Markets Today: Key levels for Sensex, Nifty; Policybazaar IPO review

Relentless selling by foreign institutional investors amid a “cautious” outlook on India by foreign brokerages has halted the market rally.
 
In the past fortnight, at least four brokerages have recommended their clients to consider a higher exposure to other markets like China and Indonesia, which have hugely underperformed India this year.
 
The latest to join the league is Morgan Stanley, which yesterday downgraded India to “Equal-weight”, citing valuation and near-term headwinds as key concerns.
 
Remember, Nomura and UBS had recently downgraded Indian equities owing to similar reasons. Meanwhile, Christopher Wood, global head of equity strategy at Jefferies, said his company’s overweight position on India had come under a threat.
 
The change in stance has coincided with the latest round of correction in the domestic market. In the past nine sessions, the benchmark S&P BSE Sensex has shed 1,781 points, of which 1,100 points came yesterday alone.
 
The Nifty50, meanwhile, has fallen about 600 points, half of that yesterday.
 
In the broader markets, the Nifty MidCap 100 and the Nifty SmallCap 100 have declined nearly 2,400 points and 900 points, respectively, during the period.  
 
So, where are the markets headed?
 

• Sensex, Nifty saw biggest intra-day correction YTD yesterday
• Key support levels: 59,000 (Sensex) and 17,550 (Nifty50)
• Uptrend will resume above 60,900 (Sensex) and 18,150 (Nifty)
• The bullish set-up hasn’t been dismantled yet

 
 
Gaurang Shah, who is the senior vice president at Geojit Financial Services, also suggests investors to use this correction to enter the markets.
 

• It’s a healthy correction
• It’s a chance for new investors to come in
• There were a lot of leveraged positions; this cleansing was necessary

 
 
So is this a good time to buy?
 
According to Shah this is a good time to buy, but he advises focusing on quality large-caps and sector-specific midcaps.
 
As the near-term trajectory looks uncertain, investors should trade cautiously and focus on fundamentally strong companies.
 
However, if you are still unsure about trading in the secondary market, you may turn to the IPO market, which is abuzz with fresh offers.
 
Nykaa’s initial share sale, for instance, sailed through on the very first day yesterday, despite the weakness in the secondary market.
 
Further, Fino Payments Bank will open its Rs 1,200-crore IPO today with a price band of Rs 560-577 per share.
 
That apart, the initial public offering of PB Fintech, the parent company of PolicyBazaar and PaisaBazaar, will open on November 1.
 
With a price band of Rs 940–980, the company is looking to raise Rs 5,700 crore at a valuation of Rs 44,000 crore. Notably, this is more than the Rs 25,923-crore market cap of New India Assurance, the country's largest non-life insurer. The IPO comprises a fresh issue of Rs 3,750 crore, along with an offer for sale of Rs 1959.72 crore by existing promoters and shareholders.
 
However, despite being one of the leading online insurance players, analysts are cautious on the issue, given its weak financials.
 
Yesha Shah, who is head of equity research at Samco Securities, says the firm commands 93.4% market share in digital insurance market. Its revenue has grown at 34% CAGR in the past 3 years. It, however, remains Ebitda-negative. So the key challenge is be defending market share, and scaling up revenue. The valuation is expensive, she says, adding that long-term investors with high risk appetite might like to subscribe.
 
Clearly, the company has strong growth levers in place from a long-term perspective, but it needs to turn around its bottom-line financials to satisfy investors.