Our markets began last week with a great Monday, remained flat for the next three days and lost substantial ground on Friday, but managed to gain just under 1% on a weekly basis. The BSESENSEX gained 0.93% while NIFTY gained 0.65%. The markets seem to be developing cold feet or suffering from ‘Acrophobia’ which is the fear of heights. BSESENSEX is under 4% of its all-time high 30,024 while NIFTY is less than 3% of 9,119 points. The momentum seems to have broken and there are global cues for it, nothing from within the country.
It appears that there is consensus in the Fed that they need to raise interest rates and the US market fell sharply on Friday on this count. Monday would see a fall in our markets as well when they open for trading post the weekend. The upward momentum would be broken and they would need to gather steam and pick up momentum after a period of consolidation.
Two IPO’s open this week. The first opening on Monday is from L&T Technology Services Limited. The company is offering for sale 1.04 cr shares in a price ban of Rs 850-860. The company has allotted on Friday 31.20 lac shares to 19 anchor investors comprising of 33 entities. This would be the third divestment from the L&T stable. The earlier two issues did not make money for investors on listing or immediately thereafter. Will this be a hat-trick or third time lucky? Only time will tell but the odds are stacked up against the company. The asking price is expensive and the PE on a fully diluted basis is a steep 26.5 to 26.8 times. Very clearly some companies refuse to learn and this would probably not do well on listing like the other issues. The most recent example was that of L&T info which even after listing in July is almost 10% below the issue price. This is after a stellar performance in the June quarter where they reported excellent results.
The second issue is from GNA Axles Limited which is selling through a fresh issue 63 lac shares in a price band of Rs 205-207. The company is the leading manufacturer of axle shafts in the country and sells more than half of its products abroad. The PE multiple at which the shares are being offered is 11.99-12.11 times.
The markets would be choppy and would trade with a negative bias. Things could begin to turn around towards the end of the week.
