NIFTY scales new heights, expect Sensex to follow this time around

Mumbai: Markets were on a roll last week and even though there was extreme volatility, they continued their upward march. NIFTY has made a new high this week effectively on every trading session.

However, the BSESENSEX has yet to cross the high of 73,427.59 points which was made on 16th January. The new high made on Friday on NIFTY was at 22,297.50 points while BSESENSEX reached 73,413.93 points, short of previous high by a mere 14 points. This makes one believe that sooner than later this would be breached and also confirming that NIFTY is yet to make another high on Monday or Tuesday.

At the end of the week, BSESENSEX gained 716.16 points or 0.99 per cent to close at 73,142.80 points while NIFTY gained 172 points or 0.78 per cent to close at 22,212.70 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.70 per cent, 0.76 per cent and 0.74 per cent respectively. BSEMIDCAP gained 0.01 per cent while BSESMALLCAP was up 0.82 per cent.

Markets gained on three of the five trading sessions and lost on two. On Thursday, markets opened in the red but rallied smartly to close in the positive. The intraday movement on Thursday between the low and the close was 1,076 points on BSESENSEX and 342 points on NIFTY. If one compares this to the weekly gains, it’s almost 1.5 times on BSESENSEX and double on NIFTY. The markets had probably a sharp intraday correction.

The Indian Rupee gained 8 paisa or 0.10 per cent to close at Rs 82.94 to the US Dollar. Dow Jones gained on three of the four sessions and lost on one session. Dow gained 503.54 points or 1.30 per cent to close at 39,131.53 points.

Shares of Vibhor Steel Tubes Limited which had issued shares at Rs 151, listed at the bourses on Tuesday, February 20. The primary issue from the company was of a very small size with a fresh issue of Rs 72 crore in the price band of Rs 141-151.

Normally, issues of this size come on the SME exchange but this was on the main board. The issue was oversubscribed 320 times overall and there were 28 lakh applications in all. The issue debuted at Rs 421, a gain of Rs 270 or 178.80 per cent. The share closed at upper circuit of Rs 442, a gain of Rs 291 or 192.71 per cent. Every day thereafter, the share has been closing at lower circuit.

On Friday, the share closed at the lower circuit of Rs 379.05, a gain of Rs 228.05 or 151.03 per cent. Expect more circuits to follow till the ten days of trade-to-trade mechanism to get over. Friday was the fourth such session.

The primary issue from Juniper Hotels Limited which had tapped the markets with its fresh issue of Rs 1,800 crs in a price band of Rs 342-360, managed to get subscribed. Considering the mood and the liquidity in the markets currently, it could be described as a lackluster response.

Overall, the issue was subscribed 2.07 times; the QIB portion was subscribed 2.96 times; the HNI portion undersubscribed at 0.84 times; and the retail portion subscribed 1.24 times. There were 1.21 lakh applications.

The week ahead sees the issue from Exicom Tele-Systems Limited tap the markets. The issue which opens on Tuesday, February 27, would close on Thursday the 29th February. The issue consists of a fresh issue of Rs 329 crore and an offer for sale of 70,42,200 shares in a price band of Rs 135-142.

The company is a power management solutions provider, operating under two business verticals, wherein the first is critical power solutions and the second is into manufacture and supply of Electric Vehicle supply equipment which includes EV Chargers for residential, business and public charging.

The company reported revenues of Rs 723.39 crore for the year ending on March 31, 2023. About two-third of the revenue comes from the power business while 1/3rd comes from the EV business. Needless to say, the margins and the growth in the EV business vertical are significantly higher than the power business which is competitive.

The company reported an EPS of Rs 3.38 for the year ending on March 2023. The PE multiple of the company is at 39.9-42.01. The price band is attractive considering the business opportunity and the sustained demand of EV chargers going forward. The issue would do well and be oversubscribed many times. Apply and hope that allotment happens.

For the fixed income category of investors there is an issue from Bharat Highways Invit which opens in the week ahead. The issue consists of units which would be issued in a band of Rs 98-100. The issue would be of Rs 2,500 crores. It opens on Wednesday, February 28, and closes on Friday, March 1.

The INVIT would have an initial portfolio of seven assets which are HAM assets from G.R. Infraprojects Limited. The HAM model consists of semi-annual annuities which are given by NHAI. The INVIT also has the right of first offer or ‘ROFO’ for the remaining 23 assets owned by G.R. Infraprojects. There is also a ROFO right for any assets that would be made by G.R. Infraprojects for the next five years.

The expected payout from this instrument is expected to be at 400 basis points higher than the current G-Sec rate. This would translate into an effective yield of between 11-25 per cent -11.75 per cent, making it attractive for investors with a fixed income return.

As the assets are based on the HAM model, there is no risk involved linked to traffic or toll collection whatsoever. Decent offer for investors looking at a fixed income as this would also take care of interest rates as and when the fall or rise as the project has been designed accordingly.

The week ahead sees February futures expire on the last day of the month, February 29. This is a leap year and the last time something like this happened was in 1996, 28 years ago.

The current value of NIFTY is higher by 860.10 points or 4.03 per cent. The February series had begun at a level of 21,352.60 points. Currently, the bulls have complete control of the series and there is no way that they would allow the series to slip out of their hands.

At best, the bears may attempt to pull something back, but that too looks difficult in light of what happened last Thursday. Expect the bulls to rule the ring and charge with greater vigour over the next few days riding into expiry.

The markets are continuously making new highs and are in a bull grip. The breadth of the markets has become vulnerable and different stocks are moving on different days.

Clearly, many of the stocks in this segment are seeing distribution and strong hands exiting the stocks and ownership moving into weaker hands. The phenomenon would continue for some time and it therefore makes sense to move into large cap stocks where there is safety. This has been advocated for a few weeks by me in my articles each time.

Coming to the strategy in the week ahead, expect volatility and sharp intraday moves in both directions to be the order of the day. Trade with a positive mindset but keep on booking profits in sharp rallies. At the same time use sharp dips to buy and refrain from having large overnight positions.

Sector rotation is on and will continue. The lows made on Thursday, February 22, at 72,081 on BSESENSEX and at 21,875 on NIFTY would act as strong support. On the upside we have steam left as BSESENSEX is yet to make a new high.

Trade with a long mindset but cautiously.


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