Street signs: Nifty may scale Mt 19K, grey market premium, and more

Uphill climb, but Nifty may scale Mt 19K

 
Last week, the benchmark Nifty and Sensex came close to topping their lifetime highs made in October 2021. Domestic brokerage ICICIdirect expects the Nifty to not just surpass its previous highs, but edge towards 19,000 this year. “We reiterate our constructive stance and expect the Nifty to challenge the all-time high of 18,600 and eventually head towards 18,900 by December. In the process, bouts of volatility owing to global uncertainty cannot be ruled out,” it has said in a note. The brokerage has highlighted a number of factors for its positive stance: these include a breakout from the 12-month falling trend, favourable VIX reading, and positive historical returns during the October-December quarter of 2022-23.
 
Investors see colour in grey market premium
 
The initial public offerings (IPOs) of Bikaji Foods International and Global Health (Medanta), which close on Monday, have received subdued response thus far. Until Friday, Bikaji was subscribed 1.5x; Medanta was half covered. The grey market premium (GMP) for both these companies is between 5 per cent and 10 per cent. Enthused with the positive GMP, some retail investors could take the newly-created small high networth individual (HNI) category to invest in these IPOs, say market players. The new HNI category is for applications between Rs 2 lakh and Rs 10 lakh. “Here the chances of allotment are higher and even small gains in percentage terms can yield high absolute returns in case the listing is positive,” observes a broker.
 
DVR, ordinary shares not moving in lockstep
 
Tata Motors’ ordinary shares and differential voting rights (DVR) usually move in lockstep. However, both have seen huge divergence in performance lately. In October, DVR shot up over 20 per cent, even as ordinary shares rose just 2 per cent. DVR’s outperformance has triggered speculation that Tata Motors may delist DVR or merge it with ordinary shares. Some believe Tata Motors could make it to the Sensex after exclusion of HDFC, following the merger. If ordinary shares are added, DVR, too, will have to be added to the index, which will result in buying by passive funds. Only time will tell why DVR and ordinary shares have been out of sync of late.