Sharp flips ahead, trade cautiously

New Delhi: The week went by and had four trading days with a mid-week holiday on May 1, thereby making it two periods of two days each. The volatility witnessed was several notches higher than usual. Surprises one to note that just about 10 days ago, India VIX, which is the volatility index, crashed to a new low. Maybe it was the lull before the storm.

On Tuesday and Friday, NIFTY made new highs and then fell sharply, closing in the red. Not sure how one should read it, but the scene is not comfortable. At the end of the week, BSE SENSEX gained 147.99 points or 0.20 per cent to close at 73,878.15 points, while NIFTY gained 55.90 points or 0.25 per cent to close at 22,475.85 points.

The Indian Rupee lost eight paise or 0.10 per cent to close at Rs 83.42 to the US Dollar. Dow Jones was on a roller coaster ride with gains on four days and losses on one day.

NIFTY made a new lifetime high yet again at 22,794 points against the previous day’s close of 22,648 points. It fell very sharply to close at 22,475 points, a loss of 319 points from the high and 173 points from the previous day’s close. The week ahead has three primary issues tapping the capital markets. Indegene Limited is tapping the markets with Indegene Limited tapping the capital markets with its fresh issue for Rs 760 crore and an offer for sale of 2,39,32,732 shares in a price band of Rs 430-452.

Indigene is an integrated solutions provider, and almost 85 per cent of its revenues come from its US subsidiary. There is no comparable company or peer set in the Indian space, while there are some comparable foreign companies globally.

The second issue is from Aadhar Housing Finance Limited. The issue is entirely an offer for the sale of Rs 2,800 crore. The price band is Rs 300-315. The selling shareholder is the promoter. This company was acquired from the DHFL group when they fell on bad times around 2016-17.

The company acquired was clean and had no issues while the group was struggling with various issues. The issue will open on Wednesday, May 8, and close on Friday, May 10. The company is a housing Finance company focused on the low-income housing segment with a cap on ticket size at Rs 15 lakh.

Based on the post-issue, the NAV would improve to Rs 123.07 at the top end of the band, and the same ratio would be at 2.56 times the price to book. This compared more than favourably with the peer set. There is money to be made in the issue in the medium to long term. There would be some listing pop as well.

The third issue is from TBO TEK Limited. It consists of a fresh issue of Rs 400 crore and an offer for sale of 1,25,06,797 equity shares. The price band is Rs 875-920. The issue would open on Wednesday, May 8, and close on Friday, May 10.

The company is in a negative working capital cycle as it pays after receiving the money. It is adding new offerings on the platform and has recently added the Eurail on its platform recently.

There is no comparable peer in India in this space, and the listed players are basically online travel players like Make My Trip, Easy Trip and Yatra Online, who would be using the platform provided by TBO TEL Limited. The issue offers scope on listing and in the medium to long term as well.

Coming to the markets, we are at a crossroads once again. On the upside, I would go long only if 22,800 on the NIFTY and 75,200 on the BSESENSEX are crossed and sustained. On the downside, immediate support exists at 22,100 points on NIFTY and 72,800 points on BSESENSEX. It is time to be cautious, as the wild gyrations last week are not giving comfort. The strategy would be to sell on any rallies and buy on sharp dips.

(Writer is is founder of Kejriwal Research and

Investment Services.

The views are personal)