Home Markets Expiry week could lead to some selling pressure

Expiry week could lead to some selling pressure

by Arun Kejriwal (Market veteran investor and Opinion Maker)
Aug 28, 2023
Expiry week could lead to some selling pressure, Market, KonexioNetwork.com

It was an eventful week at the markets which kept people glued to their seats as to which way they would move. Till Friday, they were positive for the week and then just gave way ending with small losses for the week. However, at the end of the week they have given enough indicators that going forward, markets could weaken further. Markets gained on two of the five trading sessions, lost on two and remained flat on the fifth, showing how even-stevens things were. BSESENSEX lost 62.15 points or 0.10% to close at 64,886.51 points while NIFTY lost 44.35 points or 0.23% to close at 19,265.80 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.11%, 0.22% and 0.40%. BSEMIDCAP was up 1.50% and BSESMALLCAP was up 2.19%. 

Indian Rupee recovered from the previous week’s losses and gained 45 paisa or 0.54% to close at Rs 82.65. Dow Jones gained on two of the five trading sessions and lost on the remaining three. It was down 153.76 points or 0.45% to close at 34,346.90 points. The US FED Chairman has in a meeting held on Friday indicated that there could be further rate hikes as inflation continues to remain high. This could be a cause for worry in US markets as well as globally. 

In India too, RBI is cautioning on inflation and that they would do whatever is required to keep it under check. 

Primary market saw a lot of action. We had one issue open and close for subscription, while yet another opened and would close next week. We also saw one issue have its roadshow and would open next week. We also had one issue list on the bourses. 

The issue from Aeroflex Industries Limited saw its issue getting subscribed 97.78 times. The QIB portion was subscribed 190.97 times, HNI portion 129.56 times and Retail portion 35.28 times. There were 27.64 lac applications. The issue was open between Tuesday the 24th August and Thursday the 26th August and the price band was Rs 102-108. 

The second issue is from Vishnu Prakash R Punglia which opened on Thursday the 24th of August and would close on Monday the 28th of August. The issue is for 3.12 cr shares and the price band is Rs 94-99. The company is an infrastructure company involved in water projects, Railway projects, Road projects and Irrigation network projects. The company generates close to 85% of its revenues from water supply projects which are executed for state governments, local municipal bodies, Ste PWD bodies and many more. They are integrated players doing EPC (engineering, procurement and construction). 

The company reported revenues of Rs 1,171.46 crs for the year ended March 23 and a profit after tax of Rs 90.64 crs. The EPS on a fully diluted basis is Rs 10.41 and the PE band is a very attractive 9.03-9.57. The company has a robust order book of over Rs 3,800 crs which would be executed in about 24-30 months. The issue is very attractively valued and offers scope for appreciation. At the end of the 2nd day of subscription, the issue was overall subscribed 10.63 times with QIB subscribed 0.35 times, HNI subscribed 19.39 times and Retail subscribed 12.89 times. There are 7.61 lac applications in all. 

The issue from TVS Supply Chain Solutions Limited which had issued shares at Rs 197 listed on Wednesday the 23rd of August. The issue had received a tepid response during subscription. The share closed day one at Rs 200.95, a gain of Rs 3.95 or 2.00%. It slipped during the balance of the week but still managed to close with miniscule gains at Rs 197.05. 

The issue from Rishabh Instruments Limited opens on Wednesday the 30th of August and closes on Friday the 1st of September. The issue consists of a fresh issue of Rs 75 crs and an offer for sale of 94.58 lac shares in a price band of Rs 418-441. The company is a global energy efficiency solution company focused on electrical automation, metering and measurement, precision engineered products, et al. with diverse applications across industries including power, automotive and industrial sectors. They supply a wide range of electrical measurement and process optimization equipment, and are engaged in designing, developing and manufacturing, and sale of devices significantly under their own brand across several sectors. They provide comprehensive solutions to customers looking for cost-effective ways to measure, control, record, analyse and optimise energy and processes through the array of products. They also provide complete aluminium high pressure die casting solutions for customers requiring close tolerance fabrication (such as automotive compressor manufacturers and automation high precision flow meters manufacturers), machining and finishing of precision components.

The company reported revenues of Rs 579.78 crs for the year ended March 23 and Rs 49.68 crs profit after tax. The EPS for the year was Rs 12.76 on a fully diluted basis. The working for FY23 was affected due to the chip shortage. 

The PE multiple for the share is 32.76-34.56. At the current multiples it looks expensive but if one were to consider the effect of chip shortage and invest with a longer time frame it becomes attractive. 

Shares of Jio Financial Services listed on the bourses and were under pressure through the week. After hitting the lower circuit even on Friday at the open, they rallied from the lows to close at Rs 212.25 on Friday. During the week, the share lost Rs 52.75 or 24.85%. Reliance Industries has its AGM on Monday and the street expects big announcements on Monday. 

The week ahead sees August futures expire on Thursday the 31st of August. The present value of NIFTY at 19,265.80 points is 394.10 points or 2% lower than the start of the series. Bears have the upper hand and there is no way they would like to surrender their advantage.

Coming to the markets, they have turned decisively weak and 19,200 on NIFTY is looking vulnerable. While we survived closing below it on Friday, probably the next attack could be the undoing. In case these levels break, then we would look for decent and sustainable support at 18,600-18,650 levels on the NIFTY and at 63,000-63,200 on BSESENSEX. The breakdown would see sharp and volatile moves. On the upside, levels of 19,600-19,650 and 66,100-66,250 are becoming strong resistances with Mount 20K seeming far into the distant horizon. 

Trade cautiously in a week where with high expectations from Reliance in the AGM and expiry week, markets could be under a bear attack.