Choppy waters swirl at D-street

It was a real mix ‘n’ match here last week, while FED rates make global markets jittery

The markets were mixed last week, even as the Parliament has been in session. The market was marginally up for the first two days of the week and then fell over the last two days, with Wednesday being marginally down.

Minister of State for Finance, Jayant Sinha speaks during the winter session of Parliament at New Delhi on Friday. Pic/PTI
Minister of State for Finance, Jayant Sinha speaks during the winter session of Parliament at New Delhi on Friday. Pic/PTI

Global markets too were affected with the ECB announcing a lesser than expected cut in interest rates. The global markets have their eye on the FED raising rates in the meeting on December 15 and 16.

Gainers and losers
The BSESENSEX lost 490.09 points or 1.88 per cent to close at 25,638.11 points, while NIFTY lost 160.80 points or 2.02 per cent to close at 7,781.90 points.

The broader indices saw the BSE100, BSE200 and BSE500 lose 1.80per cent, 1.58per cent and 1.46 per cent respectively. The BSEMIDCAP lost a mere 0.45per cent while BSESMALLCAP gained a tad at 0.10 per cent.

While the large cap stocks seem to be under pressure, it appears all the action is centred on midcap and smallcap stocks. It’s a cautionary signal and one should have their antenna out to catch any adverse signals.

The top performer was BSEMETAL, which gained 1.91 per cent followed by BSEHEALCARE 0.85 per cent and BSEREALTY 0.35 per cent. The losers were led by BSEBANKEX down 2.68 per cent followed by BSECONDUR 1.83 per cent and BSETECK 1.66 per cent.

In individual stocks, Tata Steel led the gainers up 3.89 per cent followed by Dr Reddy 3.10 per cent and SAIL 2.64per cent. The losers were largely from the banking space led by PNB down 6.76 per cent. Other losers included Bank of Baroda down 6.58 per cent, Canara Bank 6.57 per cent and HDFC down 4.72 per cent.

Dow Jumps
The Indian rupee closed at Rs 66.69 to the US dollar. Dow Jones managed to close with a small gain of 49.14 points or 0.28 per cent at 17,847.63 points helped in a great manner by the super showing on Friday when it gained over 370 points or 2.12 per cent.

This week has two primary market offerings, which consist of offer for sale by existing shareholders. The issues are from Dr Lal Path Labs and Alkem Laboratories. Both issues open on December 8 and close on December 10. Dr Lal Path Labs has a price band of Rs 540-550 and is for 1.16 cr shares. The issue would raise R 626 crore to 638 crore and the PE ratio is 47.91 times at the upper band.

The second issue from Alkem Laboratories is for 1.28 crore shares in a price band of R 1020-1050. The issue would raise Rs 1311-1349 crore at a PE of 26.4-27.1 times. Both issues are on offer for sale by the existing shareholders. There is an active grey market on for both these issues, which ensures safety for retail investors to apply in the issue.

It appears that in the last fortnight of December this sudden outburst of activity in the primary market is to do with the new guideline of compulsory ASBA for retail investors as well from January 1, 2016.

Keep an eye out for
The dubious distinction of being the most unfriendly investor group would undoubtedly go to the Essar group. Time and again it has been seen that their actions have been against the interest of minority shareholders. 

In the latest case of the proposed delisting of Essar Oil the company has taken the reference date of its board meeting held on June 22, 2014.

The issue did not come earlier, as SEBI was investigating complaints against the company. SEBI has passed an order against the company, which makes them binding to give the minority shareholders the higher of discovered price or the deal, which is done with Rosenoft the Russian oil giant.

The floor price given by Essar Oil is Rs 146.05, which is 30 per cent lower than the market price. Investors should not panic though. The price behaviour will indicate what minority investors believe is the fair price of this company.

The markets would be choppy, and, the final push to GST could see markets gaining towards the middle of next week. It is evident then that this upward rally would be a time to lighten positions.

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