Markets continued to gain amid very strong momentum and buying interest from FPIs. BSE SENSEX gained 508.30 points or 1.33% to close at 38,672.91 points. NIFTY was up 167 points or 1.46% to close at 11,623.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.53%, 1.645 and 1.68% respectively. BSE MIDCAP was up 2.67% and BSE SMALLCAP gained 1.82%.
The week also saw March futures expire and they had a great series as well. NIFTY March futures expired at 11,570 points, a gain of 777.50 points or 7.20%. This was one of the best monthly performances in the last few months. The BSE SENSEX and NIFTY are literally a stone’s throw from making a new life-time high. Another way of putting the same thing would be that with under a percent more required, it could happen any day.
The moot question would, however, be: what next after a new top? Markets are likely to remain in this hyper mood for some more time, may even be the next 6-7 weeks till election results or trends become known. FPI’s or FII’s have invested more than Rs 32,000 crore in the month of March in equities.
The Indian Rupee lost 20 paisa or 0.29% to close at Rs 69.15 to the US Dollar. Dow Jones had a strong performance and gained 426.36 points or 1.67% to close at 25,928.68 points.
The week ahead sees RBI meeting for its first monetary policy review of financial year 2018-2019 on April 3 and 4. It is believed that there would definitely be a rate cut of 25 paisa. While the 25 basis-point cut is given, there are a few people who believe that the cut could be more at 50 basis points. While 25 is par for the course, a 50 basis-point cut could act as the catalyst for markets to touch new highs if not already done.
Shares of MSTC Limited listed on Friday (March 29) had a poor showing. The company had tapped the capital markets with its offer for sale which was not subscribed at the first attempt and the issue was extended. In the extension, the issue did get oversubscribed. Shares which were issued at Rs 120, closed for the week at Rs 114.20, a loss of Rs 5.80 or 4.83%.
The week ahead sees the offer for sale of RVNL. The Rail Vikas Nigam Limited is offering for sale 25,34,57,280 equity shares in a price band of Rs 17-19 with a discount of Rs 0.50 for retail and eligible employees. The issue opened on March 29 and would close on April 3. The company which is a PSU is incorporated by the Ministry of Railways. It executes projects for the Ministry of Railways on assignment basis and is given a consolidated management fee of 8.5% on the project value that it undertakes.
The company has an order book of over Rs 77,000 crore of which roughly Rs 37,000 crore are long gestation projects. The company would be able to execute the balance of roughly Rs 40,000 crore between 36-42 months. The profit making company is a dividend paying company. Being part of the PSU stable, it is obligated to pay 30% of profits or 5% of net worth, whichever is higher, as dividend. The issue looks attractive.
The second issue is from Metropolis Healthcare Limited which is tapping the capital markets with its offer for sale of 1,30,85,095 shares in a price band of Rs 877-880. The company may be compared with Dr Lal Path Lab and Thyrocare. While the PE multiple at which the company is valuing itself is cheaper than Dr Lal, it is much more expensive than that of Thyrocare. Besides, the promoter’s shares are currently pledged and assuming he repays from the sale proceeds of the IPO, he would still be in some debt. Markets don’t take too kindly to pledged shares of the promoter.
Markets in the week ahead are on course to continue their upward march and most probably hit new lifetime highs on the BSE SENSEX and NIFTY. As already mentioned, even after hitting new highs, its not as if it would be the end of the road for the markets, the momentum would continue. Enjoy the rally and be prepared for volatility as things get choppy in uncharted territory.
(The writer is founder of Kejriwal Research and Investment Services)