The markets had four trading sessions last week and each day played out differently. We had a up day, a down day, a sideways positive day and a sideways negative day. The net effect was the BSESENSEX losing 54.32 points or 0.16% to close at 34,915.78 points. NIFTY lost 74.05 points or 0.70% to close at 10,618.25 points. FII’s continue to be bearish while domestic are the bulls on the street. So far sharp rallies are the outcome of short covering and we are yet to see large delivery-based buying happening.

Dow Jones lost 200.43 points or 0.83% to close at 24,262.51 points. The Indian Rupee was under pressure and lost 74 paisa or 1.11% to close at Rs 66.86 to the US Dollar.

The dry spell in the primary markets seems to have come to an end. The first issue in the financial year 2018-2019 is opening on Wednesday the 9th of May and closing on Friday the 11th of May. The issue is from Indostar Capital Finance Limited promoted by Everstone. The company is raising Rs 700 crs of fresh capital and through an offer for sale selling 2 cr shares. The price band is Rs 570-572. The company has an EPS of Rs 26.09 for the year ended March 2017 on a diluted basis and of Rs 19.46 for the nine-month period ended December 2017. The price earnings multiple based on the results of year ended March 2017 is in a band of 21.66-21.74 points. Compared to the peers the valuations look reasonable and does offer scope for appreciation in the medium term. The other key driver for this company is the fact that it is being driven by Mr Sridhar who earlier was at the helm of affairs of Shriram Transport. The two business verticals which have been added at Indostar are the commercial vehicles and affordable housing loan segments. These verticals have been added just recently after Mr Sridhar joined the company in 2017. The company has opened the relevant offices and hired the teams to service these segments. With the infrastructure now in place, the verticals can take off and there can be huge growth in these segments where there is virtually no base. The share looks decently priced and would set in motion the primary market for the coming quarter.

PC Jewellers is a North India based jewellery company having outlets on a pan-India basis. The company has been in the thick of controversy over the last four months. The share price had touched a high of Rs 600.65 on the 16th of January 2018 and touched a low of Rs 95.05 on Thursday the 3rd of May 2018. It bounced quite sharply the very next day to Rs 174.55 as of Friday’s close. The company had called a board meeting on the 25th of May for purpose of results and also to consider the buyback of shares. The meeting for just the buyback of shares has been preponed to be held on the 10th of May. The volumes on this counter are huge and defy all logic. Incidentally the share is in ban mode in futures. The company has been in controversy after another listed player, Vakrangee Limited invested in the equity of PC Jeweller. It has been alleged that the promoter group member has been gifting small quantities of shares to relatives who have then been selling them in the market. Share prices of Vakrangee have been on a downswing and locked at lower circuit on a daily basis. Vakrangee for the week lost Rs 19.40 or 18.45% to close at Rs 85.75. What is the connection between Vakrangee and PC Jewellers would be known only to the two promoters, but what is happening in the market is pure wealth destruction.

Incidentally Vakrangee too had announced a meeting for the buyback of shares but has yet to announce the price or the terms of the buyback. What would happen to PC Jeweller from here is anybody’s guess but very clearly the share is not for the faint hearted.

Karnataka goes to polls on Saturday the 12th of May, with the results being declared on Tuesday the 15th of May. As of now the market is yet to back the expected outcome but would do so in the coming couple of days. This would lead to sharp volatility between now and the declaration of results, providing trading opportunities. Use sharp dips to buy into the market and similarly strong rallies to sell. Markets are in a trading range currently and need lot of news flow to break out of this range.

The week gone by saw the market register further gains with the BSESENSEX gaining 554.12 points or 1.58% to close at 34,969.70 points. NIFTY gained 128.25 points or 1.20% to close at 10,692.30 points. The broader indices too gained about a percent each.

April futures expired on a positive note and gained 504.10 points or 4.75% to close the series at 10,617.80 points. This is a big gain and one did see short covering on the last date. Rollovers indicate a positive bias.

The big eh of January and is now below jvent coming up is the Karnataka election which takes place on Saturday the 12th of May. Results for the same would be declared on Tuesday the 15th of May. Current opinion polls put the ruling Congress ahead of the BJP but the seats expected have narrowed significantly from the last elections. The JDS is expected to play the kingmaker and get about 18-20% of the seats. While this is one of the four states going to polls in the current calendar year this is expected to set the stage for the general elections due in April-May 2019.

In primary news the season kicks of with the launch of NBFC Indostar Capital Finance Limited. The company is tapping the capital markets with its simultaneous offer for a fresh issue of Rs 700 crs and an offer for sale of 2 cr shares. The issue opens on Wednesday the 9th of May and closes on Friday the 11th of May. The price band of the issue is Rs 570-572. Merchant bankers and promoters would be hoping that the primary market revives after the break and one again sees the flow of issues. Many issues have got stuck as the y now have to update their accounts as per the new accounting standards of Ind-AS.

All is certainly not well at Vakrangee and the stock continues to be locked at lower circuit. The last traded price on Monday the 30th of April was Rs 99.95. For record purposes the share price at the beginning of the year was Rs 421. The share made a high of Rs 515.40 on 24th of January and is now just below 100. Investors just do not believe the company and its credibility is under stress. Just recently on the 27th of April, the statutory auditors of the company PWC have resigned. While the company has reviewed its December quarter, any such news is negative in the current circumstances and acts on shareholder comfort.

Results so far are on the positive side but the valuations are already very steep and therefore do not offer any scope for further increase. One needs to be careful while investing even though it may be for the longer run.

Markets are likely to move up into the election and then wait for a blow off and then correction or correction straight away. Invest cautiously.