The week gone by had a holiday on Thursday and also had NIFTY monthly futures expiring on Tuesday instead of the traditional Thursday that we have always come to associate the product with. Markets in India gained on two of the four trading sessions and lost on two. At the end of it all, BSESENSEX gained 780.71 points or 0.97% to close at 81,207.17 points, while NIFTY gained 239.55 points or 0.97% to close at 24,894.25 points. BANKNIFTY gained 1,199.90 points or 2.21% to close at 55,589.25 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.11%, 1.26% and 1.38%. BSEMIDCAP gained 2.08% while BSESMALLCAP gained 2.09%. Almost the entire weekly gains came on Wednesday, the 1st October when the new monthly futures series began with BSESENSEX gaining 714 points and NIFTY gaining 225 points.
The Indian Rupee lost 5 paisa or 0.06% to close at Rs 88.77 to the US Dollar. Dow Jones gained on all five trading sessions of the week. It was up 510.99 points or 1.10%. The Nobel Peace Prize for which Donald Trump has staked his claim and has put at stake geo-political stability will be announced on Friday the 10th of October. While Trump is nowhere in the picture, hopefully after being in a sour mood on losing out, things should start improving. Currently the US government is in a shutdown having exceeded its borrowing limits. How long the shutdown would last is anybody’s guess but what is happening is ugly. USA citizens are beginning to face the brunt of tariffs introduced.
September futures expired on a slightly negative note in the expiry week. On an overall basis, the bulls just managed to pull of the series with gains of 110.20 points or 0.45% to close at 24,611.10 points. The series had begun at 24,500.90 points.
The primary market mad rush of IPOs continues unabated. We had as many as 11 listings in four days last week. What shows fatigue factor is that of these 11 issues, five closed in negative within the first week. Of the six that closed positive, two of them were up less than 1% at 0.50% and 0.64% respectively. Very clearly, the going is getting tougher and tougher. One more very important factor is the so called ‘GMP’ or grey market premium which is referred to by investors before applying is failing them. Premiums of 35-40% disappear post closure of issue. Time to become cautious.
In terms of present issues which are open, we have one from Wework India Management Limited which opened last Friday and would close on Tuesday the 7th of October. The company is looking to raise Rs 3,000 crores from an offer for sale of 4.62 crore shares in a price band of Rs 615-648. The company is into the co-working and shared office space, of which we have seen as many as three issues over the last couple of months.
The second issue is from Tata Capital Limited which comprises of a fresh issue of 21 crore shares and an offer for sale of 26.58 crore shares in a price band of Rs 310-326. This price came way below the unlisted price which traded as high as 1,100+ at the beginning of the year. Its high time investors become cautious as this is the third consecutive offering in recent times on the main board where the issue price is way below the unlisted price. The two other issues were NSDL and HDB Financial Services Limited. Tata Finance is an NBFC and a decent name in the lending space present across verticals. It would be the third largest AUM at 2.33 lakh crore after Bajaj Finance and Shriram Finance. The present NAV of the company is at Rs 82 as of 30th June which would improve to Rs 96.4 post the issue happening at the top end of the price band.
The third and final issue is from LG Electronics India Limited which is tapping the markets with its offer for sale of 10.18 crore shares in a price band of Rs 1,080-1,140. The issue would open on Tuesday the 7th of October and close on Thursday the 9th of October. This would be the second South Korean company to list on the Indian bourses. Earlier, Hyundai Motors had listed on 22nd October 2024. This listing would happen on 14th of October, roughly eight days before the first anniversary of Hyundai’s listing.
RBI in its monetary policy meeting held in the beginning of the week decided to keep interest rates unchanged. GST collection for September25 was at Rs 1, 89,000 crores, higher than the Rs 1, 86,000 crores in August 25. There has been a substantial reduction in GST rates from 22nd September and ever since the rate cut was announced in August, there was a destocking witnessed. Actual numbers to see for impact would be for October when it would reflect the growth in consumption post GST rate cut.
Coming to the markets in the week ahead, expect them to remain volatile. It is still awaiting direction and news flow which could come from quarterly results. On the tariff front, it appears USA has drawn itself into a corner and is stuck with its stand. It will have to find a serious way out of this mess it finds itself in. Probably the weekend would see realization once the Nobel awards are announced. The strategy would be to lie low, await results and then look at rebuilding one’s portfolio. Results this time could be interesting as prudent managements are expected to talk about not only tariffs, but also GST impact. Levels of 24,900 on the upside mentioned last week held and acted as resistance. For this week they would move upwards to 25,100-200 levels and immediate support at 24,500. Choppy markets and tough volatile conditions is what should be the undertone.
Trade cautiously.
