It was an eventful week which went by at the bourses. There was action, drama and also an unfortunate incident where the promoter of a listed entity gave up on life and his business. Markets lost ground on three of the five days and gained on remaining two days with Friday being a classical see-saw battle between the bulls and the bears. BSESENSEX lost 764.57 points or 2.02% to close at 37,118.22 points. NIFTY lost 286.95 points or 2.54% to close at 10,997.35 points. The low on the BSESENSEX was 36,607 points while it was 10,848 on NIFTY. The other indices saw the BSE100, BSE200 and BSE500 lose 2.52%, 2.53% and 2.67% respectively. BSEMIDCAP was down 2.23% while BSESMALLCAP was down 4.32%.
The India Rupee lost 68 paisa or 0.99% to close at Rs 69.58. In global news, Dow Jones lost 707.44 points or 2.60% to close at 26,485.01 points. This happened even after the FED cut interest rates by 25 basis points to make the band 2-2.25%. This cut was after 11 years. Markets wanted the cut in the first place and after it happened failed to understand how to interpret the same. It’s a classic case of Oliver Twist who wanted more.
FPI’s have been big sellers and have sold a little over Rs 20,000 crs in the month of July. There was news in the market on Friday that the PMO is looking into the issue and there may be some changes in the surcharge on the superrich trusts concerned. This helped to soothe nerves even though they were sellers of Rs 2,888 crs on Friday. In case there is some rethink and announcement on the same. There could be a strong rally in the offing.
Shares of Coffee Day and Sical Logistics hit the lower circuit on all four days after the disappearance of the promoter. Coffee Day shares lost Rs 94.60 or 48.64% to close at Rs 99.90, while Sical Logistics lost Rs 44.10 or 48.28% to close at Rs 47.25. Shares of both the companies were down the maximum permissible 20% on the first two days and then 10% on the next two. Starting Monday, they would be permitted a 5% movement in either direction. The famous tag line of CCD ‘A lot can happen over Coffee’ could be changed tongue in cheek to ‘A lot has happened over Coffee’. PE Investors have been at the receiving end ever after the letter surfaced on Tuesday morning. The truth may or may not be ever known but it has stirred a hornet’s nest. There are political ramifications, debt issues, coffee prices being at a 14-year low, money laundering issues and many more. Whether the truth will ever emerge? God alone knows.
Over the weekend one has been hearing rumours on the trifurcation of J&K and automatic cancellation of article 35A and 370. There has been heated exchange of fire on the LOC as well and the Amarnath yatra called off. The situation is tense and people expect some big announcements in the coming days.
An update to the situation in Kashmir is the introduction of section 144 and the imposition of curfew in the valley. Further former Chief Ministers Omar Abdullah and Mehbooba Mufti are not allowed to move out of their houses. The Union Cabinet is to meet at 9.30 am this morning.
The issue from Affle (India) Limited which had opened on Monday 29th July and closed on Wednesday the 31st of July was subscribed 86.49 times. The QIB portion was subscribed 55.31 times, HNI 198.69 times and Retail portion 1096 times.
RBI meets this week for its monetary policy review meet on Wednesday the 7th of August where the consensus is that they would cut rates by 25 basis points for sure. Having changed the norm of 25 basis points the cut could be steeper. While 50 basis points in the middle of the monsoon may be a little steep, expect a change from convention and a little more than 25 but less than 50.
Two more issues open for subscription this week in the primary market. The first is from Spandana Sphoorty Financial Limited, a micro finance company which is tapping the capital markets with its fresh issue of Rs 400 crs and an offer for sale of 93.56 lac shares. The issue opens on Monday the 5th of August and closes on Wednesday the 7th of August. The company was admitted to CDR after the A P crisis in 2010 and successfully exited the same. It is now promoted by the original promoter Padmaja Gangireddy and corporate promoter Kanchenjunga Limited. The shares are being offered in a price band of Rs 853-856 which is a price earnings multiple of 15.96-15.99 times based on consolidated earnings per share of Rs 53.35 for the year ended March 2019. The issue looks interesting and, in my opinion, maybe compared with Credit Access. The promoter has to be respected for her fight back and bringing the company back to this level after the A P crisis.
The second issue is from Sterling Wilson Solar Limited which is an EPC player in solar. The company is tapping the capital markets with its offer for sale of Rs 3,150 crs in a price band of Rs 775-780. The issue opens of Tuesday the 6th of August and closes on Thursday the 8th of August. The consolidated EPS is Rs 39.85 for the year ended March 2019 and the price earnings multiple is between 19.45-19.57. The company has completed the world’s largest single location plant in Abu Dhabi (UAE) of 1,177 MW. The future is solar and the way costs have come down and at the same time efficiencies on account of yield gone up, make this the future of energy. Incidentally this would be the first ever primary issue from the house of Shapoorji Pallonji in 150 years. The anchor book would be a key to the IPO’s success.
The week ahead will be driven by hope and expectation on the RBI front, FPI change in taxation and political front concerning J&K. Markets will be volatile and each of this news has the potential to turn the markets on its head. Trade cautiously.
