It was yet another week of gains with BSE Sensex up 807.65 points or 2.12 per cent to close at 38,822.57 points, while the Nifty gained 238.20 points or 2.11 per cent to close at 11,512.40 points.
Broader markets saw BSE 100, BSE 200 and BSE 500 gain 1.84 per cent, 1.80 per cent and 1.75 per cent, respectively. The BSE midcap was up 1.03 per cent while the BSE smallcap was up 0.97 per cent.
The Indian rupee recovered lost ground and gained 37 paisa or 0.52 per cent to close at Rs 70.57 to the US dollar.
Dow Jones lost some ground and was down 114.82 points or 0.43 per cent to close at 26,820.25 points.
The US-China trade war seems to be never ending and becoming a cause of concern. In the latest round, the US wants Chinese companies to stop trading on US exchanges.
The September futures expired with a major victory for bulls. The series ended at 11571.20 points, a gain of 622.90 points or 5.69 per cent.
Exactly a week before expiry, the low of the day on the Nifty was 10,670, a loss of about 280 points for the series. It effectively means that the Nifty has gained 900 points in five trading sessions.
The week ahead will see a trading holiday on October 2 on the occasion of the 150th birth anniversary of Mahatma Gandhi. This will be followed by the RBI meet, which is widely expected to cut interest rates during its meeting on Friday, October 4.
The week sees IRCTC (Indian Railways Catering and Tourism Corporation) tapping the capital markets with its offer for sale of 2,01,60,000 equity shares in a price band of Rs 315-320 per share.
Retail investors and eligible employees would be offered a discount of Rs 10 per share. The issue opens on Monday and closes on Thursday. The company had reported an EPS (earnings per share) of Rs 17.04 for the year ended March 2019.
At these earnings, the PE ratio is between 18.49 and 18.78 times. This PE ratio needs to be readjusted because post demonetisation, the service charge that IRCTC charged passengers for booking railway tickets was discontinued.
Since September 2019, the company has been allowed to charge Rs 15 for lower class and Rs 30 for AC class per ticket as service charges.
With the company selling approximately 2.5 crore tickets per month or 30 crore tickets annually, and taking an average rate of Rs 20 per ticket, this amount would come to an annual fee of Rs 600 crore.
The issue is interesting and more than adequately priced. Even discounting the fact that PSU stocks lose steam after listing, this company offers attractive prospects going forward.
The second IPO is from Vishwaraj Sugar Industries Limited which is tapping the markets with its simultaneous offer for sale of 70 lakh shares and fresh issue of 30 lakh in a price band of Rs 65-70 per share. The issue opens on Monday and closes on Friday.
The company is into sugar, ENA, IML and vinegar. It has co-generation facilities and produces power from bagasse which is sold to various discoms during the sugar season.
Sugar has been under pressure because of increased production. The sugar crushing season 2019-20 is expected to be better for sugar producers as the overall production this year is expected to reduce.
Large parts of cane producing areas in the sugar belts of Maharashtra and Karnataka were flooded and the crop has been badly damaged. This would reduce sugar output.
Secondly, the government has introduced subsidy for export of sugar which would help in stabilising low sugar prices in the country and help both cane growers and sugar producers.
Further, the government is trying to balance demand and supply by encouraging manufacture of ethanol. Vishwaraj would also look to maximise shareholder returns from this avenue as well.
While the company was profit making earlier, it had made losses in the last three years only because of higher sugar carrying inventory costs. With the change in demand and supply and better options in product utilisation and manufacture, it should return to profit in the current year.
The markets had made a new life-time high post the Lok Sabha election results and the BSE Sensex had made a level of 40,308.90 points while the Nifty had made a level of 12,103.05 points. These levels are under threat and are likely to be breached well before Diwali. What would be the trigger is still to be decided.
The week ahead with a midweek holiday will be volatile, but trade with a positive bias. Take positions accordingly.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)