A bumpy, truncated week went by as markets continued to emit confusing signals
A bumpy, truncated week went by as markets continued to emit confusing signals
The week gone by was a four-day week. Though short, it was volatile. One witnessed a sharp fall last Monday and a very sharp rise last Wednesday, on the announcement from the meteorological department that the monsoon for the year would be normal. The BSE SENSEX gained 215.43 points or 1.11 per cent to close at 19,602.25 points. The NSE NIFTY gained 60.15 points or 1.03 per cent to close at 5,884.7 points. The BSE100, BSE200 and BSE500 gained 0.83 per cent, 0.76 per cent and 0.73 per cent respectively. The BSE MIDCAP gained 0.36 per cent while the BSE SMALLCAP gained 0.80 per cent. The BSE BANKEX was a gainer and gained more than the BSE SENSEX and the NIFTY with gains of 1.21 per cent.
When the road is strewn with potholes: Jump in and sip on
champagne. The markets rose sharply as the MET department announced
a normal monsoon this yearu00a0 Illustration/Satish Acharya
Active
The IPO market has suddenly become active with a number of Issues opening or closing during the week. Future Ventures Ltd is opening today (Monday) and raising Rs 750 crore in a price band of Rs 10-11. The company is in two verticals -- namely fashion and FMCG with a focus on food. The company invests in the equity of the company and owns a majority of most of them and on a net basis, is hardly making any money on a pro-rata sales turnover of Rs 700 crore.u00a0 There is no immediate upside and the issue could be avoided currently.
Paramount Printpackaging Ltd is raising between Rs 42 crore to 46 crore in a price band of Rs 32-35. The company in nine months ended December 2010 has on a turnover of Rs 43.58 crore made a net profit of Rs 1.71 crore which is a mere 3.92 per cent. The dilution is almost 50 per cent and the equity would increase from Rs 13.6 crore to Rs 26.7 crore, offering little value to investors. The issue needs to be avoided even though there is speculative interest in the same.
Innovative
The third issue is from Innoventive Industries Ltd, which is raising Rs 220 crore in a price band of Rs 117-120. The issue opens on Tuesday, April 26 and closes on Friday, April 29. The company is a multi-product engineering company engaged in the business of precision steel tubes, tubular components, machined components, and steel products in diverse applications like oil and gas, power and farm equipment. The company in the nine months ended December 2010 had consolidated revenues of Rs 457 crore and a net profit of Rs 41.80 crore. The company has innovative products, which have good demand and the potential to go forward. Investment in the company should give returns in the medium and long-term.
Expansion
The fourth issue is from Servalakshmi Paper Ltd, which is raising Rs 60 crore in a price band of Rs 27-29. The issue is also opening on the same dates, Wednesday, April 27, to Friday, April 29. The company is raising the money for Phase II of its expansion, which will see some balancing equipment being added and also includes margin for working capital. The company had commissioned its 90,000 tons per annum paper plant in the first quarter of 2010-11 and the same has stabilised. The capacity would post this expansion increase to 108,000 tons per annum and would take about six to nine months. This is an interesting offering coming from a technocrat who has manufactured many paper mills. The company offers returns in the medium and long-term for investors.
Cues
This bunching of issues could be an indication of the immediate future of the markets, where promoters of IPO bound companies are worried about the direction markets take in the near future. Hence, they do not mind bunching the issues rather than waiting for some time. The markets this week, would continue to be volatile, looking to overseas markets and corporate results for cues. Thursday would be expiry day for April futures and is likely to be extremely volatile. The trading this month so far has been in a broad range of 5700 to 5940 in the Nifty and is fairly flat with a net gain so far of 50 points so far.
Direction
BSE SENSEX has support at 19,523 points, then at 19,357 points, 19,153 points and finally at 18,975 points. It has resistance at 19,688 points, then at 19,812 points, then at 19,873 points and finally at 20,085 points. The NSE NIFTY has support at 5,861 points, then at 5,813 points, then at 5,747 points and finally at 5,693 points. IT has resistance at 5,910 points, then at 5,962 points, then at 6,018 points and finally at 6,055 points. The markets have been giving confusing signals for the last few weeks and are refusing to go down. Probably by the end of this week, there would be clarity where they are headed in the next couple of months.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.inu00a0
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.
Courtesy: moneycontrol.com
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 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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