The calendar year 2022 has come to an end and it’s that time of the year to reflect on what happened during the year. BSESENSEX gained for the seventh year in a row and was up 2,587.22 points or 4.44% for the year at 60,840.74 points. NIFTY gained 751.25 points or 4.33% to close at 18,105.30 points. BANK NIFTY was a very important sector in the domestic markets and gained handsomely. It was up 7,504.75 points or 21.15% to close at 42,986.45 points. In comparison, Dow Jones lost 3,425.86 points or 9.43% to close at 32,912.44 points. NASDAQ was indeed very weak and lost 5,178.52 points or 33.10% to close at 10,466.48 points. Looking at what happened in the US, India is clearly an out performer. 

Coming to the week gone by, we saw markets rally and close the last week on a positive note. On the last day however, they gained at open but closed on selling pressure at the end and ended with losses. BSESENSEX gained 995.45 points or 1.66% to close at 60,840.74 points while NIFTY gained 298.50 points or 1.68% to close at 18,105.30 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.93%, 2.40% and 2.71% respectively. BSEMIDCAP gained 3.63% and BSESMALLCAP was up 6.14%. Markets gained on three of the five trading sessions during the week. The best performing sectoral index was BSEMETAL which gained 8.06% led by Tata Steel, Hindalco and Vedanta. 

The Indian Rupee gained 14 paisa or 0.17% to close at Rs 82.72 to the US Dollar. Dow Jones gained on three of the five trading sessions but ended with marginal losses for the week. Dow lost 56.68 points or 0.17% to close at 33,147.25 points. 

In primary market news there were two listings and one issue that closed for subscription during the week. The first to list was KFIN Technologies Limited which had tapped the markets with its offer for sale of Rs 1,500 crs at a price of Rs 366. The share which listed on Thursday had a discovered price of Rs 369, but it closed on listing day at Rs 364, a loss of Rs 2 or 0.54%. On Friday the share slipped and closed at Rs 344.55, a loss of Rs 21.45 or 5.86%. 

The second share to list was ELIN Electronics Limited which had tapped the markets with a fresh issue and an offer for sale at Rs 247. The discovered price of the share which listed on Friday was Rs 242.80. It closed on debut day at Rs 227.80, a loss of Rs 19.20 or 7.77%. 

The issue from Radiant Cash Management Services Limited which had tapped the markets with its fresh issue and offer for sale in a price band of Rs 94-99 struggled in getting subscribed. It was undersubscribed at the end of the period and was technically subscribed on the offer for sale portion being reduced from the original. The issue was subscribed 0.46 times overall. The QIB portion was subscribed 1.01 times, HNI portion was subscribed 0.66 times and Retail portion was subscribed 0.21 times. Overall, the issue was subscribed 0.53 times.

The primary markets have been under pressure over the last couple of months and subscription levels and performance of shares post listing is under pressure. Of the last nine issues to list, all are currently trading with losses. Further, all except one of these nine have listed and traded with discounts since day one. The one exception traded positive for the first two days but is now trading with losses. Clearly, it’s a wakeup call for the merchant bankers and promoters. 

SEBI, the regulator, has recently passed an order against the NSE Clearing Corporation and Indian Clearing Corporation in the matter of Karvy Stock Broking. The fines imposed were to the tune of Rs 25 lacs and Rs 50 lacs respectively. While action being taken by SEBI is appreciated, somewhere natural justice is not being done. The stock broking entity and the depository account have the responsibility of acting as a custodian of the client. When these funds have been diverted and misused it amounts to cheating of the highest order. The penalty for such action cannot be a few lacs. It should be in terms of being debarred from doing business for some period of time so that an example may be set on others, and such acts are prevented from happening in future.

With the listing of KFIN Technologies Limited on the exchange, there is a separate entity for the RTA activities and the erstwhile promoter is segregated from the business. This is an open letter for the chairperson of SEBI to look into the matter and take a call on this whole issue with equality and justice for betrayal of trust and suffering of patrons and clients of Karvy the broker and DP. 

Coming to the markets in the week ahead, we are precariously poised at levels which could be termed as dangerous. The failure of the markets to build on the rally during last week is cause for worry. Levels of 18,250-18,300 on NIFTY and 61,250-61,400 on BSESENSEX are key hurdles to be overcome and sustained for a couple of days in the short term. Immediate support lies at 17,750-17,800 and 59, 700-59,800. Assuming these get broken we have support around 17,500 and around 59,000. The markets would await action from FIIs or FPIs to pick up now that the year has ended. 

Trade cautiously as markets are in a tight spot and need to move up quickly if momentum is to be sustained. 

Markets in the week gone by opened on a positive note and were up on Monday. The optimism seemed to have then disappeared as we fell on each of the remaining four days of the week. On Friday, one failed to understand the colour of festivities associated with Christmas Red, which was there all over Dalal Street, but it was blood on the streets. Markets fell a massive 980 points on BSESENSEX and 320 points on NIFTY. Surprising was the fact that there was no indication of this kind of carnage anywhere else in the world. 

The previous week’s headline of ‘MAKE OR BREAK’ has come true and it appears that markets have chosen the second option of breaking. BSESENSEX lost 1,492.52 points or 2.43% to close at 59,845.29 points while NIFTY lost 462.20 points or 2.53% to close at 17,806.80 points. The broader markets saw BSE100, BSE200 and BSE500 lose 2.88%, 3.36% and 3.77% respectively. BSEMIDCAP lost 5.10% while BSESMALLCAP lost 7.67%. The carnage in midcap and small cap stocks was huge and many stocks have lost more than double digit for the week. If one looks at the share prices of some of the recent gainers which lost sharply, it would come as a shock. For example, some of the railway stocks. IRFC is down from a high of Rs 36.50 made on Wednesday 21st December to Rs 27.65 close on Friday. The loss Rs 8.85 or 24.24%. Similarly, RVNL fell from a high of Rs 75.60 to Rs 63.15 in the same time. The loss is Rs 12.45 or 16.45%. 

One normally finds that aggressive selling by FPIs is the cause of the fall in the markets. This time even that has not happened. The only plausible possibility is that stock has been distributed amongst small investors after huge volumes by smart players in the market. This is a possibility which could after a few days be confirmed. Recent changes in the market rules also ensure that the earlier form of easy margin funding has also stopped and that leading to margin calls would not be a cause for any further damage.

The Indian Rupee held its ground and gained 1 paisa or 0.01% to close at Rs 82.86 to the US Dollar. Dow Jones gained 283.47 points or 0.86% to close at 33,203.93 points. 

In primary market news, there were two issues which opened and closed for subscription during the week. A third, Radiant Cash Management Services Limited, opened on Friday and would close on Tuesday the 27th of December. Three issues listed during the week. 

The issue from KFIN Technologies Limited which had tapped the markets with its offer for sale of Rs 1,500 crs in a price band of Rs 347-366 was subscribed. The issue was subscribed overall 2.73 times. QIB book was subscribed 4.40 times, HNI portion was undersubscribed at 0.25 times and Retail portion was subscribed 1.40 times. There were 111,497 applications in the issue.

The issue from ELIN Electronics Limited had tapped the capital markets with its fresh issue for Rs 175 crs and an offer for sale of Rs 300 crs. The issue had opened on Tuesday the 20th of December and closed on Thursday the 22nd. The price band of the issue was Rs 234-247. The issue was overall subscribed 4.76 times with QIB portion subscribed 3.47 times, HNI portion subscribed 2.31 times and Retail portion subscribed 3.26 times. There were 2.39 lac applications. 

Of the three new listings, the first to list was Sula Vineyards Limited which had issued shares at Rs 357. The discovered price at the BSE was Rs 358 which was higher by Rs 1. By end of day one listing day, the share had fallen to Rs 331.15, a loss of Rs 25.85 or 7.24%. At the end of the week, the share slipped further to close at Rs 311.15, a loss of Rs 45.85 or 12.84%. 

The second share to list was Landmark Cars Limited which had issued shares at Rs 506. The share debuted at Rs 471.30, a loss of Rs 34.70 or 6.85%. By the end of the day which was also the close of the week, the share was down Rs 45.95 or 9.08%. 

The third share to list was Abans Holdings Limited which had issued shares at Rs 270. The share debuted at Rs 270 on BSE which was the issue price. At the end of the day the same closed at the lower circuit of Rs 216.05, a loss of Rs 43.95 or 19.98%. 

Very clearly IPOs continue to be priced with nothing left on the table for investors. This explains the falling interest and hence poor subscriptions being witnessed. Post listing, the consecutive poor listings over the last 6-8 issues is further proof of the over pricing. One hopes things improve in 2023 as the overall primary market has raised significantly poor amounts from the primary market in terms of overall amount as well as number of issues. This is in stark contrast to calendar year 2021 where the number of issues was significantly larger as well as the amount of money raised.

Radiant Cash Management Services Limited is tapping the capital markets with its issue which  opened on Friday the 23rd of December and would close on Tuesday the 27th of December. The issue consists of a fresh issue of Rs 60 crs and an offer for sale of 3,31,25,000 shares in a price band of Rs 94-99.

Radiant Cash Management Services Limited (Radiant) is an integrated cash logistics player with a leading presence in the retail cash management segment of the cash management services industry in India. Radiant is one of the largest players in this segment in terms of network locations or touch points served as on 31st March 22. The promoter of the company is an ex-serviceman, someone who served the Army and last rank held was Colonel. Even today the company employs roughly a fourth of its workforce from ex-servicemen. The key management or leadership team also consists of ex-servicemen. This ensures discipline, frugality and zero error. The company in terms of the cash lost during the course of business is virtually zero and reconciles its cash on a daily basis. 

Based on FY22 EPS of Rs 3.77, the PE band is 24.93-26.26. The EPS for the quarter April-June 22 is Rs 1.51. If one were to annualise the same, the EPS for FY23 based on first quarter annualised would be Rs 6.04. The PE band at these earnings would then be 15.56-16.39. The issue could be looked at considering the importance of cash collection in Tier2 to Tier4 towns in India.

The week ahead is the last week for the calendar year 2022. It would also see December futures expire on Thursday the 29th of December. At current levels, the December series is down 677.30 points or 3.66%. It’s a comfortable lead for the bears and with sentiment having taken a massive turn during last week, the bears not only have the edge, but would push the pedal. 

Covid has reared its head and the dragon land continues to baffle the world. There is a serious outbreak of cases and also deaths, but the iron curtain that exists does not allow correct information to flow. How serious is the variant this time and the possibility of it spreading is also unknown. At the moment it has dampened the mood no doubt and put brakes on any ensuing rally. 

Coming to the markets in the week ahead, very clearly with momentum lost and the trend having turned decisively, it would be a sell on any rallies. Fresh buying at current levels should be avoided. In terms of pullback rallies, it appears that levels of 60,700-60,850 on BSESENSEX and 18,050-18,100 would act as strong resistances. On the support side we have it at 58,900-59,000 on BSESENSEX and 17,500-17,550 on NIFTY. There would be some throwback rallies interspersed with falls, but very clearly the trend seems to have reversed for the time being. The fact that we made new lifetime highs on the very first day of the month and failed to build on it, shows the vulnerability. Repeated attempts to rise further met with failure. 

With little or no positive news flow expected till budget, it would be a tough 2-3 weeks for the market going forward. Trade cautiously.