Markets continued to be volatile last week and we saw two-sided movements on the indices which were sharp and in opposite directions. Many days saw markets reverse midway and give up gains or recover losses. On a weekly basis, benchmark indices were virtually flat with a downward bias.
BSE SENSEX lost 95.12 points or 0.24 per cent to close at 38,767.11 points while NIFTY lost 22.50 points or 0.19 per cent to close at 11,643.45 points. The broader indices saw the BSE 100, BSE 200 and BSE 500, lose 0.14 per cent, 0.17 per cent and 0.15 per cent respectively. Dow Jones was also virtually flat losing 12.69 points or 0.05 per cent at 26,412.30 points.
The second round of elections or phase 2 would be held on Thursday, April 18. This round of voting is interspersed with a trading holiday on either side of voting. Wednesday is closed for Mahavir Jayanti and Friday is Good Friday. This double holiday with a break will break the momentum in the market and increase the volatility.
Expect swings in the coming week of 250-plus points on the BSE SENSEX on a minimum of two trading days out of the three.
In primary market news, shares of Rail Vikas Nigam Limited listed on Thursday and gained 75 paisa or 3.95 per cent during the week. In the week ahead, shares of Metropolis Healthcare Limited would list on Monday, April 15 while Polycab India Limited, the wires and cable maker would list on Thursday.
Metropolis Healthcare would debut with a fairly unheard-of phenomenon where the promoter even after an offer for sale would have his shares pledged on the day on of listing. The promoter owns roughly 58 per cent of the company which at IPO price was valued at Rs 4,400 crore.
Post the offer for sale and retiring some shares, the net debt would still be Rs 400 crore. This would be on sale after 13 months of listing as there is a contract where the upside of the market price and issue price in a given formula would flow partially to the promoters. They would, therefore, ensure that no sale happens in 13 months and the price moves up to derive maximum advantage. The pricing of the issue was very aggressive and will face pressure on listing.
The second issue from Polycab India Limited would list on Thursday, April 18. This consisted of a fresh issue of Rs 400 crore and an offer for sale of 1.75 crore shares. The issue received exceptionally strong response from all quarters and was oversubscribed 52 times with QIB portion over 93 times and HNI portion subscribed 110 times. Funding has happened in this issue after the NBFC crisis for the first time and the fallout has been that interest rates are up 50 per cent at 7.5 per cent interest.
The results of TCS and Infosys were announced on Friday, April 12. While the results from both the companies were on expected lines, those of Infosys seem to pale in comparison. While TCS reported revenue growth of 19 per cent and a profit growth of 21.9 per cent, Infosys reported revenue growth of 17.2 per cent and an EPS degrowth of 0.3 per cent. Expect price movement in the two counters on similar lines where shares of TCS rise while those of Infosys remain subdued. Both the results were announced post market closure on Friday.
The week ahead would be super volatile on account of being a short three-day week. Use the volatility to buy into dips and sell on rallies.
(Arun Kejriwal is founder of Kejriwal Research and Investment Services)