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.

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.