Markets were topsy-turvy in the week gone by. The correction which had set in on Friday of the previous week (2nd August) continued and we saw a sharp sell-off on Monday. Probably this was a fall which post-covid market participants had never seen before. One must ignore of course the fall witnessed on the 4th of June when results were declared for the general elections which were lower than what the exit polls had said. This saw a sharp reaction from the markets in India and also globally. There has been recovery from the lower levels, but whether we are out of the woods is still an issue which is debatable. To add to the worries of the Indian markets is the fact that with results season coming to the last reporting week, the comfort one looked for in numbers showing growth in revenues and profits seems to be missing. This makes markets that much more expensive at a time when the one big factor against them is valuations. 

The BSESENSEX lost on three of the five trading sessions and gained on two. BSESENSEX was down 1,275.04 points or 1.58% to close at 79,705.91 points while NIFTY lost 350.20 points or 1.42% to close at 24,367.50 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.24%, 1.38% and 1.46% respectively. BSEMIDCAP lost 1.01% while BSESMALLCAP was down 1.86%. 

The Indian Rupee was under pressure and lost 21 paisa or 0.25% to close at 83.96. Dow Jones was choppy and lost on two of the five trading sessions. It lost 239.72 points or 0.60% to close at 39,497.54 points. 

The lows made in our markets on Monday during the sharp fall were at 78,295.86 points on BSESENSEX and at 23,893.70 points on NIFTY. These will become not only significant support levels for any downturn but also a pivot to decide any trends in the medium term on the market. On the upside previous tops are a longer resistance, but levels of 24,500 on NIFTY and at 80,500 points on BSESENSEX become important levels which have to be surpassed and maintained for any uptick to continue in the markets. Until then we can say that the broad trading zone for the markets would be in the range of 23,900-24,500 on NIFTY and at 78,300-80,500 on BSESENSEX.

Primary markets have been very active and we saw three issues listed during the week. The first of them was the listing of Akums Drugs and Pharmaceuticals Limited listed on Tuesday the 6th of August. The company had issued shares at Rs 679. The discovered price was Rs 725 on both the stock exchanges. The share hit the upper circuit at Rs 797.45 on BSE and Rs 797.50 on NSE. It closed a tad lower at Rs 796.25, a gain of Rs 117.25 or 17.26%. By Friday, the share traded higher and closed at Rs 803.70, a gain of Rs 124.70 or 18.37%.  

The second share to list was that of Ceigall (India) Limited which had issued shares at Rs 401. The share made its debut on Tuesday the 8th of August with the discovered price being Rs 413 and closing day at Rs 386.05, a loss of Rs 14.95 or 3.72%. On Friday, the share gained some ground and closed at Rs 396.95, a reduced loss of Rs 4.05 or 1.01%. 

The third share to list was that of Ola Electric Mobility Limited who had issued shares at Rs 76. Shares debuted on Friday the 9th of August and the discovered price was Rs 76. Shares then closed at the upper circuit of Rs 91.18 on BSE, a gain of Rs 15.18 or 19.97%. On NSE, the closing price was factionally higher at Rs 91.20. 

Besides this we had two issues which opened and closed for subscription. The issue from Unicommerce Esolutions Limited opened on Tuesday the 6th of August and closed on Thursday the 8th of August. The issue at close was subscribed 168.39 times overall. The QIB portion was subscribed 138.75 times, HNI portion 252.48 times and Retail portion was subscribed 131.15 times. 

The issue from Brainbees Solutions Limited had opened on Tuesday the 6th of August and closed on Thursday the 8th of August. The company is an online and off-line retailer of accessories, clothes and everything that mothers need, new born babies and kids wear up to 12 years of age. They have a popular website firstcry.com. The price band of the issue is between Rs 440-465. The company is currently loss making and is yet to make profits. It’s a one-of-a-kind company and has a head start in business. The issue was subscribed 12.22 times overall with QIB portion subscribed 19.3 times, HNI portion subscribed 4.68 times and Retail portion subscribed 2.31 times. 

Both the issues which closed for subscription last week, would list on Tuesday the 13th of August. 

The week ahead also sees the issue from Saraswati Saree Depot Limited which would open on Monday the 12th of August and close on Wednesday the 14th of August. The price band is Rs 152-160. The company is into the wholesale business of selling sarees and its predominant markets are Maharashtra. The company reported sales of Rs 610 crores for the year ended March 24 and an EPS of Rs 8.92. The PE band for the issue is 17.04-17.94 which is competitive with that of Sai Silk which is a retail brand based in South India. The wholesale and retail businesses are quite different in nature. The issue looks decently priced. 

The week ahead has a trading holiday on Thursday the 15th of August when we celebrate our Independence day. This would cause a mild disruption and see markets seeing a break in momentum. On the positive side, indications from the FED suggest that there would be an interest rate cut in the US in the September meeting. Closer home, RBI in its bi-monthly meeting kept interest rates unchanged on expected lines. RBI believes that it is getting closer to its target of inflation rates and is monitoring the progress of inflation. 

In a continuation of the Hindenburg saga, there is a spate of allegations now being made by Hindenburg against the present chair-person of SEBI. There has been a denial put out from her explaining matters. This has now become a serious matter as the tone of accusations is against the regulator and implies, what can a regulator who has an issue herself, do against Hindenburg. Expect fast developments on this issue over the next 48 hours. I believe there may not be much action in the marketplace on this news in general. This now becomes a matter for the government and the regulator to act upon, as their authority has been effectively challenged. 

Markets in the coming shortened four-day week will have a tough time to keep things under control. We were hit last week by a sell-off and the mood of FPIs is still not clear. They appear to be sellers on many more days than they are buyers. The biggest pocket of support is from Domestic institutions who seem to have compelling reasons to invest the sea of money that they are being flooded with. In such a scenario with no immediate news flow to significantly alter market direction, we should remain in a broad trading zone as mentioned above. The strategy would be to flow with the trend and use any meaningful rally to sell and book profits. 

Trase cautiously.

Things were rolling along fine for the markets until the FED meeting. Thursday, saw US markets fall as thoughts of an impending recession hit the markets overseas. Our markets too got worried and we had a sharp fall on Friday, followed by another fall in the US. Probably we could see the week beginning on Monday the 5th of August opening with a downward bias. Markets saw yet again a series of new highs being made on BSESENSEX and NIFTY. The new intraday high on BSESENSEX was at 82,129.49 points while the closing high was at 81,867.55 points. Similar levels on the NIFTY were at 25,078.30 points and 25,010.90 points. Friday was a sea of blood and markets fell across the board. The week ended with BSESENSEX losing 350.77 points or 0.43% to close at 80,981.95 points while NIFTY lost 116.65 points or 0.47% to close at 24717.70 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.37%, 0.17% and 0.13% respectively. BSDEMIDCAP lost 0.07% but BSESMALLCAP was up 0.62%. Markets gained on the first four days of the week and lost on Friday. This incidentally also brought to an end the weekly gains which the markets achieved for the previous eight weeks in a row. Incidentally, 8 is a Fibonacci number and has great relevance in technical analysis. 

The Indian rupee lost 2 paisa or 0.02% to close at Rs 83.75 to the US dollar. Dow Jones gained on two of the five trading sessions and lost on three. The last two days of the week were brutal and markets lost significant ground. Dow ended the week with losses of 852.08 points or 2.10% to close at 39,737.26 points. The US FED had its policy review meeting on Wednesday. At the end of the same, it appears that at the next meeting to be held in September, there is every possibility of a rate cut, though the quantum is not yet sure. The markets did not like the fact that the rate cut did not happen as yet or the fact that the US could slip into recession going forward. Strange are the ways of the markets and we are all yet learning.

Primary markets saw a lot of action. There was one issue which opened and closed during the previous week for subscription, while another two have opened and would close in the coming week. Yet another two issues will open and close in the coming week. 

The issue from Akums Drugs and Pharmaceuticals limited which had launched its IPO in a price band of Rs 646-679 received excellent response and was oversubscribed 63.56 times. The QIB portion was subscribed 90.09 times, HNI portion was subscribed 42.21 times and Retail portion was subscribed 21.3 times. There were 23.95 lakh applications in all. 

The issue from Ceigall India Limited has opened on Thursday the 1st august and would close on Monday the 5th August. The issue consists of a fresh issue of Rs  684.25 crores and an offer for sale of 1,41,74,840 shares in a price band of Rs 380-401. At the end of day 2 of application, the issue is subscribed 1.29 times overall. One must remember that in IPOs the largest part of subscription comes on the third afternoon with QIB and HNI bids getting bunched at that time. The company is a road developer and had revenues of Rs 3,066.19 crores and a net profit of Rs 304.91 crores for the year ended March 24. The PE multiple for the share is 19.62-20.57. The share has decent prospects going forward.

The second issue is from Ola Electric Mobility Limited which opened on Friday the 2nd of August and would close on Tuesday the 6th of August. The price band of the issue is Rs 72-76. The size of the fresh issue is Rs 5,500 crores and the offer for sale is for 80,86,26,207 equity shares. The company is Currently the company is loss making as the battery is yet to be commercialized. In terms of EV sales, it is the market leader with roughly a 42-45% market share.  Investment with a medium term view is warranted. 

The third issue slated to open on Tuesday the 6th of August and close on Thursday the 8th of August is from the makers of Firstcry.com. The company Brainbees Solutions Limited is tapping the markets with its fresh issue for Rs 1,666 cores and an offer for sale of 5,43,59,733 equity shares in a price band of Rs 440-465. Ther company is into the business of mothers to be, newborn and kids in the 0-12 range. A first of its kind with online and offline stores which are company owned and operated and also franchisee operated. Currently the company reported negative earnings. The issue is meant for long term investors. 

The week ahead would see markets open with a negative bias. First major support for markets would be the July lows of 24,200 on NIFTY and 79,500 on BSESENSEX. There would be support at these levels or even earlier but the real danger is that from investors who have never seen markets fall sharply. This could lead to a cascading effect and forceful liquidation.  While the markets fall, they would also throw up some good buying opportunities which could be useful to add positions in.

The strategy for the week would be to allow markets to find their own levels and look for buying opportunities. Trade cautiously.