The Finance Minister's statement about infusing fresh capital into PSU banks gave the markets a reason to celebrate and continue with fireworks, even though Diwali happened 10 days ago.
<img title="Finance Minister Arun Jaitley. Pic/PTI" src="http://images.mid-day.com/images/2017/oct/FM-Arun-Jaitley.jpg" alt="Finance Minister Arun Jaitley. Pic/PTI" /> Finance Minister Arun Jaitley. Pic/PTI
The banking sector shares just went through the roof and were helped by the fact that October futures were to expire a day later. The BSESENSEX gained 707.26 points or 2.31 per cent to close at 33,137.22 points. NIFTY gained 176.50 points or 1.71 per cent to close at 10,323.05 points.
The broader markets saw the BSE100, BSE200 and BSE500 gain 1.83 per cent, 1.74 per cent and 1.74 per cent respectively. BSEMIDCAP was up 1.85 per cent and BSESMALLCAP was up 1.28 per cent. In sectoral indices, the top gainer was BSEBANKEX up 4.6 per cent followed closely by BSECAPGOODS with 4.42 per cent and BSEPOWER with 3.71 per cent. There was just one loser in BSECONDUR down 1.99 per cent. The one to gain the least was BSEHEALTHCARE up a mere 0.03 per cent.
Individual gainer In individual stocks the top gainer was State Bank of India up 22.01 per cent. Bank of Baroda was up 22.52 per cent but has less weightage. ICICI Bank was up 14.32 per cent. The top loser was Yes Bank down 16.55 per cent. The other losers were Infratel 9.81 per cent and HCL Tech 7.46 per cent. The Indian Rupee lost one paisa or 0.02 per cent to close at R65.05. Dow Jones was up 105.56 points or 0.45 per cent to close at 23,434.19 points.
October futures expired on a positive note, no doubt helped by the bank recapitalization announcement. There was a frenzied short covering and trading volumes and delivery volumes witnessed in banking stocks on Wednesday were unheard of. Huge deliveries were witnessed in SBI, Bank of Baroda and even ICICI Bank. The series expired at 10,343.80 points, a gain of 574.85 points or 5.56 per cent. Action in the primary market is unabated and things could not have been better for them. The coming week has three issues opening. The first of the block is Mahindra Logistics Limited, which opens on Tuesday, October 31, and closes on Thursday, November 2. The price band is R425-429 and the company is looking to raise R828.83 crore at the top end of the band.
The second issue is from New India Assurance Company Limited, which is tapping the markets with its issue to open on Wednesday, November 1 and close on Friday, November 3. The price band is R770-800, with a discount of R30 to retail investors and employees.
The company would raise Rs 9,600 crore at the top end of the band. With the lacklustre performance on listing of state run GIC RE, this company would have to market itself.
The third issue is from Khadim's, the footwear brand based out of Kolkata. The company is looking to raise Rs 543 crore in a price band of Rs 745-750. The issue opens on Friday, November 3 and closes on Tuesday, November 6.
Controversy over allotment There were two listings in the previous week as well. The first was from IEX Limited, which is the power exchange. The shares were allotted at Rs 1,650 and there was a controversy over allotment to FPI's. The allotment made to them in the anchor book was cancelled and added back to the QIB portion, which then saw a muted response. The issue did get fully subscribed but was nothing to talk about considering the responses that are the norms these days.
The share closed below the issue price losing about 1.4 per cent on day one and at weekend was down 5.22 per cent. The second share to list was state re-insurer GIC RE who had issued shares at Rs 912. There was a retail discount of Rs 45, which made their allotment price of Rs 867 effectively. The share on listing day made a low R780 and then recovered to hit the high of Rs 898 at close. The weighted average of the last half hour saw the closing price at Rs 874, a loss of Rs 38 or 4 per cent. By the weekend, the share was down 8.17 per cent.
The issue from Reliance Nippon Life Asset Management Limited was subscribed 81.54 times. The company is the first asset management company to be listed in India. UTI AMC had filed its document earlier and was to list but it did not happen. The issue from Reliance Nippon saw the QIB portion subscribed 118.40 times, HNI portion subscribed 209.44 times and retail 5.65 times. Results from the mega companies talked about last week showed growth, but not adequate enough to say that valuations at these levels could be justified. They are expensive and markets need to factor in the low growth that has been happening over the last three years. Whether they do so right away or after a fortnight is anybody's guess.
The current rally has got a fresh lease of life after the FM's announcement on bank recapitalization. The performance of private banks leaves a lot to be desired and even they seem to be suffering from poor asset quality. Makes sense to remain on the sidelines and reduce exposure to the market.
Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research &amp; 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.

The Finance Minister's statement about infusing fresh capital into PSU banks gave the markets a reason to celebrate and continue with fireworks, even though Diwali happened 10 days ago

Jaitley's post-Diwali fireworks

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The Finance Minister's statement about infusing fresh capital into PSU banks gave the markets a reason to celebrate and continue with fireworks, even though Diwali happened 10 days ago

Jaitley's post-Diwali fireworks

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Jaitley's post-Diwali fireworks

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