Markets were open for four trading sessions in the previous week as there was a trading holiday on Monday. They were a little volatile but managed to close with small gains. There has been sector rotation with banking being in the forefront on Wednesday led by sugar stocks and then fertilizer and finally railway stocks. What could be a cause of concern going forward is the volumes in the fertilizer stocks when they gained sharply. BSESENSEX gained on three of the four sessions while it lost on one. NIFTY on the other hand gained on two and lost on two sessions. At the end of the four-day week, BSESENSEX gained 217.13 points or 0.28% to close at 77,209.90 points while NIFTY gained 35.50 points or 0.15% to close at 23,501.10 points. The broader markets saw BSE100 and BSE200 lose 0.04% and 0.14% respectively while BSE500 gained 0.04%. BSEMIDCAP was down 0.20% while BSESMALLCAP was up 1.44%. The pace at which the BSESMALLCAP and BSEMIDCAP indices have risen is a cause for concern and yet another fund house has raised valuation concerns in these segments.  

The Indian Rupee gained 3 paisa or 0.04% to close at Rs 83.53 to the US Dollar. Dow Jones gained on all four trading sessions of the week and gained 561.17 points or 1.45% to close at 39,150.33 points. 

In primary market news, we had one listing, two issues opening and closing for subscription while yet another issue had opened and would close in the following week. Two new issues would open and close in the coming week. 

The issue from Le Travenues Technology Limited who had issued shares at Rs 93 debuted on Tuesday, the 18th of June. Shares closed day one at Rs 161.99, a gain of Rs 68.99 or 74.88%. By weekend, the share gained further and closed at Rs 169.18, a gain of Rs 76.18 or 81.91%. 

The issue from Dee Development Engineers Limited who had issued shares in a price band of Rs 193-203 received excellent response and was oversubscribed 102.32 times. The QIB portion was subscribed 206.54 times, the HNI portion subscribed 148.99 times and the Retail portion subscribed 23.21 times. There were 20.61 lakh applications in all. 

The second issue was from Akme Fintrade (India) Limited which had issued shares in a price band of Rs 114-120. The issue was subscribed overall 54.24 times with QIB portion subscribed 28.12 times, HNI portion subscribed 129.79 times and Retail portion subscribed 44.14 times. There were 12.07 lakh applications. The QIB portion response was comparatively muted if one looks at other issues and even the HNI response in this issue. This was probably because the company has higher NPA’s and is in a competitive landscape environment in the NBFC space. 

The third issue was from Stanley Lifestyles Limited which opened on Friday and would close on Tuesday the issue was subscribed 1.44 times on the first day. The price band is Rs 351-369. 

The week ahead sees the issue from Allied Blenders and Distillers Limited open on Tuesday the 25th of June and close on Thursday the 27th of June. The issue consists of a fresh issue of Rs 1,000 crores and an offer for sale of Rs 500 crores in a price band of Rs 267-281. The company has a distillery in the state of Telangana and 32 bottling plants across the country. Its brand ‘OFFICERS CHOICE’ has been the world’s largest selling whisky by volume during 2016-2019. 

The company has been under stress and is raising money through the IPO to retire debt to the extent of Rs 720 crores. Further, prior to going public, the promoter has rationalized the board and separated ownership and management. The new board is entirely professional and would entail a saving of Rupees 93 crores in terms of compensation to promoters going forward. The repayment of interest and this compensation would entail a total saving of over rupees 200 crores in the financial year ending March 25. This would change the financials of the company which has just about been positive. Considering the infrastructure, prospects post rationalization and improvement in margins, it appears an investment which is warranted considering rising demand, socio-economic acceptance of liquor and growing aspirations.  

The second issue is from Vraj Iron and Steel Limited which is tapping the capital markets with its fresh issue of Rupees 171 crores in a price band of Rs 195-207. The issue opens on Wednesday the 26th of June and closes on Friday the 28th of June. The company manufactures M S Billets and TMT bars and uses the sponge iron route for doing so. It is located in Chhattisgarh and has its plants at Raipur and Bilaspur. To better use the flue gas, it has a waste recovery plant and generates power which helps in reduction of cost. The object of the issue is to raise money for expansion of sponge iron capacity and MS Billets at Bilaspur and repayment of loan taken from bank for funding this project in the interim. 

The issue is attractively priced and offers scope for appreciation in the medium term. There could also be listing gains looking at the market mood. 

The week ahead sees June futures expire on Thursday the 27th June. The current value of June series at 23,501.10 points is 1,012.45 points or 4.50% higher than the start of the series. Bulls are very well placed currently and have the upper hand considering we have a mere four days to expiry. Even though markets seem to be tiring out and are finding it difficult to hold on, the momentum and the fact that it’s a mere four days to go, would ensure that they win the series. They may at best concede some ground. One needs to remember that FPIs have been covering their shorts this series after the results of the general elections were announced on 4th June. 

Markets seem to be trading in a broad range where 23,650-23,700 is a top at the moment on NIFTY and 22,800-850 a bottom. These levels seem difficult to be taken out currently and it should be a tough time to break out. The biggest driver in the immediate future is the budget which could happen during the period 18th-23rd July. This event has the potential to make the markets break in either direction. 

The strategy for the week ahead would be to remain cautious with expiry happening. The bears led by FPIs will try to bounce back to the extent possible. Further there would be little or no news flow as well. Sector rotation is already happening and new stock ideas are difficult to come by. In such a scenario its advisable to play safe and take some money off the table. Keep the money aside for a day when new ideas emerge. 

In conclusion, trade cautiously in a week where volatility is likely to rise on account of expiry as the bulls and bears intensify their action.

After the sharp gains witnessed in the previous week, markets were circumspect this time around, but continued to post gains. Markets are at lifetime highs, and in the previous week one saw the market breadth gaining substantially. One reason for the above could be the fact that key portfolios of the cabinet have been retained by the ruling party and there is no significant change in ministers. This implies continuity. Probably that explains why the markets rallied and one saw such huge momentum. Market believes that the policies and thinking of the government in Modi 3.0, would be on similar lines as in the previous stint, even though this is a coalition government.  

Sensex gained on three of the five trading sessions and lost on two, while NIFTY gained on four sessions and lost on one session. BSESENSEX gained 299.41 points or 0.39% to close at 76,992.77 points while NIFTY gained 175.45 points or 0.75% to close at 23,465.60 points. The broader indices like BSE100, BSE200 and BSE500 gained 1.29%, 1.68% and 2.02%. BSEMIDCAP gained 4.41% while BSESMALLCAP was up 5.07%. In the benchmark indices one is seeing a churning of heavyweight stocks. In the previous week the top gainers were FMCG and IT stocks. This week they were under pressure and we saw cement shares rallying. I believe this rotation will continue till the announcement of budget and the onset of Quarter one results for the April to June Quarter. If there is one serious concern in the market, it’s the fact that valuations have run up quite sharply and we have not seen any meaningful improvement in results which indicate solid improvement in earnings growth. 

The Indian Rupee lost some ground and was down 19 paisa or 0.23% to close at Rs 83.56 to the US Dollar. There appears clarity in the US markets that there would be no immediate rate cut and that in the current calendar year there would be just one rate cut. Dow Jones lost 209.83 points or 0.54% to close at 38,589.16 points. Dow gained on just one of the five sessions and lost on four. 

In primary market news, we had one issue which opened and closed for subscription last week. The issue from Le Travenues Technologies Limited was subscribed 98.1 times overall. The QIB portion was subscribed 106.73 times, HNI portion was subscribed 110.25 times and the Retail portion was subscribed 53.95 times. There were 26.75 lakh applications overall. 

In the week ahead, we begin the week with a trading holiday on Monday. This will shorten the week and increase volatility to some extent. There are three issues which are opening in the coming week. The first of the lot is the issue from DEE Development Engineers Limited which is tapping the capital markets with its fresh issue of Rs 325 crores and an offer for sale of 45.82 lakh shares in a price band of Rs 193-203. The company is into the business of piping solutions for the oil and gas sector, chemical sector and super critical and power sector. It also makes structural towers for the wind energy space. It began operations in Haryana and has now expanded operations into Kutch at Gujarat. This place is strategically located with two ports Kandla and Mundra in the vicinity, customers for wind energy having their sites in the vicinity and major steel suppliers being in a 25-kilometer radius. The location helps in reducing costs on account of inward transportation significantly. The expansion happening at Kutch will take about 6-8 months to fructify. I believe the company has a great future and would do well post the commissioning of the new plant. The numbers of the company would reflect improved scale and efficiency for the year ended March 26. Only, if you have an investment horizon of 18 months or more should you invest now. There may always be listing gains looking at the market mood, but otherwise investment is for the medium to long term. 

The second issue is from a NBFC based out of Rajasthan, Akme Fintrade (India) Limited. The company is raising through a fresh issue of 1.1 crore shares in a price band of Rs 114-120. The issue opens on Wednesday the 19th of June and closes on Friday the 21st of June. The NBFC space is crowded and recent issues in this space have not done well. The company and its merchant banker have chosen not to have a roadshow in Mumbai for this issue. Speaks volumes for their confidence in marketing the issue. One wishes them luck. 

The third issue is from Stanley Lifestyles Limited which is tapping the capital markets with its fresh issue of Rs 200 crores and an offer for sale of 91,33,454 shares in a price band of Rs 351-369. The issue opens on Friday the 21st of June and closes on Tuesday the 25th of June. The company is a bespoke manufacturer of super-premium and luxury furniture brands in India. It’s a home-grown brand and a little over half its revenues comes from sofas and recliners. The company crafts its products as per the requirement of its customers and everything’s made to order. The business has been growing and with funds being raised to open more stores, benefits of the same would be available as time passes. The company is into a niche segment where luxury defines markets. Take a measured call as growth in revenues will not be a factor of perpendicular growth.  

Coming to the markets in the week ahead, as mentioned earlier it would be a four day week. Momentum and market breadth are in favor of the bulls and there seems to be no letting go by them as of now. However, the run-up has been fast and other than the sharp one day correction on 4th June, there have been no meaningful corrections as of now. Market corrections come suddenly and without warning. Will it happen this week or the next? Not sure. Keep one ear to the ground and prepare for the same because that could be sharp and meaningful. Until that happens, ride the wave as long as the going is good. 

Simple strategy for the period ahead would be to ensure that you have no overnight exposure as markets could open gap-up or gap-down. This could be dangerous. Trading opportunities would exist galore and provide plenty of trades to be facilitated. Use the opportunities to trade and await the correction when it comes. 

Trade cautiously.