Nifty to fall over 200 points at open

KS Badri Narayanan Chennai | Updated on July 19, 2021

Bears gain control of global markets on rising Covid-19 cases, worrisome inflation

The fresh week will begin under bear control for domestic markets. Nifty and Sensex are likely to see a sharp gap down opening on Monday, as global markets slipped sharply amid rising Covid-19 cases and inflation worries.

The SGX Nifty at (8 am) 15,728 indicates a fall of at least 200 points for Nifty at open. The Nifty futures on Friday closed at 15,936. Asian markets too on Monday fell over one per cent. Equities across Japan, Hong Kong, China, Korea and Australia are down one-to-two per cent, Taiwan was ruling slight better by falling 0.6 per cent.

Last week, the US stocks slumped sharply from peak level. All the three major indices - Dow Jones Industrial Average, S&P 500 and Nasdaq - lost about 0.8 per cent. The US Stock futures in early morning on Monday continue the slide by about 0.5 per cent.

According to analysts, Indian markets will move in a narrow range until foreign portfolio investors emerge in a big way. Of late, FPIs remained net sellers. With Q1-FY22 results so far being mixed, analysts said, focus will be more on non-performers, as the market is in a punishing mood. Progress of monsoon is another important factor for market direction.

Eyes on FPIs activity

In July, FPIs were mostly sellers in equity markets. As per NSDL data FPIs sold equity worth ₹4515 crore for the month as of July 16. FPI activity has been hugely volatile so far in 2021. There were aggressive buyers in January, February and March. But on concerns of the adverse impact of the second wave of the pandemic, FPIs sold in April and May. But having missed the rally, came back in June and started buying. But at higher levels, they have again started selling in July. For CY 21, so far FPIs have bought equity worth ₹55,829 crore.

VK Vijayakumar, Chief Investment Strategist at Geojit financial services said, "Since valuations are high and FIIs are sitting on big profits they can be expected to sell at higher levels". This is the reason why the retail activity is now focussed on mid and small-cap space where FPI activity is insignificant, he added.

Markets hovering around new highs have lured retail investors, with brokerage stocks doing well on the bourses, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

It has also persuaded promoters to come out with IPOs to take advantage of the bullish market sentiment. "We have IPO of Zomato and Tatva Chintan Pharma going live during the week and getting oversubscribed. We believe markets have taken note of stable domestic CPI, weak IIP prints (expected due to May lockdowns) and strong Q1FY22 results being reported by major IT companies".

Stocks to watch

Just Dial: Reliance Retail Ventures, the subsidiary of Reliance Industries, has bought 40.95 per cent in Just Dial for ₹3,497 crore. The retail company will make a mandatory open offer to acquire up to 26 per cent in accordance with takeover regulations set by market regulator SEBI. Reliance Retail may acquire a majority stake of 66.95 per cent in Just Dial. With the acquisition, Just Dial Founder VSS Mani will continue to lead the company as its managing director and chief executive officer (CEO). Out of the total 40.95 per cent acquired by the Reliance Industries' subsidiary, it has received a preferential allotment of 2.12 crore equity shares, which is equivalent to 25.33 percent post preferential share capital at a price per share of ₹1,022.25.

Mahindra Holidays: In line with the various advisories/guidelines issued by the Government of India and various State Government authorities, Mahindra Holidays & Resorts India Limited has recommenced its Resorts operations starting from June 2021 onwards in a staggered manner and currently, majority of its Resorts are operational. Further, the material subsidiary of the Company, Holiday Club Resorts Oy, Finland has also recommenced its operations of the SPA hotels starting from June 2021.

Rossari Biotech: The company has executed a share purchase agreement with Fairplum Private Limited for the purchase of 1.5 lakh shares amounting to 30 per cent of the total equity share capital of Rossari Personal Care Products Private Ltd and share purchase agreement with VSTAR Family Trust for the purchase of 50,000 equity shares amounting to 10 per cent of the equity share capital RPCPPL. Pursuant to the completion of the transactions, the company should hold 100 of the total equity share capital of RPCPPL. The objective of the purchase of the shares of RPCPPL is to consolidate the shareholding of the company in RPCPPL and the aggregate cost of acquisition is ₹2 crore.

Rossari Biotech has also announced that its board has approved the acquisition of Tristar Intermediates Pvt. Ltd. (Tristar Intermediates, company). As per the agreement, Rossari will be acquiring 100 per cent of the equity share capital of Tristar Intermediates. While 76 per cent of the equity share capital will be acquired upon closure of the transaction, the balance over the next 3 years. The total enterprise value of the transaction is Rs 120 crore.

Gati: Mandala Capital has acquired a controlling stake in Gati Kausar India Ltd after carving out the cold chain business from Gati Ltd ("Gati"). The transaction was envisaged as an amalgamation of Mandala's business transformation strategy & focus on the cold chain sector along with Gati's ongoing strategy of exiting non-core businesses.

Anjani Portland Cement has purchased another 33,23,423 (2.38 percent) equity shares of Bhavya Cements from its existing shareholders at a price of ₹52.59 a share. Following the acquisition, the holding of Anjani Portland in Bhavya Cements rose to 91.52 per cent.

IPO Screener

Tatva Chintan Pharma Chem: Today is the second day of the initial public offering of Tatva Chintan Pharma Chem, which saw huge investor interest on Day 1 itself, The issue got fully subscribed within hours of opening and finally closed with 4.51 times subscription on Friday. The ₹500-crore IPO received bids for 1.47 crore shares as compared to 32.62 lakh shares on offer. The qualified institutional buyers portion was subscribed 50 per cent, while the non-institutional investors’ category received 1.14 times and those for retail investors 8.24 times, according to NSE data. The offer, which came out with a price range of ₹1,073-1,083 a share, will close for subscription on Tuesday.

Result calendar

Results on July 19: ACC, Alok Industries, Allsec Technologies, Astron Paper & Board Mill, Control Print, GTPL Hathway, HCL Technologies, HDFC Life Insurance Company, Indian Bank, Mastek, Newtime Infrastructure, Nippon Life India Asset Management, Orissa Bengal Carrier, Plastiblends India, Ponni Sugars (Erode), Prism Medico, PSP Projects, Radix Industries, Raasi Refractories, Supreme Petrochem and Swaraj Engines will release quarterly earnings on July 19.

Published on July 19, 2021

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