Street signs: Capital's great takeoff, IPO buffet, SMEs defy gravity

Capital’s great takeoff: Soaring to Washington’s dollar sky

 

Domestic markets faced turbulence last week, with the S&P BSE Sensex falling by 5 per cent, marking its worst weekly decline since June 2022. The primary factor behind this downturn is the flight of capital from India and other emerging markets (EMs) to the US. According to Elara Capital’s liquidity tracker, EM funds saw a three-year high outflow of $2.9 billion. In addition, Asia ex-Japan funds saw $1.6 billion leave, bringing total EM outflows to $4.7 billion. In contrast, the US saw $82 billion in inflows, the strongest since March 2018 and March 2021, suggesting a marked shift of liquidity towards dollar assets.

 

The IPO buffet: Too many delicacies, too little time

 

Initial public offering (IPO) investors face a packed week ahead, with nine offerings available for subscription. Brokers highlight strong demand for three or four of these IPOs, driven by attractive grey market premiums (GMPs). Industry sources report GMPs exceeding 50 per cent for Mamata Machinery, Unimech Aerospace, DAM Capital Advisors, and Senores Pharmaceuticals. “Given the large number of IPOs, many investors are focusing on the most promising ones, often guided by grey market trends. While the market remains favourable for now, any weakening conditions could alter these projections,” said a broker.

 

Orbiting outside the norm: SMEs defy gravity

 

While the broader secondary markets took a sharp dip last week, small and medium enterprise (SME) companies are navigating a different path. The S&P BSE SME IPO Index, which tracks the performance of newly listed stocks, has reached new highs after a strong rally over the past month. Investor interest in IPOs remains robust, with substantial oversubscriptions across the board. For example, the Rs 10 crore initial public offering (IPO) of Nacdac Infrastructure (formerly Uma Infratech) was subscribed 2,210 times, with bids totalling Rs 14,385 crore and over 7.5 million applications. Similarly, Identical Brains’ Rs 20 crore IPO attracted Rs 7,231 crore in bids and drew over 355,000 investors. Both companies’ shares are expected to double in value during their trading debut this week.