Mkts remain under liquidity pressure

The week gone by ending with March futures expiry was yet another bad week for the markets. They lost substantial ground and were down in four of the six trading sessions. The two days of gains saw one mildly positive day while on the other day, markets had decent gains.

BSE Sensex lost 1,361.50 points or 2.81 per cent to close at 48,440.12 points, while NIFTY lost 396.40 points or 2.77 per cent to close at 14,324.90 points. It is significant and worth noting that expiry has happened at the lowest level for the month. This denotes weakness in the market and lack of interest for the next month.

Primary markets have been super active at this point of time and during the last ten days or so, we have seen a stream of primary offerings which have hit the market. Investors see several OFS (offer for sale) issues from many companies hitting the markets. Today, one saw such issue from WABCO hit the markets and yesterday was also, there's issue from RVNL hitting the market. These issues are tightening the market liquidity and sucking out money supply. To add to the market's woes, the fact that the current financial year is about to end is not helping either.

Primary offerings, some time ago were all registering large listing gains, but things have changed dramatically. Recently listed Ease My Trip is now trading at a discount of five per cent to its issue price. Similarly, Anupam Rasayan Limited which listed on yesterday, is trading at a discount of about 10 per cent.

Two issues listed today where Laxmi Organics Limited listed with gains of 26.6 per cent while Craftsman Automation closed with losses of 3.65 percent. Tomorrow, two more issues are to list with Kalyan Jewellers Limited and Suryoday Small Finance Bank Limited. Indications currently are not pointing to these being decent listings with gains, and investors should not be surprised if the listing is below par.

In such a scenario, there is every possibility that markets continue to remain under pressure on account of liquidity being squeezed out continuously. Results for the quarter and year ending March 21 are a couple of weeks away and would affect markets going forward. One needs to be patient and allow results to roll out before jumping the gun. With primary markets having run their course as far as the financial year is concerned and all of us witnessing the damage that bunching of issues does, it's time for merchant bankers and promoters to avoid such bunching of issues and pushing the valuation pedal. If nothing is left on the table for investors the urge to invest may not remain going forward.

Coming to the markets, we have just tomorrow's trading followed by a long weekend with Monday being a holiday. With US markets also under pressure, FPI's having turned sellers and being sellers on a continuous basis, supply of excessive paper is a matter of concern.

While markets may see an initial bounce tomorrow on account of two big consecutive day of falls, it will not change the present bearish mood which has hit markets. Makes sense to stay on the side-lines and allow markets to run their course. Use sharp dips to buy and rallies to sell.

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