Connect with us
हिंदी اردو
Friday,18-April-2025
Breaking News

Business

Markets at make-or-break stage

Published

2 years ago

on

It was a tough week for markets in India and the world. Interest rates were raised in the US on expected lines and the commentary post the meeting were not enough to soothe the nerves.

The week saw markets gain on two of the five trading sessions. The fall on Thursday followed by yet another fall on Friday, broke the camel’s back and markets will have to do a lot to change the current momentum.

BSESENSEX lost 843.86 points or 1.36 per cent to close at 61,337.81 points while NIFTY lost 227.60 points or 1.23 per cent to close at 18,269 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.32 per cent, 1.28 per cent and 1.15 per cent respectively. BSEMIDCAP was down 1.37 per cent while BSESMALLCAP lost 0.14 per cent. All the sectoral indices on BSE lost ground during the week.

The Indian Rupee was under pressure and lost 60 paisa or 0.73 per cent to close at Rs 82.87 to the US dollar. Dow Jones lost on three of the five sessions and gained on two. What is interesting to note is that it lost on the last three days consecutively after the FED raised interest rates. Dow Jones lost 556 points or 1.66 per cent to close at 32,920.46 points.

The FED raised interest rates by 50 basis points on expected lines and the current rate band is 4.25 per cent – 4.50 per cent. They have indicated that the rates are projected to rise by a further 75 basis points in the calendar year 2023.

In primary market news, there was one listing, three IPOs which opened and closed their subscription during the week and two IPOs which would be tapping the markets in the coming week.

Shares of Uniparts India Limited which had tapped the capital market with its offer for sale listed on Monday, the 12th of December. The listing price was Rs 575 against the issue price of Rs 577. Shares closed at the end of listing day at Rs 539.55, a loss of Rs 37.45 or 6.49 per cent. They recovered during the rest of the week and closed at Rs 570, a loss of Rs 7 or 1.21 per cent.

The offer for sale from Sula Vineyards Limited was subscribed 2.33 times overall. The QIB portion was subscribed 4.13 times, HNI 1.51 times and Retail portion 1.65 times. There were 2.65 lac applications in all. The price band of the issue which was open from Monday the 12th of December to Wednesday the 14th of December was Rs 340-357.

The second issue was from Abans Holding Limited which was subscribed 1.10 times overall. The QIB portion was subscribed 4.10 times, HNI portion was subscribed 1.48 times and Retail portion was subscribed 0.40 times. This issue had a different allocation with QIB portion at 10 per cent, HNI at 30 per cent and Retail at 60 per cent. There were 46,711 applications. The price band of the issue was Rs 256-270 and the issue was open from Monday, the 12th of December to Thursday, the 15th of December.

The Third issue was from Landmark Cars Limited which consisted of a fresh issue and an offer for sale in a price band of Rs 481-506. The issue was subscribed 3.22 times overall with QIB portion subscribed 9.17 times, HNI portion subscribed 1.38 times and Retail portion subscribed 0.61 times. There were 64,480 applications. The issue was open between Tuesday the 13th of December and Thursday the 15th of December.

The first issue to open in the week ahead is from KFIN Technologies Limited which is tapping the capital markets with its offer for sale of Rs 1,500 crore. The price band of the issue is Rs 347 – 368. The issue opens on Monday, the 19th of December, and closes on Friday, the 21st of December. The company KFIN is a technology driven financial services platform, providing comprehensive services and solutions to the capital markets ecosystem. The company began its operations in 1985 with an issuer solutions business. It added domestic mutual fund business solutions in 1995 and alternative and wealth management business solutions in 2010. In 2017 it launched its pension services business and international business solutions business in South East Asia. In 2018, General Atlantic bought out the company. Just recently in the current year 2022, the company bought Hexagram, a fund accounting system to add to the offerings and increase the wallet share of business.

The company has competition from CAMS in the mutual fund business and with Link Intime in the RTA business for the capital markets. While there are other players as well, this is a duopoly business in the two verticals mentioned. What is a key metric is the fact that more than 99 per cent is repeat or retained business which comes from the same set of clients. In other words, the stickiness of clients is very high. Gross margin is a more than healthy 60.19 per cent.

Coming to the financials of the company, revenues reported for the year ended March 22 were at Rs 639.50 crore and restated profit after tax was at Rs 148.55 crore. The breakup of revenue was 67.75 per cent from domestic mutual fund business and 13.38 per cent from issuer solutions business. The EPS on a fully diluted basis was Rs 9.36. The PE multiple at the price band is 36.76-38.77. The PE multiple for the competitor CAMS is almost similar at 39.37. NAV for KFIN is Rs 38.45 while it is Rs 132.43 for CAMS. Clearly the issue price in terms of PE is more or less similar in both cases while in terms of price to book, the same for CAMS is substantially higher compared to KFIN.

The past of KFIN has been a bit shady with the erstwhile promoter’s shareholding (around 12 per cent) being impounded and frozen by the ED. The company had reported losses in FY 21 and hence the issue is 75 per cent reserved for QIBs, 15 per cent for HNIs and 10 per cent for Retail. The issue is more than richly valued and finding immediate money on listing seems a tall order.

The second issue which opens on Tuesday, the 20th of December, and closes on Thursday, the 22nd December, is from Elin Electronics Limited. The issue consists of a fresh issue of Rs 175 crore and an offer for sale of Rs 300 crore. The price band of the issue is Rs 234-247. The company is an electronics manufacturing services company of end-to-end product solutions for major brands of lighting, fans and small kitchen appliances in India. It is also the largest fractional horsepower motor manufacturer in India. It is also a key player in the LED lighting and flashlight manufacturing business. It has marquee clients with whom the relationship is over many years and decades.

The company reported revenues of Rs 1,093.75 crore for the year ended March 22 which had grown from Rs 862.37 crore in the previous year. The profit after tax was Rs 39.14 crore in March 22 against Rs 34.85 crore. In the six months ended September 22, revenues have grown to Rs 577.16 crore and profit after tax to Rs 20.66 crore. The EPS for March 22 is Rs 9.59. At this price, the PE band is 24.40-25.76. The band looks attractive. There is one catch however. This business has lower EBITDA and Net margins because of the nature of the business. This company averages net margins of between 3.5-3.75 per cent. Going forward, there could be some improvement depending on the amount of business that they do on ODM (own design manufacture).

There is plenty of activity in the grey market in this share which gives ample opportunity for gains on listing. The share looks attractively priced for the medium term as well.

Coming to the markets in the week ahead, very clearly the momentum has broken and markets have a tough time ahead of them. They have to begin their upward journey in a day or two, failing which it would mean that the tops in the short term have been done and we would only see corrective up-moves if any. If markets do move up, then depending on the strength of the rally they may attempt to challenge the previous highs and attempt to cross 63,300 and 18,900 on the indices. Any move past these levels could see markets gain another 1-2 per cent from these levels but accompanied with huge volumes. If however they fail, there could be a slow and gradual slide of anywhere between 3-5 per cent over current levels.

As mentioned last week, we are at the stage that market direction unless accompanied with huge volumes would be incorrect and misleading. Direction of market whether up or down would have to be accompanied with volume. During the sharp fall last week on Thursday and Friday, that was not the case. There is hope left for a rally as yet.

The strategy would be to look for volume breakout in the markets. It would decide the trend. Santa Claus rally if it has to happen should begin in the coming week as time runs out in the year 2022. Trade cautiously as FII’s would look to take a short break before the New Year 2023 begins.

Trade cautiously and look for volume breakout.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

Post Views: 34
Related Tags:

Exclusive

Calcutta HC allows NGO to distribute relief material in communal violence-hit Murshidabad

Published

2 days ago

on

April 17, 2025

By

Kolkata, April 17: A single-judge bench of the Calcutta High Court, on Thursday, permitted a non-government organisation (NGO) to visit the communal violence-hit Murshidabad and distribute relief material among the affected people.

While granting permission to the NGO christened ‘Khola Hawa (Open Air)’, which was earlier denied permission by the district administration, the single-judge bench of Justice Amrita Sinha observed that there was no rule that organisations other than government bodies would not have permission to distribute relief materials at any place.

She also observed that the existing law and order problem could not be an excuse for denying permission, since the Central Armed Police Forces (CAPF) were already posted in Murshidabad.

The NGO approached the bench of Justice Sinha after the Murshidabad district magistrate denied permission for its members to visit the troubled spots in the district to distribute relief there. Parts of Murshidabad district in West Bengal have been on the boil last week after protests over the Waqf (Amendment) Act turned violent.

In the petition, the NGO alleged that while the district administration was allowing different political parties to reach the troubled spots with relief materials, the permission to the organisation was deliberately denied.

The matter came up for hearing on Thursday afternoon. The counsel for the NGO argued that there was no reason for the district magistrate to deny the permission since the state Director General of Police had already claimed that the situation at Murshidabad was currently more or less normal. “The NGO members want to go there to distribute relief items like tarpaulin, food, and medicines to those affected,” the counsel of Khola Hawa argued.

Although the state government opposed the arguments, Justice Sinha finally accepted the argument of the counsel of Khola Hawa and permitted the NGO to visit the troubled spots and distribute relief items there.

However, she maintained that only three members of a relief team should visit any troubled spot at a time for the time being. At the same time, these three team members would have to inform the district magistrate at least 24 hours in advance about their visit. The visiting team members, as per the court order, should also not make any provocative statements during the process of relief distribution that might trigger tension in the area again.

Post Views: 47,469
Continue Reading

International

Extreme marine heatwaves tripled over past 80 years: Study

Published

2 days ago

on

April 17, 2025

By

London, April 17: The number of days each year that the world’s oceans experience extreme surface heat has tripled over the past 80 years due to global warming, a new study has found.

Researchers found that, on average, the global sea surface saw about 15 days of extreme heat annually in the 1940s, Xinhua news agency reported.

Today that figure has soared to nearly 50 days per year, revealed the study published in the journal Proceedings of the National Academy of Sciences.

Global warming is responsible for almost half of the occurrence of marine heatwaves — periods when sea surface temperatures rise well above normal for an extended time.

The study, produced by a team of scientists from the Mediterranean Institute for Advanced Studies, the University of Reading, the International Space Science Institute, and the University of the Balearic Islands, also found that rising global temperatures are making extreme ocean heat events last longer and become more intense.

“Marine heatwaves can devastate underwater ecosystems. Extended periods of unusually warm water can kill coral reefs, destroy kelp forests, and harm seagrass meadows,” said Xiangbo Feng, a co-author of the study at the National Centre for Atmospheric Science at the University of Reading.

The impacts of marine heat waves extend beyond the ocean. The researcher warns that increased marine heatwaves could, in return, cause our atmosphere less stable leading to more frequent and powerful tropical storms in some regions.

“As global temperatures continue to rise, marine heatwaves will become even more common and severe, putting increasing pressure on already stressed ocean ecosystems. These increased marine heatwaves could, in return, cause our atmosphere less stable leading to more frequent and powerful tropical storms in some regions,” Feng said

Noting that human activities are fundamentally changing oceans, the study called for urgent climate action to protect marine environments.

Post Views: 39,601
Continue Reading

Business

US tariff hikes no longer make economic sense: China

Published

2 days ago

on

April 17, 2025

By

Beijing, April 17: A Chinese foreign ministry spokesperson said on Thursday that the United States’ 245 per cent tariff on certain products from China no longer makes economic sense.

It the US continues to play the “tariff numbers game”, it will pay no attention to it, according to the spokesperson, Xinhua news agency reported.

The statement came in the wake of White House’s statement that China faces tariffs of up to 245 per cent due to its retaliatory action.

China now faces up to 245 per cent tariffs on imports to the US as a result of its retaliatory tariffs, according to the White House Fact sheet.

This came after Beijing ordered its airlines not to take any further deliveries of Boeing jets in response to the earlier US decision to impose 145 per cent tariffs on Chinese goods.

According to the White House, the US President is open to making a trade deal with China, but Beijing should make the first move.

“More than 75 countries have already reached out to discuss new trade deals. As a result, the individualised higher tariffs are currently paused amid these discussions, except for China, which retaliated,” it said.

The White House also accused Beijing of banning exports to the US of gallium, germanium, antimony, and other key high-tech materials with potential military applications.

There are no winners in a trade conflict and the tussle between China and the US raises the risk of economic and geopolitical fallout, a report by S&P Global Ratings said this week.

Home to sizable manufacturing activities, Asia-Pacific is highly dependent on exports to the U.S. and China for growth. At the same time, Asia-Pacific depends on the US mostly for security.

The region could find itself pushed to take sides or walk a delicate line between the two large economies, the report stated.

To counteract tariffs, Asia-Pacific governments are exploring the formation of regional trade blocs or bilateral trade agreements. These efforts could accelerate, expediting the need to relocate supply sources and production.

China’s economic growth is seeing rising downside risk amid rising trade tensions with the US as its export engine falters from weaker global demand. The country’s domestic growth engine remains subdued, given the lingering real estate crisis, which is dragging down confidence.

Post Views: 35,109
Continue Reading

Trending