Markets behaved on expected lines and fell on the first four trading days with a sell-off on expiry day. They recovered on Friday the first day of the new futures series which is of five weeks duration. BSESENSEX lost 1,457.16 points or 3.75% to close at 37,388.66 points while NIFTY lost 454.70 points or 3.95% to close at 11,050.25 points. The broader markets saw BSE100, BSE200 and BSE 500 lose 3.98%, 4.14% and 4.24% respectively. BSEMIDCAP lost 4.73% while BSESMALLCAP lost 5.26%. There was panic across the board on Thursday and it was selling by FII’s and liquidation by momentum traders which led to the mayhem. The recovery on Friday was equally sharp and about a third of the losses of four days have been recovered.
The Indian Rupee lost 17 paisa or 0.23% to close at Rs 73.61 to the US Dollar. After a volatile week, Dow Jones closed with losses of 520.46 points or 1.88% at 27657.42 points.
September series expired with losses of 753.70 points, or 6.52% at 10,805.55 points. This was the lowest closing of NIFTY during the month. On an intra-day basis, the NIFTY on expiry day had touched a low of 10,790.20 points while the low on the BSESENSEX was 36,495.98 points.
The week gone by was about the primary market with three issues opening and closing for subscription and one new listing. Shares of Route Mobile made their debut on Monday and closed at Rs 651.10, a gain of Rs 301.10 or 86.03%. Shares were issued at Rs 350. The striking feature of the day’s trading was the delivery percentage of 97.74% of the non-anchor portion. This effectively means that almost everybody who got allotment of shares, sold on day one. 25% of these shares were bought by two institutional investors and this saw the share gaining further ground to close at Rs 938.60, a gain of Rs 168.17%.
Computer Age Management Services Limited which had tapped the capital markets with its offer for sale saw subscription of 46.99 times. The QIB portion was subscribed 73.18 times, HNI portion subscribed 111.85 times and Retail portion subscribed 46.99 times. The price band was Rs 1229-1230. Shares would list on 1st of October.
The second issue was from Chemcon Speciality Chemicals Limited and shares were issued in a price band of Rs 338-340. The issue was subscribed 149.33 times overall. QIB portion was subscribed 113.54 times, HNI portion 449.14 times while Retail portion was subscribed 41.21 times. This issue would list on Thursday the 1st of October.
The third issue was from Angel Broking Limited and was subscribed 3.94 times overall. Shares were issued in a price band of Rs 305-306. QIB portion was subscribed 5.74 times, HNI portion undersubscribed at 0.69 times and Retail portion subscribed 4.31 times. This issue would list on Monday 5th October.
There are three issues opening next week on Tuesday the 29th of September and closing on Thursday the 1st of October. The first issue is from Mazagon Dock Shipbuilders Limited which is issuing shares in a price band of Rs 135-145. The issue is an offer for sale from the government of India for 3,05,99,017 equity shares. Being a government offer, there would be no anchor allocation. The EPS for the period ended March 2020 was Rs 21.36 and the PE multiple is 6.32 to 6.79. Mazagon Dock is into warships and submarine building and is the only shipyard in India with submarine making capability. There are two other defence PSU listed shipyard companies namely, Garden Reach Shipbuilders and Cochin Shipyard. The issue is very attractively priced and offers ample scope for appreciation. However, allotment would be only by lottery.
The second issue is from UTI Asset Management Company Limited which is through an offer for sale of 3,89,87,081 shares by NSE. The price band is Rs 552.-554. The company had earned an EPS of Rs 21.53 for the year ended March 2020. The PE multiple based on March 2020 numbers is 25.64-25.73. The net asset value or NAV is Rs 212.88 as on 31st March 2020. There are two listed peers for the company, HDFC AMC and Nippon Life India Asset Management Limited. Compared to the peers, the issue is reasonably priced.
The third issue is from Likhitha Infrastructure Limited which is raising capital through a fresh issue of 51 lac shares in a price band of Rs 117-120. The EPS for the year ended March 2020 was Rs 13.59. The PE based on March 2020 is 8.61-8.83. The company is into the business of laying city gas distribution pipes and also product pipeline on a cross country basis. The company has an order book of over Rs 662 crs as of July 2020 and this would be executed over the next 24-30 months. Revenue for the year ended March 2020 was Rs 162 crs. The company gets pipes as a free item for installation from the customer, hence the revenue looks lower than the word ‘infrastructure player’ suggests. Looks an interesting company but the size of the issue and the simultaneous issues from three companies could act as a drag.
Covid-19 saw the world have 333,04,666 patients, 10,02,389 deaths and 246,34,298 patients recover. In India we had 60,73,348 patients, 95,574 deaths and 50,13,367 people recovering. Compared to the previous week, the world saw 20,65,078 new patients, 37,324 deaths and 18,00,775 patients recovering. In India we saw 5,85,768 new patients, 7,665 deaths and 6,16,968 patients recovering. This is the first time that the number of patients recovering is higher than new patients.
Coming to the markets, we saw the anticipated correction pan out and the price damage that it led to. We are not yet out of the woods and it would be fair to assume that after a continuation of the current one-day old rally which could last for a further day or two, expect the correction downwards to continue. While lows made on Thursday of 36,495 on BSESENSEX and 10,790 on NIFTY would act as immediate supports, the breaking of these levels could bring a sharper and swifter correction. Use rallies to sell and sharp dips to buy. Refrain from having overnight positions. The week has a trading holiday on Friday and that would bring a sharp reduction in positions on Thursday closing as we have a three-day holiday thereafter. The two new listings on Thursday would keep markets buoyant and engrossed on the last day of the week. Trade cautiously.
My you tube links for IPO analysis are enclosed.
Mazagaon Dock Shipbuilders Limited – https://www.youtube.com/watch?v=T2n-0OzrmPs
UTI Asset Management Limited – https://www.youtube.com/watch?v=eqdv8YEK0sE
Likhitha Infrastructure Limited – https://www.youtube.com/watch?v=_PTAfA-Zux4
