Today marks a special day in the history of Indian markets, as they reached a new high, especially at a time when people were becoming increasingly cautious. In the last two to three sessions, even after the Fed rate cut, the markets appeared tentative. However, today, the market made a bold upward move, signaling a possible rate cut in India as well. Banks, in particular, are expected to perform exceptionally well this quarter if an Indian rate cut occurs, as their bonds will be re-rated, which seems to be driving the market. The banking index has led the market, reaching a new high after a prolonged period. It seems we are set to go even higher, given today’s strong market surge.
The story of the day revolves around the Bajaj Housing IPO. Have you missed it? Was it a good thing if you did? Or for those who bought it due to FOMO on the day or the following day of listing, what should they be doing now?
Market Overview
The market delivered a resounding move today, especially considering the tentative behavior in the last five sessions, which hovered near the previous high. It seemed as though the market was hesitant to go up, but today it confidently rose, silencing the fearmongers as the Nifty shot up by 1.48%.
We are now at 25,800, inching closer to 26,000. It’s surprising to think that just seven or eight days ago, we were near 24,800, and today, the market has climbed 1,000 points so easily.
Nifty Next 50
The Nifty Next 50 also made a comeback, with yesterday being a day of shaking off weak hands, as has happened many times in recent history before the market takes a new trend. The Nifty Next 50 nearly closed at a new all-time high, at 75,481.
Nifty Mid and Small Cap
Mid-caps also reached a new high today, with a 1.32% gain after bouncing off support from the 40-day moving average. Small caps had a more modest gain of 1%, but remain near recent highs, so no complaints there.
Nifty Bank Overview
The Bank Nifty, which has been the focal point of market action, has climbed from nearly 50,000 to 54,000 in the last eight or nine sessions, hitting a new all-time high today with a 1.42% gain. The Bank Nifty’s performance is being heavily influenced by expectations of interest rate changes.
Advanced Declined Ratio Trends
The advance-decline ratio of the top 500 stocks showed a clear bull market, with 344 advances against 153 declines. Even in the previous session, Foreign Institutional Investors (FIIs) bought 1,100 crores worth of stocks, although Domestic Institutional Investors (DIIs) buying has softened recently.
Nifty Heatmap
Today’s heat maps are overwhelmingly green, with a few exceptions like State Bank of India, which has not followed the upward trend seen in other PSU banks. ICICI Bank jumped by 3.6%, while HDFC Bank, after a long time, saw a 1.9% rise. Kotak Bank was up 1.7%, Reliance gained 1.1%, Mahindra rose by 5%, Hindustan Unilever increased by 2.2%, Bharti Airtel was up by 2.8%, and L&T climbed 2.9%. Coal India also gained 2.7%, adding to a day of substantial gains. Minor losses were observed in Grasim, State Bank of India, Bajaj Finance, and TCS.
In the Nifty Next 50, a similar pattern of green was seen, with stocks like Naukri, Zomato, Bosch, Havells, Trent, Siemens, and the Adani Group leading the charge. DLF, Bajaj Holding, and United Spirits also posted gains. Public sector enterprise stocks like PFC, REC, and IRFC also saw positive movement today. However, it’s worth noting that while these public sector stocks have gained ground, they don’t seem to have the same force they once had. There is a gradual shift away from these stocks towards other sectors. In many of our strategies, we’ve also started phasing out these stocks.
Sectoral Overview
Sector-wise, real estate stocks made the biggest move, with a 3.1% gain today, followed by consumption stocks up by 2.1%, autos by 1.9%, metals by 1.7%, and infrastructure and FMCG stocks following closely behind. The only sectors lagging behind were PSU banks, which were down by 0.1%, with defensive sectors like pharma and IT also taking a backseat. This is a clear indication that the market is currently in a “risk-on” mode, with investors seeking growth and not hiding in defensive sectors.
Sectors of the Day
Nifty REALITY Index
Several real estate companies posted significant gains today, including Macrotech Developers, which rose by 7%, Sobha up 6%, Phoenix Mills up 4%, DLF up 3.3%, Godrej Properties, and Sunteck Realty all making strides upwards. Real estate stocks are not quite at their previous highs but seem to be trending in that direction.
Stocks of the Day
Concord Biotech
Today’s stock spotlight is on Concord Biotech, which has surged from Rs. 1,400 to Rs. 2,600 within a matter of weeks, not even months. The stock was up 16% for the day, showcasing a remarkable rally.
Story of the Day : Bajaj Housing IPO
Now, let’s discuss the Bajaj Housing IPO. If you missed it, you might be wondering if that was a blessing in disguise. The Bajaj Housing IPO was highly anticipated, with huge subscription numbers. It was said that the IPO’s subscription would drain liquidity from the market. Around Rs. 3 lakh crore was locked up during the subscription process, and many market pundits predicted that the market would crash due to this liquidity drain. However, to everyone’s surprise, the markets moved up, and the Bajaj Housing IPO performed spectacularly. It listed at Rs. 150, while the issue price was Rs. 70, providing a 100% return overnight.
This has become the current trend in IPOs—essentially a punt or a lottery. If you get an allocation, you can flip it for a profit. Bajaj Housing saw an overwhelming 58 lakh retail applications, far outpacing other recent IPOs like Premier Energies and Gala Precision. The SME IPOs have also been hot, with Rs. 7,000 crore garnered from SME IPOs this year, surpassing the main board in terms of mobilization. Retail participation in SME IPOs has been higher, as these tend to attract more retail flipping.
Most investors in IPOs are looking to exit quickly, with 42% selling within a week of listing and 50% selling within a month. The goal for many is to make quick gains, rather than holding on for long-term wealth creation. However, it’s important to remember that IPOs are a game where the smartest investors—like promoters, venture capitalists, and pre-IPO investors—are often the ones selling. They know the market is hot and want to cash out at the peak, leaving little value on the table for retail investors.
While IPOs can be exciting, it’s crucial not to get caught up in the frenzy. Even if you miss an allotment, there’s no need to rush into buying on the day of listing. Let the stock stabilize and evaluate its valuation before making any decisions. Bajaj Housing, for example, is trading at six times its book value, which is an unsustainable valuation for a housing company.
In conclusion, always set aside a small portion of your portfolio for IPOs, if you enjoy the thrill of flipping for quick profits. However, avoid making IPOs your main market strategy. Keep in mind that in the long term, it’s the fundamentals that will determine a company’s success, not the initial excitement around an IPO.
