Markets continue to remain in a range and seem to be discounting good and bad news as they come. The broad range of 11800-12200 on the NIFTY and 40000-41000 on the BSESENSEX seem to be keeping the indices under control. BSESENSEX lost 348.66 points or 0.85% to close at 40,445.15 points for the week while NIFTY lost 134.55 points or 1.12% to close at 11,921.50 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.39%, 1.44% and 1.47% respectively. BSEMIDCAP lost 2.77% while BSESMALLCAP lost 1.63%. The losses for the week happened on Friday, as till Thursday markets were flat.
RBI at its bi-monthly monetary policy review meet decided to hold rates and there were no changes proposed. The decision to keep them unchanged was unanimous and all six members voted to do so. Markets were fairly stable post the announcement and closed with minor losses on Thursday. What spooked the markets on Friday was the feeling that there may not be any more rate cut in the last review meet of the financial year in February 2020.
Dow Jones lost a tad, losing 36.35 points or 0.13% to close at 28,015.06 points. The Indian Rupee gained 55 paisa or 0.77% to close at 71.19 to the US dollar.
The meeting to finalise and approve the details of a preferential allotment of shares in Yes bank of 2 billion dollars is to be held at the reconvened board meeting on Tuesday 10th October. Questions continue to be raised on the credentials of the investor who is expected to invest 60% of this amount or 1.2 billion dollars. A corporate governance issue also crops up as to what happens when a person signs the term sheet, is he and the other related parties prohibited from participating in the derivatives and equity segment of the concerned stock? Are they permitted to have positions based on the information made available to probable investors?
This could be a debatable point and would also evolve over time. Shares of Yes Bank lost Rs 12.30 or 18.01% to close at Rs 56.
Counting for the 15 seats in which byelections were held in Karnataka will be held today. The fate of the BJP government hinges on these results as they need to win a minimum of six seats to continue to have a majority in the 224-house assembly. All these seats were earlier held by Congress (12) and JDS (3). Polling continues in Jharkhand where the three remaining legs of polling will take place on 12th, 16th and 20th of December. Counting of polls will take place on 23rd of December.
A lot is being made out of the slowdown in the Indian economy. One needs to read the headlines coming from countries which are global leaders to understand what is happening. Britain is facing the most prolonged investment slump in 17 years. German economy has slipped into negative growth. French economy has taken a hit as key industries see growth plummet. China slowdown has depended with growth in industrial production at its lowest in 17.5 years. Even a trading country like Singapore has not been spared and is heading for recession. It cut its forecast for GDP growth in 2019 to between 0% to 1% from the previous projection of 1.5% to 2.5%.
The reason why some of these facts have been mentioned is not to say that India alone is affected or we are better off but just to give a perspective. Things are bad and it is virtually across the globe. Effort should be made to improve things not criticize and do backseat driving.
In primary market news the IPO from Ujjivan Small Finance Bank was subscribed 170.29 times with QIB portion subscribed 113.80 times, HNI portion a staggering 486.14 times, Retail portion 50.46 times and Shareholder category 4.26 times. There were roughly 16.47 lac applications. The issue of Rs 750 crs garnered subscription of over Rs 76,000 crs. The issue would be listing in the latter half of this week.
The IPO from CSB Bank listed and gained Rs 105.10 or 53.90% over its issue price of Rs 195. The traded volumes were high and delivery volumes were unheard of. The entire IPO size was delivered on day one. Of course, there were some shares which were not locked in and these were sold as well looking at the sharp gains made on listing day. The share lost ground on subsequent days and closed at Rs 274.25 for the week, a gain of 40.64%.
The IPO from Saudi Aramco has happened with the company issuing 3 billion shares at 32 Riyals or 8.53 US Dollars. This values the company at 1.7 trillion Dollars and creates a new record of primary issuances overtaking Alibaba. The share would begin trading from 11th December and is expected to trade higher.
Markets would continue to witness two sided movements going forward as well. The good part is that while FPI’s were sellers on two days in the previous week, they have also been buyers on other days. This clearly shows that their interest in the Indian market is there. They are likely to end calendar year 2019 as big buyers.
Trade with a bullish mindset and use sharp dips to buy in the marketplace. At the same time in there is euphoria, it should be used to sell into the market. Trade cautiously without getting carried away. FPI’s going on vacation is less than a fortnight away.
