Trading in the calendar year began on a positive note with markets gaining on the first two trading sessions. They lost ground on the next three sessions with Friday witnessing a sharp sell-off. BSESENSEX ended the week with losses of 940.37 points or 1.55% to close at 59,900.37 points while NIFTY lost 245.85 points or 1.36% to close at 17,859.45 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.32%, 1.25% and 1.17% respectively. BSEMIDCAP lost 0.58% while BSESMALLCAP lost 0.50%. 

The India Rupee remained unchanged at Rs 82.72 to the US Dollar. Dow Jones began the new year on a negative note and lost on the first trading day. It then gained, lost and had a sharp rally on Friday, gaining a massive 700 points. The week ended with gains of 483.36 points or 1.46% at 33,630.61 points. 

There was one listing of a primary market issue from Radiant Cash Management Services Limited during the week. This issue had a poor response during subscription and the size of issue was reduced. The fresh issue which was for Rs 60 crs was reduced to Rs 54 crs, while the offer for sale of 331.25 lac shares was reduced to 212.22 lac shares. Further, even though the anchors were allotted shares at the top end of the price band of Rs 99, the remaining investors were allotted at the lower end of the price band of Rs 94. Merchant bankers were also allotted shares as part of their underwriting arrangement. 

The share debuted on the bourses on Wednesday at Rs 99.30, a gain of Rs 5.30 or 5.63%. They closed even higher at Rs 104.70, a gain of Rs 10.70 or 11.38%. At the end of the week shares closed at Rs 107.95, a gain of Rs 13.95 or 14.84%. The better performance of the share post listing is to do with the lower IPO size and it becoming imperative for the merchant bankers to justify their pricing and valuation for the company. 

The IPO market has taken a break temporarily and is likely to become active after the celebration of the India festival, “SANKRANT” also popular for kite flying on 15th of January. One should see a sudden rush of IPOs post this day into the week ending just before the Union Budget is presented on Wednesday, the 1st of February. Parliament session would begin a day earlier on the 31st of January. 

The week ahead would see a spate of results from the IT pack with TCS declaring results on Monday the 9th of January, HCL Tech and Infosys on Thursday the 12th of January and Wipro on Friday the 13th of January. This would give a good indication of what’s happening in the IT space with cost pressures or pricing pressures and new order wins. 

During the course of the last couple weeks of trading, the market seems to be making lower tops which is a bearish signal by itself. If one recalls, the lifetime highs were made on the 1st of December 2022. These were at levels of 63,583 on BSESENSEX and 18,887 on NIFTY. The next two lower tops were made on 14th December at 62,835 and 18,632 points respectively. The third and final one was made last week on 3rd January at 61,343 and 18,265 points. It is therefore imminent that if this bearish pattern is to be negated, we need to cross these levels at the very outset. 

Monday would see our markets rising sharply on the back of positive news flow from the US as far as job data and possibility of interest rate hike not being as quick as anticipated happening. At the same time, one must remember that FPI’s have been sellers over the last 11 consecutive days. Would they use the buoyancy on Monday to press further sales or turn positive? Not sure. 

Coming to the markets in the week ahead, as already mentioned they would open positive on Monday. How much and how far this rally would go is debatable. For the ensuing rally to be sustainable and meaningful, markets need to cross the first hurdle of the previous top of 61,343 and 18,265 and sustain them. Any failure to do so would result in further pressure as we would have made yet another lower top. On the support side, strong support does exist at levels of 59,650-59,750 and 17,770-17,800 levels. Any violation of these levels could lead to a further fall of 0.5% to 1% which could be a swift one. My gut feel for the moment is that currently neither the breakout or the breakdown looks likely in the coming week. The strategy should be to sell on rallies and keep a sharp lookout on US markets for news flow. Finally budget expectations could start being talked about in another ten days’ time when the present rally or move is over. 

Trade cautiously.

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.