Volatile sideways trading likely

Call it coincidence or sheer timing, the completion of the G20 summit and the mounting of 20K on Nifty coincided. G20 concluded on Sunday post the declaration and the very next trading session saw Nifty climb Mount 20K. On expected lines, having done so, the front leaders of the rally, mid-cap and Small-cap space saw a sharp correction on Tuesday itself. The benchmark indices however, continued their upward move. At the end of it all, the September 7-13 period under review saw the benchmark indices gain on all five trading sessions. BSE Sensex gained a massive 1,586.47 points or 2.41 per cent to close at 67,466.99 points, while Nifty gained 458.95 points or 2.34 per cent to close at 20,080.00 points. It may be mentioned that markets having achieved their immediate objective of Mount 20K saw a sharp correction on Tuesday itself in the mid-cap and small-cap space. It was on the anvil and came bang on time on the very first day after the objective was achieved. The rally is not yet over but volatility would continue to rise in the coming days.

Dow Jones gained on four of the five trading sessions, yet closed virtually flat, gaining a mere 3.89 points or 0.01 per cent to close at 34,645.99 points.

Markets had plenty of action in the primary markets and even more would follow in the coming week. The first issue to list under T+3 has happened on Monday (September 11) on both the main board and the SME exchange. The first to list on the main board was Ratnaveer Precision Engineering Ltd, which had issued shares at Rs98. The share closed the day at Rs134.40, a gain of Rs36.40 or 37.14 per cent on Monday. It lost ground on the following two days and closed at Rs121.30, a gain of Rs23.30 or 23.77 per cent. The share to list on the SME exchange was Basilic Fly Studio Ltd.

The second share to list was Rishabh Instruments Ltd, which had issued shares at Rs441. The share closed day one at Rs442.75, a gain of Rs1.75 or 0.39 per cent. The share is trading around the issue price and closed lower than the issue price today at Rs440.65, a marginal loss of Rs0.35 or 0.07 per cent.

The issue from EMS Ltd was very well received. The issue was subscribed 75.28 times overall. QIB portion was subscribed 153.02 times, HNI portion was subscribed 82.32 times and Retail portion was subscribed 29.78 times. There were 23.93 lakh applications. The issue was open between Friday (September 8) and Tuesday September (12).

The issue from Jupiter Lifeline Hospital Ltd was oversubscribed 65.42 times overall. QIB portion was subscribed 187.96 times, HNI portion was subscribed 36 times and Retail portion was subscribed 8.00 times. There were 14.6 lakh applications. The issue was open between Wednesday (September 6) and Friday (September 8).

We have a spate of issues coming up with the first being the issue from RR Kabil Ltd. The issue opened today on Wednesday (September 13) and will close on Friday (September 15). The issue consists of a fresh issue of Rs180 crore and an offer for sale of 172.36 lakh shares in a price band of Rs983-1035. The company is a manufacturer of wires and cables and has also entered the ‘FMEG’ business of electrical goods.

The second issue is from Zaggle Prepaid Ocean Services Limited which is tapping 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 into the business of providing a platform for corporates to take care of their employee expense hassles and also offers a credit card which has pre-specified limits as per the customer. The issue opens on Thursday (September 14) and closes on Monday (September 18). The third issue is from Samhi Hotels Ltd, which is tapping 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 opens on Thursday (September 14) and closes on Monday (September 18). The company is a branded hotel ownership and asset management platform in India owning 4,800 keys.

The fourth 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 Rs 602 crore and an offer for sale of 121.31 lakh shares in a price band of Rs135-142. The issue opens on Friday (September 15) and closes on Wednesday (September 20). Incidentally the shares of Yatra are listed on Nasdaq.

Besides these primary issues, three other companies, Signature Global, Sai Silk and Manoj Vaibhav have announced roadshows on Thursday and Friday.

Probably the arrival of Mount 20K on Nifty has coaxed promoters to hit the markets ASAP before a meaningful correction sets in. Readers would be wondering why subscriptions in the QIB portion of issues have suddenly picked up. Banks who have money have begun applying on the last day of the issue post 3pm. They do so in issues which are already subscribed around 40-50 times in the QIB portion.

They just block funds in their own bank and are willing to ride the rally. It would be interesting if Sebi issues a new dictate that blocking of funds cannot be done by a bank in his own bank as is the case with merchant bankers who are debarred from applying for issues which they manage. They necessarily have to open another account in a bank outside their own entity and then apply in IPOs. This will ensure proper subscription. Further, these banks sell in the price discovery at 9:45 am on listing day. If subscription continues in the same way than it would appear that they are interested in application or it would amount to taking advantage of the loophole in the system. Hope the regulators RBI and SEBI are listening.

Coming to the markets for September 14-20 period, the volatility and sharp two-sided moves would be the order of the day. We also have a trading holiday on Tuesday (September 19), when Lord Ganesha is invited to our homes for his annual trip across the length and breadth of the country. With the immediate target done we should now look for distribution across shares which have moved and counter the balance of stocks which have not moved, rising. This would be a sort of circular rotation. The strategy would be to keep booking profits at every rally in stocks which one holds and to refrain from greed by picking up just about any stock based on tips or because it has not moved. With substantial paper available in the primary market, it is yet another note of caution which should not be ignored. Finally, the example of last period under review where grey market premiums disappeared on listing and shares ended flat.

The buzzword here on is be cautious.

(The author is the founder of Kejriwal Research and

Investment Services,

an advisory firm)