Markets went into correction mode after touching new highs last week. They lost ground for the first three days of the week and then recovered some of the lost ground but remained negative for the week. The BSESENSEX lost 227.59 points or 0.77% to close at 29,421.40 points while NIFTY lost 52.05 points to close at 9,108 points.
There was plenty of news flow during the week. First of the block was the mega deal announced by Vodafone and Idea Cellular which would merge. The idea of this merger would be take on Reliance Jio which is disrupting the telecom space. Shares of Idea Cellular lost significant ground and were down Rs 17.05 or 15.8% post the announcement. Details of the price at which the shares would be swapped have not been announced. It needs to be kept in mind that while Idea is listed, Vodafone is not. With this deal happening probably the listing of Vodafone through an IPO may not be required as it could choose the indirect route through Idea.
Hindustan Zinc announced a special interim dividend of Rs 27.50 or 1375%. This would make the company which has announced and paid the highest dividend in absolute terms as well.
SEBI has finally pronounced judgement on the long pending insider trading case of Reliance Petroleum. SEBI has held Reliance and its associated companies as having indulged in insider trading and asked them to disgorge Rs 447 crs of profits and also pay interest for about nine and a half years from 29th November 2007 to date at 12% per annum. The interest amount would be bigger than the principle. They have also been debarred from trading in equity derivatives of any kind. What is surprising and intriguing is the timing of the judgement. It has happened in less than a month after the new SEBI chief has taken over. Probably the outgoing one preferred to keep on delaying this case and did so even through his extension. One wonders when justice would be done in a quicker time frame in this country. Over nine years is too long a time and this is not the end of the case as Reliance has the right to got to SAT.
Futures expiry for March happens on Thursday the 30th of March. The current value of NIFTY is higher than February by 168.50 points or 1.88%. This is clearly an advantage for bulls and they should be able to increase the lead into expiry and press home the advantage. This would also end trading for the financial year as well.
There was plenty of action in the primary market with two issues opening and closing and one listing. The listing was of the mega issue Avenue Supermarts Limited which raised Rs 1,870 crs and was oversubscribed a massive 104.59 times. The listing happened at a very well attended ceremony at the BSE on Tuesday the 21st of March. Shares were issued at Rs 299 and the issue closed at Rs 640.75 on listing day, a gain of Rs 341.75 or 114.29%. The shares consolidated thereafter and closed the week at Rs 616, a gain of Rs 317 or 106.02%. It was a huge success and has revived retail interest in the primary market with the issue receiving over 18 lakh applications, a new record.
The first issue was CL Educate which opened on Monday the 20th of March and closed on Wednesday the 22nd of March. The issue manged to get subscribed. The issue was subscribed 1.90 times with QIB portion subscribed 3.65 times, HNI undersubscribed at 0.21 times and Retail 1.63 times. Clearly the sector and the valuations were not liked by investors and hence the poor response.
The second issue was from Shankara Building Products Limited which was very well received. The issue opened on Wednesday the 22nd of March and closed on Friday the 24th of March. The issue was oversubscribed 41.88 times. The QIB portion was subscribed 51.62 times, HNI 90.68 times and Retail 15.35 times. There were 10.7 lakh applications received in all. This clearly explains that there is appetite for new paper where issues are aptly priced leaving something on the table. Investors have become savvy and are learning much faster than BRLM’s and Promoters.
Markets would be volatile in the coming week and would make one last attempt to break the previous highs made post-election results being declared. Hold your horses before re-entering the markets.
