Hold on to your seatbelts

Oct 09, 2017, 11:54 IST | Arun Kejriwal

Mood is positive, but do brace for some turbulence in the next few days

The week had four trading days and markets gained on three of those days. The BSESENSEX gained 530.50 points or 1.67 per cent to close at 31,814.22 points. NIFTY gained 191.10 points or 1.91 per cent to close at 9.979.70 points. Broader indices like the BSE100, BSE200 and BSE500 gained 2.03 per cent,2.04 per cent and 2.15 per cent respectively. BSEMIDCAP gained 2.55 per cent and BSESMALLCAP gained 3.10 per cent. Movement in the small indices has again picked up.

Union Finance Minister Arun Jaitley and Revenue Secretary Hasmukh Adhia (l) at the 22nd meeting of the Goods and Services Tax (GST) council, in New Delhi. Pic/PTI
Union Finance Minister Arun Jaitley and Revenue Secretary Hasmukh Adhia (l) at the 22nd meeting of the Goods and Services Tax (GST) council, in New Delhi. Pic/PTI

Gainers and losers
The top sectoral gainer was BSEMETAL up 4.22 per cent followed by BSEOIL&GAS 4.03 per cent and BSEHEACARE 3.51 per cent. There were no sectoral losers but the one to rise the least was BSEBANKEX at 0.68 per cent. In individual stocks, the top gainer was GAIL or Gas Authority of India Limited which was up 7.34 per cent followed by Aurobindo Pharma 6.99 per cent and Reliance Industries 6.57 per cent. The top loser was Power Grid down 2.86 per cent followed by Hero Moto 2.06 per cent and ICICI Bank 1.73 per cent.

Dow is wow
Dow Jones was up and made yet another lifetime high. It gained 368.58 points or 1.62 per cent to close at 22,773.67 points. The Indian Rupee was under pressure and lost 10 paisa or 0.15 per cent to close at Rs 65.38. RBI met for its policy review and kept rates unchanged as was widely expected. There was no adverse reaction to the same and market recorded gains for that day. They have cut SLR rates which would reduce marginally the cost of funds for banks.

Segment on track
The government has made some changes in GST norms for the SME and MSME segment. This would help many small businessmen and significantly reduce paperwork and compliance costs. Many could say that this was done keeping an eye on the upcoming State elections starting in the next two months.

Eye on issues
Primary market continues to hog the limelight. The week gone by saw the successful launch and subscription of Godrej Agrovet. The issue was subscribed over 95 times. There were two listings during the week as well with SBI Life listing on Tuesday, October 3. The company had through an offer for sale sold 12 crore shares at Rs 700 and raised Rs 8,400 crore for its shareholders. The issue did well on listing day but by the end of the week it closed with small small losses at Rs 694.90, a loss of Rs 5.10 or 0.73 per cent. The other share to list was snack maker Prataap Snacks which had issued shares at Rs 938 and gained a little over 25 per cent on day one. The share which listed on Thursday, closed with gains of over 35 per cent at the end of the week.

A primary move
The week ahead sees two primary market issues. The first is from the power exchange IEX. The cash rich company is offering shares through an offer for sale to raise just about Rs 1,000 crore in a price band of Rs 1,645-1,650. The issue opens on Monday, October 9 and closes on Wednesday, October 11.

A big opening
The week also would see the opening of the largest IPO in 2017-2018 so far from General Insurance Company of India Limited. The company is tapping the capital markets with its simultaneous fresh issue and offer for sale of 12.47 crore shares in a price band of Rs 855 to 912. There is a discount of Rs 45 for retail investors and employees of the company. The issue size would be Rs 10,661.85 crore to Rs 1,372.64 crore. The issue is priced at a PE multiple of 24.97 times.

See huge growth
Allotment in the retail category for all those who apply for one lot is assured, as the size entails 27 lakh applications. The previous best in applications was in the issue of Cochin Shipyard where under 21 lakh applications were received. To add to one's comfort is the fact that retail investors and employees would get a discount of Rs 45. There would also be a spill over from HNI category into QIB and Retail. The issue is well priced and the business is compelling.

With huge under penetration of insurance whether it is life or general insurance in India, and the same set to grow, there is only one way for reinsurers. Grow the business and one could see huge growth going forward. Markets would wait for results to be announced which would begin in the next 10 days. Market mood indicates that they expect positive results in the quarter this time around. This expectation is the same over the last 10-12 quarters. For the good of the market and the momentum to continue, I hope the feeling is right. Brace for increased volatility going forward.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.
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.

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