Investors look to RBI cues

POST expiry of March futures, trading began on a brisk note and markets registered sharp gains on Friday and then Tuesday. Incidentally Monday, March 29, was a holiday. Today, Wednesday, saw markets giving up gains and it could be said that it was profit taking after two sharp days of gains. BSE Sensex closed at 49,509.15 points, a gain of 1,069.03 points or 2.16 per cent while NIFTY gained 365.80 points or 2.49 per cent to close at 14,690.70 points.

The primary market saw the surge in new offerings and very clearly that has taken its toll on the primary markets as well. Earlier when issues were coming, invariably every listing saw the issue record gains on listing day. In the recent bunching of issues, one saw four of the seven issues trade at a discount with yet another after gaining ground on day one turned negative and is positive again. This shows the fatigue factor and probably that with the issues done for the time being, many of these were overpriced and caught the market participants off-guard.

Giving the closing prices of these issues for a quick recap by readers.

Easy Trip Planners issued at Rs 187, closed at Rs 207.10, a gain of Rs 20.10 or 10.74 per cent. Anupam Rasayan issued at Rs 555 closed at Rs 489.15, a loss of Rs 65.85 or 11.86 per cent. Craftsman Automation issued at Rs 1,490 closed at Rs 1,419.45, a loss of Rs 70.55 or 4.69 per cent. Laxmi Organics Limited issued at Rs 130, closed at Rs 174.50, a gain of Rs 44.50 or 34.23 per cent. Suryoday had issued shares at Rs 305 and closed trading at Rs 273.70, a loss of Rs 31.30 or 10.26 per cent. Kalyan Jewellers which had issued shares at Rs 87 closed at Rs 68.10, a loss of Rs 18.90 or 21.72 per cent.

The last share to list was Nazrana Technologies which had issued shares at Rs 1,101. The discovered price on BSE yesterday was Rs 1,971, a gain of Rs 870 or 79 per cent. The closing price was Rs 1576.80 a gain of Rs 475.80 or 43.21 per cent. Two things are significant here and need to be mentioned that this price was the lower circuit of the day and the share lost 20 per cent from the discovered price of Rs 1,971. Second this issue was the most hyped issue of all the issues in the present lot which had tapped the markets. The second point was that the delivery on day one was 103.99 per cent of the non-anchor portion which meant that everybody sold on day one. That more than 100 per cent happened because some AIF (Alternative Investment Funds) who had invested in the company for more than a year, did not have their shares locked in and were able to sell their shares after listing. The cost of funding of the leveraged HNI was in the region of Rs 615-625. Today the share lost further ground and closed at Rs 1,466, a gain of Rs 365 or 33.15 per cent. The share is still reeling under the after effects of the first day's trade.

The week ahead has just one more day's trade on Thursday before the long weekend with Friday being a trading holiday. RBI meets for its monetary policy review meeting between Monday, April 5, and Wednesday, April 7, with the policy being announced on Wednesday. There is a possibility that RBI may announce the guidelines on HNI funding in IPOs by NBFCs as part of the review based on the white paper issued earlier in January 21.

Markets are without a discernible trend currently. While liquidity both domestic and overseas is the biggest driver for markets, the ongoing result season would act as an added impetus. On the flip side, we see profit taking happen after two days of gains and markets tend to correct significantly. Volatility is at heightened levels. In such times it makes sense to trade in a select group of stocks shortlisted by oneself and buy on sharp dips and book profits when they rally significantly. This alone would pay dividends.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)