The Indian rupee gained 18 paise or 0.24% to close at Rs 74.56 to the US dollar. Dow Jones had a bad show on Friday when it lost around 300 points and therefore ended the week with a loss of 182.31 points or 0.52% to close at 34,687.85 points.
In primary market news, the IPO of Zomato Limited for a new issue of Rs 9,000 crore and the offer for sale of Rs 375 crore received excellent and euphoric support. The total amount raised was Rs 2.14 lakh crore including the anchoring part of approximately Rs 4,196 crore. The QIB part was subscribed 54.71 times, the HNI part was subscribed 34.80 times, the Retail part was subscribed 7.87 times and the Employee part remained subscribed 0.62 times. The Anchor portion saw 100 Anchor Investors comprising 186 entities. What is strange about the anchor allocation is an allocation of 2.90 lakh shares allocated to the ICICI Prudential Dividend Yield Fund. Isn’t it strange that a company that has accumulated losses, has never made a profit since its inception and does not know how many more years before making a profit, sees an investment by a yield fund? dividend? Another way of looking at it is that with 186 strung entities everyone is excluded.
There have been unconfirmed reports of the portion of the anchor being subscribed to or receiving offers of 35 to 37 times the size of the anchor. While the official number would be accessible to the public on the day of the award, what does this mean in practice? The oversubscription would have elicited a response of 1.47 to 1.55 lakh crore. The total response from the QIB book was 1.53 lakh crore. The math doesn’t add up. Does this mean that only people who had requested an anchor point award applied?
There is an issue of Tatva Chintan Pharma Chem Limited which is exploiting the capital markets with its new issue for Rs 225 crore and an offer to sell for Rs 275 crore in a price range is Rs 1,073 to 1,083. show opened on Friday July 16 and closes Tuesday July 20. The company is a niche specialty chemical company that manufactures SDAs (structure directing agents), PTCs (phase transfer catalysts), PASCs (pharmaceutical and agrochemical intermediates) and electrolyte salts for SCB. The company is the largest manufacturer of its class in the country and a major global player. The company’s income was Rs 300.36 crore for the fiscal year ended March 2021 and the after-tax net profit was Rs 52.40 crore. The company enjoys healthy margins of 23 percent at EBITDA level and 17 percent at PAT level. The company reported EPS of 26.02 rupees for the fiscal year ended March 2021. The PE band is 41.24 to 41.62 times based on the March 2021 figures. The show that opened Friday was subscribed 4.55 times on the first day and the Retail part was subscribed 8.32 times. There is money on the table for investors who are fortunate enough to get an allocation.
The main issues of GR Infraprojects Limited and Clean Science Technology Limited would both be listed on the stock exchange on Monday, July 19. These numbers were entirely offered for sale and had received an excellent reception.
After the meteoric success of Zomato Limited on the primary market, Paytm filed its DRHP for an IPO of Rs 16,600 crore which consists of a new issue and a sale offer of equal size.
On the Covid-19 front, the world has seen 19,07,97,676 patients, 40,99,170 deaths and 17,38,50,834 cured patients. In India, we have seen 3,11,066,066 patients, 4,13,640 deaths and 3,026,796 cured patients. In the past week, the world saw 35 18,338 new patients, 56,150 deaths and 25,964,471 cured patients. In India, we saw 2,684,444 new patients, 5,568 deaths and 2,947,732 cured patients. The number of people vaccinated has crossed the 40 crore mark.
The week ahead has a midweek holiday on Wednesday. This effectively means two trading periods of two days each. This would disrupt momentum and make Tuesday a day when we could see positions lighten up before the holidays. Likewise, Thursday could be a very volatile day, where markets react to Tuesday night’s events in the US and global markets on Wednesday. The week before, new highs were hit and markets reached the top of the band as expected. Under normal circumstances one would have expected a breakout to occur within the next week or so, but the same could be delayed due to the holidays.
It makes sense to play on the volatility that follows and continue to post profits on large rallies and buy corrections like the week before. Markets will see volatility and different groups of stocks evolve every day and reach new highs. If I had to reach out and try a guess, the week starting July 26 and also having the July futures expiration would be the frenzy week in the markets. The best that can happen this week is that the first signs of an impending move can be seen at the end of trading on Friday July 23. Trade with caution.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. Opinions expressed are personal)
kejrwal / dpb