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Markets will remain volatile, trade cautiously (Column: Market Watch)
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SME Times News Bureau | 23 Jun, 2019
Markets
continued to remain choppy and volatile on expected lines. On the very
first day of the week, they traded for quite some time in the band of
11,700-750 and once that broke, all hell was let loose. Markets saw
significant losses on Monday. For the next three days they gained and
once again gave a feeling that the level mentioned above was sacrosanct.
While Friday was another bad day at the markets, the level held. The
week ended with BSESENSEX losing 257.58 points or 0.65 per cent to close
at 39,194.49 points while NIFTY lost 99.20 points or 0.84 per cent to
close at 11,724.10 points. The broader indices saw BSE100, BSE200 and
BSE500 lose 0.77 per cent, 0.77 per cent and 0.86 per cent respectively.
The
fall on Monday and Friday saw the BSESENSEX lose more than 400 points
on each day and they lost 898 points combined. They regained 641 points
on three days to lose 257 points for the week. NIFTY similarly lost 151
points and 107 points for a loss of 258 points on the two days. They
recovered 159 over the next three to finally settle with losses of 99
points. This data has been given to illustrate two things, firstly the
volatility and secondly the trigger-happy nature of the market where
they are more than happy to short the market at every available
opportunity.
Dow Jones had a strong showing and gained 629.52
points or 2.41 per cent to close at 26,719.13 points. Incidentally the
Fed decided to keep interest rates unchanged but hinted that they would
be willing to cut if the need arose.
Global tensions continue to
rise and Iran shot down an unmanned high-tech surveillance drone of the
US, which prompted Washington to launch an attack on Iran which was
called off with 10 minutes to go before it actually happened. The reason
was that President Donald Trump asked how many casualties the attack
could lead to and on being told that the number could be as high as 150,
decided against it. Crude prices have since risen but not alarmingly as
yet.
There is an IPO from Indiamart Intermesh Ltd opening on
Monday, June 24, and closing on Wednesday, June 26. The price band for
the secondary issue consisting of entirely an offer for sale of
48,87,862 shares is Rs 970-973 and would garner Rs 475 crore. The
headline PE ratio is an unheard of 127.40 to 127.79 times. This is on
account of the treatment of IND-AS accounting standard where there is a
non-cash entry of Rs 65 crore on account of Compulsory Convertible
Cumulative Preference (CCCP) shares, which were converted in financial
year 2019. If this item is reversed, then the PE becomes a much more
respectable 32.8 times.
The company is in the business of online
B2B marketplace for business products and services. The revenue model is
from subscription fee paid by sellers. The growth in revenue from
paying subscribers is 19.68 per cent. The total revenue was Rs 548.4
crore in the year ended March 2019. The company has deferred revenue of
Rs 586 crore which is revenue received in advance from subscription.
This would typically get adjusted in 20 months. The EBITDA for March
2019 was Rs 82.3 crore. The company is debt-free and has substantial
cash holdings. The issue is likely to do well and would have listing
gains. This incidentally would be the first IPO in Modi 2.0 regime.
June
futures would expire on Thursday, June 27. The current value of NIFTY
is lower by 221.80 points or 1.86 per cent. The difference is
insignificant considering the volatility and the same could move in
either direction.
Markets are unsure of what the budget holds
for them. While people hope that many things would happen in the budget,
they are not sure of what would be the focus area this time around.
While priority is kick-starting the economy, what measures would be
announced for the same are yet unknown. Markets would continue to be
volatile in the week ahead and see sharp intra-day moves while the level
of 11,700 or thereabouts would act as a pivot. Trade cautiously.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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