Markets close negatively, traders warn people to 'tread lightly'

Volatile times call for deft, nimble movements. The markets were volatile last week and even though we lost on just two of the five trading days, the week ended in negative territory. Even on the two days that market recorded losses, they had opened gap up and then surrendered the gains and ended negative. The BSESENSEX lost 371 points or 1.11T to close at 33,314.56 points. NIFTY lost 130.75 points or 1.27 per cent to close at 10,321.75 points. The broader indices like the BSE100, BSE200 and BSE500 lost 1.26 per cent, 1.21 per cent and 1.19 per cent. BSEMIDCAP lost 0.91 per cent while BSESMALLCAP lost 1.20 per cent.

Celebrations post revision of GST tax slab in Patna. Pics/PTI

It figures
The top sectoral gainer was BSECONDUR up 9.37 per cent followed by BSEIT 3.26 per cent and BSETECK 1.70 per cent. The top loser was BSEHEACAR down 4.85 per cent followed by BSEOIL&GAS 3.41 per cent and BSEREALTY 2.94 per cent. In individual stocks, the top gainer was Mah & Mah up 4.45 per cent followed by Hind Unilever 4.11 per cent and Infosys 3.54 per cent. The top loser was Lupin down 25.78 per cent followed by Bharti Tele 7.88 per cent and Reliance Industries 7.01 per cent. The Indian Rupee lost ground and weakened 64 paisa or 0.96 per cent to Rs 65.16 to the US Dollar. Dow Jones also lost ground down 116.98 points or 0.50 per cent, to 23,422.21 points.

Bourse course
In primary market news, Shares of Reliance Nippon Life Asset Management Limited listed on the bourses and gained 12.82 per cent at the end of the week. Shares were issued at Rs 252 and closed at Rs 284.30 at the end of the week. Leveraged investors lost money in the issue as the cost of funding was Rs 55-56 and the gains made on listing were about Rs 37. The other company whose shares were listed was Mahindra Logistics Limited and they struggled to close above issue price. Shares which were issued at Rs 429 ended a tad higher at Rs 429.15, and in the process the merchant bankers avoided being classified as a share which closed below issue price on day one. One can be sure that the small change above issue price was a concerted effort by the people who would have got affected by the same.

Issue view
The issue from Khadim was just about subscribed at 1.90 times. The QIB portion was subscribed 2.44 times and Retail 2.33 times while HNI was undersubscribed 0.18 times. The other issue open for subscription was the mega issue from HDFC Standard Life Insurance, which was subscribed 4.90 times and received excellent institutional support. The QIB portion was subscribed 16.60 times while HNI was subscribed 2.29 times. Retail and shareholder quota remained undersubscribed. The issue which was to raise Rs 8,695 crore garnered interest of Rs 33,570 crore. Clearly the name HDFC did the trick and the fact that investors in the two listed entities HDFC and HDFC Bank, have made huge returns in these two stocks.

Cut down
With one eye on the state elections and the other on the economy, the GST council has pruned drastically the number of items in the 28 per cent GST bracket. They have removed 178 items from the top slab and brought them down to 18 per cent. This leaves just 50 items in the 28 per cent bracket. In a significant move, all eating houses/restaurants have been brought into the 5 per cent bracket and no input credit would be given. This piece of news would be welcomed by Mumbaikars as eating out is a necessity for the hustle bustle of Mumbai's lifestyle.

Look out
In the week ahead shares of New India list today (Monday) followed by HDFC towards the end of the week. The week is also to see the ETF issue Bharat 22 from the government. As the name suggests the ETF (Exchange Traded Fund) would comprise a basket of 22 stocks and would be traded on the Exchange on alive basis. The maximum amount to be divested would be R 10,000 crore. All investors would be offered/allotted units at a 3 per cent discount to the weighted average traded value of each stock over three trading days when the issue is open. The issue opens on Wednesday, November 15 and closes two days later, on Friday, November 17.

Raising money
The highest fund raising through IPOs was in 2007 when roughly 35,000 crore was mopped up. This year, with about 45 days to go, a sum of about Rs 65,000 crore, has been mopped up and of this roughly 45,000 crore has been through the five insurance companies. Till last year, insurance was the sunrise sector and everyone was looking forward to these issues. There has been an overkill of these issues and the effect on the markets is telling. Of the five issues, three have listed and two of them are trading at a discount while of the remaining two, New India would be listing on Monday followed by HDFC Standard Life towards the end of the week.

Caution advised
Markets would be more volatile in the coming week with geo political tensions increasing. Besides rising crude oil prices, the possibility of a default in Venezuela is looming large. This would certainly have an impact on global markets. It therefore makes sense to remain light in commitment and use sharp movement to enter and exit the markets.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only.