Markets were on a roll last week and gained on four of the five trading sessions continuously. Alas all good things do come to an end, and market movement too was no exception. Friday, markets saw a sharp correction and they declined quite sharply.
The level of 20K on NIFTY which is an important milestone in the life of an index was missed by a whisker with the level being reached at 19,991.85 points or just about 8 points short. Probably markets will need to gather its resources and then make an attempt to surmount Mount 20k as after Friday’s correction we are now short by 255 points.
BSESENSEX gained 623.36 points or 0.94 per cent to close at 66,684.26 points while NIFTY gained 180.50 points or 0.92 per cent to close at 19,745.00 points. The broader markets continued their upward movement as well and one saw the indices gain less than the benchmark indices. BSE100, BSE200 and BSE500 gained 0.67 per cent, 0.72 per cent and 0.77 per cent respectively. BSEMIDCAP was up 0.52 per cent while BSESMALLCAP was up 1.32 per cent.
The Indian Rupee gained 22 paisa or 0.27 per cent to close at Rs 81.94 to the US Dollar. Dow Jones gained on all five trading sessions of the week, though Friday was actually a flat day with gains of a mere 2.51 points. On a weekly basis, Dow was up 718.66 points or 2.08 per cent to close at 35,227.69 points.
Results from the industry and market giants were a mixed bag with some being good and some below expectations. The IT pack continues to be a disappointment and would need a few quarters before they show any signs of recovering. The core O-to-C business of Reliance Industries was a drag this time on the overall performance and saw the sheen being shaved off. How markets fare post reopening on Monday would be an event to be watched.
In other news on Reliance, the discovered price of its financial services company has been discovered at Rs 260 per share. This means that the adjustment for investors would be that the split between their holding of Reliance and the demerged share would be in the ratio of 95.32 per cent and 4.68 per cent where the former would be the value of Reliance shares and the latter the value of the financial share.
Shares of Utkarsh Small Finance Bank Limited listed on the bourses on Friday and had a spectacular debut. The company had raised Rs 500 crore through a fresh issue at Rs 25 per share. The issue was very well received and was subscribed 110.44 times overall. The script closed at Rs 47.94, a gain of Rs 22.94 or 91.76 per cent. On NSE, the share closed a tad higher at Rs 98.
There seems to be a tearing hurry for companies looking to tap the capital markets with their primary and offer for sale issues. The hurry is on two counts. The first is the present market mood with markets at all time highs. The second is that documents remain valid for 180 days from their last audited accounts. Further FPIs do not invest if the audited accounts are more than 135 days old. The deadline therefore is August 12 with audited results of March 31, 2023.
To beat this deadline, we would see a spate of issues coming up in the next fortnight.
Yatharth Hospital & Trauma Care Services Limited is tapping the capital markets with its fresh issue of Rs 490 crore and an offer for sale of 65.51 lakh shares in a price band of Rs 285-300. The issue opens on Wednesday (July 26) and closes on Friday (July 28).
The company is a Delhi-NCR focussed multi-speciality hospital, having three hospitals in Noida, Greater Noida and Noida extension of 1,100 hospitals. It acquired a 305 bedded hospital in Jhansi-Orchha which was acquired in the previous year. The company is in the process of ramping up the facilities at this acquisition and as utilisation improves, revenues would flow to the company and help in breaking even on a faster basis.
The company reported revenues of Rs 520 crore for the year ended March 23. It had a healthy net margin of 12.6 per cent. The net profit was Rs 66.07 crore, and the EPS was Rs 10.09. The PE band for the issue based on this EPS is 28.25-29.73.
In terms of future, the company has acquired adjoining land at its Greater Noida Hospital, and emerged as the highest bidder at the adjoining land to its Noida extension hospital. This will provide the ability to expand both these hospitals. A part of the proceeds of the issue of Rs 65 crore has been earmarked for inorganic expansion not yet finalised.
Looking at the track record of the company, its financials, its location in the Delhi NCR region, gives the company the opportunity to rapidly expand and build on its multi-speciality facilities. The recent organ transplant facility would be another important avenue to expand business and utilisation of facilities. Investment in the company is warranted.
Coming to the market in the week ahead, they would look to climb Mount 20K as the first target. It may or may not happen next week as the heavyweight stocks would have to recuperate and regain strength for the final onslaught. Various sectors have seen results coming and it is the banking sector or BFSI space which has a weightage of a little over 40 per cent which has the best credentials and performance currently. Going forward the pullback rally which was used in Infosys before the results were declared was used to catch bears off-guard and help the markets inch towards the 20K mark. That done, post result Infosys lost ground and could lose further.
In the week ahead we have July futures expiring on Thursday (July 27). The current value of NIFTY at 19,745 points is higher by 772.90 points or 4.07 per cent compared to the series open of 18,972.10 points. Currently the bulls have the upper hand but things could become tougher if we have another day or two of corrections like what we saw on Friday. One must also bear in mind that the US FED meets on Tuesday and Wednesday for their policy review and the larger expectation is that there would be a rate hike this time around. What could hurt the market is the commentary post the review meeting.
The strategy for the week would be to buy on large dips only in the large cap space and sell on any rallies. Expect the dips to come first and in case the rally comes earlier, it could be an opportunity to short markets. Parliament has also begun its monsoon session and normally markets remain volatile and both sides. Expect markets to be volatile and move in both directions in swift moves. While the upside immediate target is Mount 20K, we could see markets lose about 300-350 points on NIFTY and about 1,000 points on BSESENSEX.
Trade cautiously.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)
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