The week gone by had all the festivities on account of Diwali and the beginning of trading for Samvat 2079. There was just ‘Muhurat’ trading of one hour on Monday followed by a holiday on Wednesday which had disrupted and broken the market momentum. However, at the end of it all, markets did gain with a good showing for the week and they were up on three of the four trading sessions. BSESNESEX gained 652.70 points or 1.10% to close at 59,959.85 points while NIFTY gained 210.50 points or 1.20% to close at 17,786.80 points. The broader market saw BSE100, BSE200 and BSE500 gain 1.17%, 1.12% and 1.05% respectively. BSEMIDCAP was up 0.98% and BSESMALLCAP was up 0.43%. 

The Indian Rupee gained 21 paisa or 0.25% to close at Rs 82.47. Dow Jones had a terrific week and was up a massive 1779.24 points or 5.72% to close at 32,861.80 points. It gained on all the five trading sessions with Wednesday being actually a flat day. The best of the week was reserved for Friday when it gained a massive 828 points. The impact of this rally on Friday is likely to be seen in our markets on Monday when we would see a gap up opening. 

October futures expired on a positive note and the series gained in the last week. The series ended with gains of 918.85 points or 5.46% at 17,336.95 points. 

FSN E-commerce, the company which is listed under the brand Nykaa, continues to face the wrath of investors ever since it announced an unexpected bonus issue of 5 shares for every one held. The share price has been under pressure ever since the announcement was made on 3rd of October. The share price post bonus announcement was Rs 1,304.90, and has now fallen to Rs 983.15. The fall is Rs 321.75 or 24.65%. The low was Rs 975.50 which is a new low for the share since listing. The company would be declaring results for the quarter on Tuesday the 1st of November and one cannot be sure about their quality. 

The primary market is seeing a sharp flurry in activity with companies wanting to beat the validity of results of the June quarter ending in a fortnight’s time. There is a spate of issues in the week ahead and the one following. The first of the block is DCX Systems Limited which is raising Rs 400 crs fresh and Rs 100 crs through an offer for sale. The company is into defence related activity primarily in the aerospace segment and is an Indian offset partner for Israeli companies amongst others. The issue opens on Monday the 31st of October and closes on Wednesday the 2nd of November. The price band is Rs 197-207. The EPS for the year ended March 22 was Rs 9.19. At this price the PE band is 21.44-22.52 times. Considering the huge shortfall in execution of pending offset contracts, the company has a huge future going forward. The business looks interesting and investment is warranted. 

The second company is Fusion Microfinance Limited which is tapping the markets with a fresh issue of Rs 600 crs and an offer for sale 136.95 lac shares. The issue opens on Tuesday the 1st of November and closes on Thursday the 3rd of November. The price band is Rs 350-368. The company has cleaned its books as far as provisions on NPA is concerned as of march 22 and has come with a clean slate to the markets. If one considers the EPS for March 22, it is a mere Rs 2.64 for the full year, while it is Rs 8.98 on a fully diluted basis for the quarter ended June 22. Considering that the quarterly numbers are annualised for simplicity’s sake we are talking of an EPS of Rs 35 to Rs 36 for the full year March 23. The EPS should be calculated on this basis. Another way to look at it is the price to book for the bank. The NAV for March 22 is Rs 161.67, which has improved to Rs 171.10 at the end of June quarter. The issue is priced at a price to book ratio of 2.27 based on March 22 numbers and 2.15 times June numbers. The company looks attractive and investment in the company should be considered. 

The third and final issue for the week is from Global Healthcare Limited which is tapping the capital markets with its fresh issue of Rs 600 crs and an offer for sale of 507.61 lac shares in a price band of Rs 319-336. The issue opens on Thursday the 3rd of November and closes on Monday the 7th of November. The company which uses the brand ‘Medanta’, operates five hospitals in the cities of Gurugram, Lucknow, Patna, Ranchi and Indore. It is in the process of setting up a hospital in Noida which would take another 24-30 months to be commissioned. The growth for the company would come from additional beds which are set up at the existing facilities. The company has compared itself with Apollo Hospitals, Max, Fortis and Narayana. In terms of revenues, it is smaller than all of these. The company has reported losses in the new hospitals that have been set up while the oldest and established one in Gurugram is the cash cow of the company. On a net basis the company reported an EPS of Rs 7.77 for the year ended March 2022. At this EPS, the PE band is 41.08 to 43.24 on a diluted basis. This compares favourably with Apollo and Max. Is similar to Narayana but is more expensive than Fortis. While the business is good and Dr Trehan, the founder, has a tremendous background, it appears that there is hardly anything on the table in the near term for investors. While in the long term, the turnaround in the four hospitals and utilisation of land available in Gurugram would impact the hospital positively, this needs to be put into action to bear fruit. Investors should look at the company post listing or after the September results are announced. 

Coming to the markets, we are well poised to touch the levels of 18050-18,150 on NIFTY and 61,000 on BSESENSEX. If these levels are crossed and sustained, we have further upside possible. Assuming these levels are crossed which may not happen this week as we have FED meeting for their interest rate hike considerations on Tuesday and Wednesday, we are in for sharp upsides. How the US markets would react is anybody’s guess. As far as a rally is concerned, we have already gained quite sharply. At best markets may consolidate or we may react small if all is well. If data and commentary is poor there could be a sharp correction as well. The market has very strong support in the region of 17,350-17,450 on NIFTY and 58,650-58,950 on BSESENSEX. This takes care of the previous top and also some more cushion on the downside.

The strategy would be to buy on any meaningful dips and sell on strong rallies. For some time now onwards, trade going forward, with a positive bias.

Diwali festivities have come to the market in anticipation of Diwali which happens on the following Monday. Markets gained on all five trading days of the week gone by with stellar gains on the first two days and then struggling to gain but still closing with positive gains at the end of the day. BSESENSEX gained 1,387.18 points or 2.39% to close at 59,307.15 points while NIFTY gained 390.60 points or 2.27% to close at 17,576.30 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.09%, 2.00% and 1.82% respectively. BSEMIDCAP was up 0.39% while BSESMALLCAP was up 0.15%. 

The Indian Rupee lost 33 paisa or 0.40% to close at Rs 82.68 to the US Dollar. Dow Jones had a great week and it appears all concerns about inflation and interest rates are behind them currently. Dow gained on the first two days of the week, lost small amounts on the next two days and ended the week with spectacular gains on Friday. For the week, Dow gained 1,447.73 points or 4.89% to close at 31,082.56 points. For the records, from the lows, Dow has gained roughly 2,400 points in six trading sessions. 

Markets saw decent results from the heavyweights ITC and Hindustan Lever. The banking sector was the start performer and the BSEBANKEX gained 4.18% during the week. Results from ICICI Bank, Axis Bank and Kotak Bank helped in the big rise. Reliance Industries profit for the second quarter was flat as compared in the quarter, a year ago. 

The previous week saw retail investors selling midcap and Smallcap stocks. This was of their holdings that they had built up over the last couple of months. They seem to be averse to the rise in the values of the market and probably believe that the same may not be sustainable. This kept the midcap and Smallcap indices under check and also an underperformer to the benchmark indices. 

While the new norms for subscription regarding banking of applications have been very successful, we have now seen a new trend emerging which needs to be nipped in the bud. Investors applying in the HNI category for IPOs on the last day seeing the level of subscription and having a change of mind or heart, make another application in the retail category. While making two applications in the same PAN is not permitted, the registrar simply cancels both applications and the investor gets an exit which he wanted. To curb this practice which would become a menace going forward, registrars should be told to add the retail application to the HNI application and the same be treated as one. The investor in any case has made two applications. This would ensure that in future he does not try to beat the system. This is very important and needs to be looked into on an urgent basis as the situation could become serious going forward. All malpractices replicate very fast. 

There were two issues which were listed last week and they had a decent showing. The first was Electronics Mart India Limited which had issued shares at Rs 59. The shares closed on listing day at Rs 84.45. During the week they rose further to touch a high of Rs 102.10, before profit taking saw the share surrender some of its gains and close at Rs 87.70, a gain of Rs 28.70 or 48.64%. 

The second share to list was from Tracxn Technologies Limited which had issued shares at Rs 80. On debut day the share closed at Rs 93.35. On Friday, it made a high of Rs 102.65, but closed lower than the previous day at Rs 91.35. The weekly gain was Rs 11.35 or 14.19%. 

Shares of Delhivery, a company which had listed in May 22, had a disastrous performance over the last two days. The company announced on Thursday what could be termed as advance performance indicators. These indicated that the growth that was being talked about would not happen. Post this announcement, over two days the share price fell from Rs 560.35 to Rs 386.55, a loss of Rs 173.80 or 31%. This is its lowest close while intraday the share had touched Rs 377.05. Something seems wrong with the way some of these new age companies perform and the market perception and expectation from them. 

The week ahead sees trading for the new Samvat 2078 being held on Monday in a special Muhurat session for 1 hour from 6.15pm to 7.15 pm. Markets would also remain closed on Wednesday. This leaves just 1 day and 1 hour before October futures expire on Thursday the 27th of October. Currently the October futures series has seen bulls enjoy the lead that they currently have. The series is up 758.20 points or 4.51% at 17,576.30 points. With a strong showing that Dow had on Friday, it appears that bulls will build on the current lead that they have in the series. 

Expect a gap up open in the Muhurat session and typical of such sessions, low volumes would be the order of the day. Tuesday would see people squaring up or rolling their positions to November series as Thursday could be very volatile. Tuesday should experience decent volumes. 

The market has very strong support in the region of 17,350-17,450 on NIFTY and 58,650-58,950 on BSESENSEX. This takes care of the previous top and also some more cushion on the downside. On the upside we have resistance around the 17,850-17,900 on NIFTY and 60,125-60,300 on BSESENSEX. Assuming this does get crossed in the three days plus one hour during the week ahead, the resistance is at 18,100 and 61,000 levels. 

The festive mood is here just in time for Diwali. Enjoy the atmosphere and the festivities even in the marketplace. India seems better placed than many of its peers. While we will continue to be guided by overseas cues, our outperformance will continue. 

Wishing all readers Happy Diwali and a prosperous Samvat 2078.