A terrible week at the markets has come to an end but there was more in store for us. Nature has been unkind and unleased its fury on the Himalayan Kingdom of Nepal where an earthquake of devastating intensity rocked the kingdom on Saturday and aftermath shocks on Sunday. Final count of losses of human life will take some time to tally but clearly the loss is insurmountable. India being the largest neighbour in the immediate vicinity was the first to rush aid to the kingdom. This is not to say that other countries have not helped but immediate help is the first and most critical in any natural disaster of this kind.
The markets are reeling under selling pressure and the month of April has been unique. Gains made in the first fortnight have been wiped out in the remaining part of the second fortnight with another four trading days to go. The high of the month on the SENSEX was 29,094.61 points and NIFTY 8,844.80 points made on the 15th of April. The rally in the first fortnight was close to 1,600 points on the SENSEX and 550 on the NIFTY and that has been entirely lost in the second half. This effectively means we have gained and lost a staggering 3,100 points on the SENSEX and 1,100 on the points on the NIFTY in a mere 17 sessions showing the intensity of market movement.
There has been some activity in the primary market. The week gone by saw MEP infrastructure managing to get fully subscribed. The toll collector and road Maintenance Company had issues with some states like Maharashtra deciding to scrap toll collection in some places. With this being a central theme there were concerns about the future of toll collecting companies. Of course NHAI the regulator is very clear that if the terms of the contract are changed, the toll collector would have to be adequately compensated. The issue from VRL is expected to list by weekend probably on Thursday which happens to be the last trading day of the week with Friday being a holiday.
There is an offer for sale opening on Tuesday the 28th of April and closing on Thursday the 30th of April from UFO Moviez Limited. The company is offering shares worth Rs 600 crs in a price band of Rs 615-625. There is a very interesting thought which comes to mind about IPO’s. The current system of allotment in retail is by and large by lottery of the minimum one lot which is between Rs 13500-15000. When everyone applying in an issue whether it is retail or the leveraged HNI is interested only in “FIRST DAY FIRST SHOW” does the issue analysis really matter? Or does it make better sense to analyse the issue once it is listed and the price stabilised. The listing price is more a factor which reflects the cost of interest and the issue price and also the grey market premium which is currently very active. Post a few days of listing the share price is back on ground zero and then it would make better sense to look at the business and what needs to be done with the company. The uncertainty of response and price discovery is behind you and more significantly price and volume are typically in your favour.
FII’s or FPI’s are a confused lot with the issue of MAT (minimum alternate tax). It has seen such a sharp movement as mentioned above which is causing unnecessary confusion in the minds of investors. When will sanity return to our markets is currently a million dollar question but with markets at key support levels a short term bounce looks likely. It would in all probability be a dead cat bounce and then depend on further indication about the monsoon.
Infosys has changed the timing of declaring its results from early morning before markets open to mid-afternoon but the end consequence was the same? The share post declaration of results at 2.20pm lost significant ground and brought the already weak SENSEX down by another 125 points post its results. The company has declared a second bonus issue of 1 for 1 in under 12 months but the market price reflects uncertainty and uneasiness on the performance.
The markets are interestingly poised and look set for some short term positive upmove. Ride the rally.
