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Mahavir Lunawat of Pantomath Capital Advisors Comments on IPO Commentary for the week of February 03 to 09, 2024


Mahavir Lunawat of Pantomath Capital Advisors Comments on IPO Commentary for the week of February 03 to 09, 2024


Primary Market Update:

This week, commencing March 21st, 1 mainboard IPO of JNK India closed this week for size of INR 649 crores and got subscribed over 28 times. We continue to remain optimistic about the potential of the upcoming public issues. Vodafone Idea’s ₹18,000-crore follow-on public offer, the largest so far by an Indian company, was subscribed more than six times and the share price opened at ₹ 11.80 per share, 7.27% higher than the issue price.Despite a lackluster beginning to the new financial year FY25 in the IPO market, we are optimistic about the potential of the upcoming public issues.

Indian Market Update:

The Indian stock market ended correction last week & found support at lower levels. We have seen pullback rally during this week. In short term, Indian Market will remain volatile ahead of Geopolitical tensions & due to Q4 FY2024 earning season. As per RBI latest policy minutes of meeting, rates were held steady at 6.5%, continuing a 16-month status quo approach with maintaining stance at “Withdrawal of Accommodation”. No immediate rate cuts are anticipated, with potential reductions considered for Q4 of FY2025. India’s net direct tax collections reached ₹19.58 lakh crore in FY 2023-24, marking a 17.7% year-on-year growth, driven by robust corporate and personal income tax revenues. India’s Forex Reverse stood at $643.16 BN as on 12th April 2024.

Sugar sector remained in focus as sugar prices in India have increased by approximately 4.5% in the last two weeks. This rise is due to a spike in demand from beverage and ice cream manufacturers, driven by soaring temperatures that have reached 42-44 degrees Celsius in many areas. Despite the government increasing the monthly sugar sales quota from 2.2 million tonnes in February to 2.5 million tonnes in April, demand remains high. Further, the government has allowed sugar miils to use 6.7 lakh tonnes of B- heavy molasses as feed stock for making Ethanol current year.

There are growing concerns in India about the safety of baby foods, protein powders, and spices, which is not good news for the fast-moving consumer goods (FMCG) industry. These worries include the levels of sugar and chemicals in food products, as well as health claims made by companies. Such concerns can lead to immediate regulatory action and long-term consumer mistrust, impacting companies’ reputations and stock values. Additionally, social media influencers are putting pressure on FMCG companies to make their products healthier, leading to changes like reducing sugar content. Overall, these developments pose risks for FMCG companies, especially regarding consumer trust and brand reputation.

Global Market Update:

After experiencing a correction last week, the US market found support at lower levels and started a pullback rally this week with easing geopolitical tensions. The strong economic data & various comments from Fed officials during last couple of days indicating the US economy has to deal with higher interest rates for prolonged period of time dented hope of early rate cuts. Market participants have reduced their expectations for rate cuts by the Fed within this year, there is still speculation that the Fed might begin to ease rates starting in September this year, marking the beginning of a potential easing cycle. The Federal officials watch out economic data in coming months for final conclusion on their monetary decision. The US Q1CY24 GDP data, PCE data will remain focus in coming days to get an idea overall US economy.

Brent crude prices stabilized around $88 per barrel due to a mix of factors. Concerns over the U.S. Federal Reserve potentially keeping interest rates higher for longer amid strong economic data initially pressured prices. However, a significant decline in U.S. crude stockpiles, which fell much more than expected, along with easing geopolitical tensions in the Middle East and resumed oil tanker movements in the Red Sea, helped to counteract these concerns and support prices.


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