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Daily Voice | Higher volatility expected due to Omicron scare: Mohit Nigam of Hem Securities

Investors need to be watchful as it will be interesting to see how the Covid and Omicron situation pans out. Markets will be focused on the spread of the new variant for the next few weeks.

December 19, 2021 / 11:58 AM IST

As per World Health Organisation, Omicron is detected in 89 countries now. Hence, Mohit Nigam, Head - PMS, Hem Securities says the next few weeks could see higher volatility in the markets as Omicron is slowly spreading in India, though the absolute case count continues to be low.

As far as the 2022 is concerned after stellar returns in 2021, Mohit Nigam who has exposure in the capital markets across forex, equities, bonds and investment banking, says going forward investors should realise that these kind of returns are abnormal and cannot be achieved on a regular basis in such a short span of time.

The market will continue to give good returns in the long term therefore investors should remain patient and avoid going after quick returns, he advised.

The market remained range-bound for several weeks now. What could be triggers in short term that could push the markets beyond record high levels?

With all the major policy announcements out of the way, the market will shift their attention to domestic cues. The RBI continues to push for growth while keeping an eye on price stability. FII flow is fairly weak in India whereas it's the domestic flows that have been supporting the markets for the past several months.

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The next few weeks could see higher volatility in the markets as Omicron is slowly spreading in India, though the absolute case count continues to be low. Investors need to be watchful as it will be interesting to see how the Covid and Omicron situation pans out. Markets will be focused on the spread of the new variant for the next few weeks.

CMS Info Systems IPO will be opened for subscription next week and it is entirely an offer for sale issue. Should one subscribe to the offer and why?

CMS Info Systems will launch its IPO on December 21 and will sell its shares in the range of Rs 205-216 per share. The issue is entirely an offer for sale exercised by the company's promoter Sion Investment Holdings Pte, who will offload equity shares aggregating to Rs 1,100 crore. The company will not receive any net proceeds from the IPO.

Company was incorporated on March 26, 2008. CMS is India’s largest cash management company based on number of ATM points and number of retail pick-up points, as well as one of the largest ATM cash management companies worldwide based on number of ATM points as of March 31, 2021. CMS operates their business in 3 segments:
1) Cash Management Services: which includes end-to-end ATM replenishment services; cash pick-up and delivery.
2) Managed Services: which includes banking automation product sales, deployment and associated annual maintenance.

3). Others include end-to-end financial cards issuance and management for banks and card personalization services.

Company's customers in its retail cash management business are primarily banks and include Axis Bank, HDFC Bank, ICICI Bank and IDBI Bank, among others.

CMS Info Systems, being India’s largest cash management company along with strong fundamentals have pan India presence with deep penetration in growing markets is definitely a must apply IPO and we will advise investors to hold this company for long term.

Click Here To Know All IPO Related News

Shriram Properties (Monday), MapmyIndia (Tuesday), Metro Brands (Wednesday), Medplus Health Services (Thursday) and Data Patterns (Friday) will make debut on the bourses next week? What could be listing premiums for these IPOs?

Listing price for Shriram Properties could be at around 10 percent premium, MapmyIndia at around 90 percent premium, Metro Brands at around 7 percent premium, Medplus Health Services at around 30 percent, and Data Patterns at around 75 percent.

Also read - Shriram Properties shares see muted demand in grey market. How will its listing be?

How do you sum up the primary market that saw fund raising of more than Rs 1.3 lakh crore in the year 2021? Do you expect similar kind of fund raising in 2022 and can you name the companies that are planning IPOs in 2022?

This is for the first time ever that the total fund raised through IPOs in a year has crossed the Rs 1.03 lakh crore. The previous high was registered in 2017 when a total of Rs 67,147.44 crore was raised by 36 companies, as per data from Prime Database, a primary market tracker. Major reasons why market participants found traction in the Indian primary market are:

1) Strong rally in secondary markets as Indian Indices are one of the best performing indices globally.
2) Entry of new investors in markets.
3) Falling interest rates of bank deposits

4) More & More startups coming to the markets.

The high momentum is expected to continue in the upcoming year (2022) with some big companies getting listed on the exchanges are LICs, Byju's, Delhivery and Ola. Several other big names will list for IPO 2022 apart from the four discussed above. These include OYO, PhonePe and Flipkart. If liquidity remains high and the momentum sustains, then the upcoming financial year will also see a number of successful IPOs.

Several stocks after IPOs in 2021 including Latent View, Sigachi Industries, Paras Defence, Tatva Chintan, GR Infraprojects, Clean Science, Sona Comstar, Macrotech Developers, Barbeque Nation, Nazara Technologies, Laxmi Organic, Easy Trip Planners, MTAR Technologies, Nureca, and Stove Kraft remained multibaggers till the end of the year. Do you expect such performance from these stocks to continue in 2022 as well and will there be more multibaggers in 2022 compared to 2021? Also what is your overall reading?

So far IPOs have performed well on the back of plentiful liquidity and investor frenzy. Many of the recent listings are good long term bets with unique business models and strong market share. The high performing IPOs are expected to continue to deliver positive return in 2022 as well but some stock specific correction could be expected before the next rally. We could expect multibaggers in 2022 too with many IPOs lined up, however, multibaggers could be fewer than in 2021 as interest rate cycle reversal could pump out excess liquidity from the markets. Any subdued IPO performance could be an opportunity to accumulate a fundamentally-strong script at reasonable valuations.

Paytm, SJS Enterprises, Fino Payments Bank, Aditya Birla Sun Life AMC, CarTrade Tech, Krsnaa Diagnostics, Windlas Biotech, Glenmark Life Sciences, Suryoday Small Finance Bank, Kalyan Jewellers and IRFC were the biggest losers with double digit decline amongst IPOs that listed in 2021. Overall what are the key reasons for such underperformance, what should investors do with these kind of stocks and what should investors learn from this?

The key reasons for the underperformance for the few IPOs were their valuations, some of these IPOs were at an expensive valuations as compared to their peers and were shown lesser interest by the institutional investors. The investors should take every IPO on its merit and understand that all IPOs are not presented at a favourable price points. Some of the IPOs like Paytm were reporting losses over the years, while some others were reporting very meagre profits so were fundamentally weak for the IPO listing gains.

Since the equity investments have inherent risks, investors are advised to enter equity markets after deep study or with professional help like Portfolio Management Services.

What should investors learn from the year 2021 that has seen strong rally, created several multibaggers, higher commodity prices and many more things?

2021 has been a really good year for the stock market. The market witnessed an excellent rally and a significant number of multibaggers. Even after the second wave of Covid which again forced the nation into lockdown and harsh restrictions, the markets delivered stupendous returns. Many IPOs were listed at attractive premiums and even delivered more than 100 percent returns. After rising to record highs of 18,600 market has seen a both time wise and sector wise correction. The concluding part of the year saw record sales from FIIs.

Going forward investors should realise that these kind of returns are abnormal and cannot be achieved on a regular basis in such a short span of time. The market will continue to give good returns in the long term therefore investors should remain patient and avoid going after quick returns. Investors should look for companies that are fundamentally strong, have good revenue growth and have minimal or no debt. We advise investors to be cautious in the market and every significant dip is a good opportunity to accumulate quality stocks.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Sunil Shankar Matkar
first published: Dec 19, 2021 11:58 am
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