IPOs were oversubscribed as mkts fell during week

IN the four-day period which began with Friday and ended today, markets have fallen on all the four days. The difference being that on Tuesday the direction was sideways while on the other days the fall was steep. BSE Sensex lost a whopping 1,477.89 points or 2.97 per cent while Nifty lost 453.50 points or 3.50 per cent.

The pressure on the markets seems to be increasing on two counts. One is the number of OFS (offer for sale) from listed entities like the one we had from Tata Communications yesterday and today and the one from SBI Cards, today. These are reasonably large issuances and suck liquidity out. Arbitrageurs and even short-term players looking for quick money throw their hats into the ring and often get burned. Tata Communications is down from Monday's closing of Rs 1,297 by Rs 156. SBI Card lost Rs 50 to close at Rs 978. It is not just the loss, it's the temptation where small investors jump into the fray and buy some shares to make a quick buck and end up making a big loss on a small number of shares that they had bought. Further the share remains weak for some time, until the so-called weak hands are eliminated.

In primary market news, shares of MTAR Technologies Limited were listed on Monday and had a great debut gaining Rs 507 or 88 per cent. In the next two days, the share lost Rs 130. The primary issue from Anupam Rasayan which closed on Tuesday was subscribed 45.21 times with Retail portion subscribed 10.81 times. It received 16.49 lakh applications.

The issue from Laxmi Organics which closed today was subscribed 106.76 times. Retail portion was subscribed 20 times and there were 23.21 lakh applications. The other issue to close today was Craftsman Automation, which was subscribed 3.81 times with Retail portion subscribed 3.42 times. There were 5.38 lakh applications in the issue.

The bunching of issues has given some concern to liquidity and shown the response from Robin Hood investors based on their understanding about the issues. Their subscription has varied from 5.4 lakh applications to as much as 23.2 lakh applications.

Dow Jones in the same period has been quite steady. It has gained 500 points in the last week and is trading less than 0.5 per cent from a lifetime high of 32,973 points at 32,826 points.

The promoter of Vedanta Limited continues to show how opportunistic a person he is. He launched a buyback offer at a price of Rs 87.25 last year and at the buyback offer, LIC of India in the reverse book building process offered shares at Rs 320. On the failure of the delisting offer, he bought 5 per cent shares from the market at Rs 160. He then made a voluntary offer to buy at Rs 160 in January 2021, and today has made a revised offer to buy at Rs 235. Incidentally the market price of the share is around Rs 225. If only he did not display extreme greed in the first place and had offered a fair price, he would not be in this position today. Even at this price, how many shares he would receive is unknown. Coming to the markets for the period from Thursday the 18th March to the 24th March, volatility would be the order of the day. The Monday phenomenon where markets have been gaining on every Monday barring one occasion over the past seven weeks was decisively broken. This makes one wonder whether the coming Friday where markets lose significant ground each time will hold or again see a change is uncertain. The strategy would be to sell on rallies and buy on sharp dips. Buy quality stocks and refrain from being sucked in by momentum stocks.

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