The week gone by saw the BSESENSEX register new highs and gain further ground. It was up 313.07 points or 0.83% up at 37,869.23 points. NIFTY gained 68.70 points or 0.60% to close at 11,429.50 points. During the week the intra-day highs were 38,076.20 points on the BSESENSEX and 11,495.20 on NIFTY. Both are lifetime highs and seem to be being made even though geo political and global cues are not the best.
Dow had a weak showing and was down 149.44 points or 0.59%. Turkey is the latest in the firing line of the US and is in the thick of a financial and currency crisis. They were a strong ally of the USA and what they have done could be a warning to many others. The Turkish Lira has lost a third of its value to the US Dollar in about a year’s time.
The week is a short time and many unexpected developments are taking place place. Some ten days ago Jet Airways was in the news about not having enough cash and asking its crew to take a pay cut of about 25%. Now in a completely surprise development Jet Airways deferred its results on the day they were to be declared. Yet another news, the Deputy Managing Director of HDFC Bank, Paresh Sukhthankar has quit. He was there since the inception of the bank. One wonders what transpired with Aditya Puri due for retirement in 2020. Mr Sukhthankar was widely believed to succeed Mr Puri. Strange indeed but speculation that he is joining Axis Bank is being talked about.
SEBI has asked the holding company of Vakrangee Limited to make an open offer for violation of the 25% holding rule. The open offer would have to be at the price prevailing in June 2013 and would include interest at 10% to those shareholders who held shares at that time and continue to hold shares even today. While many of the original shareholders may not be there as the price moved from Rs 30 to Rs 515 and is now currently at Rs 63, the order was well overdue. Rough estimates say that the open offer price would be around the Rs 170 mark and one could be sure that investors would be more than willing to tender, in case the open offer is made. Knowing the promoter group, one could be sure that they would contest the same and go to the tribunal for appeal rather than make the open offer. This open offer mandate would keep trading volumes and interest in the stock at heightened levels.
In primary market news, the IPO from HDFC AMC had a stellar debut and gained 65% on day one. Shares which were issued at Rs 1,100 gained Rs 715, but by weekend they had lost some of the gains and closed at Rs 1,749.30, a gain of Rs 649.30 or 59.03%. This would probably be the best performing share on debut, in the current calendar year registering gains of close to 65%. Bandhan Bank is currently up around 87% from its issue price of Rs 375 at a closing price of Rs 703.
The IPO from microfinance company Credit Access Grameen Limited which had opened and closed during the week was subscribed 2.21 times. The IPO which consisted of a fresh issue and offer for sale saw QIB’s subscribe 5.52 times, HNI undersubscribed at 0.98 times and Retail undersubscribed at 0.88 times. Probably the block buster IPO from HDFC AMC changed people’s expectations and that resulted in poor subscription for the issue.
Markets saw a historical rally in July becoming the 12th consecutive year when such a rally has happened. We also saw the midcaps and small caps finally moving. Next week has a mid-week holiday because of Independence Day. Prime Minister Modi is expected to launch BJP’S election campaign for 2019 general elections. His body language and the text of his speech would be analysed by the market for the final assault on the indices. The rally is getting tired and seems to have run its course. We are in the final stages of the same which is explosive and then leads to sharp sell-offs. When it would start is anybody’s guess but it would happen in August for sure. With such strong conviction it makes sense to book profits and wait for the correction which would be swift and deep.
