Global markets are in a correction mode and India is no exception. While falling crude oil prices is great news for oil importing countries like India and the world, one must also remember that some of the exporters are also investors in global equity markets. Prices at some point when away from reality hurt all. Coming to our markets they fell between 3.5% to 3.85% and excepting the BSEHEALTHCARE which was up a tad, all sectoral indices were in the red with capital goods, realty and oil and gas sectors losing about 7.25%.
The markets are correcting and this is not any big thing. They were overheated and there seemed to be optimistic exuberance with open interest in the December series higher by 13% compared to the November series at Rs 83,200 crs. In economic news consumer inflation at 4.2% was the lowest since the new series began in January 2012 while IIP was a negative 4.2%. The fall in inflation was welcome while IIP was below expectation and now clamour for rate cut will grow.
Whether the same will happen or not only RR can tell. Infosys founders sold shares worth over a billion dollars and the bulk of the same was bought by FII’s. This deal happened on Monday the 8th of December and effectively over the next four days FII’s were net sellers of about Rs 1700 crs. For the week considering the Infosys purchase their net purchases were Rs 3,240 crs.
The correction is likely to continue during the week though this time it would be more volatile unlike last week where it was down one way except for a small recovery midweek on Wednesday. It makes sense to buy fundamentally strong stocks midweek when the correction has taken its toll.
Markets always give everyone a chance, but they seldom give a second chance. So all the fence sitters who wanted to buy on a correction, this is the week to do so.
Have a great week and get set for Christmas and then the New Year.
Correction to continue
Markets to change track and all action to shift to midcap and smallcap
The world will be celebrating Christmas and New Year in a little over two weeks from now and more importantly the institutional fund managers typically begin their break a little earlier. With institutional player’s activity likely to be reducing in the coming days, local players or operators are gearing up to move the midcap and smallcap space. An initial trailer of this was visible last week where the benchmark indices the SENSEX and NIFTTY lost but the MIDCAP and SMALLCAP indices registered big gains. Further the BSEMIDCAP is at a new lifetime high while the SMALLCAP is at a 52 week high.
SAIL did its OFS successfully on Friday and the government raised Rs 1,715 from the divestment. The issue was oversubscribed 1.8 times in the non-retail category and 2.6 times in the retail category which got a 5% discount to the bid price. SEBI has permitted OFS to come with a cut off price for retail category so that retail investors need not get into the bidding issue and fine tune their bid. Unfortunately that did not happen here and hence the oversubscription was not as much as expected. The share price of SAIL has corrected significantly during the week on account of the OFS and lost Rs 6.50 pr 7.28% to close at Rs 82.80 which is below the floor price of Rs 83 for the OFS. One hopes that in future issues particularly the larger ones like Coal India which is expected next will have this facility.
Mangalore Chemicals is back in the news with SarojPoddar led Zuari group making a voluntary offer for 25.90% of Mangalore Chemicals at Rs 91.92. Readers would recall that the earlier offer from Zuari did not garner adequate response and whatever response was there had gone to Deepak Fertilisers whose bid price was substantially higher. The new offer is without Vijay Mallya as person acting in concert and this is probably due to the fact that the “Wilful defaulter” tag issue is there with him.
Whether this offer will succeed where the price is still lower than what Deepak had offered in its final price the first time around of Rs 93.60 plus an interest component. Interesting days ahead for the shareholders of Mangalore Chemicals which gained Rs 9.25 or 11.34% for the week to close atRs 90.85.
The IPO from Monte Carlo was oversubscribed with HNI’s preferring to avoid the issue. Details of the same are available on the article separately. The market will be choppy and action will continue to shift to midcap and smallcap which is more difficult to predict than the benchmark stocks or indices. Trade with caution so as not to dampen the festive spirit ahead.
Performance of Newly Listed Shares as on 5th December 2014
| Name | Date of listing | Issue Price | closing price | closing price | % gain loss | change over |
| 5th December | 28th November | over week | lssue price | |||
| Snowman Logistics Limited | 12th September | 47.00 | 102.80 | 111.00 | -17.45 | 118.72 |
| Sharda Cropchem Limited | 23rd September | 156.00 | 266.35 | 272.90 | -4.20 | 70.74 |
| Shemaroo Entertainment Limited | 1st October | 170.00 | 186.75 | 200.35 | -8.00 | 9.85 |
