Markets may continue in broad sideways range
Until and unless the Nifty break out of 15,800-16450 points range in either direction, expect markets to remain choppy and volatile; trade cautiously and keep money for a rainy day
image for illustrative purpose
The May 19-25 period under review saw markets continue their wild swings. We had a sharp down day on Thursday followed by an equally sharp up day on Friday. This was followed by three consecutive days of losses, but small. At the end of it all, BSE Sensex was down 459.17 points or 0.85 per cent at 53,749.26 points while Nifty was down 214.50 points or 1.34 per cent at 16,025.80 points. It appears that every afternoon, FII's get active and sells aggressively, which ensures that markets end in the negative.
During the same period, we saw Dow lose on the first two days and gain on the remaining three days. The net change was down 726.85 points or 2.22 per cent to close at 31,928.62 points. The Dow is down 12.14 per cent on a year-to-date basis. It also made a new 52 week low during the course of the week on Friday.
Markets are seeing some traction in the primary markets with new issues and also listings. During the period under review, we saw three listings and one issue close for subscription.
The first issue to list was from Prudent Corporate Advisory Services Limited which was an offer for sale and had allotted shares at Rs 630. The share closed day one at Rs 562.70, a loss of Rs 67.30 or 10.68 per cent. The share has been under pressure since listing and closed today at Rs 493.15, a loss of Rs 136.85 or 21.72 per cent.
The second share to list was from Delhivery Limited which had issued shares at Rs 487. Shares closed on listing day at Rs 537.25, a gain of Rs 50.25 or 10.31 per cent. Shares lost ground today and closed at Rs 509.85, a gain of Rs 22.85 or 4.69 per cent.
The third share to list was from Venus Pipes Limited which had issued shares at Rs 326. Shares closed day one at Rs 351.75, a gain of Rs 25.75 or 7.89 per cent. The share lost some ground today and closed at Rs 341.30, a gain of Rs 15.30 or 4.69 per cent.
The issue from Paradeep Phosphates Limited was subscribed 1.88 times overall with QIB portion subscribed 3.40 times, HNI portion subscribed 0.86 times and Retail portion subscribed 1.44 times. The issue which was open from Tuesday the 17th of May to Thursday the 19th of May was in a price band of Rs 39-42. This share would list on Friday the 27th of May.
The second issue which was from Ethos Limited was open from Wednesday the 18th of May to Friday the 20th of May was in a price band of Rs 836-878. The issue was subscribed 1.10 times with QIB portion subscribed 1.17 times, HNI portion subscribed 1.54 times and Retail portion subscribed 0.87 times.
The third issue was from eMudhra Limited and was open from Friday the 20th of May till Tuesday the 24th of May. The price band was Rs 243-256. The issue was subscribed 2.74 times overall with QIB portion subscribed 3.93 times, HNI portion subscribed 1.31 times and Retail portion subscribed 2.67 times.
The issue from Aether Industries Limited which has opened for subscription from Tuesday the 24th of May and would close on Thursday the 26th of May is currently on. The price band is Rs 610-642. At end of day 2, the issue is subscribed 0.52 times overall.
There is a new type of incident happening in IPOs since the beginning of April 22. A large number of applications are being rejected in every issue. This is on account of investors not giving confirmation to the UPI message which is sent to them for applications bid through syndicate brokers. Rejection of 1-2 lakhs has become the norm. In LIC the number was 12 lakhs out of 73 lakh applications. In Prudent Corporate Advisory it was 1.10 lakh applications from 1.53 lakh applications. In Delhivery it was 1 lakh forms from 1.73 lakhs and in the case of Venus it was 1.92 lakh applications out of 6.28 lakh applications. This is a serious issue and hope the regulator with merchant bankers find solutions before some issue goes down under.
Coming to the markets in the period under review May 26th to June 1st, they would continue to be in a broad sideways range with levels of Nifty being 15,800-16450 points. Until and unless the markets break out of this range in either direction, expect them to remain choppy and volatile. With FII's hell bent on selling every afternoon, there is little anyone can do. This is even though DII's and retail investors have been buying aggressively.
The strategy would be to sell on sharp rallies and wait for buying opportunities when sharp dips come. While everyone seems to have given up on the Russia-Ukraine war, its time that some action happened there considering we have completed three months. It appears even primary market issuances would take a break until the above application issue is resolved. Trade cautiously and keep money for a rainy day.
(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)
