Global markets to cue stocks next week

The Indian stock market was largely influenced by global cues this week--interest rate concerns, liquidity constraints, and rising inflation. Adding to this, were the slew of domestic public offerings.

Bombay Stock Exchanges' Sensex gained 0.7% over the week to close at 14163 on Friday. National Stock Exchange’s Nifty rose 0.6% week on week.

Capital goods shares saw good amount of buying interest and the BSE Capital Goods Index ended 2.9% higher over the week. BSE Metals Index also put up a good show and gained 2.5%. But autos witnessed selling pressure and the BSE Auto Index lost 0.6% week on week.

Asian equities continued their upward momentum on Monday and Tuesday on the back of Wall Street gains. But they came under a cloud as bond yields soared to a five-year high in the US on rate worries. But as the concerns eased, Japan’s Nikkei and South Korea’s KOSPI scaled new highs. Friday, Bank of Japan decided to leave interest rates unchanged at 0.5%.

Back home, the week kicked off with investor expectation high from the 17.5-crore share DLF issue. Vishal Retail’s 47 lakh share, which also opened Monday, seemed ill-timed. But it was subscribed 69 times as it closed Wednesday.

In comparison, the DLF float was subscribed 3.5 times, but retail portion just 1.05 times. Analysts said the high price band of Rs 500-550 made retail investors shy away.

The Roman Tarmat issue, which opened on Tuesday closes on June 19, has not been as lucky as Vishal Retail and has evoked a lukewarm response.

Next week, investors will again ready themselves for the Rs 20,000 crore follow-on issue from ICICI Bank which opens Tuesday. The domestic issue is for Rs 8,750 crore, with a greenshoe option of Rs 1,312.5 crore. The bank also plans an American depositary share issue of Rs 10,100 crore. Both the ADS and domestic issues will run simultaneously.

Market watchers feel ICICI will receive more retail participation. The price band for the issue will be fixed Monday. It closes June 22.

Such a huge strain on liquidity will play on the secondary market, even as global happenings during the weekend give fresh cues.

“Till the Nifty spot decisively crosses 4200 and provided the cost of carry in derivatives stabilises at 10%, the gyrations in the market will continue,” said Amit Hiremath, analyst at IDBI Capital Market Services.