Volatility to continue, new listings would decide sentiment

By Arun Kejriwal

Markets continued to remain highly volatile and the trend of the previous week which saw markets gain on Monday and lose ground on Friday, was reversed.

This week we saw markets lose ground on Monday and gain ground on Friday. Markets lost ground on the first four days of the week and it appeared midway through Friday that this would happen for a fifth day in a row.

However, markets reversed very sharply. The Bombay Stock Exchange (BSE) SENSEX saw an intraday move of more than 1,300 points while NIFTY saw a move of nearly 400 points. Huge volatility, and it took most traders to the cleaners. The BSE SENSEX ended the week with losses of 933.84 points or 1.84 per cent to close at 49,858.24 points while NIFTY ended the week with losses of 286.95 points or 1.91 per cent at 14,744.00 points.

Dow Jones made a new lifetime high of 33,228 points. It was down 150.67 points or 0.46 per cent at 32,627.97 points. The Indian Rupee gained ground and was up 27 paisa or 0.37 per cent at Rs 72.51 to the US Dollar.

The week gone by had plenty of action on the primary markets front. Two IPOs listed during the week and six issues closed for subscription during the week. The first to list was MTAR Technologies Limited which had issued shares at Rs 575. The share debuted at Rs 1,063.75 against an issue price of Rs 575. After hitting a high of Rs 1,154, profit taking saw the issue lose some ground and the share closed at Rs 1,082.25, a gain of Rs 507.25 or 88.22 per cent. The share slipped further during the week and closed at Rs 969.40, a gain of Rs 395.60.

The second issue to list was Easy Trip Planners Limited which had issued shares at Rs 187. The share debuted at Rs 206, made a high of Rs 233.15 and closed at Rs 208.30. It gained Rs 21.30 or 11.39 per cent. The cost of funding in this issue was nearly Rs 110 which meant all leveraged High Net-Worth Individual's who sold their shares on day one have lost money.

The fresh issue from Anupam Rasayan Limited closed for subscription and was subscribed 45.21 times. The company had raised Rs 760 crore in a price band of Rs 553 to 555. Qualified Institutional Buyer (QIB) portion was subscribed 65.99 times, High Net-Worth Individuals (HNI) portion 97.78 times and Retail portion was subscribed 10.81 times. There were 16.49 lakh applications.

The issue from Craftsman Automation which had a fresh issue component of Rs 150 crore and an offer for sale of 45,21,450 shares in a price band of Rs 1488 to 1490 was subscribed 2.80 times. The QIB portion was subscribed 5.21 times, HNI portion 2.84 times and retail portion 3.44 times. There were 5.42 lakh applications.

The issue from Laxmi Organics Limited which consisted of a fresh issue of Rs 300 crore and an offer for sale of Rs 300 crore was subscribed 106.81 times. The price band was Rs 129 to 130. The QIB portion was subscribed 175.43 times, HNI portion 217.62 times and retail portion 20.11 times. There were 23.35 lakh applications.

The issue from Kalyan Jewellers Limited which consisted of a fresh issue of Rs 800 crore and an offer for sale of Rs 375 crore in a price band of Rs 86 to 87 was subscribed 2.64 times. The QIB portion was subscribed 2.79 times, HNI portion 1.93 times, retail portion 2.85 times and employee portion 3.78 times. There were 5.94 lakh applications.

The issue from Suryoday Small Finance Bank Limited which had tapped the capital markets with its fresh issue of 81.50 lakh shares and an offer for sale of 109.43 lakh shares in a price band of Rs 303 to 305 was subscribed 2.37 times. The QIB portion was subscribed 2.18 times, HNI portion 1.31 times, retail portion 3.09 times and employee portion 0.34 times. There were 3.44 lakh applications.

The final issue was from Nazara Technologies Limited which had tapped the capital markets with its offer for sale of 52,94,392 shares in a price band of Rs 1100 to 1101. This was the company which had the maximum hype in the markets. The issue was subscribed 175.46 times with QIB portion subscribed 103.77 times, HNI portion 389.89 times, retail portion 75.29 times and employee portion 7.55 times. There were 23.35 lakh applications.

There is an issue tapping the markets in the coming week from Barbeque Nation Hospitality Limited. The issue consists of a fresh issue of Rs 180 crore and an offer for sale of 54.57 lakh shares in a price band of Rs 498 to 500. The issue opens on March 24 and closes on March 26. The company has recently in January 2021 allotted about 10 per cent of its shares through a preferential allotment to Jubilant Food Works Limited. This was a strategic allotment. The company Barbeque Nation runs a chain of restaurants and has 144 outlets across the country and six of them overseas as well. The company had been incurring losses in the last couple of years and hopes to be back in the black in the next financial year 2021-2022.

The week ahead sees March futures expire on March 25. The current value of futures is lower by 353.35 points or 2.34 per cent compared to the beginning of the series. While the bears have had an upper hand so far in the month, what with a mega scare on Friday as well, the tussle would be interesting. While bears would like to press their advantage, bulls would like to claw their way back. The next four days of trading into expiry would be interesting and highly volatile.

On the Covid-19 front, the world saw 12,34,38,633 patients, 27,22,127 deaths and 9,94,28,534 patients recovering. In India we saw 1,15,99,130 patients, 1,59,790 deaths and 1,11,30,288 patients recovering. During the week, the world saw 33,81,000 new patients, 62,291 new deaths and 28,39,178 patients recovering. In India we saw 2,40,082 new patients, 1,148 new deaths and 1,40,391 patients recovering. In India, the new cases and the number of active cases has been rising quite sharply. Maharashtra is again at the forefront of new cases and cities like Mumbai, Nagpur and Pune are leading the surge. We need to ensure that social distancing and wearing of masks always is strictly followed.

The week ahead with expiry in four days would see an increase in volatility. Further there would be four primary issues which closed for subscription last week's listing. Readers are advised to use sharp dips to add to their position and use rallies to sell and book profits. On a medium-term basis, upcoming results in a fortnight from now would set the trend going forward.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

Source: IANS