Street Signs: Navigating market rapids, IPO Street set to sparkle, and more

Navigating market rapids: Buckle up for Nifty’s wild ride

On two occasions in the past week, the benchmark National Stock Exchange Nifty fell sharply after registering new record highs. Market players expect this trend to continue as the 50-share blue-chip index faces tough resistance at around 22,700. On Friday, the index, after hitting a record high of 22,795, ended at 22,476 as Vix (volatility index) spiked 9 per cent to hit a two-month high of 14.62. “The sharp increase in the India Vix suggests caution among traders. Resistance is expected in the 22,750–22,900 zone in case of further upward movement. The performance of the information technology and banking pack is likely to heavily influence market sentiment. It’s advisable to consider hedged positions and await clearer signals before making significant moves,” said Ajit Mishra, senior vice-president of research at Religare Broking.

IPO fever: Riding the wave of premium bonanzas

The grey market premiums (GMPs) for the three initial public offerings (IPOs) that open this week range between 20 per cent and 55 per cent. The success of recent share sales by Vodafone Idea, Bharti Hexacom, and JNK India has buoyed the prospects for the IPO markets, say experts. Biopharmaceutical firm Indegene has the highest GMP at 55 per cent, followed by 50 per cent for the travel distribution platform TBO Tek and about 20 per cent for Blackstone-backed Aadhar Housing Finance. All three issues are looking to raise a cumulative ~6,400 crore, making next week the busiest for IPOs this calendar year. Market experts said the three issues could suck out liquidity from the secondary market, which could weigh on the performance of the listed universe.

Stock lock-in: Breaking free or breaking the bank?

The lock-up period on shares of five companies is set to expire this week. These are Apeejay Surrendra Park Hotels, ESAF Small Finance Bank, Cello World, Flair Writing Industries, and DCX Systems. In the case of Park Hotels, it is the end of the 90-day lock-up period for the anchor investors of its initial public offering, while in the case of DCX Systems, it is the end of the 18-month lock-up period. Historically, stocks have come under pressure following the expiration of the lock-up period, particularly in companies where there are private equity investments. Market players don’t rule out some selling pressure at these counters over the next few weeks.