It was a volatile week with markets moving in both directions. There were wild swings and though the US has elected a new President, it moved markets globally. At the end of the week, in which we lost on three of the five trading sessions, there was no clarity for the trend of markets in the immediate short term. BSESENSEX lost 237.80 points or 0.30% to close at 79,486.32 points while NIFTY lost 156.15 points or 0.64% to close at 24,148.20 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.58%, 0.62% and 0.80% respectively. BSEMIDCAP was down 0.44% while BSESMALLCAP was a larger loser at 1.27%. %

The Indian Rupee was under pressure and made a new low to close at Rs 84.38. It lost 30 paisa or 0.38%. The US has a new President in Donald Trump. At the end of a long campaign which saw Joe Biden the present President stepping down in favor of the running mate, Kamala Harris, was a tough campaign with abuses of all types being flung against women and so on. At the end of it all, the Republicans have control of the White House, Senate and almost the House, a feat that would be accomplished after 142 years. Donald Trump has won the election with 312 electoral votes against 226 won by Kamala Harris. In the Senate the Republicans have 52 seats against the Democrats 46. In the house currently the Republicans have 213 seats with 5 more needed for control with 19 seats yet to be decided. Clearly they have the edge and are set to have full control. It may be added that Donald Trump has won all the seven swing states this time around. Dow Jones had a spectacular week and gained on three of the five trading sessions and lost on one. The fifth session saw markets change by a mere fraction of a point, 0.59 points. It gained a massive 1,936.80 points or 4.61% to close at 43,988.99 points, a lifetime high closing. On an intraday basis the high was 44,157.29 points.

The IPO market though buzzing with new issues week after week seems to have been hit by the fatigue factor. Subscription levels are falling, interest seems to be diminishing and of course listing gains seem to be vanishing. Last week we saw three issues close for subscription. The first of the list was Swiggy Limited which was subscribed 3.59 times, helped in no small means by QIBs who subscribed the issue 6.02 times. HNI portion was undersubscribed at 0.41 times while Retail was subscribed 1.14 times. There were 7.16 lakh applications. It would be interesting to see what was the response in the anchor portion where newspaper articles indicated a couple of days before the issue actually opened that the response saw a demand of between 25-35 times the anchor portion. If this was a reality, one wonders why the QIB response was in just single digit. 

The second issue was from Sagility India Limited which was subscribed 3.2 times with QIB portion subscribed 3.52 times, HNI portion subscribed 1.93 times and Retail portion subscribed 4.16 times. There were 5.73 lakh applications.

The Third issue was from Acme Solar Holdings Limited which was subscribed 2.89 times overall. The QIB portion was subscribed 3.72 times, HNI portion was subscribed 1.02 times and Retail portion was subscribed 3.26 times. There were 6.01 lac applications. 

The fourth issue which is currently open and would close on Monday the 11th of November is from Niva Bupa Health Insurance Company Limited. The issue consists of a fresh issue of Rs 800 crores and an offer for sale of Rs 1,400 crores in a price band of Rs 70-74. At the end of the second day of subscription, the issue was subscribed 1.24 times with QIB portion subscribed 1.59 times, HNI portion subscribed 0.42 times and Retail portion subscribed 1.43 times. There are 1.84 lakh applications in all. 

The issue from Afcons Infrastructure listed on Monday the 4th of November. The company had issued shares at Rs 463. After a tepid listing at Rs 430.05 the share gained on institutional buying and closed at Rs 474.55, a gain of Rs 11.55 or 2.49%. By the end of the week the share had gained further to close at Rs 492, a gain of Rs 29 or 6.26%. 

Zinka Logistics Solution Limited is tapping the capital markets with its fresh issue for Rs 550 crores and an offer for sale of 2,06,85,800 equity shares in a price band of Rs 259-273. The issue would open on Wednesday the 13th of November and close on Monday the 18th of November. The company is into the business of providing tolling and refueling recharges and services through its app. Its income consists of commission and subscription for its app service. It has a 27% market share currently and reported revenues of just under Rs 300crs. The biggest concern in this kind of a business is the fact that they already have a market share which is large at 27% and they are not making money. When and at what market share would they do so? Secondly, they have formed an NBFC for financing trucks. While there is a natural affinity considering that they have a a connect with the customer, the truck financing business is large, well organized and highly competitive. It needs large finance and deep pockets. One is not sure how this company would compete in this space. Considering the markets and response to IPOs, it makes sense to skip the current issue. 

Markets are trading in a broad band of 23,800-24,500 on NIFTY and at levels of 78,200-80,600 on BSESENSEX. Currently these are sacrosanct levels and we are likely to spend a good amount of time between these levels. What is needed is a break out or breakdown from these levels for any new trend to emerge. Global news will take a back seat in the coming days as the US elections are over. The President would assume office only in January and its only then when we would know what would be repercussions on global cues, current wars and impact on China. Talking of China, they have announced a stimulus and not sure whether it would have any great impact on markets in China or globally. 

Coming to our markets, we are in the last week of quarterly results declaration, suffice to say that they have been by and large below expectations. Not good enough to revise guidance upwards. The negative performance after 10 quarters is now becoming a cause for concern and doesn’t help the cause of rich valuations. While large cap stocks have born the brunt of FPI selling which has now reached 1.35 lakh crores since the beginning of October and matched with 1.21 lakh crores of buying by local domestic institutions, what next? The kitty that mutual funds were flush with is now on its last leg. If this selling does not subside, we could be in spot of bother. Retail investors are not yet worried and the new ones who have joined the markets over the last four and a half years post covid, are experiencing a meaningful correction for the first time.  The barrage of IPOs is reducing liquidity in the system in no small manner and we are caught between the devil and the deep sea. 

Something has to happen or give way. The present state of flux cannot continue. Will the state elections give a new twist or what. The week ahead has a trading holiday on Friday and is therefore of a mere four days. Trade cautiously and make a conscious effort to take some money of the table. It would act as a kitty and hold you in good stead in any deep correction in the short term. 

Finally, trade cautiously and allow markets to find their own levels.

It was a tough and dramatic week at the bourses and the timing, right in the middle of Diwali added to the excitement and colorful fireworks. Markets began the week on expected lines with a relief rally and by the time we ended normal trading on Thursday, which also happened to be the last trading day of the month and the October series, we had given up almost all the gains. Friday was ‘Muhurat’ day where volumes are low and the mood different. This was the seventh consecutive Samvat where markets have gained on Muhurat day. BSESENSEX gained 321.83 points or 0.41% to close at 79,724.12 points while NIFTY gained 123.55 points or 0.51% to close at 24,304.35 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.67%, 0.85% and 1.39% respectively. BSEMIDCAP was up 1.83% while BSESMALLCAP gained a massive 6.28%. Our markets gained on two of the five trading sessions. 

The Indian Rupee lost 2 paisa or 0.02% to close at Rs 84.08 to the US Dollar. Dow Jones gained on two of the five trading sessions and lost on three. It was down 62.21 points or 0.15% to close at 42,052.19 points. US goes to vote for a new President tomorrow and if it is not a close race, we should have early indication by Tuesday night our time about the outcome. If it becomes close, probably Wednesday morning would tell us the outcome. Global markets would be on tenterhook awaiting the outcome as interest rates could move sharply depending on who ultimately wins. It might be a good idea to take a breather and await the final outcome of the elections before taking a big plunge. 

The relief rally saw BSESENSEX touch a intraday high of 80,539 points and 24,492 points on NIFTY. The intraday gain was 1,134 points on BSESENSEX and 312 points on NIFTY. The closing was significantly lower with gains being reduced to 603 points on BSESENSEX and 159 points on NIFTY. At the end of the four day period it was virtually flat. 

Thursday the 31st of October saw October futures expire. The series lost a massive 2,010.70 points or 7.67% to close at 24,205.35 points. This is the biggest monthly fall since the advent of covid-19 or March 2020. While the benchmark indices were flattish at the end of Thursday, one saw the BSESMALLCAP index gain at a staggering pace. The rise was ‘FRIGHTENING’ and one wonders what to read from it. It could be positive or the Pied Piper charming his prey. Only time will tell. 

Results continue to be disappointing on a broad front and it appears that India Inc has failed to live up to expectations. On the other hand, FPIs aggression in sales continues unabated. They have in the month of October sold on every single trading session and cumulatively sold 1,14,445.89 crores. It’s a big number by all means and has been equally matched by DIIs who bought Rs 1,07,254.68 crores. In the process they have used up their kitty built with the help of monthly SIPs and is now less than half the monthly purchases made last month. What next? Will have to wait and US elections certainly hold a major part of what would happen going forward. 

Promoters and merchant bankers do not seem to have learnt the fine art of pricing upcoming IPOs. The pressure to tap the markets is mounting and it seems no one wants to leave anything on the table. Two companies had roadshows in the week gone by. 

The first issue was from  Swiggy Limited which consists of a fresh issue of Rs 4,499 crores and an offer for sale of 17,50,87,863 shares in a price band of Rs 371-390. The issue would open on Wednesday the 6th of November and close on Friday the 8th of November. The company is into the business of offering an easy-to-use convenience platform, accessible through a unified app. The object is to browse, select, order and pay for food, grocery and household goods.  It can also bee used to make restaurant bookings (Discount) and for events bookings (Stepping Out). Access to all of this is available through membership program.

Currently the company is loss making and while it hopes to become profitable in the near foreseeable future, one is not sure of the timeframe. 

Its larger competitor had gone public during July 21 and it had tried to create a buzz of the strong anchor investment it was receiving through the subscription. It had leaked newspaper stories that the anchor portion was subscribed some 35-37 times. The final number was 100 entities were allotted shares and the total subscription was made by 186 entities. The final bid of all 186 entities was a mere 1.04 times of the anchor portion. The entire news story was done by the newspaper popularly known at that time as “ZOMATO TIMES”. This time the company seems to have leaked a source based story in two or more publications which includes the statutory newspaper and claimed that with the anchor to be allotted on Tuesday the 5th of November they have already received bids which are about 25 times the anchor size. Is this a way to create artificial demand or a way to induce investment. Either way its not good or correct. Reflects on the team of the issuer and its large number of seven seasoned bankers. It’s a matter of time when the source of leak is detected and the food delivery platform pays for it. 

The company is loss making and therefore has an infinite PE. Trying to evaluate such a companies fundamentals are indeed difficult and with the amount of paper available for SWIGGY in the unlisted market which would be available at every rise in price, applying for the shares in the short to medium term or for listing pop is not viable or profitable. 

The second issue to tap the markets is Sagility India Limited which is tapping the markets with its offer for sale of 70,21,99,262 shares in a price band of Rs 28-30. The issue opens on Tuesday the 5th of November and closes on Thursday the 7th of November. The company is into the business of providing technology-enabled business solutions and services to clients in the US Healthcare Industry. The company is a pure-play healthcare focused services provider and clients include Payers (US health insurance companies), which finance and reimburse the cost of health services) and Providers (primarily hospitals, physicians, and diagnostic and medical devices companies). 

The company reported revenues of Rs 4,753.55 crores for the year ended March 24. It reported a profit after tax of Rs 589.55 crores and a PAT margin of 12.40%. The fully diluted EPS was Rs 0.53. The PE for the issue based on March 24 financials is 52.83-56.60. Expensive valuations at current times. There is not much that the company offers in terms of listing pop. In the long term we need to look at coming two quarters before taking a call. 

There are two other issues which would be having roadshows on Monday. The first is Acme Solar Holdings Limited which is a fresh issue of Rs 2,395 crores and an offer for sale of Rs 505 crores. The issue would open on Wednesday the 6th of November and close on Friday the 8th of November.  

The second issue is from Niva Bupa Health Insurance Company Limited. The issue consists of a fresh issue of Rs 800 crores and an offer for sale of 1,400 crores. The issue would open on Thursday the 7th of November and close on Monday the 11th of November. Details of the two issues price band would be available on Monday in the newspapers. 

Shares of Afcons Infrastructure Limited which had issued shares in a price band of Rs 440-463 would list on Monday the 4th of November. The issue was subscribed 2.77 times. The listing is expected to be flattish.