It was a week with a negative bias and benchmark indices closed in the red. The BSESENSEX lost 245.16 points or 0.83% to close at 29,461.45 points. NIFTY lost 47.50 points or 0.52% to close at 9,150.80 points. BSEMIDCAP and BSESMALLCAP gained 0.83% and 1.36% respectively indicating that action in the smaller space continues.
Infosys declared its results and continued to signal that all is not well at the tech major. Its revenue guidance for the year 2017-18 is muted as it has mentioned that the same would be in the band of 6.5% – 8.5% in constant currency terms. The profit for the quarter is lower than the previous quarter. It has also announced its intent to return Rs 13,000 crs to shareholders by way of dividend and /or buyback of shares. The elevation of independent director Ravi Venkatesan as Co-Chairman is probably a step to ease the friction between the founders of the company and the present management. It would also be pertinent to note that Vishal Sikka has received 40% lower remuneration from his variable component on account of the performance of the company. No wonder that the share lost 3.86% for the day and 5.08% for the week.
Dow Jones lost 202.91 points or 0.98% to close at 20,453.25 points. The US exploded a bomb better known as ‘MOAB’ (mother of all bombs) in Afghanistan on a cave held by ISIS fighters. This bombing took place on Thursday evening after our markets had closed and US markets were trading. Friday was a global holiday and how markets would react to yet another conflict would be known only tomorrow. The North Korea front is heating up and the fact that Russia doesn’t like America is a well-known fact. The only thing clear is that markets don’t like conflict and there would be some fallout on this account.
Shares of CL Educate are currently trading in the trade to trade category as the issue size was less than Rs 250 crs. The company had through a simultaneous fresh issue and offer for sale of shares raised Rs 238.95 crs in a price band of Rs 500-502. The total size was 47.60 lakh shares. The volume in the last nine days has been quite low and a cumulative volume traded is 9.81 lakh shares which is 20.61% of the IPO size and 29.45% if one considers the non-anchor portion. Considering the fact that the share would trade under normal market, the share is likely to see huge volatility from Tuesday and it would be interesting to see where the share goes from here. Clearly the education sector is under pressure and this company did not help matters by making it an overvalued offering.
Readers would remember that when issues are fairly priced and leave something on the table they receive overwhelming response. Names which come to mind are BSE, Avenue Super Marts and Shankara Building Products Limited. With a strong pipeline of IPO’s over the next couple of quarters one hopes that merchant bankers and promoters take note of this and price appropriately.
Markets are looking tired and need to consolidate at these levels. Some correction in terms of time and value is on the cards. Await till the same is over.
