Over the last two weeks, there has been a noticeable improvement in the market — both in the final week of July and the first week of August. The primary reason is that even as geopolitical tensions persist, there is no shortage of inflows into the market. The dollar is also hovering around 95, which is stable, and this is lifting sentiment. Over the last fortnight, FIIs have been buyers on many days, and it’s also a positive. If this sustains, we could see meaningful growth over the next two months.
A hectic week ahead
In the secondary market, however, investors should brace for plenty of ups and downs and considerable choppiness, which means one has to be selective in stock picks. This week alone is going to be extremely hectic, with around 1,820 companies set to declare their results — enough to keep the markets on their toes, and enough to keep investors and analysts busy.
At the same time, the primary market is buzzing with activity. Several issues are already open or lined up in the coming days, and if you listen to some of the primary market commentary, roughly 100 IPOs are expected to hit the market before the end of September.
Preparations are already underway, and formal announcements will likely start rolling out next week. If the opportunities there look attractive, it could create a demand for IPOs. Noticeably, a heavy IPO calendar will also have some impact on the secondary market because of the liquidity crunch it creates.
The GMP trap
From what we have seen recently, two main board IPOs — Manipal Health and Juniper Green — were both rescued by the QIB portion, and both listings were positive. But the response from the general public was quite poor. That listing pattern tells us something important: the public is not investing based on techno-fundamentals but is chasing the GMP. And GMP, in my dictionary, stands for Grossly Manipulated Price.
If you want to invest, look at techno-fundamentals. Take advice. Don’t go by the crowd. Don’t be a scapegoat.
300 issues in the pipeline
In the coming months, you will get opportunities to invest in good long-term stocks. Yes, valuations are stretched in some cases, but some of the recent listings have shown that investing in good stocks pays off when the issue itself delivers. You have to be alert on stock selection.
If we see about 100 IPOs in the next two months, then by March we could be looking at close to 200 more. Roughly, there is scope for about 300 issues in all — and if this plays out, the primary market will be quite eventful and turbulent to watch. It’s high time for investors to stay alert, be choosy, safeguard their own money, and take wise decisions.
On the main board, the names to watch in the coming week include Technocraft Ventures, LEAP India, Dhoot Transmission, Milky Mist Dairy Food and Behari Lal Engineering. Among consumables, Milky Mist is worth tracking; in specialised diagnostics, Molbio Diagnostics looks interesting; and in the infrastructure and logistics space, LEAP India is one to keep on the radar.
The Shift in SME
Some of the SME IPOs where QIBs are participating are priced at rather high valuations, and one has to be watchful there. That said, there have been a few good techno-fundamental SME IPOs that have delivered strong returns. The government and several agencies are also looking positively at this segment.
QIBs have started participating in smaller issues as well — earlier, they wouldn’t have shown interest even in Rs 200-300 crore offerings, but the SME IPO landscape is now shifting. Of course, the QIB list in main board companies is quite different from the SME one, and there are not many popular names on the SME QIB list. We will have to see how long this trend holds.
Be Watchful
Markets today are finicky — they are rewarding companies with strong fundamentals and punishing the rest just as quickly. That is why stock selection matters more than ever. At the same time, the market can react heavily to any number of unpredictable triggers, and every investment in the securities market carries some element of market-related risk. So be careful, stay tuned with the times, and gear yourself to invest wisely in this heating market.