The Week gone by saw markets lose on three of the four trading days and register small weekly losses at close. BSESENSEX closed the week with losses of 87.62 points or 0.21% to end at 41,170.12 points. NIFTY was down 32.60 points or 0.27% to close at 12,080.85 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.17%, 0.08% and 0.06% respectively. BSEMIDCAP gained 0.21% while BSESMALLCAP was up 0.44%.

The top gainer in the benchmark indices in individual stocks was Zee which gained 7.58% while the top loser was Yes Bank, down 8.87%. The Indian Rupee lost 25 paisa or 0.35% to close at Rs 71.65 to the dollar. Dow Jones lost 405.67 points or 1.38% to close at 28,992.41 points.

The week ahead sees US President Donald Trump begin his flying visit to Ahmedabad, followed by Agra and then the business part of the meeting in Delhi. With the back drop of heightened tensions between China and US on the trade front and not helped in any manner by the outbreak of Coronavirus, both countries will look to India becoming a manufacturing hub. While markets have not anticipated any events happening there is a buzz as Trump visits the world’s largest cricket stadium for a rousing reception.

This would be followed by February futures expiring on Thursday the 27th of February. The current value of NIFTY at 12,080.85 points is higher by 45.05 points or 0.37%. The lead is slender and in a volatile week could go in either the direction of bulls or bears.

A large and much awaited IPO from SBI Cards and payment Services Limited would be opening for subscription by Anchor Investors on Friday the 28th of February. The main issue would open on Monday the 2nd of March and close for QIB’s on the 4th of March and for HNI’s, Retail and Shareholders on 5th of March. The issue consists of a fresh issue of Rs 500 crs and an offer for sale of 13.05 cr shares. The price band would be announced on Tuesday, the day the company kicks of its roadshow in Mumbai. The street expects a price band of Rs 750-755, while I believe this would be lower. The market cap of the company going public at the above expected price would be in excess of Rs 90,000 crs with SBI holding 74% shares.

One wonders why the company has played unfair with shareholders of State Bank of India. It has allowed HNI applications and would thus ensure that this quota gets cannibalised by HNI’s who will borrow money and put in applications for the entire shareholder quota and disturb the complete demand for the category. This move by the company is against the interest of small shareholders which is a very large number, SBI being the largest bank by breadth and reach in the country. I am sure post the allotment of this category even those people who agreed with the decision of allowing HNI applications will have regret on their decision. I also hope SEBI looks into this issue and does not allow issuers to trample upon the right of small shareholders.

While this issue would do well, one needs to ponder whether State Bank of India becomes an attractive investment or not. The bank has a market capitalisation of Rs 2.92 lac crs. SBI Life has a market cap of Rs 92,795 crs where SBI (State Bank of India) has 62.80% shareholding. To this if one adds a notional 65,000 crs of SBI cards we are talking of Rs 1.57 lac crs for just these two companies as SBI share. This leaves the bank with a valuation of a mere 1.35 lac crs. Even considering holding discount, the bank valuation is just too attractive to ignore. With AMC business in demand, it would be a matter of time after UTI AMC hits the market, SBI AMC would follow.

Following close on the heels of SBI Card is the issue from Antony Waste handling Cell Company Limited which would be tapping the capital markets with its offer for sale and a small fresh issue. The company as the name suggest, is in the business of collecting and transporting waste and also the composting and treatment of such waste.

From the primary market perspective, SBI Cards would act as a catalyst for the markets and help many more companies waiting on the side-lines to actually get the courage to tap the markets.

Sterling and Wilson Solar continues to be in the news for all the wrong reasons. The company declared a massive dividend of 600% (Rs 6 per share of face value Re 1) and thought the minority shareholder would be appeased with the generosity. The company thought that this action would kill two birds with one stone. The first being that minority shareholders would be happy and second that the bulk of the dividend (77.22% is promoter shareholding) would come back to them. Markets did not like this as the business of the company is under pressure and is affected with supply issues post Coronavirus. The key takeaway from this ongoing saga for the management of Sterling and Wilson and other companies is that they must be straight forward and place facts as they are. By being extra smart, it just does not help.

Contrary to the management’s expectation. The share price tanked further and made a new 52 week. The share lost Rs 47.80 or 17.38% to close at Rs 227.20 against an issue price of Rs 780.

Coming to the markets, expect them to remain volatile ahead of Trump’s visit followed by expiry. On a net basis there may not be a significant change on a weekly basis, but intraday moves could be sharp and swift. Use any sharp dips to buy and sell on strong rallies.

The Week gone by saw consolidation and markets rallying as well as the benchmark indices lost on three of the five trading days, while gaining on the remaining two. The week end saw BSESENSEX gain 115.89 points or 0.28% to close at 41,257.74 points while NIFTY gained 15.10 points or 0.12% to close at 12,113.45 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.25%, 0.33% and 0.43% respectively. BSEMIDCAP was down 1.53% while BSESMALLCAP was down 1.06%. It could be said while the benchmark indices registered small gains the rest were under pressure.

The Indian Rupee gained 5 paisa or 0.07% to close at Rs 71.40 to the US Dollar. Dow Jones was up 295.57 points or 1.02% to close at 29,398.08 points. On the Coronavirus front there are no positive news and the same continues to spread with isolated cases in many more countries. In China even the earlier health workers are beginning to get affected with the virus.

On the primary market front, the much-awaited issue from SBI Cards is expected to hit the markets in the last week of February to first week of March. The issue has garnered huge expectation and is actively traded in the grey market. It is widely expected to create records in the amount of subscription value garnered in the HNI category and the NBFC circle which finances such applications is expecting an amount upwards of 1 lac crs.

IEA (International Energy Association) has forecast a drop in global energy demand for the first time in a decade for the current Quarter, January to March 2020. A big contributor of this is the slowdown and lockdown being witnessed in China on account of the Coronavirus.

Result season is over for the third quarter of FY20 and it has been a mixed bag so far. While there have been some green shoots visible, it could partly be on account of the tax rebate announced by the government for corporates in September 2019, which has now been factored in. The financial sector has seen some rebound-on resolution of many insolvency cases and further there seems to be a demand increase as well. While it is early days, in another fortnight there would be better clarity.

Results from the railway companies have seen a stellar performance and the street has reacted positively to them. IRCTC, IRCON and RITES have gained on the street while RVNL has faltered. Incidentally RVNL has yet to take a call on the new tax rates and would do so in the final quarter of FY20. Shares of IRCTC touched an intra-week high of Rs 1,609.30 before closing at Rs 1.579.95, a weekly gain of Rs 66.10. Since its IPO listed on the 14th of October, the share which was issued at Rs 320 has moved up almost 5 times gaining 393.73%.

SEBI the regulator needs to take a call on companies which have gone to IBC, the insolvency court for resolution and the trading in these shares thereafter. Take the case of Essar Steel after a little over two years the resolution happened and the buyer cancelled all outstanding shares. In the case of Ruchi Soya, the shares were reorganised and the value became 1/100th of the face value. Shareholders had no idea of this kind of reduction was being planned. Yet another example is Jet Airways where the share is seeing regular trading even though no definitive bids have been received even after over a year has passed. This writer has a simple suggestion that all such companies’ shares be put under suspended category and trading be frozen with due notice until there is resolution and clarity on shareholders interest.

The crisis in Sterling and Wilson Solar Limited continues. The company declared its results for the quarter and there was a sudden agenda item of interim dividend on the board meeting date also included. Probably the dividend announced which is 600% (Rs 6 per share of Re 1 face value) was meant to be a carrot for minority shareholders. The management continues to justify its action of rescheduling the loan repayment by the promoter as valid and not contravening any law whatsoever. Its high time the regulator came out with its version on this issue.

The telecom issue has become so complicated that it leaves me more confused than clear. I therefore believe it is best left to Supreme Court, Government and the players to sort out the same.

Coming to the week ahead there would be both sided movement and market trading in a broad range. The BSESENSEX is likely to trade in a range of 40,900-41,900 while NIFTY would trade in a range of 12,000-12,400 points. The breakdown or breakout in either direction if it does happen and sustain could see a sharp movement but that looks highly unlikely.

The strategy for the week would be to buy on any sharp fall and sell on strong rallies. The possibility of the same happening may not materialise, but one must be prepared.