Trading for the four-day week began on a strong note, but markets went into a correction mode for the next two days and Friday saw a flat market. BSESENSEX ended the week with losses of 473.92 points or 0.96% at 48,732.55 points while NIFTY lost 145.35 points or 0.98% to close at 14,677.80 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.75%, 0.75% and 0.69% respectively. BSEMIDCAP lost 0.49% while BSESMALLCAP lost 0.08%.

The Indian Rupee gained 23 paisa or 0.31% to close at Rs 73.28 to the US Dollar. Dow Jones had a volatile week and lost for the first three days and then gained for the next two days. The index hit a new lifetime high on Monday at 35,092 points before losing 35 points. It then lost 474 points and 681 points before gaining 434 points and 361 points to end the week with losses of 395.63 points or 1.14% at 34,382.13 points. The volatility being witnessed in Dow clearly indicates that there is resistance and profit taking at each higher level. Markets there are also concerned about inflation.

Metals and commodities as mentioned last week were under pressure and lost ground. BSEMETAL index was the top loser and was down 4.47%. There are concerns about resistance from user industry buyers to pay higher prices.

Units of PowerGrid Infrastructure Investment Trust which had tapped the capital markets with its issue for Rs 7,700 crs saw its units list on Friday the 14th of May. Units which were issued at Rs 100, debuted at Rs 104 and made an intraday high of Rs 104.90 before closing at Rs 102.98. The performance was decent as far as day one is concerned. The regulator needs to take a clearer stand on issues concerning INVITS. The application size is Rs one lac or more and in the case of this instrument it was 1,100 units or Rs one lac ten thousand. The trading lot was however 100 units or effectively Rs 10,000. In the case of SME exchange, the application size and the trading lot remain the same for the period of two years or till the time the stock remains listed on the SME exchange before migrating to the main board. Here it appears that the retail investor is not capable of understanding the invit for applying and hence the lot size is above one lac but he is good to understand when trading and therefore the lot size is 100. This double standard must be eliminated at the earliest.

Covid-19 saw the world have 16,37,16,139 patients, 33,93,303 deaths and 14,21,61,366 patients recovering. In India we saw 2,49,64,925 patients, 2,74,411 deaths and 2,11,67,609 patients recovering. During the week the world saw, 47,47,974 new patients, 86,628 deaths and 56,50,539 patients recovering. In India we saw 23,02,515 new patients, 28,265 deaths and 25,02,343 patients recovering. The wave in many parts of India seems to have peaked while in others it seems to be coming under control. The country has so far vaccinated 18 crore people and this number includes the first and second jab. Taking the lead from Mumbai and Maharashtra, many other states have imposed lockdown for about a fortnight. This forced lockdown helps in restricting movement and isolating areas which have high incidence of affected patients. The solution will always remain the following of SOP’s strictly and observing social distancing. Hopefully things should be better in the coming days.

Markets are stuck in a broad range and are seeking direction desperately. They come close to the breakout or breakdown levels and then turn in the opposite direction viciously. The immediate support levels for the BSESENSEX and NIFTY are 48,050 points and 14,400 points while the resistance level is 50,250 points and 14,950-15,000 points respectively. On the downside, the next level of support is at 47,250 and 14,150 points. If these levels are broken for any reason, there could be a couple of days of sharp sell-off.

The other couple of disturbing facts in the market is that FPI’s are sellers on most days and secondly money making seems to have become too easy. These are very disturbing signs and indicate that some change in trend is imminent. Considering the factors enumerated above it appears that looking at the strong showing of Dow on Friday, we could see a strong beginning to the week ahead in our markets followed by a correction. Continue to sell on rallies and buy on sharp dips in the coming week as well.

PowerGrid Infrastructure Investment Trust or PGInvit which had tapped the capital markets with its fresh issue and offer for sale of Rs 7,735 crs listed on the bourses. The fresh issue was for Rs 4993.48 crs while the offer for sale was for Rs 2741.51 crs. The issue was open from Thursday the 29th of April and closed on Monday the 3rd of May. The price band was Rs 99-100. The company allotted 34,80,74,100 units to 33 investors comprising of 47 entities. The top allocation was done to CPP Investment Board of 8 cr units or 22.98% of the anchor size. Three investors were allocated an identical 4 cr units or 11.49% of the allocation. They included Capital Income Builder and two Indian mutual funds, SBI and HDFC. This means that the top four investors were allocated 57.45% of the anchor allocation.

There were just two buckets. In the QIB category the issue was subscribed 4.63 times while the Non-institution category it was subscribed 5.07 times. The overall issue was subscribed 4.83 times. There were over 46,200 forms. The average application size was about 21.20 lacs. The issue including anchor portion received bids for over 24,000 crs against the issue size of 7,735 crs.

The discovered price was Rs 104 on both the exchanges. At the discovered price, the traded volume was 2.69 lac units at BSE and 92.18 lac units at NSE. The high of the day was Rs 104.97, low was Rs 102.84 and close Rs 102.98 on BSE. The gain was Rs 2.98 or 2.98%. On NSE, the high of the day was Rs 104.90, low was Rs 102.75 and close was Rs 103.05. The gain was Rs 3.05 or 3.05%.

The traded volume was 468.62 lac units on the two exchanges combined. This was 6% of the IPO size of 7734.99 lac units and 11% of the non-anchor portion of 4254.25 lac units. Delivery volume was 417.54 lac shares which was 89.10% of the traded volume. It was 5.40% of the IPO size and 9.81% of the non-anchor portion. Weighted average of the days trade was Rs 103.55 on BSE and Rs 103.69 on NSE. On expected lines, there were no names in the institutional trade’s category on BSE or NSE.

There was an event which had me taken by surprise. The application lot size was 1,100 units or Rs 1.10 lac at the top end of the band while the trading lot was 100 units or effectively Rs 10,000 on listing day. While SEBI has been maintaining that INVIT is not a product for retail investors, it seems quite strange and contradictory that retail investors do not understand the product and hence the ticket size for application is Rs 1.1 lac. However, when it comes to trading, retail investors understand the product and hence trading lot size is Rs 10,000. In the case of the SME exchange, the lot size which is greater than 1 lac remains the same until the share migrates to the main board. Here in the case of INVIT, the change happens on listing. One would like to understand the rationale behind the move and appreciate why such a thing has been done. One wonders whether the idea is to debar retail investors the benefit of getting allotment at par or something more than that. Hope the regulator throws some light on this issue on some day.

The issue has done well for itself on day one. With the first pay-out due only post the September quarterly results, the next event of importance would be RBI MPC (Monetary policy committee) meeting and whether there are any changes to the interest rates.

Expect the rates of this instrument to drift from hereon.