Shares of Sharda Cropchem listed on the bourses and were off to a flying start. The company had tapped the capital markets with its offer for sale of 2.25 cr shares in the price band of Rs 145-156 between the 5th and 9th of September. The issue received excellent response and was subscribed 60 times. The issue was priced at Rs 156 and raised Rs 351.86 crs at the top end of the price band at which shares were allotted.

The oversubscription in the QIB category was a massive 251 times. The cost of application with borrowed finance considering 8% interest for 9 days meant that the interest cost would amount to Rs 77.24. This effectively meant that the allotment price for HNI’s with borrowed money was Rs 233.24.

From the table above one can see that the discovered price at 10 am when trading went live was Rs 254.10 on the BSE and Rs 260 on the NSE. The share made it’s high soon after and then began to fall on profit taking from the leveraged HNI and partially from the retail investor who was making over Rs 100 or about 64%. When the market price fell under Rs 240 there was some panic selling as HNI’s exited either at cost or marginal losses.

The traded volume was a healthy 355.43 lac shares which was 1.57 times the issue size while delivery volume was 103 lacs which was 29.06% of the traded value and a decent 45.79% of the issue size. The weighted average of the day’s trading is Rs 244.02 on the BSE and Rs 244.44 on the NSE indicating that the bulk of those who have sold even amongst the leverage HNI have made money. What is worth noting is that there are no names in either the delivery selling or delivery buying which makes one believe that the majority selling has come from the non-institutional category comprising of HNI’s and retail. This augurs well for the share in the medium term and long term as the buying which has happened could be from serious players.

This is the second consecutive listing of IPO where after Snowman, investors are making decent money. The price of Snowman is just about double while that of Sharda is about 50% up after day one. This would put tremendous pressure on the third IPO of Shemaroo Entertainment which would ne listing a little later. The issue from Shemaroo compared to the earlier two has poorer fundamentals and has issues about working capital and a tough and challenging environment.

All in all it can be said that the management of Sharda or its promoters who sold their shares along with the PE investor for once have not been greedy in pricing the issue and have left substantial money on the table for the investors as can be seen from the price at which the share listed and closed for trading at the end of day one.

Markets have been choppy and are giving signs of becoming nervous. The last week saw a sharp selloff on the first two days with the market losing 245 on Monday and 345 points on Tuesday before a rally happened on Wednesday which saw markets recover 139 points. Thursday they went crazy and rallied a strong 481 points led by short covering and also positive announcements. Friday was a fairly quiet day with nothing much happening. On a weekly basis the markets gained 620 points and lost 591 points on three days to end the week with a miniscule gain of a mere 29 points on a base of 27,000 points. FII’s also turned neutral and there net buying was less than 100 crs.

The key event net week is expiry of September futures which happens on Thursday the 25th. The current NIFTY is higher by 167 points or 2.1%. The comfort factor of bulls is not very high this time but they need to fend off for the next four days to see the month through.

Alibaba created history and raised a staggering 21.8 billion dollar. The share issued at 68% a piece gained 38% on listing day and is now valued at a massive 232 billion dollars.
Shemaroo completed its IPO and was oversubscribed over 7 times. Shares of Sharda Cropchem will list on Tuesday the 23rd of September. The share which was issued at Rs 156 was oversubscribed over 60 times. The grey market premium indicates that the share would list at a price of around Rs 240-245. The lucky investors in this issue would be making a killing in this issue and this would augur well for further IPO’s going forward.

It is widely believed that the first divestment from the government is likely to open this week. With three issues cleared in the form of SAIL, NHPC and ONGC already in place the government needs to only take a call which one would happen first. The first issue most likely to happen would be SAIL.

Prime Minister Narendra Modi negotiated a deal of 35 billion with Japan, 20 billion with China and commercial use of uranium with Australia would this weekend embark on his maiden visit to the USA. It is widely expected that the deal with USA would be far bigger than what has been done so far. It would be more interesting to see how many defence deals involving technology transfer are signed and what the official US stand on the same is. In terms of individual companies I would like to keep my eyes focused on Bharat Electronics.

The markets are crucially poised but are certainly looking tired. One needs to be more than cautious and though the US visit is keenly awaited the market may already have run ahead of time. Keep a close look on development and if the market fails to break out there could be short term pain.
Trade cautiously but look to invest in dips.