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Tuesday, Sep 17, 2019

Market watch: Uneasy calm

There has been some stability in global markets over the last couple of days, a pattern reflected in our market as well, writes Udayan Mukherjee.

india Updated: Aug 03, 2007 22:07 IST
Udayan Mukherjee
Udayan Mukherjee
Hindustan Times

After a stomach churning five days, the market ended on a positive note for the week. There has been some stability in global markets over the last couple of days, a pattern reflected in our market as well. It is an uneasy calm though; one can almost touch the undercurrent of apprehension on the trading screen.

Big swings lie ahead: if global markets do stabilise and recover from this bleak phase, the pull-back could be very sharp. Lots of shorts still remain uncovered and that itself can trigger off a vertical rise. If, however, bad news from the US pours in again, another sell-off may ensue. In such volatile times the level of correlation between global markets gets magnified, all markets tend to move in a synchronised manner. This makes it even harder to predict the immediate future for any market on the strength of its internal fundamentals.

The fact that the moves of the last few sessions are not decisive is borne out by the thinness of volumes. If this was a confident bounce-back, there would have been more conviction in the traded turnover. These shallow moves only highlight the inherent uncertainty at this point.

An interesting event was the re-pricing of the Puravankara initial public offering. The price band has now been reduced from Rs 500-525 to Rs 400-450. Stung by undersubscription though the management says it is in light of recent "global volatility".

What they are essentially admitting is this: if they could palm off the issue to investors at that exorbitant level using euphoric market conditions, they would have without any qualms, but sadly market conditions got in the way, forcing them to reconsider. A few promoters and investment bankers have been shown up in recent months.

Some have at least had the grace to eat humble pie and reduce the IPO price band while others have gone ahead and done the issue, leaving investors saddled with post-listing losses. Distasteful greed if you ask me. What a bad first impression it must cut with investors. Now, in light of Puravankara, I am just hoping that the "re-pricing" of IVR Prime does not happen post-listing.

First Published: Aug 03, 2007 21:50 IST