Arun Kejriwal: Rock 'n' roll

Markets were on a roll last week and the benchmark indices saw them hitting new lifetime highs BSESENSEX gained 84048 points or 225 per cent to close at 3733685 points NIFTY gained 26815 points or 238 per cent to close at 1127835 points The broader indices saw BSE100 BSE200 and BSE500 gain 279 per cent 293 per cent and 306 per cent respectively BSEMIDCAP was up 450 per cent while BSESMALLCAP was up 443 per centJuly eyeOver the last 1213 years July has been a successful month for stock markets with the indices gaining in each successive year July 2018 has been no different with NIFTY up 56405 points with two trading sessions yet to go July futures was virtually a oneway street for bulls and the series gained 57820 points or 518 per cent to close at 1116730 pointsCement topsThe top sectoral gainer was BSEMETAL up 624 per cent followed by BSEFMCG 464 per cent and BSEREALTY 449 per cent The top loser was BSEIT down 038 per cent followed by BSETECH 004 per cent In individual stocks the top gainer was cement major ACC up 1578 per cent followed by Ambuja ITC 951 per cent The top loser was Bajaj Auto down 608 per cent followed by HeroMoto 560 per cent and Yes Bank 453 per centJuly series expired on a positive note and the series gained 57820 points or 518 per cent to close at 1116730 points The Indian Rupee gained 19 paisa or 028 per cent to close at Rs 6865 to the dollar Dow Jones too chipped in and gained 39294 points or 154 per cent to close at 2545106 pointsOffer arrayIn primary market news the offer for sale from HDFC AMC was a runaway success The offer for sale of 254 crore shares was oversubscribed 8306 times QIB portion was subscribed 192 times HNI portion 195 times and retail portion was subscribed 673 times What is heartening is the fact that there were 2530 lakh applications which is a new record by itself overtaking the previous best of Cochin Shipyard and HUDCO Cochin Shipyard saw 2075 lakh applications while it was 2013 lakh for HUDCO The demand for this share has seen the addition of over 45 lakh applications for the first time Comparing like to like one must remember that in PSU issues there is a retail discount of around 34 per cent which was not there in the case of HDFC AMCSharp riseThe cost of funding for the HNI which used to hover around 5 per cent went up sharply to around 10 per cent for this issue The subscription of 195 times translates to an interest cost of R410 Depending on the rate of interest which hovered between 975 per cent105 per cent the cost could vary between Rs 400430 Indicative prices suggest that the share commands a premium of R600 or thereabouts implying huge upside for leveraged investors The total amount raised by this issue including the anchor allotment is a massive R172 lakh crore The liquidity in the markets is indeed at very high levelsShares of TCNS Clothing Co Ltd will list on Monday July 30 The current buoyancy in markets will help during the listing The issue was subscribed 527 times overallApt timeThe revival of the markets could not have come at a better time than this and this writer had been advocating buying into the market over the past month or so Having been proved correct the question to be answered is what next Market momentum is too strong for things to just fizzle out However the movement in Smallcap and midcap stocks would be more pronounced going forward While SENSEX and NIFTY are at alltime highs Midcap and Smallcap are lower by 15 per cent and 22 per cent respectively from their January 2018 highsA balanceWith such a difference in performance of benchmark indices and the mid and small cap indices they are at best trying to play catch up While the gap could narrow substantially it can never be made up in the medium term Allow your smaller stocks to gain before cashing out on them but do not get carried away by momentum The advice here would be to not get carried away and invest more in these smaller stocks Keep your balance and begin to take money off the table as this rally in these small cap stocks may not last very long Trade with extreme cautionArun Kejriwal is founder of the Mumbaibased advisory firm Kejriwal Research amp Investment Services Pvt LtdDisclaimer 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 onlyCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai from food to things to do and events across the city here Also download the new midday Android and iOS apps to get latest updates