Bajaj Housing Finance's IPO aims to secure Rs.6,560 crore

On Thursday, the Sensex and Nifty unexpectedly reached a record high, thanks to an IPO that ignited their upward momentum.

Throughout most of the day, the Nifty experienced difficulty surpassing the 25,000 threshold. Nevertheless, after 2 PM, there was a significant one-way movement in the market.

The surge on Thursday was largely influenced by the Bajaj Housing Finance IPO and two other IPOs that concluded their subscription on Wednesday.

An IPO was launched by Bajaj Housing Finance with an aim to raise Rs.6,560 crore. However, the bids received from investors totalled a staggering amount of Rs.3.24 lakh crore. Two other IPOs - Kross and Tollins Tyres- also attracted healthy subscriptions resulting in approximately Rs.4 lakh crore investor wealth being locked-in across all three offerings.

Under the ASBA mechanism, when an application is made for an IPO, the corresponding amount is blocked in the applicant's bank account, rendering it unavailable for other uses.

If the allotment is successful, the funds are debited; otherwise, the blocked amount is released back into the account. This release of funds, in the event of no allotment, can quickly be redirected into the market, potentially driving the sharp rise in the Nifty and Sensex.

Thursday's surge was led primarily by large-cap stocks, with major contributors such as Reliance Industries, HDFC Bank, Bharti Airtel, Infosys, and SBI boosting the Nifty. All 50 index constituents closed higher on the day.

Additionally, the weekly expiry of Nifty 50 contracts played a role in the market's recovery. Once the Nifty crossed the 25,200 mark, call writers rushed to cover their positions, causing a short squeeze and sparking a rapid move upward due to short covering.