The week gone by was eventful and choppy. The dream run by NIFTY in logging 14 straight sessions came to an end and the correction picked up steam on Friday. What the week ahead holds in store would be discussed later on. With BSESENSEX losing on four of the five sessions and NIFTY losing on three, markets ended in a sea of red on Friday. The week ahead has plenty of IPOs opening on the main board and whether that would be impacted by this weakness is something to be watched out for. BSESENSEX lost 1,181.84 points or 1.43% to close at 81,183.93 points while NIFTY lost 383.75 points or 1.52% to close at 24,852.15 points. The broader markets saw BSE100, BSE200 and BSE500 lose 1.31%, 1.32% and 1.08% respectively. BSEMIDCAP was down 1.14% while BSESMALLCAP was down a mere 0.08%. 

The Indian Rupee lost 9 paisa or 0.11% to close at Rs 83.95. Dow Jones had a terrible week, losing on three of the four sessions and managing gains on just one. It lost a massive 1,217.67 points or 2.93% to close at 40,345.41 points. What is worrisome is that the S&P and NASDAQ were weak as well. With a US FED rate cut expected sooner than later, the market seems to be getting confused with how to react to the cut and the quantum of cut when it happens. 

In terms of primary markets, it was full of action. We had three listings and one issue closing for subscription in the week gone by. The week ahead has as many as four issues opening and closing for subscription, with three of them opening on Monday and closing on Wednesday. The fourth would open on Tuesday and close on Thursday. We would also have two listings in the week ahead.

The first share to list on Tuesday the 3rd of September was Premier Energies Limited which had issued shares at Rs 450. The discovered price was Rs 991 which was a massive gain of Rs 541 or 119.95%. The share was unable to sustain itself and lost ground and closed at Rs 839.65, a gain of Rs 389.65 or 86.58%. The share lost some ground on the following day and then rose sharply to close at Rs 1,095.40, a gain of Rs 645.40 or 143.42%. 

The second share to list was ECOS Mobility and Hospitality Limited which did so on Wednesday the 4th of September. The discovered price was Rs 391.30 against the issue price of Rs 334. The share closed day one at Rs 442.80. It lost some ground and closed the week at Rs 438.60 a gain of Rs 104.60 or 31.32%. 

The third share to list was Bazaar Style Retail Limited which had issued shares at Rs 389. The share listed on Friday at the identical price of Rs 389 and went on to hit the high at Rs 430.95. Profit taking saw the share come down sharply and close at Rs 399.65, a gain of Rs 10.65 or 2.74%. 

The first of the three IPOs slated to open on Monday the 9th of September is from Bajaj Housing Limited. The issue consists of a fresh issue of Rs 3,560 crores and an offer for sale of Rs 3,000 crores in a price band of Rs 66-70. The company is promoted by Bajaj Finance and Bajaj Finserv. The company has been into the business of mortgage lending since 2018. It has the full basket of products and caters to home loans, loans against property, lease rental discounting and developer finance. 

The company reported an EPS of Rs 2.6 for the year ended March 24. Based on these numbers the PE multiple is 25.4-26.9 for the company. A better way to look at a finance company is the price to book. This in the case of the company who has an NAV of Rs 18.81 as of 30th June 24 is at 3.72. One does understand that post the fund raising this would improve significantly but so also the EPS would get diluted in the short term due to the fresh fund raise. While the company has size, scale and has everything going in its favor, it has competition and one should look at valuations of its peers such as PNB Housing as well.  

One other point which needs to be mentioned is that this is an issue from the group after 30 years and one expected that shareholders would be rewarded. While the DRHP mentioned it, the same was significantly altered in the RHP. One did not expect this from just a respectable group. The hue and cry caused sanity to prevail and the status quo to be restored. The sore point which remained at the end of it all was why the drama in the first place and did someone benefit from it.

The second issue to open on the same dates is from Tolin Tyres Limited which is tapping the capital markets to raise Rs 230 crores. Of this, Rs 200 crores is through a fresh issue and Rs 30 crores is through an offer for sale in a price band of Rs 215-226. 

The company is into the manufacture of tyres and tread rubber with the latter being the dominant share being of tread rubber. The company earned an EPS of Rs 9.52 for the year ended March 24. At this EPS the PE band is 22.59-23.75. The company compares favorably with its competitors and has an advantage in the fact that it is the only entity making tread rubber in the UAE. 

The third and final issue to open on Monday is Kross Limited which is raising Rs 250 crores through a fresh issue and Rs 250 crores through an offer for sale in a price band of Rs 228-240. The company is into the manufacture of trailer axle and suspensions and Truck components. It reported an EPS of Rs 8.30 for the year ended March 24. Based on this EPS, the PE multiple is 27.47-28.02 for the issue. 

The present revenue is fairly divided between the two broad segments and exports is a very insignificant portion. Going forward, exports would pick up and marh=gins in exports are higher than domestic. The company has developed a range of products for export and received validation for many of them. This is a time-consuming process and ramping up would happen and the product stream continues to receive validation. With Europe and America outsourcing to India happening this would be a great opportunity for Kross to stand up and deliver. 

The line of activity, its comparison with peers in the group offer investors with a medium-term outlook to make returns. 

The final issue for the week ahead is from P N Gadgil Jewellers Limited which is tapping the capital markets with its fresh issue of Rs 850 crores and an offer for sale of Rs 250 crores in a price band of Rs 456-480. The company as the name suggests is a jeweller selling gold, diamonds, platinum and silver jewellery. The company is a dominant player in Maharashtra and has all its stores in the state. It began operations in its flagship store in Pune and has grown in the state since then. 

The company is known for its quality and is well appreciated by its customers for its customer centric approach to doing business. It enjoys decent margins and has been growing over the years. With the IPO proceeds it would be able to convert its working capital loans and switch to more efficient gold metal loans which are a natural hedge as well. 

The company reported an EPS of Rs 12.59 for the year ended March 24 which reduced to Rs 5.89 on  a fully diluted basis. The PE multiple on basic EPS is 21.12-22.23 while on a fully diluted basis is 34.86-36.70 times. This is comparable when compared with a regional player from Tamil Nadu, Thangamayil Jewellers and a large Eastern India player Senco Gold. It is significantly cheaper than Kalyan Jewellers. The share offers appreciation in the medium term for investors. 

The correction last week was significant and also served as a reality check for market participants. With global cues and markets also under pressure, our markets will need a superhuman effort to come out of the present pressure being witnessed. The downgrade of SBI on Friday and yet another brokerage house commenting on Vodafone Idea, are trouble spots. Going forward many more such downgrades should be expected considering that the present rally is now mature, and needs to correct. Key support at 24,850 is where the NIFTY is presently and on Fridy it made a low at 24,801. If the low of Friday were to break there could be further weakness in the markets and levels of 24,500-24,600 would loom large. The active participation of the smaller investors who have made money but have no holding capacity could now bite the markets as weakness builds up. 

Markets are in interesting times and pressure exists on the bulls with the bears having the upper hand. Trade cautiously.

Markets continued their gains and made new highs on an intraday and closing basis on the benchmark indices. The benchmark indices recorded gains on all five trading sessions of the week. In doing so, NIFTY has created a new record of gaining 12 straight sessions. BSESENSEX could not do so as it had lost ground on 19th of August when it was down a mere 12 points while NIFTY  gained 31 points. BSESENSEX gained 1,279.56 points or 1.58% to close at 82,365.77 points while NIFTY gained 412.75 points or 1.66% to close at 23,235.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.53%, 1.37% and 1.32% respectively. BSEMIDCAP gained 1.54% while BSESMALLCAP was up 0.61%. The intraday highs made on BSESENSEX was at 82,637.03 points. The closing of Friday was the closing highs. 

The Indian Rupee gained three paisa or 0.04% to close at Rs 83.86 to the US Dollar. Dow Jones gained on four of the five trading sessions and lost on one. Dow Jones gained 388 points or 0.94% to close at 41,563.08 points. 

Reliance Industries Limited at its AGM held on Thursday the 29th of August decided to announce a bonus of 1:1 at its Board of Directors meeting convened for the purpose on Thursday the 5th of September. This would be a bonus issue after seven years being announced by the company. The impact of the announcement did not have any significant impact on the share price and the weekly gain on the share was a mere Rs 20 or 0.67%. Not sure how one should read this as it appears the old adage; ‘Buy the rumour, sell the fact, apply or the counter has become tired after being active over the last couple of weeks. 

August futures expired on Thursday the 29th of August on a positive note. For the series the gains were 745.85 points or 3.06% to close at 25,151.95 points. The series had begun at 24,406.10 points. 

The week saw an active primary market with two listings during the week. There were two issues which opened and closed for subscription during the week. Looking at subscription numbers, one can clearly conclude that investor appetite and liquidity seem to have no limits. 

The first issue to list was Interarch Building Products Limited which had allotted shares at Rs 900 per share. The share debuted on Monday the 26th of August at Rs 1,291.20, a gain of Rs 391.20 or 43.46%. The share closed on Monday at Rs 1,196.45, a gain of Rs 296.45 or 32.93%. Over the remaining four days, the share lost some ground and closed at Rs 1,171.75, a gain of Rs 271.75 or 30.19%. 

The second share to list was Orient Technologies Limited which had issued shares at Rs 206. The discovered price of the share which listed on Wednesday was Rs 290 and thereafter it was locked at upper circuit at Rs 304.45, a gain of Rs 98.45 or 47.79%. On NSE, the discovered price was Rs 288 and the upper circuit was at Rs 302.40. The share continued to hit upper circuit of 5% on the remaining two days of the week and closed at Rs 335.60, a gain of Rs 129.60 or 62.91%. The share would trade for the next seven trading sessions in the trade-to-trade segment as the issue size was less than Rs 250 crores. 

The first IPO to open and close its subscription was Premier Energies Limited. This issue became the second company to garner a subscription of over Rs 1 lakh crores after Tata Technologies Limited who had done so in November 23. Premier garnered Rs 1.48 lakh crores. The issue was oversubscribed an overall 75.62 times. QIB portion was subscribed 212.62 times, HNI portion 51.27 times and Retail portion was subscribed 7.88 times. There were 40.63 lakh applications. The issue was open from Tuesday the 27th of August and closed on Thursday the 29th of August. 

The second issue to open and close during the week was ECOS (India) Mobility and Hospitality Limited. This issue was open from Wednesday the 28th of August to Friday the 30th of August. The issue was oversubscribed an overall 64.26 times with QIB portion subscribed 136.85 times, HNI portion subscribed 171.23 times and Retail portion 19.79 times. There were 25.12 lakh applications in all. 

The week ahead has two issues open for subscription with one issue having opened on Friday and yet another opening on Monday. The issue from Bazaar Style Retail Limited opened on Friday the 30th of August and would close on Tuesday the 3rd of September. The issue consists of a fresh issue of Rs 148 crores and an offer for sale of 1,76,52,320 equity shares in a price band of Rs 370-389. 

The company reported an EPS of Rs 3.14 for the year ended March 24. It is in the business of being a value fashion retailer offering quality and affordable products under the apparels and general merchandise segments through a chain of value retail stores. Its stores are primarily located in Orissa and West Bengal and the company has a total of 163 stores. 

The PE multiple is 117.83-123.89 based on the March 24 numbers. On the face of it the PE multiple looks a little expensive but looking at the flavor and the market liquidity one may apply for listing gains as there is substantial activity in the counter in the grey market. 

The second issue is from Gala Precision Engineering Limited which is tapping the capital markets with its fresh issue of 25,58,416 equity shares and an offer for sale of 6,16,000 equity shares in a price band of Rs 503-529. The issue opens on Monday the 2nd of September and closes on Wednesday the 4th of September. The company is a precision component manufacturer of technical springs like disc and strip springs including wedge lock washers. It reported an EPS of Rs 21.77 for the year ended March 24 and based on the above EPS, the PE multiple is 20.94-22.02 times. 

There are a number of roadshows planned in the week ahead for IPOs on the main board. Besides this the two IPOs that closed last week would be listed on Tuesday and Wednesday respectively while the issue that opened on Friday and would close on Tuesday, Bazaar Style Retail would also list on Friday the 6th of September. 

Coming to the markets in the week ahead, expect markets to have volatility as the key driver. With surplus liquidity and optimism, people are willing to buy on every dip. Gut feel says that this month (September) would be the month where markets sit back, relax and take a pause after a hectic rally over the last 12 months or so. It’s time to retrospect on what has happened and take a hard look at June results which saw the slowest growth in the last 9 quarters. It would be time to reflect, ponder and think out of the box as to what could change in the quarter ahead, which would bring the sequence of falling growth back on track. 

With markets at new highs, we are in uncharted territory and the upside has no immediate levels of resistances. Support levels of 25,000 on NIFTY and at 81,650 on BSESENSEX become crucial levels for longs. If these levels are decisively broken and sustained, one should liquidate long positions and brace for corrections. This is for the brave hearted and impulse traders. For the seasoned player, systematically reducing positions could be a better idea as the positions get lightened in a systematic manner and give you place and room to manoeuvre. 

If I had to play to my thoughts and gut feel, I strongly believe that the series which began on Friday the 30th of August would end with losses when the series closes on Thursday the 26th of September. This is considering many factors which include the expected US FED interest rate cut, expected September quarter results and many more factors.