Markets continued to remain volatile and saw 4 trading days with a net change of about 250 points on the BSESENSEX. Final weekly tally was a gain of 76.57 points or 0.22% on the BSESENEX which closed at 34,924.87 points. NIFTY gained 8.75 points or 0.08% to close at 10,605.15 points.
The Indian rupee had a strong showing. It hit an intra-week low of Rs 68.69 to the dollar and bounced back to close at Rs 67.78. the close was a gain of 38 paisa or 0.15%. What would come as a relief to the government was that crude oil prices have fallen and so has the rupee strengthened. This would be a big piece of news for all concerned.
The week ahead sees May futures expiring on Thursday the 31st of May. The current value of NIFTY at 10,605.15 points is lower by 12.65 points compared to the start of the series. The high of the series was at 10,929.20 points made on 15th of May when Karnataka results were declared, and the low was 10,417.80 points made on 23rd of May just last week. Currently the series is tied between the bulls and the bears and could go either way.
SEBI has written to ICICI Bank on the issue of disclosures in the case of CEO&MD and the loans of Videocon and Nu-power. While this notice was in the offing for a long time it has finally happened and would put pressure on the bank board and the CEO&MD. If readers recall, the board had given an unwarranted or uncalled for clean chit to Chanda Kochhar on the issue. Her husband was being accused of having been funded by Videocon based on loans given by ICICI Bank as a quid-pro-quo.
The second company in the news is Fortis Healthcare where the shareholders have voted out the last director after the other three stepped down one day prior to the EGM. The new board would have to relook at the binding bids before it can take a fresh call on the sale of Fortis group of hospitals.
The third company in the news is Binani Cement. The resolution plan seems to be never ending and has become a court issue where the two bidders seem to be locked in an acrimonious court battle as well. Industry sources also mention that the resolution professional has a larger than required role which he is playing and could be the cause of this uncertain route. When the sale would see the light of day is indeed a million-dollar question.
These three cases would sooner than later become benchmark cases for such disputes and interesting reference material as well.
The change in mutual funds holding of midcaps and small caps as designated by SEBI with 30th June 2018 being the deadline would keep this segment of the market under extreme pressure. To give a sample of the market cap of these companies would explain things better. Midcap would be between 101-250 companies by rank of market capitalisation which based on average of the October-December 2017 quarter would be Rs 8500 crs to Rs 2800 crs. All companies below Rs 2800 cr market bcp would be small cap and similarly above Rs 8,500 crs would be large cap. Funds would have to invest 75% in the dominant category as per the name of the scheme and the balance 25% in others. Leaving aside the current week where short covering could dominate the proceedings, in the coming month this would be a big factor in market movement with 30th June being the deadline.
Primary market is quiet as far as the equity side is concerned but has become very active on the debt front. The size of issues and the coupon rates indicate that the issuers of debt expect interest rates to go up in the immediate future. RBI raising rates in the next meeting could be a reality and there could be more than just one rate hike in the current financial year. Rising rates could also act as a dampener on corporate earnings as higher interest rates has a cascading effect on costs.
With expiry four days away and markets flat as far as the futures is concerned, expect volatility.
