On Thursday, the market appeared to reverse the pain of the last few days. IN fact, the last 3 days were quickly forgotten as the Nifty rallied by a whopping 192 points to close at 15,825. With just one day to go for the week, one could see large trading positions built up in metals, financials and even IT stocks. The sentiments look positive.

If you look at the specific indices on 22 July, then the large cap, mid cap and the small cap indices were in the green but more importantly the VIX plunged to below the 12 mark. This is positive and gives hope that the worst may be over for the markets. The big stars on Thursday were Bharti and even the Adani group stocks gained on Thursday.

Foreign investors were net sellers of Rs.248 crore on 22 Jul but the real big story was the huge overall volumes of Rs.17,000 crore by the FPIs. This implied a lot of block deal action. Domestic institutions bought Rs.943 crore in the equities market. Considering that FPIs were still net sellers, the market still looks to be quite tentative in terms of immediate triggers.

It was a flat day in the US and Europe and the SGX Nifty is absolutely flat to negative in early trades and is giving indications of consolidation at these levels. However, the big story to watch will be Zomato which has been priced at the upper band of Rs.76. There is likely to be selling by HNIs, but QIB appetite is huge so any correction will be met with buying.

The Competition Commission of India or CCI, which regulates industry domination and unfair pricing, has accused Amazon of concealing material facts and making false submissions when it had sought approval for its investment in Future Coupons. It may be recollected that in 2018, Amazon had bought a stake in Future Coupons and that had been the bone of contention in its ongoing legal tussle with Future group.

This submission by the CCI actually adds a new angle to the ongoing legal feud going on between Amazon and Future group pertaining to the sale of stake in Future Group to Reliance Retail. While the deal was closed in Aug-20, Amazon had demanded first right of refusal for Future Retail on account of its 49% holding in Future Coupons. If the CCI has strong grounds, it could result in penalty and also nullification of the original deal.

The stock of IDFC, the holding company of IDFC First Bank, was up nearly 19% on Thursday, 22 July. In fact, the stock traced a 52-week high of Rs.62.60 after the RBI allowed IDFC to exit as the promoter of IDFC First Bank. It may be recollected that recently RBI had clarified that holding companies of banks can exit their banking ownership after completion of 5-year lock in. Since IDFC Bank commenced operations in October 2015, five years are over.

Currently IDFC owns 36.6% in IDFC First Bank, which was formed by the merger of IDFC Bank and Capital First in 2018. However, IDFC has not mentioned about its intent to exit IDFC Bank and looks like it could continue for now. However, investors are betting that now IDFC can be absorbed into IDFC Bank through the process of reverse merger. This will enhance group value and also save IDFC from the typical holding company discount.

In a rather interesting move, Zomato has decided to pull back its listing date to 23 July instead of 27 July, which was the original schedule. This appears to be a kind of method to surprise the market and ensure that institutional demand is robust when the listing happens. The company is expecting some pressure of selling from FPIs as there were a large number of funding applications that were put in on the last day.

The IPO price was discovered at the upper end of the stipulated price band at Rs.76 per share. Zomato expects to see a high level of interest on listing day plus a lot of volumes happening on Friday. The issue was subscribed 38.25 times with QIB portion subscribed 51.8 times. Zomato is a quick delivery portal and the early listing is unprecedented and also, perhaps, in sync with the business model of early delivery that Zomato is looking to underline.

In fact, I am suggesting to book profits in Burger King, more as a means of churning the holdings. Burger King has rallied quite sharply in last few days and you can book profits. However, I would suggest that you hold on to Aarti Industries as the momentum on the specialty chemicals stock has just about begun. Here is a quick summary response.

· Burger King at Rs.171 (CMP-184) – Book Profits

· Aarti Industries Rs.864 (CMP – 881) – Suggest to Hold

Being the last day of the week, I am really not suggesting any fresh calls for Friday. However, you can take a fresh view on the markets in the coming week. Stocks like RIL and Cipla, if you missed out in the last few days you can still buy at around or below our recommended prices for these stocks.

You can expect a double whammy for airline companies in Q1 with a hit on business volumes and also profits due to fuel costs. Losses will widen sequentially with Interglobe losses more than doubling. SpiceJet losses will also widen but could be redeemed by Boeing compensation. ATF costs are up 11% sequentially.

The government has confirmed that lawsuits by Cairn Energy as well as the purported threat to attach assets of Air India against the dues of the Indian government, would not impact the proposed divestment of Air India. It may be recollected that after getting a favourable tribunal order in the Cairn India sale case, Cairn UK had sought to recover dues of $1.73 billion from the Indian government. This is currently under legal dispute.

The dues pertain to the shares of Vedanta that the Indian government had sold to recover its retrospective dues. Government had also withheld dividends and tax refunds due to Cairn Energy and had adjusted it against the partial recovery of retrospective taxation on Cairn for round tripping funds. While the government appears to be confident, it is not too clear what colour the entire tussle will eventually take.

Star Health, backed by Westbridge, Madison Capital and Rakesh Jhunjhunwala, filed its DRHP with SEBI for its proposed IPO. Star Health is a major health insurance provider. The IPO will include fresh issue of Rs.2,000 crore and 6 crore shares as OFS. The IPO will reserve 75% for QIBs and just 10% for retail. Star will be the first non-institution backed insurer to list on the stock exchanges.