Markets may fall this week due to a number of factors
Markets may fall this week due to a number of factors
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The week gone by has been a depressing one with the Mumbai blasts at three crowded places at evening peak hour.
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As is expected of Mumbai, the city bounced back as if nothing had happened, with one big difference this time in the common man expressing anguish and his displeasure at the state unable to provide basic security to its citizens. Politicians as expected made some stupid statements and added insult to injury to the city's hurt public.
Benchmark
After rising for the last three weeks, the BSE SENSEX fell this time losing 296.12 points or 1.57 per cent to close at 18,561.92 points.
The NSE NIFTY lost 79.55 points or 1.41 per cent to close at 5,581.10 points. The BSE 100, BSE 200 and BSE 500 registered losses but much less than the benchmark indices losing 1.11 per cent, 0.97 per cent and 0.83 per cent respectively.
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The BSE MIDCAP actually gained a small 0.15 per cent while the BSE SMALLCAP lost 0.14 per cent.u00a0 Power Finance Corporation or PFC was a big gainer at Rs 211.25, adding Rs 17.55 or 9.06 per cent.
Loss
Infosys declared its results and kicked off the results season with numbers and guidance, which the market disliked. The share lost Rs 247 or 8.29 per cent to close at Rs 2,731. TCS also declared its numbers, which were much better than Infosys and the share lost Rs 23.75 or 2.03 per cent.
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The week saw the listing of Readymade Steel India Limited, which had issued shares at Rs 108. The company received a very poor response from QIBs and was subscribed to the extent of a mere 3 per cent of their quota.
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The issue was subscribed by retail investors who subscribed their quota by 4.18 times and overall 1.68 times.
The share opened steady and made a high of Rs 117.75 and crashed the same day to Rs 66.45. The share made a low of Rs 53.95 on Friday before closing for last week at Rs 63.15, a weekly loss of Rs 44.85 or 41.53 per cent.
Listing
This week will see the listing of Shriram Transport Finance Company bond issue.
The company had issued bondsu00a0 for a value of Rs 1,000 crore and the scheme carried a coupon rate of 11.35 per cent for three years duration and 11.6 per cent for five years duration. The bonds received excellent response from retail investors and were oversubscribed.
The allotment to retail investors who applied on day one for 500 bonds of Rs 1000 each were allotted 138 bonds which means an allotment ratio of 27.6 per cent.
There is a premium likely on listing because the coupon rate for institutional investors was 11.1 per cent against 11.6 per cent. The success of this issue is likely to see many more bond issues in the near future.
Profit
On the primary market front, an issue from Inventure Growth & Securities Limited opens on Wednesday, July 20 and closes on Friday,u00a0 July 22. The price band is between Rs 100-117 and the issue is for 70 lakh shares. The company is in the business of Stock Broking and is also a non-deposit taking NBFC.
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The issue as almost all small sized companies are, is extremely aggressively priced and the net profit of the company for the year ended March 2011 is Rs 621.23 lakh on a turnover of Rs 4135.06 lakh. The EPS on the pre-ipo equity of 1.4 crore shares would be Rs 4.44 and on a fully diluted basis would be Rs 2.96.
The implied price earnings multiple for this share on a fully diluted basis would be a staggering 33.78 times at the lower band of Rs 100 and 39.52 times at the upper end of the band of Rs 117. Large broking company stocks are available at multiples of 9 and 11 times.
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This issue is expensive and should be avoided even though there could be listing gains like in some recent issues.
Bhartiya Global Infomedia Limited issued 67.20 lakh shares in a price band of Rs 75-82, did not receive subscription of a single share from QIBs. The issue was subscribed 5.06 times by retail investors and 1.94 times by HNIs to be subscribed an overall 2.06 times. The issue was extremely expensive and lacked fundamentals.
Support
Coming to the markets in the week beginning today, they are likely to be under pressure. The support from FIIs witnessed in the last few weeks is receding and not much of buying on a net basis was witnessed last week.
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The BSE SENSEX has support at 18,490, then at 18,404, then at 18,280, then at 18,132 and finally at 17,981 points.
It has resistance at 18,827, then at 18,890, then at 19,097 and finally at 19,148 points. The NSE NIFTY has support at 5,552, then at 5,500, then at 5,483, then at 5,434 and finally at 5,343 points.
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It has resistance at 5,620, then at 5,657, then at 5,689, then at 5,745 and finally at 5,814 points. The week is likely to see the markets falling and there would be a negative bias.u00a0
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Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website https://ak57.in
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 isu00a0 for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions.
Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.
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