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.

Markets were in fine fettle and gained on expected lines. They almost recovered the entire losses they suffered in the previous week. BSESENSEX gained 2,034.87 points or 2.68% to close at 28,094.64 points while NIFTY gained 616.15 points or 2.59% to close at 24,383.60 points. BANKNIFTY gained 571.35 points or 1.01% to close at 57,264.85 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.65%, 2.47% and 2.39% respectively. BSEMIDCAP was up 1.67% while BSESMALLCAP was up 0.63%. The top sectorial gainer was BSEAUTO which gained a massive 5.89% while the top loser was BSEPOWER, down 0.70%. Markets gained on four of the five trading sessions and lost on one session. The intraweek high on BSESENSEX and NIFTY were made at 78,272.25 points and 24,429.40 points, while the lows were made at 76517.85 points and 23,891.95 points. The lows were made on Monday while the highs were made on Friday, giving a possible direction and indication that there is more steam left in the markets in the coming week. 

The Indian Rupee gained Rs 1.19 or 1.23% to close at Rs 95.49 to the US Dollar. Dow Jones gained 537.78 points or 1.04% to close at 52,485.03 points. Dow gained on three of the five trading sessions and lost on two. The FED kept interest rates unchanged for the fifth consecutive time by a split 9-3 vote. The verdict indicates that the FED is certainly going to raise interest rates in the coming meetings and would be more likely than just once. Inflation would be the reason for the same. Markets fell very sharply post the announcement on Wednesday and lost 1,153 points. US 10 year bond yields are trading at levels of 4.718% after hitting a high of 4.745%. The rate is almost a percent higher than the FED interest rate.  

The week gone by had three main board listings and all of them happened on Thursday the 30th of July. The first of the lot was Indo-MIM limited which had issued shares at Rs 485. The share closed day one at Rs 741.80 and gained further on Friday to close at Rs 774, a gain of Rs 289 or 59.59%. 

The second to list was machinery manufacturer Lohia Corp from Kanpur who had issued shares at Rs 425. The share closed listing day at Rs 494.65 and gained further to close at Rs 534.40, a gain of Rs 109.40 or 25.74%. 

The third and final share to list was Xtranet Technologies Limited which had issued shares at Rs 127 and closed debut day at Rs 124.80. The share recovered marginally on Friday and closed at Rs 126.60, a loss of Rs 0.40 or 0.31%. 

Tuesday the 28th of July saw NIFTY July futures expire on a positive note. The series was running neck to neck and the bulls pulled it off. The series gain was 119.60 points or 0.50% to close at 23,985.35 points. The July series had begun at levels of 23,865.75 points. 

The week ahead sees many mainboard IPO’s opening and even more planning their road shows. The issue from Manipal Health Enterprises Limited closed on Friday and was subscribed 5.12 times overall. The issue from M V Electro systems Limited is currently open and would close on Monday the 3rd of august. The issue is subscribed 12.97 times. Similarly the issue from Juniper Green energy Limited would also close on Monday the 3rd of august and is currently subscribed 0.49 times. 

Upcoming issues in the week ahead include Ardee Industries, Technocraft Ventures Limited, Leap India Limited and Molbio Diagnostics Limited. 

There will be a flood of IPO’s in the month of August and it would be a time to pick and choose from issues galore.

Coming to the markets in the week ahead, it could be a make or break week. Over the previous week, markets have held there stead and made a good base from where there could be an upward move. The breakout point would be at levels of 24,600 points on NIFTY. Support at the immediate levels are at 24,000-24,100 points and further below at 23,800 around. On the upward side level of breakout is at 24,600 points. If we were to see that happen, markets could give another 200-300 points move and make a new base. For any such move we need geo-political stability and positive news as well. 

The strategy would be to go long and remain long with moving stop losses and refraining from large overnight positions as we all know that announcements from the US are driven on ‘self-trades’. One needs to be cautious in such situations. 

Trade cautiously.