TATA to 2012
The year ended with Ratan Tata's resignation and overpriced IPOs, but 2013 just might be off to a positive start, thanks to the Five Tuesdays factor
The markets had a trading holiday on Tuesday and were weak on expiry day on Thursday. They had a great start to the January series, which began on Friday, and saw the week end with decent gains. The BSESENSEX gained 202.48 points or 1.05 per cent to close at 19,444.48 points. The NSENIFTY gained 60.65 points or 1.04 per cent to close at 5,908.35 points. The BSE100, BSE200 and BSE500 gained 1.09 per cent, 1.09 per cent and 1.07 per cent. BSEMIDCAP gained 1.36 per cent while BSESMALLCAP gained a mere 0.23 per cent. The sectoral gainers included BSEOIL (up 2.05 per cent), BSEREALTY (up 2.02 per cent), BSECAP (up 1.58 per cent) and BSEPSU (up 1.46 per cent). There were no losers but BSEMETAL gained the least — up a mere 0.02 per cent.
In individual stocks, the gainers were LIC Housing (up 5.41 per cent), Hind Petroleum (up 5.36 per cent), Tata Communications (up 5.6 per cent) and Union Bank (up 4.28 per cent). The losers, which were much smaller in percentage terms, included M&M (down 1.49 per cent), Hind Unilever (down 1.12 per cent), Tata Steel (down 0.28 per cent) and Maruti (down 0.27 per cent).
In the news
Meanwhile, Ratan Tata retired as Chairman of the Tata Group on his 75th birthday, December 28, 2012, and handed over the reins to Cyrus Mistry. The government intends to increase the price of diesel by R10 per litre in phases of R1 per litre per month, beginning from January 2013. This decision saw the shares of all the state-run PSU oil marketing companies posting gains.
There was plenty of action with three consecutive IPO listings from Wednesday to Friday. CARE gained over 23 per cent over its issue price while PC Jeweller gained 9 per cent. The issue of Bharti Infratel, which raised the largest amount of money through an IPO in 2012, was the biggest disaster losing 13 per cent on the listing day. The company had raised R4,200 crore at R220 per share by way of issue of fresh issue and an offer for sale. Retail investors were offered a discount of R10 per share but did not subscribe to the same and the issue remained undersubscribed in the retail and HNI category by more than 75 per cent. The shortfall was made up by the ‘qualified institutional bidders’ or QIB. This issue saw history repeating itself as 11 years ago, when the parent Bharti Airtel listed its shares, they also traded at a discount on listing and it took almost 18 months for them to trade at a premium. On the other hand, in the US, the Dow continued to fall on worries about the Fiscal Cliff. It was down almost 2 per cent for the week.
SEBI’s safety net
U K Sinha, the SEBI Chairman, has been quite vociferous in expressing his displeasure at merchant bankers and promoters for overpricing issues and for the dismal performance of these issues post listing. Almost three out of four issues in the last four years are trading at a discount. SEBI is under discussion to bring out a safety net mechanism which would serve the dual purpose of putting a check on the overpricing and also boost confidence of retail investors. There is also a veiled threat that in case things don’t improve, SEBI would be forced to bring about price controls on IPOs. One hopes that there is sanity amongst the merchant bankers and things improve in the greater interest of markets at large.
Five Tuesdays factor
January 2012 saw the Five Tuesdays factor at play, in which the markets rose significantly on Tuesdays alone. The total gain in January 2012 was 1,738 points on the SENSEX of which 1,622 or 93.94 per cent happened on the five Tuesdays. Similarly, in the NIFTY, the gain was 575 points of which 522 points or 90.75 per cent was accounted for by Tuesdays. There were three other months which had five Tuesdays, but there was a trading holiday on one or the other Tuesday in the month. The New Year would see January 1, 2013 as a Tuesday and consequently, there would be five Tuesdays in the month. I believe this Five Tuesdays factor would continue to drive the markets as well.
The BSESENSEX has support at 19,372 points, then at 19,252 points, then at 19,149 points and finally at 19,019 points. It has resistance at 19,491 points, then at 19,611 points, then at 19,737 points and finally at 19,820 points. The NSENIFTY has support at 5,886 points, then at 5,850 points, then at 5,804 points and finally at 5,772 points. It has resistance at 5,912 points, then at 5,959 points, then at 5,994 points and finally at 6,030 points. Trade on the long side and expect markets to gain in the coming week.
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 http://ak57.in
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.