Markets Stagnate; Expiry May Trigger Changes

By Hazle Jakubowski

June 23, 2024


As the week ahead unfolds, it would be prudent to exercise caution given that expiry is on the horizon. The previous trading week was shortened due to a holiday on Monday and witnessed four sessions with slight volatility but ultimately closed with minor gains. We have seen sector rotation occurring within these sessions, with banking taking the lead on Wednesday, followed by sugar stocks, fertilizer, and finally railway stocks. 
A potential concern moving forward could be the volume in fertilizer stocks, as they experienced sharp gains. BSE SENSEX gained in three of the four sessions, while NIFTY managed two wins out of four sessions. At week’s end, BSE SENSEX had increased by 217.13 points, or 0.28 percent, closing at 77,209.90 points, whereas NIFTY saw a rise of 35.50 points, or 0.15 percent, concluding at 23,501.10 points. 
The broader markets displayed mixed results; BSE MIDCAP decreased by 0.20 percent, while BSE SMALLCAP rose by an impressive 1.44 percent, despite a decrease in both the BSE100 and BSE200 indices, respectively, by.04 percent and.14 percent. 
The rapid growth rate observed in both the SMALLCAP and MIDCAP indices raises some concern over valuation issues within these segments, as pointed out by another fund house recently. 
In terms of currency exchange rates, last week saw the Indian rupee gain marginally against the US dollar, increasing from Rs83 to Rs83:53, which accounted for an overall increase of.04 percent. 
Looking towards primary market news, we see one listing along with two issues opening for subscription, while another issue opened last week will close this coming week; additionally, we await two new issues that are scheduled to open during this upcoming period. 
Shares issued from Le Travenues Technology Limited debuted at Rs93 before closing their first day at Rs161:99, representing an increase of almost 75 percent. By the end of the week, shares had increased further, closing at Rs169:18, a gain of over eighty percent. 
Dee Development Engineers Limited issued shares in a price band of Rs 193-203 and received an excellent response, with oversubscription noted 102.32 times overall across various portions, such as QIB, which was subscribed to 206.54 times, HNI, which was subscribed to 148.99 times, and Retail, which was subscribed to 23.21 times. This resulted in total applications of around twenty lakh. 
The second issue came from Akme Fintrade (India) Limited, which issued shares within the pricing band of Rs114–120; these were oversubscribed fifty-four times overall but saw somewhat muted responses, particularly from QIB, when compared to other issues likely due to higher NPA's and competitive landscape concerns present within the NBFC space. 
Stanley Lifestyles Limited is set to open its third issue on Friday before closing next Tuesday; it has already been fully subscribed on the first day, with a pricing band set between Rs 351-369. 
Looking ahead, we anticipate Allied Blenders and Distillers Limited opening their new issue next Tuesday, scheduled for close by Thursday, offering fresh issuance worth one thousand crores along with an offer for sale valued at five hundred crores placed within the price range of Rs 267–Rs 281. 
Their brand 'OFFICERS CHOICE' achieved global recognition as world’s largest-selling whisky volume-wise during period covering years 2016 till 2019 however company itself experienced financial stress hence they are now looking towards raising funds via IPO route so as to retire debts amounting approximately seven hundred twenty crores plus rationalising board structure prior going public thereby saving rupees ninety-three crores compensation meant for promoters moving forward thus changing financial outlook positively given substantial savings expected reaching above two hundred crore mark by fiscal year ending March ’25 considering infrastructure prospects post-rationalisation coupled with anticipated margin improvements making it an attractive investment proposition especially in light rising demand, socio-economic acceptance of liquor and growing aspirations. 
The second issue is from Vraj Iron and Steel Limited, which plans to raise funds via fresh issuance worth rupees one hundred and seventy-one crores within a price band ranging from Rs195 to Rs207, scheduled for opening on Wednesday, June 26th, before closing two days later on Friday. The company’s main objective behind this fundraising effort is the expansion of sponge iron capacity along with MS Billets at their Bilaspur plant, plus repayment of a bank loan taken earlier for funding the same project in the interim period. The issue appears attractively priced, offering scope for appreciation over the medium term along with potential listing gains given the current market mood. 
June futures are set to expire this coming Thursday, currently valued at 23,501:10 points, marking an increase of twelve points, or four points, five percent, since the start of the series, with bulls seemingly having the upper hand considering there are just four days remaining till expiry. Even though markets appear somewhat exhausted, holding onto gains momentum seems likely to ensure they win series, although some ground may be conceded. 
Foreign Portfolio Investors (FPI's) have been covering shorts post-general election results announcement dated June 4; therefore, we can expect some bounce back led by bears, especially as little or no news flow is expected during the upcoming week. This is further complicated due to sector rotation already occurring, making new stock ideas hard to come by, hence it would seem wise to play safe, taking money off the table, and keeping aside until newer ideas emerge. Thus, strategy ahead remains cautious given the imminent expiry likelihood and increased volatility amid intensified action between bulls and bears alike.


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