Further fall more likely if correction picks up steam

Sai Silks (Kalamandir) Ltd is tapping the capital markets with its fresh issue for Rs600 crore and an offer for sale of 272.72 lakh shares in a price band of Rs210-222. The issue opens on Sept 20 and closes on Sept 22

Week Ahead

♦ Large-cap & mid-cap stocks corrected significantly from their highs

♦ 19,600-19,650 support level for Nifty

♦ 65,900-66,000 support level for Sensex

♦ Expect last few sessions prior to expiry to become choppy

The period September 14-20 under review saw markets feeling the heat as they continued their rise. Having achieved a psychological level of 20,000 points on Nifty and various optics, where TV anchors wore T-shirts with captions of Nifty at 20K, it was back to business. The sustained rally from 19K to 20K underwent correction. The sharp movements witnessed in the mid-cap and small-cap suffered the most. BSE Sensex lost on two of the four sessions with Tuesday being a trading holiday to welcome Lord Ganesha. BSE Sensex lost 666.15 points or 0.84 per cent to close at 66,800.54 points, while Nifty lost 168.60 points or 0.84 per cent to close at 19,901.40 points. Over the last few days, the volatility in the mid-cap and small-cap space has increased significantly. The number of stocks rising in this space is fewer than the number of stocks falling.

Dow Jones lost on alternate days and was down on three of the five sessions, and gained on two. Dow Jones lost 128.26 points or 0.37 per cent to close at 34,517.73 points. The US Fed meets tonight (Wednesday) to take a call on the interest rates. While the consensus is that rates would remain unchanged, one just cannot be sure with inflation being the moot cause for worry.

The primary markets continue to hog the limelight. One saw shares of RR Kabel Limited list on Wednesday (September 20). This stock has made history with becoming the first company to list on T+2 days against the new Sebi dictate of T+3. Kudos to the Registrar of the issue. Shares which were issued at Rs1,035, closed day one at Rs1,186.20, a gain of Rs151.20 or 14 per cent.

Shares of Jupiter Lifeline Hospitals Ltd listed on Monday (September 18). Against the issue price of Rs735, shares debuted at Rs960 and closed on Monday at Rs1,075.25, a gain of Rs340.20 or 46.28 per cent. On Wednesday, shares lost marginally and closed lower at Rs1,062.

There were many issues, which opened during the week. The first issue was from Zaggle Prepaid Ocean Services Ltd, which had tapped the markets with its fresh issue of Rs392 crore and an offer for sale of 104.49 lakh shares in a price band of Rs156-164. The company is in to the business of providing a platform for corporates to take care of their employee expense hassles and also offers a credit card which has prespecified limits as per the customer. The issue had opened on Thursday (September 14) and closed on Monday (September 18). The price band was Rs156-164. The issue was subscribed 12.85 times with QIB subscribed 16.94 times, HNI 9.16 times and Retail 6.13 times. There were 2.25 lakh forms received.

The second issue was from Samhi Hotels Ltd, which had tapped the markets with its fresh issue for Rs1,200 crore and an offer for sale of 1.35 cr shares in a price band of Rs119-126. The issue opened on Thursday (September 14) and closed on Monday (September 18). The company is a branded hotel ownership and asset management platform in India owning 4,800 keys. Currently the company is reporting losses and is expected to turn profitable in the next few quarters. At the end of bidding, the issue was subscribed 5.57 times overall with QIB receiving 9.18 times, HNI 1.28 times and Retail 1.16 times. There are a total of 90,000 applications received.

The third issue is from Yatra Online Ltd, which is a travel company having a large corporate presence as well. The issue consists of a fresh issue of Rs602 crore and an offer for sale of 121.31 lakh shares in a price band of Rs135-142. The issue opened on Friday (September 15) and closes on Wednesday (September 20). Incidentally the shares of Yatra are listed on Nasdaq. At close to the end of bidding, the issue was subscribed 1.41 times so far. The QIB portion is subscribed 1.70 times, HNI portion is subscribed 0.41 times and Retail portion is subscribed 2.05 times. There are 84,322 application forms.

There are two other issues, which are opening and closing for subscription in the week ahead. The first is from Signature Global (India) Ltd. The issue consists of a fresh issue of Rs603 crore and an offer for sale of Rs127 crore in a price band of Rs366-385. The issue opens on Wednesday (September (20) and closes on Friday (September 22). The company is a real estate player in the NCR region and is present in the affordable and lower mid segment housing segments. They are the largest in these segments in the region in terms of number of units supplied and had a market share of 19 per cent. Close to the end of day one of bidding, the issue is subscribed 0.28 times with HNI subscribed 0.54 times and Retail subscribed 0.77 times.

The second issue is from Sai Silks (Kalamandir) Ltd, which is tapping the capital markets with its fresh issue for Rs 600 crore and an offer for sale of 272.72 lakh shares in a price band of Rs210-222. The issue opens on Wednesday (September 20) and closes on Friday (September 22). The company is in the business of ethnic retail and is one of the top ten retailers in the segment having its presence in Southern India with 54 stores spread across Andhra Pradesh, Telangana, Karnataka and Tamil Nadu. They are a leading brand selling sarees amongst other products. Close to the end of day one of bidding, the issue is subscribed 0.04 times with HNI subscribed 0.11 times and Retail subscribed 0.06 times.

Coming to the September 21-27 period, one would see the September series expiring immediately after the period ends. Expect the last couple of days prior to expiry to become choppy. Further, there has been a sustained rally over the last few months and if the current correction picks up steam it could continue to fall faster. Supports exist at levels of 19,600-19,650 on Nifty and at 65,900-66,000 points on the BSE Sensex.

The strategy would be to look at stocks, which have corrected significantly from their highs in the large-cap and mid-cap space. Brace from volatility as markets unfold in the coming period.

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