Street Signs: High cost of trading, Akums Drugs GMP at 25%, and more

Eight-week winning streak: Nifty’s endurance race continues

Thanks to strong gains on Friday, the benchmark National Stock Exchange Nifty 50 Index managed to cap its eighth straight weekly advance — its longest weekly gaining streak since January 2018. During these eight weeks starting May 27, the blue-chip index has added 2,304 points, or 10.2 per cent. If the Nifty gains for one more week, it will mark the longest streak since March 2010. Although the market is in an extremely ‘overbought’ zone, making the possibility slim, it is not impossible. Experts suggest that the strong buy-the-dip pattern indicates that any pullback could be a good opportunity to build long positions. On the downside, traders should eye the 24,500–24,400 zone to build long positions. On Friday, the Nifty ended at a record high of 24,835.

Trading’s price tag: The silent profit killer

The study published by the Securities and Exchange Board of India (Sebi) last week showing 71 per cent of intraday traders incurring losses captured everyone’s attention. However, a key data point around the high cost of trading failed to gain much notice. One of the key factors weighing on profitability is the high cost of trading, which includes brokerage fees, exchange fees, Sebi turnover fees, stamp duty, securities transaction tax (STT), and goods and services tax. It does not include short- and long-term capital gains tax. “In 2022-23 (FY23), loss-makers exacerbated their trading losses by 57 per cent due to trading costs. Profit makers incurred 19 per cent of their trading profits as trading costs in FY23,” the study said. The cost is set to rise further with the increase in STT and a potential increase in brokerage fees due to Sebi’s uniform fee mandate for exchanges.

Akums Drugs IPO: A hot ticket with a 25% market premium

Shares of Akums Drugs and Pharmaceuticals commanded a grey market premium of 25 per cent ahead of its initial public offering (IPO). The active pharmaceutical ingredient maker’s shares were trading at Rs 850 against its price band of Rs 646–679 per share. Akums Drugs’ IPO comprises Rs 680 crore in fresh fundraising and Rs 1,177 crore in secondary share sales, translating into a total issue size of Rs 1,857 crore. The IPO proceeds will mainly be used to repay debt. At the top end, Akums Drugs will be valued at Rs 10,687 crore on a post-dilution basis. In 2023-24 (FY24), the company clocked revenue from operations of Rs 4,178 crore, registering a year-on-year growth of 14 per cent. In FY24, Akums had a 30 per cent share of the domestic contract development and manufacturing organisation market.