Markets seeking a final burst of liquidity before the year ends.
We are now close to the point where the rally should resume in the next few days. If this does not occur, another round of selling could take place. This could put an end to the Santa Claus rally one is used to seeing on Indian markets.
BSE SENSEX fell by 686.83 points, or 1.09 percent, to close at 62.181.67 points. NIFTY fell by 199.50 points (or 1.07%) to close at 18,496.60.0 points. BSE100 and BSE200 saw their shares drop 0.95 percent, 0.96%, and 0.96% respectively in the broader markets.
BSEMIDCAP suffered a huge loss and fell 4.32 percent, while BSE SMALLCAP dropped 1.18 percent. The markets lost in four of five trading sessions, but gained one. The IT pack made a significant loss on Friday, bringing down markets.
The Rupee fell to 1.17 percent, or 95 paisa, to close at 82.27 against the US Dollar. Dow Jones was also under pressure. It lost three trading sessions and gained two. Closed at 33,476.46 Points, it lost 953.42 points (or 2.77%)
After the three-day meeting that took place between December 5th and December 7, RBI announced its credit policy. The repo rate has been raised by 35 basis points to 6.25 percent. After three rate increases of 50 basis points each, this is the third time that RBI has raised repo rates. This is due to inflation easing, but also growth tapering. RBI has revised down GDP for FY23 from 6.8 percent to 6.8 percent.
We had one listing in primary market news and three IPOs opening next week. Dharmaj Crop Guard Limited shares, which had issued shares at Rs 236, was listed on Thursday. After touching an intraday high at Rs 278.90, shares closed at Rs 266.40. They gained Rs 29.40, or 12.40 percent. They lost ground on Friday and closed at Rs 249.85, a gain in Rs 12.85 or 5.42 percent.
Uniparts India Limited shares will list Monday, December 12. This issue was a complete Offer for Sale. The price range was Rs 548-577.
Sula Vineyards Limited is offering 2,69,00.530 equity shares at a price range of Rs 340-357 as its first issue. This is to tap the capital markets. The issue will open Monday, December 12th and close Wednesday, December 14th. The maximum fundraise would be at Rs 960 crore. Promoters and PE Investors are the selling shareholders.
Sula, India’s largest wine seller and producer, is in the wine business. It has a dominating market share, and its value is slightly more than half of the 100 percent grape wine market.
The company owns wine-making facilities in Maharashtra, Karnataka and Nasik. A subsidy was granted for grape exports to transport, but it has been removed.
The state tax refund for wine in Maharashtra was also put on hold. If not restored, it would be a major dampener to Sula’s performance.
For the year ending March 22, revenues were Rs 453.91 million. The company’s revenues for the six months ending September 21 stood at Rs 159.15 million, which has risen to Rs 223.91 crore for the current six-month period. The full-year net profit was Rs 69.53 million. They were at Rs 41.25 Crore in the six-months ended June, compared to Rs 5.62crore.
The EPS for March 22nd was Rs 6.53. At this price, the PE band is 52.07-54.67. This company compares itself to breweries like United Spirits (NS.UNSP), Radico Khaitan, NS.RADC and United Breweries. Although they are in an allied industry, these companies are not necessarily comparable.
This share is eligible for more issues in the future than it has ever seen. Subscribers are advised to subscribe to receive listing gains.
Abans Holdings Limited is launching its second issue, which will offer a sale of 90 million shares and a fresh issue for 38 Lakh shares. The issue’s price range is Rs 256-270. It opens Monday, December 12, and closes Thursday, December 15. The QIBs get 10%, HNIs get 30% and Retail investors get 60%.
The company is a holding firm and operates in the diversified finance space through 17 subsidiaries.
It reported an EPS value of Rs 13.37 in the year ended March 22, 2018. The PE range is 19.15-20.19. The company has compared itself to three broking companies: Geojit, Geoweiss, and Choice. The broking activities of these companies are significantly more extensive than those of the company. This business is complex. Before the company can be listed, the proposed entity must demonstrate its core strengths.
Landmark Cars Limited, a premium and luxurious car retailer, has issued the third and final issue. With a new issue of Rs 150 crore, and an offer to sell Rs 402 crore, the company taps capital markets. The issue will open on Tuesday, December 13th and close on Thursday, December 15. The issue’s price range is Rs 481-506.
The company sells vehicles from Mercedes, Honda (ETR:VOWG_p), Volkswagen (EPA:RENA), Jeep, EV maker BYD and Renault (EPA:RENA). Through 112 service and sales outlets, it is available in eight states. It sold 19,264 vehicles in FY22, compared to 13,282 in FY21. The company also serviced 2.79 million vehicles against 2.21 crore vehicles.
The company had revenues of Rs 2,976 crore, against Rs 1,956 million. The company’s PAT was Rs. 66.18 crore, against 11.14 million. The EPS was Rs 17.45 on a diluted basis. The PE range was 27.56-29.
This business has everything it needs, according to the reports that auto sales rose by more than 25% in November 22nd compared to the previous year.
It is a good idea to consider the company’s long-term and medium-term prospects as India grows to be a five-trillion-dollar economy.
Expect volatility when you come to the market over the next week. As we approach the end of the calendar year, there is not much news to be expected. Except for the FED meeting December 12-13, there isn’t much to expect from overseas. This could cause sharp volatility in the US markets, and possibly around the globe.
Markets will react to the news and decide if they are likely to make new highs or turn negative.
Play to market movements and pay attention to volumes is the strategy for this week. At this point, sharp movements without volumes are not possible. The market must show volume and move in the same direction. They will continue to be dominated by smallcap and midcap space. Trade with caution.
Kejriwal Research and Investment Services was founded by Arun Kejriwal. These views are my own.