‘BREXIT’ did global markets in and what seemed to be markets were settling down just turned topsy-turvy all over again. Equity markets, bonds, currencies, gold and oil were super volatile across markets. The British Pound crashed, US dollar fell versus the yen and gold rallied, while oil fell. It was a black Friday and affected everyone leaving no one unscathed. The degree of hurt alone varied.
India was comparatively better off than the rest and this is because of the fact that we are largely a self-consumption economy excepting oil where we have to depend on imports. This was probably why we fell less than some of the other global markets.
The week ahead would continue to see volatility and it may rise considering the fact the June futures expires on Thursday the 30th of June. ‘BREXIT’ is not just about the referendum but it is going to affect a lot many things. Scotland voted overwhelmingly favour of staying with the EU, even though the combined average was of leaving the EU. Scotland is now demanding that they will go with the EU which means the United Kingdom will not remain the same. Similar is the case with Ireland but they are waiting for what happens with Scotland.
Another key concern is the status of London being the financial capital of the world. The number of people appointed in the sector will see massive cuts, hurting the job market. The EU needs Britain to quit as quickly as possible so that any more countries who may be thinking of leaving the EU are countered. These are some of the immediate ramifications of Thursday’s vote.
Coming to India, June futures expire this Thursday and currently the NIFTY is a tad higher than the May futures expiry. NIFTY is up 18.95 points or 0.23% higher. There is no advantage currently for bulls or bears and both would have to work hard over the next four days to eke out some advantage. The recovery on Friday from the lows was remarkable and had the support of financial institutions backed by the government. The rupee did lose ground and lost 88 paisa or 1.31% during the week to close at Rs 67.96 to the dollar.
The primary market seems to be in the news and seeing a lot of action. The offer for sale from Mahanagar Gas Limited was open for subscription in the week gone by and received excellent response. The overall issue was subscribed 64.54 times and received 9.93 lakh applications, a new record. This is in comparison to 6.76 lakh applications received by Ujjivan which was the previous record. The HNI category was subscribed 191.61 times and at this subscription the cost of the leveraged investor would be Rs 123. This premium looks unlikely on listing of the share and in all probability the investor would lose some money. With ‘ASBA’ mandatory for all, SEBI should ensure that HNI’s do not manage to have their applications rejected on flimsy ground like making multiple applications etc. They should monitor this IPO closely and plug unwarranted excesses being committed by this category.
Another IPO opens this week from Quess Corp which is raising Rs 400 crs in a price band of Rs 310-317. The company is into manpower providing and other three verticals. It could be partially compared with a recently listed entity Team Lease which is only into manpower services. Quess Corp’s dominant business is manpower services at about 60% of total revenue but the bulk of the profit comes from the other three services which have significantly better margins. This issue is in demand and with retail portion a mere 10% and HNI 15% is likely to see frenzied bidding, when the issue opens on Wednesday and closes on Friday.
