It was a tough week at the bourses and the feeble recovery that markets tried to make just did not materialise. BSESENSEX lost 579.46 points or 1.78% to close at 32,596.54 points. NIFTY lost 197.10 points or 1.97% to close at 9,998.05 points. Dow Jones was at the receiving end of the trade wars which have begun and sank 1,413.31 points or 6.01% to close at 23,533.20 points.
What is important to note is that the tops were made in India and the US on the same day, Monday the 29th of January 2018. Budget day was later on 1st February. Markets have been on a downward trajectory since then. While BSESENSEX and NIFTY have lost 11.80% and 11.74% from their highs of 29th January while Dow has lost 13.10% from the same date. Not sure whether it is concerns of US or LTCG as markets are global and tend to follow each other. Also, the difference in LTCG is choosing 12 months lock in to save 5% or being free and paying the normal 15% against the concessional 10%.
The US FED has raised interest rates by 25 basis points and indicated that 3 to 4 more could be on their way in the remaining nine months of the calendar year 2018.
Primary markets saw six issues open during the week. The next issue was from auto component makes Sandhar Technologies Limited which was subscribed 6.19 times. QIB portion was subscribed 14.49 times, HNI 6.39 times and Retail 1.42 times. Special alloy maker from the PSU, Mishra Dhatu Nigam Limited was subscribed 1.21 times with QIB portion subscribed 1.96 times. The others were undersubscribed at HNI 0.12 times, Retail 0.72 times and Employee 0.26 times. The final issue was from real estate player Karda Constructions from Nasik in Maharashtra. The issue was subscribed 2.54 times with QIB subscribed 1.55 times, HNI portion subscribed 3.44 times and Retail 2.01 times.
The issue from Bharat Dynamics Limited last Friday. Shares were issued at Rs 428 with a discount of Rs 10 to retail investors and eligible employees. After a discovered price of Rs 360 and Rs 370 on the BSE and NSE respectively, the share closed at Rs 390.70 and Rs 389.80, closing with losses of 8.71% and 8.93% respectively. While the secondary market took a beating on Friday, the poor volumes indicate that there could be further weakness ahead.
The issue from ICICI Securities is currently on and would close on Monday the 26th of March.
The last issue in this March madness opens on Monday the 26th of March and closes on Wednesday the 28th of March. The offer for sale from Lemon Tree Hotels Limited is for 9,45,00,053 shares in a price band of Rs 54 to Rs 56. The company has made a net profit after tax on a consolidated basis only in the nine-month period ended December 2017. The price earnings multiple based on standalone results for year ended March 2017 is between 771.43 to 800 times its earnings per share of Rs 0.07. If one were to consider the book value or NAV it is at Rs 15.66 for December 2017 which values the company at 3.57 times. Indian Hotels is available at a price to book of 3.70 times and is a company having a track record of god alone knows how many decades. Clearly the companies are not comparable and valuations such that there is nothing left on the table for the investor.
A strange development has happened with a SME which was IPO bound, Deccan Healthcare. It had a press conference on Friday the 23rd of March for the issue which was to open on Wednesday the 28th of March and that same evening it withdrew the RHP. Seems strange and one wonders whether it has anything to do with the poor response of issues on listing these days. It could also be the flirting of investors or honeymoon period of HNI’s and SME may have got over.
March Futures expire on Wednesday 28th March. The current value of NIFTY futures is lower by 384.65 points or 3.85%, giving bears the upper hand. With three days to expiry and year end, it is difficult to imagine that bulls could stage a turn around. Markets have a trading holiday on Thursday and Friday in the coming week. It therefore makes sense to look for buying opportunities.
