Street signs: Lacklustre retail demand for OFS, bond sales, and more

Will Nifty be third time lucky?
 

The Nifty last closed at 10,244, above its 100-day moving average, considered to be a crucial technical indicator. Most traders have now set their eyes on 10,350, a level from which the 50-share index retreated twice last week. Technical analysts say, if the Nifty manages to breach this level, the next stop could be 10,550. Some analysts believe the strong momentum in banking shares and heavyweights, such as Reliance Industries (RIL), could help the index get past the 10,350 hurdle. “If the rally seen in HDFC twins and RIL sustains, the market could overcome the technical hurdle and provide impetus to other stocks also to gain,” said an analyst. Despite high volatility, the benchmark Nifty gained 2.7 per cent last week, outperforming the mid-cap indices, which rose 1.6 per cent.
 

Sundar Sethuraman

Mid-cap cos may go slow on bond sales

Rating agencies could see some slowdown in fresh bond issuances from mid-sized companies, as such firms are likely to delay their capital expenditure in light of the pandemic and economic uncertainty. "To this extent, we could see some impact on rating-related revenue streams. However, large-sized firms typically have pre-agreed tie-ups with rating agencies, so this income source is likely to see limited impact," said a senior analyst at a rating agency. In April, the value of debt papers where ratings were withdrawn or suspended stood at Rs 5.14 trillion, more than double the March's figure ofRs 2.12 trillion. Experts say this could partially be attributed to smaller-sized players putting their issuances on hold, and requesting withdrawal of ratings.

Jash Kriplani

Lacklustre retail demand for OFS

The offer for sale (OFS) of both HDFC Asset Management Company (HDFC AMC) and SBI Life Insurance failed to garner full subscription in the retail segment, even as institutional investor demand remained strong. Retail investors — those investing up to Rs 200,000 — did not subscribe to all the shares on offer despite arbitrage gains on the table. Secondary market price of both HDFC AMC and SBI Life quoted above the base price set for the OFS. Market experts say retail investors don’t quite have a handle on OFS like how they have on initial public offerings (IPOs). “There is lack of awareness among retail investors as to how to apply in an OFS and what’s the price one should bid at. Probably, the regulator should ease the process or educate investors,” said an official with a retail-brokerage.

Samie Modak