Markets have a mind of their own and they do give advance indication and warning if they plan to do the unexpected. Last week we saw markets take a severe beating and but for the recovery on Friday, the first day of November futures series registering a sharp rise, things could have been really different. Probably it would now be clear to many of the readers why I took a U-turn from being bullish to becoming bearish at the beginning of last week. BSESENSEX lost on three of the four trading sessions and gained on just Friday. BSESENSEX lost 1,614.82 points or 2.47% to close at 63,782.80 points while NIFTY lost 495.40 points or 2.53% to close at 19,047.25 points. The broader markets saw BSE100, BSE200 and BSE500 lose 2.46%, 2.51% and 2.62% respectively. BSEMIDCAP lost 2.41% while BSESMALLCAP lost significantly more at 3.43%. 

The Indian Rupee lost 12 paisa or 0.14% to close at Rs 83.24 to the US Dollar. Doe Jones had a bad week once again and lost 709.69 points or 2.14% to close at 32,417.59 points. Dow was down on four of the five trading sessions. Significantly, Dow has entered negative territory on a year-to-date basis and is down 2.20% so far. 

In primary market news, there was one listing and one issue which opened and closed during the week. In the week ahead we have two issues which would open and close for subscription. 

Shares of IRM Energy Limited which were issued at Rs 505 listed on Thursday the 26th of October. The discovered price was Rs 479 on the BSE and the share closed at Rs 472.95 on debut day, a loss of Rs and 32.05 or 6.34%. Friday saw the share recovering and closed at Rs 482.25, a loss of Rs 22.75 or 4.50%. The share performance has been impacted after the announcement of the Electric Vehicle policy in Delhi and NCR regions. This saw IGL AND MGL share prices getting impacted. For the records, it may be stated that IRM is not in close proximity to Delhi NCR and there would be no impact of this policy.

The issue from Blue Jet Healthcare Limited saw the issue open between Wednesday the 25th of October and Friday the 27th of October. The issue price band was Rs 329-346. The issue was overall subscribed 7.94 times with QIB portion subscribed 13.72 times, HNI portion subscribed 13.59 times and Retail portion subscribed 9.46 times. There were 3.91 lac applications. 

The first issue in the week ahead is from Cello World Limited which is tapping the markets with its offer for sale of 2.93 cr shares in a price band of Rs 617-648. The issue would open on Monday the 30th of August and close on Wednesday the 1st of November. 

The company Cello World Limited is into three broad verticals of manufacturing. The first is Consumer ware, the second is writing instruments and the third is moulded furniture. The company reported revenues of Rs 1,796.69 crs for the year ended March 23. It reported a net profit of Rs 285 crs. The fully diluted EPS for the period was Rs 13.17, and the PE Price band for the issue is 46.85-49.20 times its March 23 earnings. The company enjoys robust growth and healthy margins which make the company a respected brand and choice for investment. As the issue is an offer for sale there are no objects of the issue. The company has detailed an expansion plan in its various verticals and would be setting up a third hub in Falana, Rajasthan after hubs in Daman and Uttarakhand. Investment is warranted looking at the growth prospects of the business. 

The second issue is from the consumer company, Honasa Consumer Limited. The company is tapping the markets with its fresh issue of Rs 365 crs and an offer for sale of 4.12 cr shares in a price band of Rs 308-324. The company is a retailer of baby care, face care, body care, hair care, colour, cosmetics and fragrances segment. The issue opens on Tuesday the 31st of October and closes on Thursday the 2nd of November. The company reported revenues of Rs 1,492 crs for the year ended March 23 and a restated net loss of Rs 11.52 crs. As the EPS is negative, the issue has no PE band as the same is infinite. 

The issue is one from the new age companies and is primarily an exit for existing investors. 78.55% of the proceeds at the top end of the price band would go to selling investors while a mere 21.45% would go to the company. This company has a long way to go to establish its credentials as three of its six brands are acquisitions and need to establish the growth trajectory. The company has a long way ahead and needs to perform. The issue is 75% reserved for QIBs and would get subscribed, it would need a few quarters of consistency and performance before the share is actively traded and established. Investors with a high risk reward ratio alone should look at the above issue. 

October futures expired on an extremely weak note. There was sharp selling on expiry day itself and NIFTY lost 265 points on Thursday alone. The series lost 666.30 points or 3.41% to close at 18,857.25 points. 

Coming to the markets in the week ahead, expect volatility with sharp intraday moves to dominate markets. Intraday lows made on Thursday would act as strong support in the short term. These were at 63,092.98 points on BSESENSEX and at 18,837.85 points on NIFTY. The upside is currently capped at levels of 19,200-250 points on NIFTY and at 63,175-63,350 points. For markets to move up meaningfully, these levels have to be crossed and sustained over the next couple of days. Results season is on and while we have a few points of outperformance in them, there is no broad trend to confirm that India Inc has had a stellar performance. 

If one is to look at the news on the Israel-Hamas conflict, it’s not too good with the kind of preparations that Hamas had made at Gaza under the ground. It looks like this event is going to turn bloody and life taking before any meaningful settlement or solution is found. This indicates that market rallies in the short to medium term are going to be short lived and markets will spend time consolidating and adjusting to new levels on the lower side. 

The continued selling by FPIs remains a matter of concern and also the supply of fresh paper through primary market offerings ensures that liquidity in the market place gets absorbed before one can say ‘Hey Presto’. Suffice to say that we have tough times ahead with markets being volatile and choppy. It could be a good time for intraday traders who square up at the end of the day and avoid overnight exposure. 

Trade cautiously.

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.