Missed out on the hot debates in the market this week? Well, here’s a short wrap of interesting goings-on in the stock market that should add some zing to your weekend.

Underwhelming earnings As the earnings season stretched on, the markets seemed to be sharply divided on whether we’re overdue for a correction or pausing for breath on the threshold of a bigger rally. Kotak Institutional Equities noted in a Strategy report on Q1 earnings that the aggregate net profits of Nifty and Sensex firms had mostly kept to expectations though the quality of earnings “was underwhelming”, as banking and metals contributed to most of the profit growth. After saying that it expected net profits of the Nifty firms to grow 14.4 per cent in FY17 and 20.7 per cent in FY18 led by ‘general economic recovery and normalization of profits’, it closed out its report with a cautionary note. “Our bigger worry would be the analyst community using inflated price, profitability and volume assumptions to model their bottom-up earnings numbers to justify target prices close to the current market prices of stocks. This can lead to disappointments later on if the ‘rosy’ assumptions of the Street turn out to be overly optimistic.”

Things that suck Here, Capitalmind scored a point for the bearish camp by highlighting the growing disconnect between the pathetic earnings being delivered by Nifty firms and the current valuation of the index. As they pithily put it: “Things still suck, with the (Nifty) PE at nearly 24, while earnings (for the latest quarter) have grown at a minuscule 0.76 per cent.” You can read the full note here

Gaga over RBL But if the secondary markets were assailed by self-doubt, the celebratory mood continued in the primary markets. RBL Bank closed its book-built offer for Rs 1211 crore with bids for 69.57 times the issue size. If you wonder why, when bank stocks in the listed space are a dime a dozen, attribute it to the bank’s ‘quality’ management, low NPAs and strong loan book growth when some PSBs are languishing on these very same parameters. Surprisingly though, retail investors proved to be most sober bidders of the lot, bidding for only 5.6 times the shares on offer. The real action was in the HNI category where bids were received for 198 times the shares on offer. For those who’ve been borrowing to punt on IPOs, good luck with this one!

In a twist The Welspun saga unravelled in a rather nasty way for investors with the stock losing a mind-numbing 52 per cent over the week to close at sub-Rs 50 levels. The firm has been under fire ever since US retailing giant Target terminated a supply agreement with it, accused it of passing off inferior quality sheets as Egyptian cotton and decided to recall its own products from the market. As Wal-Mart and JC Penney jumped on to the bandwagon to review their own contracts with the Indian supplier, Welspun went into damage-control mode and announced an immediate audit into its supply chain and internal processes by a Big Four firm. But with over 90 per cent of the firm’s sales coming from overseas and the bottom dropping off the stock, the markets weren’t in the mood to listen.

Moving In other news, Invesco Mutual Fund lost a seasoned money manager with its Chief Investment Officer Vetri Subramaniam joining UTI Mutual Fund . The 47-year old will take over as new Group President and Head of Equity at UTI AMC overseeing Rs 38,000 crore in assets. UTI has been on the hunt for an equities boss ever since Anoop Bhaskar, its popular Head of Equities headed to IDFC Mutual Fund in February this year. Vetri, who has had a long stint in the Indian markets has previously managed money for Kotak AMC and advised clients at Motilal Oswal. Vetri’s exit may be a loss to Invesco, which only recently acquired full ownership of its Indian mutual fund arm from the Religare group. But his conservative credo may fit in well with UTI Mutual Fund, which has taken a play-it-safe approach to its equity funds - even those with an aggressive mandate, in recent years.

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