Time to take profit off the table or keep trailing stop loss

B0Y ARUN KEJRIWAL The week gone by saw markets on a roll and score handsome gains on every day of the week. BSESENSEX gained 1,812.44 points or 4.68% to close at 40,509.49 points. NIFTY gained 497.25 points or 4.36% to close at 11,914.20 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.73%, 3.35% and 3.06% respectively. BSEMIDCAP lost 0.32% while BSESMALLCAP lost 0.03%. While the benchmark indices have recovered and are now trading at 7-month high, they are yet to cross the highest levels recorded during the year.
The Indian Rupee was flat and gained one paisa or 0.01% to close at Rs 73.13 to the US Dollar. Dow Jones had a stellar week and gained 904.09 points or 3.27% to close at 28,586.90 points. With these gains Dow is in positive territory for the year 2020 and is higher than the year end level of 28,538.44 points.
The week was eventful with TCS announcing its results and a buyback of Rs 16,000 crs at a premium to the market price. The stock which was at Rs 2,737.40 rallied to close at Rs 2,814.95 for the week. It had opened the week with strong gains and clocked weekly gains of Rs 292.20 or 11.58%. Wipro has also announced a buyback and the board would be meeting on 12/13 October. The share rallied strongly to close at Rs 374.10, a gain of Rs 61.10 or 19.52%. Incidentally the two-buyback announcements and decent results from TCS, saw the sector register strong gains with BSEIT up 9.17% and BSETECK up 7.67%. They were ably supported by BSEBANKEX which gained 6.73%.
The primary offering of 51 lac fresh shares from Likhitha Infrastructure Limited which was extended due to poor response from QIB’s was subscribed. The issue was extended to close on Wednesday the 7th of October instead of the original 1st of October. The QIB portion of 50% was reduced to 1% and the QIB portion difference was added to HNI portion. The issue was subscribed 9.51 times with QIB portion subscribed 21.99 times, HNI portion subscribed 1.54 times and Retail portion subscribed 23.71 times. This change in allocation from 50% to 1% during the issue was unprecedented and throws up a window of opportunities going ahead.
The mega reverse book building issue from Vedanta Limited met its expected end with the exercise failing at the very first hurdle. The company failed in garnering support of enough number of shares to take it to the threshold level of 90%. Against thelevel required of 134.10 cr shares, the company could garner support of just 125.47 cr shares. Though there were bids for over 11 cr shares which were pending to be confirmed over the last 24 hours or more, they failed to get confirmed clearly indicating that the idea was to get the issue past the first hurdle. The case needs to be investigated by the exchange as to who were the persons who had bid for over 11 cr shares and did not get them confirmed even after such a long time. The strictest action should be taken against them as the promoters and merchant bankers of Vedanta wanted the issue to be extended by at least one day.
The failure to get the required number of shares required, saved Anil Agarwal the embarrassment of having to acknowledge the fact that against his delisting offer of Rs 87.25, the book was built at Rs 320, which is approximately 3.66 times higher. Readers would recall that the promoter Anil Agarwal had made a delisting proposal at Rs 87.25 which was below the book value of the share way back in May 2020. This is when Covid-19 had broken out and crude prices fell sharply, but had then recovered. The promoter Anil Agarwal who has a track record of being unfair to minority shareholders, reduced the book value of his company by taking a notional impairment loss in the books which brought his book value to a similar oneto the delisting price.