Markets were under pressure in the week gone by and the optimism about markets and new highs in the festive season simply disappeared looking at the Israel-Hamas stand. Markets lost on four of the five sessions and gained on just one session. The continued hammering or selling by FPIs during the result season which has just begun and a fair spectrum of results declared, does not indicate any negativity in the results, even though the reason to be optimist is not present either. At the end of the week, BSESENSEX lost 885.12 points or 1.34% to close at 65,397.62 points while NIFTY lost 208.40 points or 1.06% to close at 19,542.65 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.18%, 1.20% and 1.09% respectively. BSEMIDCAP lost 1.31% while BSESMALLCAP to show a different face actually registered gains, though minuscule of 0.04%. The markets have surrendered the momentum and the heavyweight stocks are just not moving up. The week ahead would see Reliance declare results on Friday post market closure. Whether that helps in boosting markets or not will be a million-dollar question. 

The Indian rupee gained 14 paisa or 0.17% to close at Rs 83.12. Dow Jones had a torrid time and lost on three of the five trading sessions and gained on two. The losses were consecutively on the last three days of the week. Dow lost 543.01 points or 1.61% to close at 33,127.28 points. 

In primary market news we saw the issue from IRM Energy Limited open and close for subscription. The issue for 1.08 cr shares in a price band of Rs 480-505 was open from Wednesday the 18th of October to Friday the 20th of October. The issue was subscribed 27.05 times with QIB portion subscribed 44.73 times, HNI portion subscribed 48.34 times and Retail portion subscribed 9.29 times. 

There is one issue which would open on Wednesday the 25th of October and close on Friday the 27th of October. The issue from Blue Jet Chemicals Limited is entirely an offer for sale by the promoters for 242.85 lac shares in a price band of Rs 329-346. The issue would garner Rs 840 crs. 

The company reported revenues of Rs 721 crs and an EBITDA margin of 30.39% and PAT margins of 22.20%. The EBITDA in absolute terms was Rs 219 crs and PAT was Rs 160 crs. The reported EPS for FY23 was Rs 9.23 and the PE multiple, price band is 35.64-37.49. 

The company is into three business verticals where the largest is contrast media where it makes chemicals used during MRI and CT scan. This is the largest business vertical for the company and they have relations with the top four players in the vertical who control almost 78% of the global market. The second business vertical is making synthetic sugar sweeteners used across product categories such as beverages, toothpaste and even pharma. The third vertical is CDMO where they make value added products for pharma players across the globe. 

As the issue is an offer for sale, there would be no objects of the issue. However, the company is in the midst of capacity expansion which will be up and running in the fourth quarter of FY24. This would raise the capacity from the present 1,100 KL to about 1,500 KL. They are also working on a larger capex which has started but would take about 18-24 months for completion which would take the capacity further higher to about 2,200KL. The production of higher value add products would come from this expansion and costlier molecules would be produced. 

Share is attractively priced and offers good scope for returns to shareholders. 

The week ahead has a trading holiday on Tuesday. This would restrict the trading week to just 4 trading sessions. Adding to the volatility in a truncated week is the fact that Thursday the 26th of October sees October futures expire. The current value of NIFTY is ahead of the series currently open by a whisker. The lead for the bulls is a mere 19.10 points or 0.10%. The series had begun at 19,523.55 points. If I had to bet my money on either the bulls or the bears for taking the series, I would go with the bears. There is hardly any carry-forward lead and the present momentum is with the bears. Secondly, the ground reality of FPIs is negative with they being net sellers of approximately 16,176 crs so far in October. Finally, the Israel-Hamas conflict seems to be getting elongated with no ready solution whatsoever. 

Coming to the week ahead, we have 4 trading sessions and series expiry leading to higher volatility. Bulls seem to have lost momentum and it’s too soon how much pressure can be piled on. With levels of 19,200-19,250 looming large and after multiple supports in the recent past from these levels are under threat of breaking this time around. The next level of support would beat closer to 18,800-18,850. Similar support would be at 63,050-63,200 on BSESENSEX. 

The strategy would be to sell on any rallies in the coming week and allow markets to find their own levels. Being adventurous could be a liability. Buying should only be done if stocks are available really cheap. Simple approach would be to sell and buy. 

Trade cautiously.

Markets have a mind of their own and last week was a great example of the same. They fell on the opening day of the week on expected lines on the back of the Hamas-Israel conflict, but bounced back more than they lost on Tuesday itself. At the end of the week, markets had actually closed in the positive. They lost on three of the five trading sessions and gained on two. BSESENSEX gained 287.11 points or 0.44% to close at 66,282.74 points while NIFTY gained 97.55 points or 0.50% to close at 19,751.05 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.55%, 0.56% and 0.58% respectively. BSEMIDCAP was up 0.71% while BSESMALLCAP was up 0.86%. 

The Indian Rupee lost 2 paisa or 0.02% to close at Rs 83.26 to the US Dollar. Dow Jones gained on four of the five trading sessions. It gained 262.71 points or 0.79% for the week to close at 33,670.29 points.

In primary market news, we saw one listing in the week gone by. Shares of Plaza Wires Limited which had issued shares at Rs 54 listed on Thursday. Shares closed day one at Rs 80.23, a gain of Rs 26.23 or 48.57%. On Friday, the share gained another 5% to close at Rs 84.24, a gain of Rs 30.24 or 56%. 

The week ahead sees the primary issue from IRM Energy Limited open and close. The company is tapping the capital markets with its entirely fresh issue of 1.08 cr shares in a price band of Rs 480-505. The issue opens on Wednesday the 18th of October and closes on Friday the 20th of October. The company is in the business of CNG and PNG distribution and operates dispensing stations in three different areas and has just started in one more area. The company is operating in Banaskatha and Diu, Gir and Somnath areas in Gujarat. It also has an operation in Fatehpur Sahib in Punjab. It started the first couple of pumps in the new area of Namakkal and Tiruchirappalli in Tamil Nadu in the first quarter of FY24. The object of issue is to raise funds for the capex of installing the network in the Tamil Nadu area.  

The company reported revenues of Rs 980 crs for the year ended March 23 and an EBITDA of Rs 118.93 crs and a PAT of Rs 63.1 crs for the same year. The EPS for the year was Rs 20.93. The PE multiple is 22.93-24.13 based on the above EPS. Considering the fact that the company has just started business in the fourth geography in the previous quarter, it has a significant revenue growth ahead of it as it scales the distribution going forward. 

The share looks attractively priced and offers growth for the medium-term investor. Application in the share is warranted. 

The result season has begun and the first of the block were the IT sector results. While TCS weathered the storm, Infosys took the stick and was hammered by investors. There is pain in the sector and is likely to take at least one to two quarters to come out of the present downtrend. The attractive buyback offered by TCS is also a contributor to the TCS share price stabilizing quite well. 

This week one would see some of the leading banks declaring results. HDFC Bank is holding its meeting over Sunday and Monday the 15th and 16th of October, followed by IndusInd Bank on Wednesday the 18th of October and followed by Kotak Bank on Saturday the 21st of October. Post these leading results, one would get a fair sense of how the BFSI sector has fared. Incidentally, BFSI accounts for roughly 42% of NIFTY and is a very dominant part of the benchmark index. 

The mood in the market is very positive and even though FPIs are net sellers for quite some time, their selling is being absorbed by domestic mutual funds on the back of very strong inflows from SIPs. With this inflow they are able to ensure that markets don’t lose ground simply because of the selling.  Further markets have given good returns to investors over the last couple of months with markets in general gaining and even more with the kind of outperformance witnessed from midcap and Smallcap sectors. In such a scenario the attraction and domination of retail investors has increased significantly. The subscription in the retail segment of SME platform issues is a clear indication of this massive influx. In such a scenario it would be natural to expect markets to continue their upward movement backed by strong momentum. 

Coming to the markets in the week ahead, the movement in the previous week demonstrates the strong momentum that the markets have. There is optimism and a strong belief that markets are wanting to go higher. The immediate pivot for the markets is the levels of 19,800-19,850 points on NIFTY and 66,400-66,550 points on BSESENSEX. Once these levels are crossed and sustained, the next targets are the all-time highs with some small resistance at levels of 20,000-20,050 points and 67,000-67,150 points. India has won a high-octane match against its neighbour in the on-going world cup cricket match and sentiments would be carried on to the market front on Monday as well. With Navratri having begun and a large part of India entering into a festive mood, expect markets to also have the same mood. This would make upward movement in the markets easier.  

The strategy would be to play in large cap stocks and be careful in entering unmoved stocks from the midcap and Smallcap space. Markets seem to be on target for reaching the previous all-time highs if not bettering the same in the festive month of Dussehra to Diwali.