Markets behaved exactly as expected in the week gone by and opened with an upward gap on Monday. Markets moved with sharp volatility thereafter but failed to make further gains at the end of the week. Friday closing was lower than the closing of Monday, indicating that it ran into resistance even faster than expected. BSESENSEX gained 884.57 points or 1.61% to close at 55,769.23 points. NIFTY gained 231.85 points or 1.42% to close at 16,584.30 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.19%, 1.20% and 1.37% respectively. BSEMIDCAP gained 1.14% while BSESMALLCAP gained 2.98%. Markets gained on two of the five trading days while they lost on three days. Gains were recorded on Monday and Thursday. 

The Indian Rupee lost 6 paisa or 0.08% to close at Rs 77.62 to the US Dollar. Dow Jones lost 313.26 points or 0.94% to close at 32,899.70 points. Readers would recall that Monday was a trading holiday in the US. Markets gained on just Thursday and lost on the remaining three trading days. 

Analysing the trading week in India brings some interesting facts. Reliance Industries had a spectacular week and even though it was not the top gainer with Coal India being the top gainer, it contributed the maximum to the BSESENSEX. Reliance gained Rs 205 or 7.96% to close at Rs 2,780. It contributed about 625 points of the 885 that the BSESENSEX gained during the week which is roughly 70% of the gains. Secondly, the high of the week was 56,432 on BSESENSEX and 16,793 on NIFTY, but the close was below the levels we hit on Monday close. Incidentally the beginning of the second set of numbers mentioned last week were within touching distance only. Levels mentioned were 56,500-56,800 points on BSESENSEX and 16,850-16925 levels on NSENIFTY. We hit levels of 56,432 on BSESENSEX and 16,793 on NIFTY. This was close at the lower end but nowhere in the range and just not enough. The failure of crossing these levels would be felt this week. 

There were three listings last week. The first of the lot on Monday was international watch retailer Ethos Limited which listed on Monday. The company had issued shares at Rs 878. Shares closed day one at Rs 802.60, a loss of Rs 75.40 or 8.58%. By Friday they lost further ground to close at Rs 748.15, a loss of Rs 129.85 or 14.79%. 

The second issue to list was eMudhra Limited which listed on Wednesday. The company had issued shares at Rs 256. Shares closed on listing day at Rs 258.85, a gain of Rs 2.85 or 1.11%. By Friday, they lost some ground and remained just afloat at Rs 256.15, up Rs 0.15 or 0.06%. 

The third share to list was speciality chemicals company Aether Industries Limited which had issued shares at Rs 642. Shares were listed on Friday and they had a flying start gaining Rs 134.75 or 20.99% on day one. Shares were locked at the upper circuit of 10% at end of trading on Friday. 

There are no further primary market offerings in the coming week. 

The issue of applications bid on the exchange and subsequently being not banked was taken up by the regulator SEBI and corrective measures announced. Effective 1st September it has been specified by the regulator that applications which have been bid will have to be banked and the option whereby investors can conveniently get away will be blocked. Readers will be aware that when one bids online or through an app or goes to a bank and bids, the money against the application is first blocked and only then the application is bid. It is only in the case of the syndicate member where the bidding happens first and then the blocking. One will have to wait to understand the mechanism where this anomaly is removed. This move will however bring sanity to the IPO bidding system. 

The week ahead sees RBI meet for its policy review. The MPC as it is known would be meeting between the 6th-8th of June and announcing its policy midway on 8th of June. It is widely believed that there would be another round of rate hikes this time considering the rise in inflation. Probably after this round, rate hikes may stop for some time as a normal monsoon would help in softening of prices going forward. The US FED would also be meeting in the middle of June for a similar rate hike. 

Coming to the markets, we have a tough and volatile week ahead of us. While last week saw gains being made in the market, things could be the reverse this time around with markets losing ground. Previous week’s highs would be resistances and we would be back at supports which are at quite lower levels. As far as immediate support is concerned, lows of the fortnight ago at 53,400 and 15,900 levels will act as strong support. Immediate resistances would be at the highs of the week at 56,432 and 16,793. If levels of 54,500 and 16,400 are broken we could see the downward move picking momentum.

The strategy would be to sell on any rally and look for buys only on really sharp falls. With the results season completed there are no immediate triggers. The war between Russia and Ukraine is over 100 days old and has become a never ending one. With the US looking under pressure and Indian markets not too positive either, tough times are ahead.

Markets continued their choppy and volatile manner during the week gone by. The end result was quite straight forward with the first three days of trading resulting in losses and the remaining two days seeing the market record gains. In reality it was not so. On each of the three days of losses, markets had opened positive and were up for a sizeable part of the day before selling brought the markets down and turn negative. On Thursday, markets were weak and recovered form the lows to record gains. BSESENSEX gained 558.27 points or 1.03% to close at 54,884.66 points while NIFTY gained 86.30 points or 0.53% to close at 16,352.45 points. The broader indices saw BSE100 and BSE200 gain 0.30% and 0.17% respectively while BSE500 lost 0.11%. Similarly, while BSEMIDCAP gained 0.05%, BSESMALLCAP lost a massive 2.77%. For the records, the low on BSESENSEX was 53,425 points while it was 15,903.70 points on NIFTY. 

The Indian Rupee was volatile and closed virtually unchanged losing 1 paisa or 0.01% to close at Rs 77.56 to the US Dollar. Dow Jones had a stellar week and gained on all five days of the week. Dow Jones gained 1,951.06 points or 6.24% to close at 33,212.96 points.

May expiry saw the series lose 892.60 points or 5.18% to close at 16,352.45 points. The series was volatile and saw markets move in both directions. The high of the series was on the opening day 29th of April of 17,377 points while the low was 15,735 points. The low has been tested twice and would be a point of support in the immediate short term.

Primary markets were active with there being three listings and two issues closing for subscription.

The first share to list was from Delhivery Limited which had issued shares at Rs 487. Shares closed on listing day at Rs 537.25, a gain of Rs 50.25 or 10.31%. Shares gained some ground to close the week at Rs 541, a gain of Rs 54 or 11.09%. 

The second share to list was from Venus Pipes and Tubes Limited which had issued shares at Rs 326. Shares closed day one at Rs 351.75, a gain of Rs 25.75 or 7.89%. The share lost some ground during the week and closed at Rs 334.40, a gain of Rs 8.40 or 2.58%.

The third share to list was from Paradeep Phosphates Limited which had issued shares at Rs 42. Shares closed day one at Rs 43.95, a gain of Rs 1.95 or 4.64%. 

Two issues closed their subscription during the week. The first was eMudhra Limited and was open from Friday the 20th of May till Tuesday the 24th of May. The price band was Rs 243-256. The issue was subscribed 2.74 times overall with QIB portion subscribed 3.93 times, HNI portion subscribed 1.31 times and Retail portion subscribed 2.67 times. There were 2,18,894 application forms. 

The second issue was from Aether Industries Limited which had opened for subscription on Tuesday the 24th of May and closed on Thursday the 26th of May. The price band was Rs 610-642. The issue was subscribed 6.62 times overall with QIB portion subscribed 19.36 times, HNI portion 2.63 times, Retail portion 1.19 times and Employee portion subscribed 1.12 times. There were 1.85 lac applications. 

The week ahead has three listings with Ethos Limited listing on Monday, eMudhra Limited listing on Wednesday and Aether Industries Limited listing on Friday. No fresh issues are slated thereafter. 

There is a new type of incident happening in IPOs prominently since the beginning of April 22. A large number of applications are being rejected in every issue as they are not being banked after being bid. This is on account of investors not giving confirmation to the UPI message which is sent to them for applications bid through syndicate brokers. Rejection of 1-2 lac applications has become the norm. In LIC the number was 12 lacs out of 73 lac applications. In Prudent Corporate Advisory it was 1.10 lac applications from 1.53 lac applications. In Delhivery it was 1 lac forms from 1.73 lacs and in the case of Venus it was 1.92 lac applications out of 6.28 lac applications. In the case of Paradeep Phosphates about 1.75 lac applications were not banked against 4.11 lac applications.

Ethos was a serious example by itself. The issue was for a fresh issue of Rs 375 crs and an offer for sale of Rs 100 crs. The issue was subscribed 1.10 times and had received 88,476 application forms. Post the closure, this number was reduced to 20,238. The fall at 77.12% is serious and indicates that all is certainly not well in the system. The issue complied with regulations for subscription with the two merchant bankers to the issue contributing Rs 14 crs each approximately to the issue and completing the process. This is a serious issue and hope the regulator with merchant bankers find solutions before some issue goes down under. The area where things seem to be going out of control is applications which are bid at syndicate member terminals. 

The week ahead begins with a holiday in the US on Monday on account of Memorial Day. This will allow markets in India to resume their upward momentum of the last two days and build on it. Expect markets to correct post the strong momentum. Key resistances would be around the 16500-16,600 levels. If these are crossed, the next resistance would be 16,850-16925 levels on NSENIFTY. These would correspond to levels of 55,700-56,000 points on BSESENSEX. The next level for resistance would be 56,500-56,800 points. Whether these levels particularly the second are reached during the week look doubtful but are mentioned as key extremes. As far as immediate support is concerned, lows of the previous week at 53,400 and 15,900 levels will act as strong support. 

The strategy for the week would be to play for the expected bounce when the week begins. Expect some correction thereafter and momentum to again pick up after the correction. Sell on strong rallies and buy on dips. It continues to be a trader’s market.