All eyes on Assembly poll results in 5 States

IPO Spl Week

• 5 IPOs open and close for subscription
• Response to all IPOs except one was overwhelming
• All the bids in 5 issues were Rs2.62 lakh cr
• Outperformance by Mid-&Small-caps continues unabated

The November 23-29 period under review saw markets move up sharply on Wednesday when the ‘satta markets’ for election results have predicted that there would be a swing in fortunes in Rajasthan and maybe a neck-to-neck fight in Madhya Pradesh, and a close fight with the ruling BRS having the edge in Telangana. In Chhattisgarh, the incumbent is expected to win with a reduced margin. On a net basis, the situation would remain the same compared to the situation pre-election and markets on Monday (December 4) would by and large be unaffected in any negative manner.

This saw markets give a thumbs up and saw BSE Sensex gain a massive 727 points or 1.10 per cent, while Nifty gained 206.90 points or 1.04 per cent. For the rest of the period, markets gained marginally and were mostly flat with little or no net movement. For the period under review, BSE Sensex was up 878.67 points or 1.33 per cent to close at 66,901.91 points, while Nifty was up 284.75 points or 1.44 per cent to close at 20,096.60 points. The outperformance by the Mid-cap and Small-cap indices continues unabated.

Dow Jones gained on two of the four trading sessions and lost on two. At the end of the period, Dow gained 328.69 points or 0.94 per cent to close at 35,416.98 points.

This is the IPO special week as we saw five IPOs open and close for subscription. The response in all except one was overwhelming. The first issue was PSU renewable energy finance company, Indian Renewable Energy Development Agency Limited or IREDA. The issue was subscribed 38.80 times overall and had 30.92 lakh applications. The QIB portion was subscribed 104.57 times, HNI portion was subscribed 24.16 times and Retail portion was subscribed 7.73 times. The total bidding was for 1827.25 crore shares and the amount raised excluding anchor was Rs58,472 crore.

The second issue was from Tata Technologies Ltd, which was the darling in this round and fired the imagination of many new investors as well. The offer for sale was subscribed 69.43 times overall with QIB portion subscribed 203.41 times, HNI portion subscribed 62.11 times, Retail portion subscribed 16.50 times and shareholders reservation portion subscribed 29.20 times. There were 73.58 lakh applications which is a new record by itself. The issue saw bids for 312.64 cr shares which was for a sum of Rs156.32 lakh cr. Shareholders of various Tata group companies have applied for the shareholder quota which was meant only for Tata Motors shareholders. Based on this fact, the allotment ration in the shareholders category would therefore improve and there would be better allotment.

The third issue was from Flair Writing Instruments Limited which saw an overall subscription of 46.68 times with QIB portion subscribed 115.60 times, HNI portion subscribed 33.37 times and Retail portion subscribed 13.01 times. There were 17.02 lakh applications and the issue garnered subscription for 67.28 cr shares for a sum of Rs20,454 cr.

The fourth issue was from Gandhar Oil Refinery (India) Ltd, which was subscribed 64.07 times overall with QIB portion subscribed 129 times, HNI portion was subscribed 62.23 times and Retail portion was subscribed 28.95 times. There were 28.47 lakh applications and bids were received for 136.10 cr shares valued at Rs23,001 cr.

The final issue was from Fedbank Financial Services Ltd, which managed to get subscribed 2.20 times overall with QIB portion subscribed 3.51 times, HNI portion subscribed 1.45 times and Retail portion subscribed 1.82 times. There were 3.67 lakh applications in all. The issue garnered bids for 12.30 cr shares at Rs1,722.18 cr.

If one were to add all the bids in the five issues and the anchor portion of roughly Rs2,200 cr, total fund raised was Rs2,62,179 cr or Rs2.62 lakh cr. This can at best be termed as a massive fund rise which took place.

The first from the five IPOs listed today at the bourses. Indian Renewable Energy Development Agency Limited or IREDA listed today. Against an issue price of Rs 32, the discovered price on both the exchanges was Rs 50, a gain of Rs 18 or 56.25 per cent. As trading progressed through the day, the share rose even higher and hit the upper circuit at Rs 60 on NSE and Rs59.99 on BSE. The share closed at Rs 60, a gain of Rs 28 or 87.5 per cent. At the close of the day the traded volume on NSE was almost 58 cr shares and another 3.81 cr shares traded on BSE. The combined volume at 61.80 cr shares was 1.33 times the non-anchor size. This outperformance and beyond expectation listing of IREDA will put pressure on the remaining four shares when they list on Thursday and Friday.

The period ahead would see November futures expire on Thursday (November 30). The bulls have the upper hand and are very comfortably placed with the series well under control. With just one day to go, the lead is at 1,239.25 points or 6.57 per cent. What bears can do at best is pull back and reduce some of the gains.

The first day of the new period (November 30-December 6) would see November futures expire and three IPOs to list. While the issues from Tata Technologies and Gandhar Oil will do well, one hopes that Fed Fina does have some positive rub off effect on its listing as well.

The last IPO to list would be Flair Writing Instruments Limited which would list on Friday the 1st of December.

Coming to the markets, it appears that markets have taken the expected results from the five state elections even before they are announced in their stride. They believe that it would be business as usual or better for the ruling party at the centre. They have discounted these results in all manner of speaking. Barring a disaster, things as they stand can only improve from here. Expect markets in the coming week to attempt to make new highs.

The all-time intraday high on the BSE Sensex is 67,927.23 points, while that on Nifty is 20,222.45 points. On a closing basis the values are 67,838.63 points and 20,192.35 points. Both these levels were made on September 15, 2023. The difference is less than 1,000 points on BSE Sensex and just about 125 points on Nifty. This could be done in a day or at best two.

Expect markets to trade in a tight range with an upward bias in the remaining two days of the current week. The flurry if it happens would be post results on Monday (December 4). If the flurry begins, there would be a new high and more to follow after that. The strategy would be to ride the rally and book profits in the mid-cap and small-cap space and remain invested in the large-cap space.

Trade cautiously and allow the new lifetime highs to hit the markets.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)