Street Signs: DMart's stock surge, Tepid GMP and a IPO lull, more

Shares of Avenue Supermarts (DMart) have rallied 15 per cent in the past month, even as the benchmark National Stock Exchange Nifty has remained flat. The stock has garnered favourable commentary from both fundamental and technical analysts after three years of poor performance. “DMart has reached its first 52-week high since October 2021, taking off from solid base formations. This is the best ‘buy’ signal that has emerged since November 2020. The bear run in the stock saw a price as low as Rs 3,200 in mid-2022, representing a two-thirds retracement of the previous bull run. The absolute trends project Rs 5,000 in the near term, followed by Rs 5,800 in the medium term,” said a note by Elara Capital. Earlier, a note by ICICI Securities suggested that it expects DMart to outperform Nestlé in the medium term, following a narrowing of the valuation gap between the two.

Of IPO market cool-down and grey market frost

Shares of Bharti Hexacom are currently commanding a grey market premium (GMP) of less than 7 per cent. If grey market activity is any indication, the subsidiary of Bharti Airtel could list at Rs 610, slightly above the initial public offering (IPO) price range of Rs 542-570. Market players note that GMPs and overall activity have declined for both mainboard and small and midsize enterprise issues over the past month. The sell-off in smallcaps, poor performance of new listings in March, and increased regulatory scrutiny are cited as reasons for the shift in sentiment. This is also expected to dampen the IPO pipeline, with market players anticipating only a couple of companies to roll out their issues in April unless there is a bullish turn in the market.

Bulk deal alert: Proceed with caution

Shares of Zee Entertainment Enterprises (Zee) witnessed a surge in the previous two trading sessions after bulk deal data revealed that PPFAS Mutual Fund (MF) — known for its ‘value investing’ approach — had acquired a 0.65 per cent stake. After closing at Rs 139 on Tuesday, the stock rallied nearly 4 per cent to Rs 145 on Thursday before experiencing a sharp decline to close at a multi-year low of Rs 138.6. Market observers noted that following the bulk deal, data-savvy investors rushed to buy the beaten-down stock, only for it to be a false trigger. PPFAS MF later clarified that “there is a bulk deal trade of Parag Parikh Flexi Cap Fund buying Zee shares... We wish to clarify that this was an arbitrage transaction”. An arbitrage transaction occurs when fund houses either buy on one exchange and sell on another or buy in cash and sell in derivatives to capitalise on any pricing anomalies.