Rahul Shah on which new IPO could be a likely winner

Last week was led by a lot of broader market names. Also a lot of the high momentum stocks corrected quite massively!
The last entire week, there was a lot of volatility. The clear winners were the PSU banks which did very well as did a lot of IT companies reported their numbers. A few of the numbers were a miss and we saw some selling. It was the same with the FMCG pack as well. Going forward, the important thing to look out for is when the wholesale bankers start to report their numbers next week and a lot of Nifty companies as well. It should be important to track the next week from here.

We have seen the IPO market hotting up. But how are the companies that have seen recent IPOs faring? Do you see the momentum sustaining?
We have come across a lot of new IPOs in the last couple of months. One is obviously the fancy in the markets and a lot of IPOs are fully valued when they are entering the market just because of the way the markets have been.

The stocks tend to do well during the listing gains and then they tend to give up most of it post that. The most important thing to look at is the valuation metrics. Obviously a lot of stocks came up with unreasonable valuations. The markets have punished them post listing as well. As a couple of IPOs will list in November or this month end. One is Nykaa. In the It tech rally, we have seen a spectacular listing by Zomato.

There could be good listing gains in terms of Nykaa as well. It is important to look at Nykaa which is coming up and later on Paytm IPO which could be the next big bang on the Street. The third is Policybazaar. The market should look at going forward from here and in the near term, Nykaa should be the clear winner.

A lot of companies came up with their earnings mainly in the consumption space. They were facing cost pressure. How do you see these companies going ahead? Can this linger on for the next few quarters as well?
Managements of all the majors like which reported their numbers mentioned that in the last four decades, this is the fastest inflation they have seen and this kind of inflation in a quarter have not come across. This is important and worrisome and that is what we saw in the stock price reacting negatively. Similarly, we were expecting the same thing in HUL’s results as well or Nestle’s results.

Obviously the inflation is inching up and which is hitting most of the companies. This has impacted earnings as well as the stock prices we saw last. Holistically and globally, this inflation is not a domestic worry but it is a global worry. We saw the commodity prices moving up from sector to sector. It was first in the metals and then it shifted to energy and oil prices hit 5-7 year high. It is a global worry. Things should cool off in a couple of months or so. But we have to live through this kind of inflation at least for the next one quarter or so. It is more of a global thing. Domestically things should be in sync with the global economy in the coming couple of months.