So end of the week, a good week from all perspectives. And the good news at the end of the week is that India’s biggest ever IPO may be around the corner. And if we’ll give you the details in the second half of this video and ask you if you want to subscribe to it.

Market Overview

Where are the markets headed? So markets opened gap down primarily on the back of poor numbers from HDFC Bank. We’ll talk about it. But there was a very smart recovery through the day for Nifty to have closed at slightly in the green, actually at absolutely flat levels at 24,314. But in the morning you had lost almost 100 points there. So a very good two weeks.

Now, the last week was also extremely robust and this week as well has gained almost 300 points in the last five sessions.

Nifty Next 50

Nifty Junior not bothered by the large cap banking stress, moved upwards by 0.68%, very much in the flow of a bullish move

Nifty Mid and Small Cap

Mid caps, and small caps, both 0.65% up on mid caps, singular run here. And in small caps you had 0.68%. Again, a fantastic move in the last five sessions.

Nifty Bank Overview

Bank Nifty down 0.83%. But again, it’s in this congestion zone, so not so badly hit.

Nifty Heatmap

I would say HDFC Bank was the main reason why this was all happening. So HDFC Bank is the biggest loser in Nifty -4.58% today. This comes on the back of two sessions of losses prior to this and we’ll talk more about this a bit later. Reliance up 2.23%. So Reliance and State Bank, along with NTPC, LNT Levers were the sort of counterbalance to HDFC Bank today in the markets. And that is why Nifty was able to close at near zero mark.

In the Nifty Next 50, you had railway stocks performing extremely well. So IRFC and other railway stocks which are not in the Nifty Next 50, RVNL, Railtel all doing quite well. IRCTC also doing a bit well. And you also had Bharat Electronics, Gas Authority, all these stocks doing quite well along with them. So the only losers here were mild losers, less than 1% 2%. Bajaj Holding, of course, lost 2.38%, but other than that, the gains have been reasonably steady.

Sectoral Overview

I would say HDFC Bank was the main reason why this was all happening. So HDFC Bank is the biggest loser in Nifty -4.58% today. This comes on the back of two sessions of losses prior to this and we’ll talk more about this a bit later. Reliance up 2.23%. So Reliance and State Bank, along with NTPC, LNT Levers were the sort of counterbalance to HDFC Bank today in the markets. And that is why Nifty was able to close at near zero mark.

In the Nifty Next 50, you had railway stocks performing extremely well. So IRFC and other railway stocks which are not in the Nifty Next 50, RVNL, Railtel all doing quite well. IRCTC also doing a bit well. And you also had Bharat Electronics, Gas Authority, all these stocks doing quite well along with them. So the only losers here were mild losers, less than 1% 2%. Bajaj Holding, of course, lost 2.38%, but other than that, the gains have been reasonably steady.

Sectors of the Day

Nifty Oil & Gas Index

On the back of the HDFC Bank fall, oil and gas index is the one bearing up. I think the narrative is not yet moved towards the oil price. I think oil price is going to be the headwinds for the market in coming months as US election comes around and maybe Mr. Trump comes in as the president and geopolitical issues can crop up.

So oil and gas and other commodities are gradually inching up on the chart. Also Nifty oil and gas index has broken out above the election day high and is looking very, very strong. On

Stock of the Day

HDFC

On the stock spotlight, HDFC bank is the one today, 4.5% today. And you can see that in three sessions. We’ve come down from near 1800 to 1649. There were two sessions before the release of that rumor or news that how many billions of dollars will flow into HDFC bank? And then the bank comes out with some poor numbers. Q on Q looking bad. Earlier, all these results used to look 20% year on year, but this time they have come below expectations, especially since we’ve had the merger with HDFC. The deposit issues have cropped up and the fundamentals of the bank as measured by most analysts are not up to expectations and the bank is currently, as per them, quite richly valued. So this breakout has failed. There is also some thesis going around in the market that this entire upswing was manufactured by some players. I would think that the regulator should look at these kinds of plays because this is a massive market cap company and any play that has happened due to any misinformation about FII flows, etc. should be looked at. But I think for now the breakout has completely smashed down. I think it will come back to some range in the 1600 to 1400 region is my guess on this. This is again the same longer-term chart. You can see that it has many times tried to break out in the last three years, but has been failing the breakout test.

Stock of the Day

Reliance

So now the main story of the day, India’s biggest ever IPO. What is being heard is that Reliance Jio is coming out with an IPO, a massive 55,000 crore IPO and this is only 5% of the equity. These are all data and news from the media, so the propensity to have some deviation from these numbers is possible. The size of the entire company, the market cap of the company is likely to be above eleven lakh crores. And this is the current news. So this is also an aftermath of very recent tariff hikes done by Jio. And this again was an indicator. At least now we can say that Jio would want the ARPU, the average revenue per user to go up before going for the IPO, and so that shareholders will be more inclined to buy the IPO. And that’s why the company decided to raise the rates very, very recently. In terms of the parent company, you can see there is a breakout that had happened at Rs3000 which the consolidation was happening for the last three, four months. And that breakout is now very near 3200. It can go up much, much further is what I think.

So details surrounding the IPO may be announced in the AGM of Reliance in August and it is likely to be the largest in the country. As you know, companies with more than one lakh crore market cap are required to sell at least 5%. Jeffreys is valuing it at eleven lakh crores and it would mean a 55,000 crore IPO size. These are all rough figures for now. And the top largest Indian IPOs till date have been these. LIC was the latest large IPO in 2022 with a size of 21,000 crores. Then you had Paytm in November, 2021 with 18,000 crores. You had Coal India in 2010 with 15,000 crores. Reliance Power, if you remember, was the IPO which caused the peak of the market in 2008. Virtually, it coincided with the peak of the market for 11,000 crores. At that point of time, 11,000 crores was seen as a crazy figure where all the liquidity of the market got sucked into that IPO and people were lining up to buy that IPO. And we all know what happened post that.

So what we also need to see here is that many of the times when the market gets overheated is the time when a lot of IPOs will start to come because the market is so hot and everybody is vying to get their hands on some stock. That is the easiest time to sell an IPO. It is the easiest time to make, I don’t want to say it, but make a fool of the investors who are investing in the IPO. See, one thing you have to see very, very practically is who is bringing the IPO to the market? The IPO is being brought to the market by very shrewd promoters of the companies, by very shrewd pre-IPO investors, venture capitalists, and private equity players. These are the guys who are bringing the IPO to the market. Why are they bringing them to the market? Because they want to offload their equity to you. Please see the construct of the IPO. It is not something that is put on a platter for the public to make money on. It is essentially an exit for somebody. And if you were them, you would want to maximize your exit price, right? So they will also want to maximize their exit price, whatever they may say on the face of it.

You remember what Paytm management said on the day of the IPO, that we’ve left so much on the table for the investors. And you can see, 2150 was the IPO price and we are at 400 today. So none of this actually is ever in favor of the IPO participant by choice. It may happen that, you know, it’s a roaring market, everything is going up. So even if it is highly priced, maybe it goes up even further. That may happen. But by design, they are not doing any charity. They are there to maximize their gain. And it is fair that as business owners, they want to maximize their gain. And you have to see your interest, whether what is coming to the market is worth buying into or not.

As momentum investors, we definitely do not participate in any IPO. We allow the markets to all these new stocks to first create a history in the market for at least six months and only then if there are trends that lead us to buy these stocks, even if it had a higher price, only then we will get in, get into them. Because you have to allow a stock to come in and display that it is able to go up. I don’t want to believe somebody that there’s a lot of value and hence I want to buy it. I want the stock to display that to me over a period of time and only then I’m willing to buy that. Zomato fell down almost 40, 50, 60%. And then it displayed that, you know, I want to go up and we bought it on the way up. DLF launched at 550 IPO. I think listing was at 1200. From 1200 for the next ten years, it came down to Rs100. Similarly, Reliance Power, of course, LIC also, you know the journey, what it has been.

So before considering the IPO, you must also consider what has happened to many IPOs. Paytm is down 73% and this. So this is sourced from Investivise. Reliance Power is down 97%. Today you have DLF, which is down 31%. HDFC Life is up 103%. LIC is down 24%. Paytm is down 73%. Sorry, LIC is down even more. So there is a sort of a sense that the bottom of the LIC, I mean whenever, when it hit the bottom, there is a sense that you must allow the stock to demonstrate that it is going up. Don’t rush into an IPO. If you want to play the flipping game that I put an application and I know that, you know, I can flip it on the day. That is a different game. And it seems that a lot of people will be playing that game only. But as even medium-term investors, you have to allow the stock to really, you know, show its worth.