Street signs: Mkts on weak footing, SEC rule may prompt IPO rush, and more

Markets on weak footing

The markets could extend the losses due to weak technical formation after the Union Budget, say technical analysts. “The benchmark Nifty had opened ‘gap down’ a day after the Budget. The gap will only be filled after the Nifty crosses 11,800. Till then the overall trend remains weak,” said a technical analyst, adding that the 50-share index could decline to 11,500. On Friday, the index closed at 11,419. Experts say the weakness in the banking sector has lead to the pressure. “Financial stocks were supporting the markets post the budget. However, poor results by some of the private sector banks has dampened sentiment,” the analyst added.

Samie Modak

Stock fall to hurt RBL’s Nifty chances  

The benchmark Nifty’s semi-annual review is slated for next month. According to analysts, RBL Bank was one of the frontrunners to be included in the premier index. However, the sharp drop in the stock price could hurt the mid-sized private sector bank. Shares of RBL Bank dropped 14 per cent to Rs 500 on Friday after the lender said it expects asset quality pressure going ahead. A key Nifty inclusion criterion is that the six-month average free-float market capitalisation of a new entrant has to be 1.5 times that of the smallest constituent. “RBL Bank is seen as the closest inclusion candidate. However, the latest stock price fall could cost the bank the coveted Nifty spot,” said an analyst.           

     

Samie Modak

SEC rule may prompt IPO rush

A slew of initial public offerings (IPOs) are set to hit the market over the next few weeks even as domestic market conditions remain challenging. Investment bankers say a regulation of the US Securities and Exchange Commission (SEC) is the real trigger for the IPOs. Under the SEC regulation, financial statements in IPO document are valid only for 135 days. US-domiciled investors are not allowed to invest in companies that fail to adhere to this rule. “Some of the companies looking to tap into the markets are banking on foreign investor participation. As a result, they have to rush to the markets to ensure the SEC deadline is met,” said an investment banker.

Sundar Sethuraman