Mkts staying afloat on sufficient liquidity

Trade cautiously this truncated week, which has 4 trading sessions, Nov F&O expiry on Thursday and 5 listings

Range-bound Week

• Nov F&O expiry on Thu (Nov 30)

• State election results on Sunday

• Breather for mkts as Israel-Hamas conflict moving to peace

The week gone by could be dedicated as a special IPO week as we had five issues opening and closing for subscription. They consisted of one PSU and four private issues. Tata Technologies was entirely an offer for sale while the remaining four were mixed issues with a fresh issue component and an offer for sale component as well. Markets gained on two of the five sessions, lost on two and were flat on one.

At the end of the week, BSE Sensex gained 175.31 points or 0.27 per cent to close at 65,970.04 points, while Nifty gained 62.90 points or 0.32 per cent to close at 19,794.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.18 per cent, 0.20 per cent and 0.22 per cent respectively. BSE Mid-cap index gained 0.69 per cent, while BSE Small-cap index was up 0.53 per cent. The outperformance of the midcap and small-cap space continues unabated. Coming to the IPO week, 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 total bidding was for 1827.25 crore shares and the amount raised excluding anchor was Rs 58,472 crore.

The second issue was from Tata Technologies Limited 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. There were 73.58 lakh applications which is a new record by itself. The issue saw bids for 312.64 crore shares which was for a sum of Rs 156.32 lakh crore.

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 crore shares for a sum of Rs 20,454 crore.

The fourth issue was from Gandhar Oil Refinery (India) Limited which was subscribed 64.07 times overall. There were 28.47 lakh applications and bids were received for 136.10 crore shares valued at Rs 23,001 crore.

The final issue was from Fedbank Financial Services Limited which managed to get subscribed 2.20 times overall. There were 3.67 lakh applications in all. The issue garnered bids for 12.30 crore shares at Rs 1,722.18 crore.

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

This probably explains why markets refuse to go down. There is enough liquidity to prevent the markets from falling or going down and the PE is high to prevent markets from going up. I believe this just about sums up the mood of the markets currently.

Coming to markets in the week ahead, we have a trading holiday on Monday followed by five issues listing with one on Wednesday, three on Thursday and one on Friday. In between we have November futures expiring on Thursday the 30th of November.

The first to list would be IREDA on Wednesday (November 29). This would be followed by Tata Technologies, Gandhar and FedFina on Thursday and followed by Flair on Friday. The reason for Flair listing on Friday is that two issues are listing at NSE on Thursday and there is therefore no room or venue for the listing.

Listing of the five shares would be a great and euphoric moment. If one were to go by the grey market premiums all the issues barring one would have a great debut. The moot question would be how much of the listing day gains are they able to hold on to. I strongly believe that the shares listing would shave off quite a bit of the gains and close lower from the day’s high. The challenge would be to decide when successful applicants should book their profits.

Friday would be a crucial day as the exit polls of the five states going to polls would be aired in the evening, before the results are announced on Sunday (December 3). Markets would see some movement with expected exit polls late on Friday before closing. In any case there would be a knee jerk reaction to the outcome of the poll results on Monday morning and then markets would be back on track.

The strategy for the week would be to play on any intraday volatility and keep light on overnight positions. The benchmark indices are quite range bound at this moment and need definite upward breakout for any meaningful up move. Key levels would be 19,900-19,950 on Nifty and 66,300-66,450 on BSE Sensex. On the downside support exists at 19,600-19,650 on Nifty and at 65,350-65,500 on BSE Sensex. There is no reason for this to break in the coming week on either the downside or upside. Globally even the Israel-Hamas conflict has reached some sort of peace and may get partially resolved going forward. In conclusion, trade cautiously in a week which has four trading sessions, November futures expiry and five listings. The week would end with state election results on Sunday. While the news flow is big, markets may remain range bound this week and react on Monday, indicating a breakdown or breakout. Trade cautiously.