It was a volatile week on expected lines and expiry of May futures made it super dramatic. Bulls who were not having the upper hand mauled the bears on expiry day and saw the BSESENSEX gain 416 points while NIFTY gained 122 points. For the week BSESENSEX gained 302.39 points or 0.86% to close at 35,227.26 points. NIFTY gained 91.05 points or 0.85% to close at 10,696.20 points. But for the heroics of Thursday, there would have been weekly losses.
The Indian Rupee which has been under pressure for some time staged a smart recovery and gained 72 p or 1.07% to close the week at Rs 67.06 to the US Dollar. This matched the softening of crude oil prices and was a big relief to the government. Further the proposed sanctions on Iran would also help India as we are one of the biggest consumers of oil from that country and we follow UN sanctions not US sanctions.
Last week I had spoken about three companies becoming test cases going forward. Lot of water has flown under the bridge since then and things are happening. In the first case a probe has been ordered by the board of ICICI Bank into the matter concerned. The MD&CEO is on annual leave which is planned, or coincidental only time will tell. In the second case the new directors on the board of Fortis Hospitals have called fresh bids from the participating bidders and hopefully a sale would happen in due course. In the case of Binani Cement, the consortium of lenders has approved the bid of Ultratech Cement which was the highest bid.
SEBI has through a circular directed mutual funds to realign their schemes in terms of market capitalisation where the top 100 stocks by market cap would be classified as large cap stocks. The next category of midcap would be from 101-250, while small-cap would be from 251 onwards. A large cap fund would have to invest 80% of its corpus in stocks from the top 100 while a midcap fund would have to invest 65% from its category. Similarly, a large and midcap fund would have to invest 35% each into large and midcap funds. The balance could be from other categories. The realignment is currently on and schemes are expected to complete this process by the end of 30th June. While in the case of large cap holdings there is hardly any concern the problem can be seen in small-cap which begin with a market cap of below 8,600 crs based on the top 1000 ranking for the period June to December 2017. The 250th stock has a market cap of Rs 8,600 crs based on average market cap for the period July to December 2017. This realignment would offer ample buying opportunities for the smart investor. As far as mutual funds scheme this would benefit the retail investor as the scheme would be self-explanatory and it now be possible to compare different schemes from different funds. More importantly one would be able to compare schemes of different fund houses as apples to apples and oranges to oranges.
Volatility is likely to continue in the market and would provide ample of buying opportunities.
