The week gone by saw losses on two of the five trading days. Markets ended with weekly losses with the BSESENSEX losing 1.11% and NIFTY down 1.27%. Even on the two days that markets ended n the red they began with gains and then surrendered them and went into the negative, call it profit booking or resistance, it is difficult to coin the exact word.
In primary market news there were two listings during the week. Reliance Nippon Life listed with gains of over 12%, yet leveraged investors lost money. The second listing was from Mahindra Logistics which had to be managed to cloe above the issue price of Rs 429, It closed at Rs 429.15 on the BSE, a gain of a mere 0.03%. The close on the NSE was a little higher at Rs 429.50. The significance of the higher than issue price close on listing day is for merchant bankers whose track record gets impacted.
Two issues were open for subscription as well. The first was Khadim which was just about subscribed at 1.90 times. The QIB portion was subscribed 2.44 times and Retail 2.33 times while HNI was undersubscribed 0.18 times. The second issue open for subscription was the mega issue from HDFC Standard Life Insurance which was subscribed 4.90 times and received excellent institutional support. The QIB portion was subscribed 16.60 times while HNI was subscribed 2.29 times. Retail and shareholder quota remained undersubscribed. The issue which was to raise Rs 8,695 crs garnered interest of Rs 33,570 crs. Clearly the name HDFC did the trick and the fact that investors in the two listed entities HDFC and HDFC Bank have made huge returns in these two stocks.
The highest fund raising was in the year 2007 when about Rs 35,000 crs were raised from the primary market. This year so far about Rs 65,000 crs have been raised and of this about Rs 45,000 is by the insurance companies. Till last year the insurance sector was a sunrise sector and people were waiting for their issues to come. With this flood of issues not only is the appetite killed there seems to be negativity about the valuations. Currently three of the five issues are listed and two of them are trading at a discount. The third is trading at a premium of 3%. A fourth would list today and the last of the lot towards the end of the week. It can be said that the timing of these issues could have been better and more spaced out rather than the bunch in which they came. Probably the promoters and the merchant bankers may be aware of developments which we the general public are not known to.
Markets are in no man’s land and unsure which way they want to go. Why the upward trend is intact it seems to be running out of momentum as the results do not back the valuations. It makes sense tyo stay light and play by the ear on a daily basis.
