The week gone by ended on a positive note and it had significant gains on the week’s opening and closing days. BSESENSEX gained 620.41 points or 1.75% to close at 35,535.79 points. NIFTY gained 188.25 points or 1.74% to close at 10,806.50 points. Dow Jones too had a stellar performance and was up 568.66 points 2.29% to close at 24,831.17 points.
The primary market issue from Indostar Capital Finance Limited was subscribed 6.8 times. The company had tapped the capital markets with a fresh issue for Rs 700 crs and an offer for sale of 2 cr shares in a price band of Rs 570-572. QIB portion was subscribed 16.08 times, HNI portion 6.91 times and Retail portion 1.48 times.
Karnataka elections were held on Saturday and the exit polls indicate a fractured mandate. Of the seven exit polls, six indicate the fractured mandate while one gives majority to the BJP. In any case the exit polls are know to be erroneous and one cannot follow them blindly. The move in the markets on Friday suggest the leaning towards BJP. In case the results to follow tomorrow do not give a clear mandate, there is bound to be super volatility in the markets. This would provide ample opportunities to enter the market on dips.
PC Jeweller preponed its board meeting to announce a buyback through the tender offer. The board meeting for accounts and buyback was to be held on25th of May. Looking at the precarious condition of its share price it decided to announce the buyback price through an earlier board meeting on 10th May. The company would be buying 121.14 lac shares constituting 3.07% of its paid-up capital at the price of Rs 350. The price on the eve of the announcement was at Rs 209 which post announcement opened gap up at Rs 229.90, rose to Rs 247, fell to Rs 197.50 and finally closed with losses of Rs 7.85 at Rs 201.15. The company’s promoters who own 57.63% of the shares would not be participating in the tender offer. These measures to shore up the share price will be long term damaging to the company as it is already a debt laden company and whatever liquidity it has, will be over in this buyback which would cost it Rs 424 crs. It is best to stay away from such shares which have controversy written large over it.
Secondly the irony is that the company linked with PCJ where the controversy had started, Vakrangee had similarly opted to announce a buyback of shares, the price of which is still awaited. The Share price meanwhile has continued to be locked at lower circuit and is now Rs 66.50 against a high of Rs 515.40 on the 24th of January 2018.
With last week’s rise the benchmark indices are a mere 2.5% and 3.5% negative from the highs of the current calendar year made on 29th January. If one were to consider on a year to date mode, BSESENSEX is up 4.16% while NIFTY is up 2.55%. With headwinds on account of rising crude prices, depreciating rupee and sanction being Imposed on Iran, markets seem to be treading in dangerous territories. Results on Tuesday are likely to dictate immediate trends in the marketplace. Trade cautiously.
