Q: But it could well mean that the trader’s eye might shift from 4,900 to 5,000 now?
A: That is a day’s work at the current rate that we are pulling back. So the traders are going long again and the surest sign has been with what has happened with midcaps these last few days. Even liquidity has eased up, Rs 1,100 crore of cash plus futures market buying from foreign institutional investors (FIIs) once again yesterday.

If you look at the options data 4,800–4,900, Puts have become very active. It could be because Puts have been written and also some protection is  being brought by buying puts at 4,800–4,900 a bit of  both but Puts are being written at 4,800 and 4,900 once again. So we probably have a good chance of building on that 4,900 rally.

The only thing is we have come back from 4,550 to 4,900 in about three–four sessions. So one of these days you might see an intraday kind of correction coming in but the market has rediscovered quite a bit of momentum and has become technically strong by cruising about its 50 DMA with far greater ease than people thought it might. So the last couple of resistances have not stuck; that probably will embolden traders to trade on the long side once again.

Q: There were some announcements from Sebi yesterday?
A: The important one that the market is making a song and dance about is the QIB auction. However, I don’t think it makes such a lot of difference for Follow-on Public Offers (FPOs). There is no price discovery which needs to be done for a large company which is doing a FPO. NTPC being a case in point, it is a liquidity stock. It trades everyday and the market has discovered a price. So it’s highly unlikely that a QIB which can buy any quantity of NTPC from the screen will suddenly decide in the FPO to bid 10% higher than the current market price and take NTPC. If this is a starting point to test the system before unleashing it on IPOs. Then, it’s a good move but I don’t think auctions for FPOs make a whole lot of sense in any case.

For IPOs, it could be a big thing because the critical thing is not that QIBs are allowed to bid and discover the price, the critical thing is that the retail gets it at the base price or the floor price. So you could have a situation where the management sets a floor price for Rs 50 for an IPO and all institutions scramble and discover the price at Rs 70 and the stock goes on to list at Rs 70–75 and retail is still getting allotment at Rs 50 you could actually then make a lot of gains.

What this may also do is that it may just take a little bit of sting away from greedy pricing from managements, that is what the last IPOs have been.

So now managements might say, “I set a floor price which is conservative and I know that people will because of instead of getting it 25 times subscribed the QIPs they will probably get the price higher to what they think is a fairer price and I am happy to give 10% of the issue or whatever 25% to retail at my base price”. I think that might cure the ill of too aggressive pricing to a limited extend as well and the good thing is that six months balance sheet is very desirable.