It was an eventful week at the markets which kept people glued to their seats as to which way they would move. Till Friday, they were positive for the week and then just gave way ending with small losses for the week. However, at the end of the week they have given enough indicators that going forward, markets could weaken further. Markets gained on two of the five trading sessions, lost on two and remained flat on the fifth, showing how even-stevens things were. BSESENSEX lost 62.15 points or 0.10% to close at 64,886.51 points while NIFTY lost 44.35 points or 0.23% to close at 19,265.80 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.11%, 0.22% and 0.40%. BSEMIDCAP was up 1.50% and BSESMALLCAP was up 2.19%. 

Indian Rupee recovered from the previous week’s losses and gained 45 paisa or 0.54% to close at Rs 82.65. Dow Jones gained on two of the five trading sessions and lost on the remaining three. It was down 153.76 points or 0.45% to close at 34,346.90 points. The US FED Chairman has in a meeting held on Friday indicated that there could be further rate hikes as inflation continues to remain high. This could be a cause for worry in US markets as well as globally. 

In India too, RBI is cautioning on inflation and that they would do whatever is required to keep it under check. 

Primary market saw a lot of action. We had one issue open and close for subscription, while yet another opened and would close next week. We also saw one issue have its roadshow and would open next week. We also had one issue list on the bourses. 

The issue from Aeroflex Industries Limited saw its issue getting subscribed 97.78 times. The QIB portion was subscribed 190.97 times, HNI portion 129.56 times and Retail portion 35.28 times. There were 27.64 lac applications. The issue was open between Tuesday the 24th August and Thursday the 26th August and the price band was Rs 102-108. 

The second issue is from Vishnu Prakash R Punglia which opened on Thursday the 24th of August and would close on Monday the 28th of August. The issue is for 3.12 cr shares and the price band is Rs 94-99. The company is an infrastructure company involved in water projects, Railway projects, Road projects and Irrigation network projects. The company generates close to 85% of its revenues from water supply projects which are executed for state governments, local municipal bodies, Ste PWD bodies and many more. They are integrated players doing EPC (engineering, procurement and construction). 

The company reported revenues of Rs 1,171.46 crs for the year ended March 23 and a profit after tax of Rs 90.64 crs. The EPS on a fully diluted basis is Rs 10.41 and the PE band is a very attractive 9.03-9.57. The company has a robust order book of over Rs 3,800 crs which would be executed in about 24-30 months. The issue is very attractively valued and offers scope for appreciation. At the end of the 2nd day of subscription, the issue was overall subscribed 10.63 times with QIB subscribed 0.35 times, HNI subscribed 19.39 times and Retail subscribed 12.89 times. There are 7.61 lac applications in all. 

The issue from TVS Supply Chain Solutions Limited which had issued shares at Rs 197 listed on Wednesday the 23rd of August. The issue had received a tepid response during subscription. The share closed day one at Rs 200.95, a gain of Rs 3.95 or 2.00%. It slipped during the balance of the week but still managed to close with miniscule gains at Rs 197.05. 

The issue from Rishabh Instruments Limited opens on Wednesday the 30th of August and closes on Friday the 1st of September. The issue consists of a fresh issue of Rs 75 crs and an offer for sale of 94.58 lac shares in a price band of Rs 418-441. The company is a global energy efficiency solution company focused on electrical automation, metering and measurement, precision engineered products, et al. with diverse applications across industries including power, automotive and industrial sectors. They supply a wide range of electrical measurement and process optimization equipment, and are engaged in designing, developing and manufacturing, and sale of devices significantly under their own brand

across several sectors. They provide comprehensive solutions to customers looking for cost-effective ways to measure, control, record, analyse and optimise energy and processes through the array of products. They also provide complete aluminium high pressure die casting solutions for customers requiring close tolerance fabrication (such as automotive compressor manufacturers and automation high precision flow meters manufacturers), machining and finishing of precision components.

The company reported revenues of Rs 579.78 crs for the year ended March 23 and Rs 49.68 crs profit after tax. The EPS for the year was Rs 12.76 on a fully diluted basis. The working for FY23 was affected due to the chip shortage. 

The PE multiple for the share is 32.76-34.56. At the current multiples it looks expensive but if one were to consider the effect of chip shortage and invest with a longer time frame it becomes attractive. 

Shares of Jio Financial Services listed on the bourses and were under pressure through the week. After hitting the lower circuit even on Friday at the open, they rallied from the lows to close at Rs 212.25 on Friday. During the week, the share lost Rs 52.75 or 24.85%. Reliance Industries has its AGM on Monday and the street expects big announcements on Monday. 

The week ahead sees August futures expire on Thursday the 31st of August. The present value of NIFTY at 19,265.80 points is 394.10 points or 2% lower than the start of the series. Bears have the upper hand and there is no way they would like to surrender their advantage.

Coming to the markets, they have turned decisively weak and 19,200 on NIFTY is looking vulnerable. While we survived closing below it on Friday, probably the next attack could be the undoing. In case these levels break, then we would look for decent and sustainable support at 18,600-18,650 levels on the NIFTY and at 63,000-63,200 on BSESENSEX. The breakdown would see sharp and volatile moves. On the upside, levels of 19,600-19,650 and 66,100-66,250 are becoming strong resistances with Mount 20K seeming far into the distant horizon. 

Trade cautiously in a week where with high expectations from Reliance in the AGM and expiry week, markets could be under a bear attack.

Markets continued to drift downwards and lost ground once again on a weekly basis. They lost on two of the four trading sessions of the truncated week which had Independence Day as the holiday. At the end of it all, BSESENSEX lost 373.99 points or 0.57% to close at 64,948.66 points while NIFTY lost 118.15 points or 0.61% to close at 19,310.15 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.68%, 0.65% and 0.61% respectively. The action packed BSEMIDCAP and BSESMALLCAP too lost ground this week and were down 0.54% and 0.02% respectively. 

The Indian Rupee was under pressure and lost 26 paisa or 0.31% to close at Rs 83.10 to the US Dollar. Dow Jones too had a bad week and lost on three of the five trading sessions. It was down 780.74 points or 2.21% to close at 34,500.66 points. What could be interesting to note is the fact that the two days of gains on the Dow were the opening and closing sessions of the week and both days saw gains of an almost identical 26 points. Losses were much bigger at 360 points, 180 points and 290 points. There are concerns in the US about interest rates and the looming downgrade of banks. 

Coming to Indian markets, the benchmark indices have lost ground for a fourth consecutive week. In what could be a precursor for future trends, the midcap and Smallcap which were at the forefront of all action, lost ground this week after being up for seven consecutive weeks. Is fatigue factor setting in? Only the weeks ahead will tell, but certainly it’s a cautionary signal, something not to be ignored.

Primary markets saw two listings in the week gone by. The first share to list was SBFC Finance Limited which has issued shares at Rs 57. The share listed on Wednesday the 16th of August at Rs 81.99 on BSE and at Rs 82 on NSE. The closing price on listing day was Rs 92.21 on BSE, a gain of Rs 35.21 or 61.77%. In the remaining two days the share lost some ground on profit taking and closed at Rs 88.24, still gaining Rs 31.24 or 54.80%. 

The second share to list was Concorde Biotech Limited which had issued shares at Rs 741. The discovered price was Rs 900.05, a gain of Rs 159.05 or 21.46%. As the day progressed, the share gained ground and closed at Rs 941.85, a gain of Rs 200.85 or 27.10%. 

The issue from TVS Supply Chain Logistics Limited which had tapped the markets and closed on Monday the 14th of August received a tepid response, but was oversubscribed 2.84 times. The QIB portion was subscribed 1.37 times, HNI portion 2.44 times and Retail portion was subscribed 7.88 times. There were 3.65 lac applications in all. 

The week ahead sees the issue from Aeroflex Industries Limited tap the markets with its offer for sale of 1.75 cr shares in a price band of Rs 102 to Rs 108. The selling shareholder is SAT Industries Limited which is a listed entity on the bourses. 

The company is into the business of manufacturing and supplying of environmentally friendly metallic flexible flow solution products like braided and unbraided hoses, solar hoses, gas hoses, interlock hoses, hose assemblies etc. About 80% of its turnover is exported to customers in the US and Europe amongst others. The company claims it has no peer group in India. 

It reported revenues of Rs 269.46 crs for the year ended March 23 against the previous year figure of Rs 240.8 crs. The profit after tax was at Rs 30.15 crs against previous year of Rs 27.5 crs. Capacity utilisation has been high and was at over 83%. This limits the growth that the company can achieve going forward without doing capex. The EPS for the year ended March 23 was Rs 2.64. At this EPS, the PE band is 38.63-40.91, certainly not cheap even considering that the company has quoted foreign companies as peer comparison. 

The company had as recently as May and June 23 done a secondary transaction where approximately 87 lac shares were transacted at Rs 87.56. The asking price at the top end of the price band is a steep premium of over 23%. One wonders what has changed that the asking price has moved so significantly. 

The business is good and as mentioned earlier needs investments in capital expenditure to add capacity. Currently the mood of the market is that over and above the issue price, irrespective of valuations there is a healthy grey market active in all issues. This issue is no exception. Apply for listing gains and sell on successful allotment. 

Some interesting data points on the retail participation in markets. New demat accounts opened in July23 were 29 lacs, taking the total to 12.34 cr demat accounts. Of these a staggering 9.07 cr demat accounts or 86% are with CDSL and 3.27 cr or 14% are with NSDL.  

FPI inflows into India in the first four months of the current fiscal are at 18.16 billion US dollars. Similarly, inflows into the capital markets through SIPs and mutual funds continue to be robust. 

Shares of demerged Jio Financial Services Limited would list on Monday the 21st of August and would add some flavour to the market colour. Readers would recall that the discovered price for the same on 20th of July was at Rs 261.65. The share would trade in the T-to-T segment for the next ten trading sessions. 

Coming to the markets in the week ahead, it has become clear that 20K on NIFTY is Mount Everest and will need a superhuman effort to be taken out. Immediate support for markets is at 19,200 on NIFTY and at 64,650 on BSESENSEX. If these levels were to break and trade below them, we could see a sharp fall in the markets. This breakdown could ultimately bring us to levels around 18,600 and 63,000 on BSESENSEX. For this sharp fall, the breakdown must happen first and also sustain. 

The trading strategy for the week would be to remain nimble footed. It is early signs that midcap and Smallcap stocks have run out of steam and are ripe for correction. Use sharp dips to buy select stocks and rallies to sell. 

In conclusion, markets would remain range bound with a downward bias, with a strong possibility of a downward breakdown looming large.