It's now or never

A swarm of photographers get shutter happy as CEOs of Public Sector Banks look pensive at a meeting with the Finance Minister Arun Jaitley during the FM's Quarterly Performance Review Meeting on Friday. Pic/PTI

The markets began the week with a sharp correction, and then began recovering at the end of the week to close with losses for the week. The BSESENSEX lost 198.22 points or 0.69 per cent to close at 28,599.03 points. NIFTY lost 86.85 points or 0.98 per cent to close at 8,779.85 points. The broader indices lost a little more with BSE100, BSE200 and BSE500 losing 1.12 per cent, 1.105 and 1.10 per cent respectively. BSEMIDCAP lost 2.21 per cent while BSESMALLCAP lost 0.75 per cent. The top sectoral gainer was BSEIT up 1.17 per cent followed by BSETECH 0.92 per cent and BSEFMCG 0.03 per cent. The losers were led by BSEMETAL down 5.67 per cent followed by BSEREALTY 4.40 per cent and BSEPOWER 3.26 per cent. In individual stocks, Reliance gained 3.07 per cent followed by Maruti at 3.05 per cent and Infosys 2.32 per cent. Tata Steel was the top loser down 8.99 per cent followed by Yes Bank 8.53 per cent, NMDC 8.48 per cent and SAIL 7.90 per cent.

Balance it out
The Indian Rupee lost 0.30 or 0.45 per cent to close at Rs 66.98. Dow Jones gained 38.35 points or 0.21 per cent to close the week at 18,123.80 points. The top gainer is Reliance and one should expect further upmove in the market. It is also a bright possibility that the Reliance upmove could be counterbalanced by some other stocks declining, and evening out things. The primary market continued to see lot of action with two issues opening and closing for subscription last week. L&T Technology Services Limited which was to raise R 894 crore at the top end of the band managed to get subscribed 2.53 times. The QIB portion was subscribed 5.01 times, HNI just about subscribed at 1.03 times and retail 1.75 times. The number of applications was 3.10 lakh, a far cry from the 10.93 lakh applications in the earlier issue of L&T Info in July 2016. The fact that investors lost money in that issue and it continues to trade below issue price, discouraged a lot of investors from applying.

For business schools
The second issue was from GNA axles which raised Rs 130 crore from 63 lakh shares in a price band of Rs 205-207. The issue was subscribed a massive 54.88 times with the QIB portion subscribed 17.18 times, HNI 217.47 times and retail 11.84 times. There were 2.93 lakh applications received and it must be a record for the size of issue. One must also note that this issue would trade in the ‘Trade to trade' segment for the first 10 trading days. One cannot help compare the two issues which were separated by a day with the level of subscription. The first issue was from a pedigreed house, where investors did not make money in the earlier issue in July and also found the issue expensive. The second was from an unknown promoter where the issue was backed by India's top three mutual funds, HDFC, Reliance and UTI (not in order) and HNIs applied with funding. Small issue having backing, and you has subscription of 55 times. It is a case study for business schools to understand the psychology of investors in the two issues. The performance of these two issues would be closely watched on listing and one sincerely hopes that neither of them disappoints.

The largest offering
The primary market saga continues with the largest offering in this year opening on Monday, September 19 and closing on Wednesday, September 21. ICICI Prudential Life Insurance Company Limited (ICICI Pru) is offering for sale 18.13 crore shares in a price band of Rs 300-334. The issue size at the top end of the band would be Rs 6,056.79 crore. There is a reservation of 10 per cent for shareholders of ICICI Bank. Looking at the size of the issue and 35 per cent reserved for retail, all applicants in the retail category would get allotted the minimum customary one lot. The highest number of applications received so far were, 10.93 lakh and it looks difficult to imagine that the number would be exceeded by 30-40 per cent. The market cap of the company post issue, at the top end of the band of Rs 334 would value the company at Rs 47,939.82 crore.

A crucial juncture
Markets are very crucially poised. There was a lot of short covering on Friday, which saw markets trade substantially higher in the early part but giving up half of the intraday gains. Results season for the quarter ended September, would begin around October 10, and, we still have 20-21 days or three weeks to go. It is in this period that fireworks if any, in the market would happen. Also with so close to the all-time high (5 per cent away), it is a now or never like situation. Keep your fingers crossed and hope for the best. Final piece of advice: If we head to a new high, it will be wise to use it to sell and create cash for the right opportunity to re-invest.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website https://ak57.in

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