Markets seemed to be in slow motion mode and were fairly quiet all of last week. Movements were narrow and it appeared the war had taken a pause as well as Donald Trump. More action was concentrated on the spate of IPO’s which were happening on the main board. In the coming week we have as many as five IPO’s which are opening and closing. At the end of the week, neither supports were breached nor resistances taken out. In summary, dull and boring and a listless week. BSESENSEX lost 489.92 points or 0.62% to close at 78,009.25 points while NIFTY lost 204.65 points or 0.83% to close at 24,366.00 points. BANKNIFTY lost 255.35 points or 0.44% to close at 57,491.10 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.47%, 0.41% and 0.37% respectively. BSEMIDCAP lost 0.13% while BSESMALLCAP was up 0.10%. Markets gained on two of the five trading sessions and lost on three. The highs on the BSESENSEX and NIFTY were at 78,670.98 points and 24,620.95 points respectively. Lows were made at 77,497.93 points and 24,366 points respectively. The highs were made on Monday while the lows were made on Wednesday. 

The Indian Rupee lost 26 paisa or 0.27% to close at Rs 95.47 to the US Dollar. Dow Jones lost on four of the five trading sessions and gained on just one. It lost 304.52 points or 0.56% to close at 53,732.41 points. 

There were three main board listings last week. The first of the lot was Ardee Industries Limited which had issued shares at Rs 53 and listed on Wednesday the 12th of August. The share opened at the high at Rs 73.60 and then closed on day one at Rs 67.13. It lost further ground during the remaining two days and closed at Rs 59.17, a weekly gain of Rs 6.17 or 11.64%. 

The second share to list was Leap India Limited which had issued shares at Rs 159. Shares listed on Friday the 14th of August at Rs 166, made a high of Rs 166.80 and closed at Rs 145.10, a loss of Rs 13.90 or 8.74%. 

The third and final share to list was Technocraft Ventures Limited which listed on Friday, 14th August at Rs 285 against an issue price of Rs 212. It made a high of Rs 334.60 and closed at Rs 311.15, a gain of Rs 99.15 or 46.77%. 

There are as many as five IPO’s opening and closing in the week ahead. The first of the lot is Lalithaa Jewellery Mart Limited which is tapping the markets with its 1,700 crores issue on Monday the 17th of August and closing on Wednesday the 19th of August. The issue consists of a fresh issue of Rs 1,200 crores and an offer for sale of Rs 500 crores. The price band is Rs 190-201. The company is a manufacturer of Jewellery and a retailer with presence in the southern states. It reported revenues of Rs 25,000 crores for the year ended March 26. So far the business model has been to sell Jewellery the cheapest and attract customers. It is a big player in the advance gold scheme, where a potential customer invests in buying Jewellery in instalments over 11 months and then takes Jewellery of the amount collected/deposited. It had over Rs 5,000 crores under this scheme. This is a scheme followed by almost all jewellers in the country. 

The second issue is from Horizon Industrial Parks Limited which is opening on Monday the 17th of August and closing on Wednesday the 19th of August. The issue consists of a fresh issue of Rs 2,600 crores in a price band of Rs 57-60. The company is a developer of large scale industrial parks for customers and offers built to suit and highly well designed parks with virtually all facilities and amenities for customers. It has roughly 28 million square feet built and with 94% leased and has another approximately 31 million square feet that would be developed in a phased manner over 2-4 years. It operates on a long lease basis.

The third issue is from Sunshine Pictures Limited. The issue consists of a fresh issue of Rs 172 crores and an offer for sale of Rs 110 crores. The price band is Rs 342-360. The issue would open on Tuesday the 18th of August and close on Thursday the 20th of August. The biggest risk in film making is the possibility of the picture being a disaster at the box office or being an average film and sometimes a super hit. The model of Vipul Amrutlal Shah, the promoter of the company is to make big actors, directors and other heavyweights from the film industry, partners in the venture that is launched. This ensures that the film is made with a lower budget and once the film breaks even, profits are shared. The track record of film industry related companies at the bourses have not been the best and hardly any have made money. Invest keeping the high risk in mind.

The fourth issue is from yet another jeweler, Shankesh Jewellers Limited. The issue consists of a fresh issue of Rs 274 crores and an offer for sale of Rs 93 crores. The price band is Rs 88-93. The issue would open on Tuesday the 18th of August and close on Thursday the 20th of August. The company is a manufacturer of handcrafted Jewellery and is a wholesaler, supplying gold Jewellery almost across the country. The fact that it makes handmade or hand crafted gives it an edge and higher margins. The company is a niche player and has limited size and reach and hence the IPO. 

The fifth and final issue is from Gaja Alternative Asset Management Limited, an AMC of funds. The issue consists of a fresh issue of Rs 450 crores and an offer for sale of Rs 100 crores. The price band is Rs 152-160. The issue would open on Wednesday the 19th of August and close on Friday the 21st of August. The issue is unique and has no comparable in the listed space in India. What is listed in India is the mutual funds AMC which are different from Gaja. Mutual funds have schemes in which investors invest and there is income which the AMC earns as basis points on the size of the AMC. In this company, there is a fee which is a percentage of the committed capital, carried interest on the performance of the fund and also the investment that the AMC does in the fund. This gives an overall higher returns when compared to AMC’s managing mutual funds. The size of the two is also not comparable where the mutual fund has AUM running into lakhs of crores while this is a few thousand crores. 

As mentioned last week in the article, the deluge of IPO’s took its toll on the markets and things were not the best. This week also has five IPOs lined up and the following week will have a similar number as well. All of this does not augur well for markets. Coming to the markets, supports were not tested and markets were well behaved, moving in a narrow range. At the same time they were unable to break out either. On the positive side we saw FPI’s doing select buying and very small selling if any. This gives one comfort that the markets are well balance currently. 

Support in the coming week is around 24,100-24,300 points and lower down at levels of 23,800 points. Resistance is around 24,650-24,800 points. It appears that neither of these two levels would get violated in the coming week. Results season is over for the quarter and now it would be time to take stock of the results and which sectors look good or not so good. 

The strategy would be to continue to trade long and refrain from large weekend positions as the war situation still shows no clarity. Oil is again climbing and is likely to become a crisis all over again. 

Trade cautiously.

The week gone by was quiet by and large with no major eruptions or disruptions taking place between USA and Iran. Markets too went through the motions but for ‘CAS’ which disrupted markets. CAS stands for closing auction system where there is a price discovery for the closing price, and the F&O stocks close for trading 15 minutes before market closing. Then there is a price discovery all over again as happens at the start of the day. There was major disruption in the pricing on the two exchanges with none the wiser, how and why it happened. The only answer one got was market depth is missing. 

Markets gained on three of the five trading sessions and lost on two. BSESENSEX gained 404.52 points or 0.52% to close at 78,999.17 points while NIFTY gained 187.05 points or 0.77% to close at 24,570.65 points. BANKNIFTY gained 481.60 points or 0.84% to close at 57,746.45 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.87%, 0.87% and 1.13% respectively. BSEMIDCAP was up 1.99% while BSESMALLCAP gained 3.45%. The intraweek highs and lows on BSESENSEX and NIFTY were at 79,143.15 and 78,211.87 on BSESENSEX and at 24,703.90 and 24,427.95 points on NIFTY. A fairly narrow range. What was most surprising was the fact that both the highs and lows were made on Tuesday and markets recovered from thereon for the remaining part of the week. 

The Indian Rupee gained 28 paisa or 0.29% to close at Rs 95.21 to the US Dollar. Dow Jones gained on four of the five trading sessions and lost on one. It was up 1,551.90 points or 2.96% at 54,036.93 points. 

RBI kept interest rates unchanged for the fourth time in a row in its meeting last week. Repo rate has been kept at 5.25%. The last change was in its December 25 meeting when rates were cut by 25 basis points. 

There is a deluge of mainboard IPO’s on Dalal Street. Last week we had three listings and currently seven issues are open or would open in the week ahead. The first to list was Manipal Health Enterprises Limited which had issued shares at Rs 590. Shares listed on Wednesday the 5th of July and closed day one at Rs 666.70. By weekend they gained further to close at Rs 677.40, a gain of Rs 87.40 or 14.81%. 

The second share to list was Juniper Green Energy Limited which listed on Thursday the 6th of August. The company had issued shares at Rs 225. Shares closed day one at Rs 259.60 but lost some ground to close the week at Rs 249.40, a gain of Rs 24.40 or 10.84%. 

The third share to list was MV Electrosystems Limited which listed on Thursday the 6th of
August. The company had issued shares at Rs 425. Shares closed day one at Rs 622.75 but lost some ground to close the week at Rs 611.45, a gain of Rs 186.45 or 43.87%. 

In terms of new issues, the IPO’s of Leap India and Technocraft Industries are currently open. Leap India is a combined issue of Rs 2,480 crores and would close on Tuesday the 11th of August. The price band is Rs 151-159. The company is one of a kind and is into the business of pooled wooden pallets used for logistics. It enjoys a market share of close to 90% in the organized sector but the same is highly under-penetrated in India when compared globally. The issue is interesting and would be closely tracked considering it has a triple digit PE multiple. 

Technocraft Industries issue would close on Tuesday the 11th of August and has a price band of Rs 200-212. It is an EPC contractor with focus on last mile connectivity of water sewage projects. The PE multiple is in line with the industry and with the IPO proceeds would be able to scale its business. The space is crowded with multiple players and the key to doing well is fresh orders which are timely executed. 

The new issues in the coming week would see Dhoot Transmissions open its issue on Monday the 10th of August and close on Wednesday the 12th of August. The issue size is Rs 3,067 crores and the price band is Rs 829-871. The core business of the company is making wire harnesses for the 2 wheeler and 3 wheeler industry where it is the dominant player and has a market leading share. It has plants near all its OEM’s and is also an exporter. Besides making the products it has also backward integrated into making wires and cables and electronic components used for the same. It has been expanding continuously and has also entered into making battery packs for EV’s 2 wheelers and 3 wheelers. Interesting company with valuations slightly on the higher side.

The second issue is from Molbio Diagnostics Limited which is entering the markets with its issue opening on Monday the 10th of August and closing on Wednesday the 12th of August. The price band of the issue is Rs 768-807 and the issue size is 939.70 crores. The company makes machines to diagnose various viruses and also testing kits for the same. Currently its focus area is Tuberculosis and the same is being fought on the global front. It has more than 12,500 machines currently in use and it supplies kits to Central health agencies in India and also abroad. Many of its customers abroad include multilateral funds and agencies involved in health. They have also developed a portable X-ray machine and the same is now being marketed globally with clearances and acceptances in place. It is one of its kind as of now in terms of machine and has an edge in its business but healthcare is a rapidly evolving and disruptive industry. One should look to invest with a medium and long term view only. 

The third issue is from Milky Mist Dairy Food Limited which is tapping the markets with its IPO which opens on Tuesday the 11th of August and closes on Thursday the 13th of August. The price band is Rs 133-140 and the size of the issue is Rs 1,553 crores. The company does not sell low value liquid milk and processes on an average 15 lakh liters of milk on a daily basis. 97.5% of its revenue comes from dairy products but it has chosen to call itself a packaged food company. The rebranding helps as the PE that the company is looking for is in excess of 60 while dairy companies are available at 24 and 25 multiples.

The fourth issue is from Shiprocket Limited which is tapping the markets with its issue which opens on Wednesday the 12th of August and closes on Friday the 14th of August. The price band is Rs 92-97 and the issue size is Rs 1,617.48 crores. The company is an integrated player providing a platform to sellers and further providing value added services to MSME to reach their products to customers across the country and abroad. The company is yet to make profits and therefore there is no PE multiple available. Tough choice whether to invest or not.

The fifth and final issue is from Beharilal Engineering Limited which is tapping the markets with its issue which opens on Wednesday the 12th of August and closes on Friday the 14th of August. The price band is Rs 271-285 and the issue size is Rs 301.62 crores. The company is into manufacturing of various types of rolls used in the rolling mills and crusher industries. It also does precision castings. Attractive industry and reasonable valuations offering upside for the medium to long term. 

Coming to the markets, we have failed to penetrate and close above 24,600 on the NIFTY. The band of 24,600-24,800 will therefore act as a strong resistance in the coming week. On the downside or support side, there is very strong support in the band of 24,100-24,300 points and substantially lower at 23,800 points. Results season is almost over and only the last week remains. No nasty surprises are now likely to happen. The quarterly numbers have been decent with very few unpleasant surprises and a steady state of numbers. For markets to remain on a steady path, the only joker in the pack could be Donald and his impulsive nature to push the narrative. 

The strategy would be to continue trading long until levels mentioned hold or dramatic events do not unfold. Weekend large positions should be avoided as anything untoward happens only during weekends.