521.40 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.29% and 0.14% respectively while BSE500 was flat. BSEMIDCAP lost 0.22% while BSESMALLCAP lost 0.14%. Very clearly the broader markets were under pressure on Friday, the day the benchmark indices had a great showing. BSESENSEX gained on four trading sessions while NIFTY gained on three trading sessions.
The Indian Rupee was under pressure and lost 93 paisa or 0.97% to close at Rs 96.40 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on three. It was down 490.61 points or 0.93% to close at Rs 52,146.40 points.
The escalation of tensions caught the world in its crossfire. At the same time even Ukraine has suddenly become more aggressive and one gets the feeling that nations having the oceans, straits and waterways are suddenly becoming aware of the importance of such geographical locations. The war between USA and Iran has moved up many levels in the last week and could take a serious turn considering that retaliation by Iran on US allies in the Middle East will also cause unrepairable damage sooner than later. For us in India, developments with our neighbor Pakistan cannot be ignored. A country always involved in exporting terrorism is now facing the brunt with some of its provinces including POK. While its tit for tat, the worrisome factor is that internal strife in Pakistan is increasing alarmingly.
Coming to the IPO markets, we had two listings last week. The first was from Kusumgar Limited which had issued shares at Rs 419 and listed on Wednesday the 15th of July. Shares closed day one at Rs 604.45, a gain of Rs 185.45. By weekend, the share gave up some of its gains and closed at Rs 575.90, a gain of Rs 156.90 or 37.45%.
The second share to list was Laser Power and Infra Limited which had issued shares at Rs 214. It listed on Thursday the 16th of July and closed at Rs 262.85, a gain of Rs 48.85. On Friday it hit upper circuit of 10% and closed at Rs 289.10, a gain of Rs 75.10 or 35.09%.
The issue from SBI Funds Management Limited received excellent response and was subscribed 41.66 times overall. QIB portion was subscribed 140.11 times, HNI portion 22.51 times and Retail portion 3.6 times. There were 62.59 lac applications in all. The share would list on Tuesday the 21st of July.
The issue from Caliber Limited has opened on Friday the 17th of July and would close on Tuesday the 21st of July. The issue is for Rs 450 crores with a fresh issue component of Rs 400 crores and an offer for sale of Rs 50 crores in a price band of Rs 402-424. The company is in the business of removing overburden in the mining industry and coal excavation. It provides the full array of equipment and logistics required for mining. It’s the first company of its kind on a standalone basis to be listed in this sector and appears promising for the medium to long term. The share is reasonably priced and offers appreciation in the short term and certainly for the medium to long term. On a growth perspective beside larger number of contracts the company is also entering iron-ore mining and has got exploratory mining license for rare earth minerals in Sindhudurg.
While on the primary markets, one disturbing trend has begun in recent times. Recent apps on the social media and digital technology have started displaying unpublished information (UPI) in regards to price band of IPO bound companies without their price band advertisements being published. This could lead to serious repercussions going forward as there would be many violations which would become difficult to prove. I believe as a responsible intermediary and person connected with the capital markets for decades, it is my duty to alert and inform. One hopes the regulator would take action at the earliest. Full details could be shared on request. Let me take the latest example. Two issues are having their roadshows in Mumbai today, Monday 20th July. They are Lohia Corp Limited and Indo-Mim Limited. These apps have given prices which are not what the company has declared. In the case of Lohia Corp, the app shows 400-426 while the declared price is 404-425. Similarly for Indo-MIM, the app shows 465-490 while the declared price is 461-485. This amounts to misleading and is probably being done to confuse retail investors and more importantly to activate grey market transactions. Things which SEBI is dead against. Time for the SEBI Chairman to show how he can regulate these activities. One other actionable point is that even apps from online brokerages start displaying such price communications.
Mega results from Reliance and about four banks were declared over the weekend. By and large the story is intact except in the case of one bank. I believe this could be a reason for markets opening on the upside on Monday. Levels of 23,800 on NIFTY would act as solid support and a tighter stop loss could be kept at 24,100 points for any long positions. On the upside while 24,600 points is the trigger for fresh longs, in case this level is broken out we could see resistance at 24,850-24,900 points. Keep in mind this would be a break out after a very long time and hence there would be hurdles in the way. The strategy would be to keep long positions and monitor two other things. Firstly oil going above 90$ would start hurting and secondly, Iran hurting and attacking infra assets where USA has it troops stationed.
Trade cautiously.
