Arun Kejriwal: Obstacle course

Union Home Minister Rajnath Singh and Ananth Kumar campaign for the Chickpet constituency candidate Uday Garudachar (right) ahead of the Karnataka Assembly election in Bengaluru. Pic/PTI

Markets continued to remain volatile and in the four-day trading week we had all possible combinations. Markets were up, down sideways and again sideways. The net change on the BSESENSEX was a loss of 54.32 points or 0.16 per cent to close at 34,915.38 points. NIFTY lost 74.05 points or 0.70 per cent to close at 10,018.25 points. The broader market saw the BSE100, BSE200 and BSE500 lose 0.90 per cent, 1.03 per cent and 1.06 per cent respectively. BSEMIDCAP was down 2.15 per cent while BSESMALLCAP was down 1.38 per cent.

Only one
The top sectoral gainer was BSEBANKEX up 0.46 per cent. Incidentally this was the only gainer. The top loser was BSEMETAL down 3.46 per cent followed by BSEOIL&GAS 2.44 per cent, BSEREALTY 2.36 per cent and BSEAUTO 2.22 per cent. In individual stocks the top gainer was Kotak Bank up 3.49 per cent followed by HDFC Bank 3.27 per cent and HDFC 2.82 per cent. On the losing side was HCL Tech down 11.94 per cent followed by Eicher Motor 8.01 per cent and India Bulls Housing 5.39 per cent.

Sensex in a week. Graphic/PTI

Under pressure
Dow Jones lost 200.43 points or 0.83 per cent to close at 24,262.51 points. The India Rupee was under pressure and lost 74 paisa or 1.11 per cent to close at R66.86 to the US dollar. There may be some concerns about the ramifications of a trade war act as a hanging sword over markets and investors but no one seems to take it too seriously.

Very huge
PC Jewellers is a North India based jewellery company which has been in the thick of controversy over the last four months. The share price had touched a high of Rs 600.65 on January 16, 2018 and touched a low of Rs 95.05 on Thursday, May 3, 2018. It bounced quite sharply to R 174.55 as of Friday's close. The company had called a board meeting on May 25 for results and to consider the buyback of shares. The meeting for just the buyback of shares has been preponed to May 10. The volumes on this counter are too huge and defy all logic.

The backstory
The company has been in controversy after another listed player, Vakrangee Limited invested in the equity of PC Jeweller. 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 per cent to close at Rs 85.75. 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. Very clearly, this share is not for the faint hearted.

One issue
The primary market sees an issue after a long time. The issue from Indostar Capital Finance Limited opens on Wednesday, May 9 and closes on Friday, May 11. The company is raising Rs 700 crore of fresh capital and through an offer for sale selling two crore 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 do offer scope for appreciation in the medium term.

Election time
Elections to the Karnataka assembly will be held on Saturday, May 12 and results will be declared on Tuesday, May 15. Markets are yet to take a stand on the likely results and we should see volatility in the upcoming week. One should use any sharp dip to buy and conversely any sharp rally to sell. Opportunities for both buying and selling are available. One has to use them wisely.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only.

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