Markets had a crazy week and were under pressure throughout. They fell on expected lines and this time we could not blame the US markets as they gained on all five trading sessions. What happened is a blessing in disguise as it has cooled of the markets, even though Mumbai is having sweltering heat currently. BSESENSEX lost 1,213.68 points or 1.64% to close at 72,664.47 points while NIFTY lost 420.65 points or 1.87% to close at 22,055.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.83%, 2.04% and 2.25% respectively. BSEMIDCAP lost 3.27% while BSESMALLCAP lost 3.80%. In what could best be described as an unusual situation, markets lost on two trading sessions but were flat on the remaining three sessions. Just an instance to point out the flatness was NIFTY closing at unchanged levels down to two decimal points on Wednesday at 22,302.50 points compared to Tuesday. I do not remember any other instance in recent times when the levels have remained identical like this. 

The Indian Rupee lost 8 paisa or 0.10% to close at Rs 83.50 to the US Dollar. Dow Jones had a stellar week and gained on all five trading sessions of the week. It was up 836.96 points or 2.16% to close at 39,512.64 points. 

The week gone by saw three IPOs open and close for subscription. The first was Indegene Limited which had issued shares in a price band of Rs 430-452. The issue was open from Monday the 6th of May to Wednesday the 10th of May. The issue was subscribed an overall 70.26 times with QIB portion subscribed 192.72 times, HNI portion subscribed 55.84 times and Retail portion subscribed 7.8 times. There were 27.80 lakh applications in all. 

The second issue was from Aadhar Housing Finance Limited which was open from Wednesday the 8th of May to Friday the 10th of May. The price band was Rs 300-315. The issue was subscribed 26.76 times overall with QIB portion subscribed 76.42 times, HNI portion subscribed 17.33 times and Retail portion subscribed 2.58 times. There were 16.38 lakh applications. 

The third issue was from TBO TEK Limited which was open from Wednesday the 8th of May to Friday the 10th of May. The price band was Rs 875-920. The issue was subscribed 86.68 times overall with QIB portion subscribed 125.51 times, HNI portion subscribed 50.51 times and Retail portion subscribed 25.65 times. There were 23.75 lakh applications. 

The week ahead sees one IPO from general insurer, Go Digit General Insurance Limited. The issue opens on Wednesday the 13th of May and closes on Friday the 15th of May. The issue consists of a fresh issue of Rs 1,125 crores and an offer for sale of 5,47,66,392 equity shares in a price band of Rs 258-272. The company is promoted by Prom Watsa of Fairfax. 

The company helps in customizing products as required in the general insurance space. It became profitable in Fy22-23 and has built on the same in the current nine months ended December 23. The valuations based on current nine months are attractive and offer scope for appreciation on listing as well as for people with a minimum, medium term holding period. 

Markets on Thursday, made the intraweek lows at 72,334.18 points on BSESENSEX and at 21,932.48 points on NIFTY. These were higher than the lows made on 19th April at 71,816.46 points and 21,777.65 points. 

The fourth round of voting out of seven phases would be held on Monday the 13th of May followed by the 5th round the following Monday. Volatility has increased in line with the significance of the event and is further borne out by the fact that FPIs have sold close to Rs 30,000 crores in the current month which has been counterbalanced by domestic institutions who have spent their entire kitty of record SIP inflows for the month. 

Coming to the markets in the week ahead, while support exists at the lows made on Thursday and the previous lows made on 19th April, even if they are broken, support exists around 21,500 on NIFTY and at 71,650 points on BSESENSEX. On the upside hurdles exist around 22,450-500 and at 73,900 points on BSESENSEX. These levels need to be broken and sustained for any further up move. Expect markets to trade in a narrow range till then. 

The trading strategy for the coming week would be simple. Sell on rallies and expect markets to trade in a broad range. Volatility would increase if the levels on either side whether lower or higher are likely to be breached. Trading opportunities will exist and allow the disciplined trader to make money. 

Trade cautiously.

The week went by and had four trading days with a mid-week holiday on 1st May, thereby making it two periods of two days each. The volatility witnessed was several notches higher than usual. Surprises one to note that just about 10 days ago, India VIX which is the volatility index had crashed to a new low. Maybe it was the lull before the storm. On Tuesday and Friday, NIFTY made new highs and then fell sharply, closing in the red. Not sure how one should read it, but the scene is not comfortable. At the end of the week, BSESENSEX gained 147.99 points or 0.20% to close at 73,878.15 points while NIFTY gained 55.90 points or 0.25% to close at 22,475.85 points. The broader indices saw BSE100, BSE200 and BSE500 gain 0.55%, 0.70% and 0.61% respectively. BSEMIDCAP was up 1.99% while BSESMALLCAP was down 0.10%. Plenty of mixed signals in the market place. Markets gained on two sessions and lost on two. Incidentally gains and losses alternated with Monday and Thursday gaining while Tuesday and Friday were losing days. 

The Indian Rupee lost 8 paisa or 0.10% to close at Rs 83.42 to the US Dollar. Dow Jones was on a roller coaster ride with gains on four days and losses on one day. Wednesday saw the FED meet for its policy review meet where they decided on expected lines to keep interest rates unchanged. The commentary post the meeting spelt out very clearly that inflation higher than 2% will not see any rate cuts. This saw markets rallying sharply on Thursday and Friday. One wonders why markets in the US are hell bent on just a rate cut. One needs to see that economic data is red hot and points to a booming economy. Things could not be better. Why bother about a rate cut at all. 

Coming to our markets and the crazy movement we witnessed last week. Tuesday the 30th of April saw NIFTY make a new life-time high at 22,783 points. The previous day’s close was 22,643 points. After the high, markets fell sharply and closed at 22,604 points and closed in the red, losing 39 points. BSESENSEX made a high at 75,111 points but did not make a new high. The previous day’s close was 74,671 points. From there the market fell to 74,488 points, losing 183 points. 

Friday the 3rd of May was even more volatile. NIFTY made a new lifetime high yet again at 22,794 points against the previous day’s close of 22,648 points. It fell very sharply to close at 22,475 points, a loss of 319 points from the high and 173 points from the previous day’s close. BSESENSEX made a high at 75,095 points against the previous day’s close of 74,611 points. From there it fell very sharply to lose 1,217 points from the high and 610 points from the previous day’s close. Indeed very volatile and a bit scary.

The week ahead has three primary issues tapping the capital markets. Indegene Limited is tapping the markets with Indegene Limited tapping the capital markets with its fresh issue for Rs 760 crores and an offer for sale of 2,39,32,732 shares in a price band of Rs 430-452. The issue would open on Monday the 6th of May and close on Wednesday the 8th of May. The fresh issue and offer for sale would raise Rs 1,841 crores at the top end of the price band.

The company provides digital led commercialization services for life sciences industry, including bio-pharmaceutical, emerging biotech and medical devices companies, that assist them with drug development and clinical trials, regulatory submissions, pharmacovigilance and complaints management, and the sales and marketing of their products. Indigene is an integrated solutions provider and almost 85% of its revenues comes from its US subsidiary. 

The company reported revenues of Rs 2,306 crores for the year ended March 23, an EBITDA of 19.69%, and a Profit after tax margin of 11.54%. In absolute terms, the profit after tax was Rs 266.09 crores. The EPS on a fully diluted basis was Rs 11.97. At this EPS, the PE band for the issue is 35.92-37.78. 

There is no comparable company or peer set in the India space while there are some comparable foreign companies globally. The share offers an opportunity for investors with a medium to long term outlook. There could be listing pop as well available considering that markets are at lifetime highs or thereabout.  

The second issue is from Aadhar Housing Finance Limited. The issue is entirely an offer for sale of Rupees 2,800 crores. The price band is Rupees 300-315. The selling shareholder is the promoter. This company was acquired from the DHFL group when they fell on bad times around 2016-17. The company acquired was clean and had no issues while the group is struggling with various issues. The issue will open on Wednesday the 8th of May and close on Friday the 10th of May. The company is a housing Finance company focused on the low-income housing segment with a cap on ticket size at Rs 15 lakhs. 

In terms of performance, the company reported a gross AUM of just under Rupees 20,000 crores at the end of the nine months period ended December 2023. A mix of the clients they serve is 60% salaried and 40% self-employed. The average ticket size is between Rs 9 lakhs to 10 ten lakhs. 

The company reported an EPS of Rs 13.8 for the year ended March 2023 which on a fully diluted basis was Rs 13.4. The PE band for the issue on diluted earnings is 22.4-23.5. NAV for the company at the end of December 23 is Rupees 107.6. The price to book at this NAV is 2.92 at the top end of the band. Based on the post issue, the NAV would improve to Rs 123.07 at the top end of the band and the same ratio would be at 2.56 times price to book. This compared more than favorably with the peer set. There is money to be made in the issue in the medium to long term. There would be some listing pop as well. 

The third issue is from TBO TEK Limited. It consists of a fresh issue of Rs 400 crores and an offer for sale of 1,25,06,797 equity shares. The price band is Rs 875-920. The issue would open on Wednesday the 8th of May and close on Friday the 10th of May. 

The company operates an online B2B travel portal distribution platform that connects buyers and sellers. It is present in the airline and hotel business currently. It earns a commission from the airlines whose tickets are sold on the platform while it charges a mark up on the rooms that are sold on the platform. The company is in a negative working capital cycle as its pays after receiving the money. It is adding new offerings on the platform and has recently added Eurail on its platform recently. 

The company reported an EPS of Rs 14.07 on a fully diluted basis for the year ended March 2023 and the PE band would be 62.19-65.39 on this EPS. There is no comparable peer in India in this space and listed players are basically online travel players like make my trip, Easy trip and Yatra online who would be using the platform provided by TBO TEK Limited. 

The issue offers scope on listing and in the medium to long term as well. 

Coming to the markets we are at a crossroads once again. On the upside, I would go long only if 22,800 on the NIFTY and 75,200 on the BSESENSEX are crossed and sustained. On the downside, immediate support exists at 22,100 points on NIFTY and at 72, 800 points on BSESENSEX. Its time to be cautious as the wild gyrations last week are not giving comfort. The strategy would be to sell on any rallies and buy on sharp dips.

Trade cautiously.