It was a tough week for the markets and what one saw was red all over the street. One had to struggle to see some green. The unfortunate part is that it has come on the eve of Diwali. There would however be hope that things would improve post Diwali which takes place during the current week. BSESENSEX lost 1,822.46 points or 2.24% to close at 79,402.29 points while NIFTY lost 673.25 points 2.71% to close at 24,180.80 points. The broader markets saw BSE100, BSE200 and BSE500 experience greater degree of pain and lose 3.15%, 3.53% and 3.98%. BSEMIDCAP lost 5.20% while BSESMALLCAP was down a massive 7.37%. Markets lost on all five trading sessions. This would put pressure on markets going forward as retail investors have the bulk of their investments in the small and midcap space. 

We had a large number of investors coming to the markets post the onset of Covid-19 in March 2020 when markets had hit a rock bottom of 25,638 points on BSESENSEX and 7,511 points on NIFTY during the month of March. In February 2020, the indices were at around 40,000 and 11,200 points respectively. Since then, it has been more or less a secular uptrend over the last four and a half years and the investor base which more than trebled since this period, enjoying what could be termed as a dream run. This is probably for the first time since this period began that we have a benchmark index down so sharply. NIFTY for the current month of October is down 2,035.25 points or 7.76% for the series so far. Global cues are not the best and we would have a new President in the USA in a week’s time with the race being too close to call. Results for the July-September quarter are certainly not the best and we seem to be under pressure on that count. 

There were no sectoral gainers in the last week and the one to fall the least was BSEIT, which was down 1.57%. The one to fall the most was BSEOIL&GAS which was down 7.34%. The primary markets have suddenly seen a sharp jump in issues coming and one is getting an uncanny feeling that merchant bankers and promoters are trying to push through their issues before the markets take any further beating. This comes on top of the Rs 1,00,242 crores sales so far in the month of October by FIIs which has been very well matched by the SIP fed domestic institutions who have invested almost an equal 97,090 crores so far. 

The Indian rupee lost 2 paisa or 0.02% to close at Rs 84.08 to the US Dollar. Dow Jones had a poor week and lost on all five trading sessions. Dow lost 1,161.51 points or 2.68% to close at 42,114.40 points. 

In primary markets we saw the listing of Hyundai Motor India Limited on Tuesday the 19th of October. The listing was tepid on expected lines. Against the issue price of Rs 1,960, the discovered price was Rs 1,931, a loss of Rs 29. It made a low of Rs 1,807.05 and closed at Rs 1,820.40, a loss of Rs 139.60 or 7.12%. By the end of the week, the share had recovered some lost ground and closed at Rs 1,843.85, a loss of Rs 116.35 or 5.93%. 

We had a bumper subscription to the issue of Waaree Energies Limited which was subscribed 79.44 times. There was record subscription in terms of number of applications which hit 97.34 lakhs. The issue which was priced at Rs 1,503 would list on Monday the 28th of October. 

The issue from Afcons Infrastructure Limited is open and would close on Tuesday the 29th of October. 

Coming to the markets in the week ahead, we have October futures expiring on Thursday the 31st of October. The present value of NIFTY at 24,180.80 points is down 2,035.25 points or 7.76% compared to the series opening at 26,216.05 points. At best, the bulls may pull back some points, but the series is lost by a long way. 

Geo political news flow is not the best and we could see a measured escalation of the Israel-Iran conflict. Hopefully the election of the new US President by the 4th/5th of November could bring about some thawing of relations, but not sure. As mentioned earlier, the results emerging are not what one hoped for and they could be termed as disappointing. In such a scenario to expect any sharp recovery in the markets would be unlikely. 

Markets made a low at 79,137.98 points on BSESENSEX and at 24,073.90 points on NIFTY on Friday. Support exists at levels around these and slightly lower at around 78,300 on BSESENSEX. This was the low made in August 2024. On NIFTY, we have support at 23,900 levels which is the low of August at the same time. There could be a bounce in the short term from around these levels, but I believe this would be only a technical bounce. The pain in the market would continue and for some time, it would be a “Sell on Rally” situation. Diwali Muhurat trading would take place on Friday the 1st of November, which means the week would be effectively of four days with just an hour’s trading on Friday which is more symbolic in nature. Muhurat trading time is 6pm to 7pm. 

The strategy for the week ahead would be to sell on rally and look at select buying on large dips, but only in the large cap stocks. Pain would continue in the mid and small cap space for some more time as new investors who have joined over the last 50-54 months experience what ‘Mandi’ means. 

Trade cautiously.

Wishing all a Happy and Prosperous Diwali and New Year (SAMVAT 2081)

The week gone by began with a bang, but midweek saw the gains being surrendered and markets flat. Thereafter we saw markets break support levels and recover some lost ground. In the process we have violated important support zones at 24,700-800 points on NIFTY and markets are looking vulnerable at present levels. Markets lost on three of the five trading sessions and gained on two which happened to be on the opening and closing days of the week. BSESENSEX lost 156.61 points or 0.19% to close at 81,224.74 points while NIFTY lost 110.20 points or 0.44% to close at 24,854.05 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.69%, 0.78% and 0.74% respectively. BSEMIDCAP lost 1.01% while BSESMALLCAP was down 0.18%. The lows made on Friday, were at 80,409.25 points on BSESENSEX and at 24,567.65 points on NIFTY. 

The Indian Rupee remained unchanged at Rs 84.06 to the US Dollar. Dow Jones gained on four of the five trading sessions and lost on just one. It was up 412.05 points or 0.96% to close at 43,275.91 points. 

The largest ever IPO in India till date was from Hyundai Motor India Limited. It opened and closed during the week gone by. The issue was an offer for sale of 14.22 crore shares in a price band of Rs 1865-1960. The issue was subscribed overall 2.37 times with QIB portion subscribed 6.97 times. The non-institutional portion comprising HNI was undersubscribed at 0.60 times while Retail was subscribed 0.50 times. The employee portion was subscribed 1.74 times. There were 21.52 lakh applications received in all. The general feeling about the issue was that the promoters have left nothing on the table and priced it very stiffly. The issue would be listing on Tuesday the 22nd of October and one wonders what the listing has in store. 

The week ahead sees a couple of big-ticket IPOs opening. The first of the block is Waree Energies Limited which is tapping the markets with its fresh issue of Rs 3,600 crores and an offer for sale of 48 lakh shares in a price band of Rs 1,427-1,503. The issue opens on Monday the 21st of October and closes on Wednesday the 23rd of October. The company is a large manufacturer of solar modules and has a capacity of 13.3 gigawatt currently which would be expanded by setting up a greenfield plant in Orissa of 6 gigawatt and 1.6 gigawatt in the US subsidiary. Further the company is backward integrating into solar cell capacity of 5.4 gigawatt which would be operational in a phased manner over coming 6 months and an additional 6 gigawatt at Orissa. The Orissa plant is expected to be commercialized in 36 months. The company will also make ingot wafer of 6 gigawatt estimated to start by fiscal 2027. The company has a proven track record and has a reasonable size and scale in the business. 

The grey market has a price which is equal or thereabouts to the issue price. Applying for the issue for listing gains is warranted but whether one would like to hold thereafter is a personal call as valuations at that point will no longer be cheap. 

The other large issue is from Afcons Infrastructure Limited which is tapping the capital markets with its fresh issue of Rs 1,250 crores and an offer for sale of 4,180 crores in a price band of Rs 440-463. The issue would open on Friday the 25th of October and close on Tuesday the 29th of October. The company is part of the Shapoorji Pallonji group and is into the business of engineering and construction company. They have done many prestigious and critical projects in India and abroad. Most recently they have built the world’s tallest single-arch railway bridge over river Chenab in J&K. Notably they have also built the Atal Tunnel in Himachal Pradesh which is the world’s longest highway tunnel above 10,000 feet (3,000 meters). They have execution skills, capabilities and equipment to handle almost anything. The price at which the shares are being offered are attractive and there is money on the table for the investors for the short, medium and long term. 

The third and final issue is from Godavri Biorefineries Limited which is tapping the capital markets with its fresh issue of Rs 325 crores and an offer for sale of 65,26,983 shares in a price band of Rs 334-352. The issue would open on Wednesday the 23rd of October and close on Friday the 25th of October. The company is into the business of ethanol-based chemicals. The company’s portfolio consists of bio-based chemicals, sugar, different grades of ethanol and power. None of the businesses are dominant or large and are a combination with almost equal contibution. While the sweet spot is the bio chemicals based on ethanol, the scaling up of the same is some time away. At current capacities and valuation, the company does not offer investors anything which makes the issue attractive or a must apply.  The PE at which the issue is priced at is a steep 113.99-120.14. Competitors as mentioned in the RHP are available at a much lower multiple. Some of these peers include Alkyl Amines, Jubilant Ingrevia, Laxmi Organic and Triveni Engineering. 

Coming to the markets in the week ahead, expect markets to remain volatile and choppy. We have just survived a scare when we were seeing the markets break down on Friday. Thank God we saw a sharp pull back which ensures that we live to fight another day. The broad band that we were trading in of 24,700-750 on the lower side and 25,300-400 on the upper side, has been broken. The lower end would now shift to 24,400-450 and this would be probably a final support which if broken could bring us to around 24,000. Similar levels on the BSESENSEX are at 80,650-800 points on the lower side and 82,450-750 points. This would now shift to 79,800-950 points. With FPI selling continuing, one is not sure what is it that they have in their mind about India. This remains a cause for concern as much as geo-political cues globally are. 

With results season on, the picture is not the best one could have hoped for. There is pressure and its time to be cautious in the market place. Listing and performance of the largest ever issue in the Indian markets, will have a bearing on markets. Trade cautiously.