Arun Kejriwal: Going quite well, really

May 14, 2018, 07:41 IST | Arun Kejriwal

Mood buoyant amidst uncertainty about Karnataka

Two newly married couples show their ink-marked fingers after casting their votes for Karnataka Assembly. Pic/PTI
Two newly married couples show their ink-marked fingers after casting their votes for Karnataka Assembly. Pic/PTI

Markets were on a roll last week and had two big gain days on Monday and Friday. The BSESENSEX gained 620.41 points or 1.75 per cent to close at 35,535.79 points. NIFTY gained 188.25 points or 1.74 per cent to close at 10,806.50 points. BSEMIDCAP lost 1.33 per cent while BSESMALLCAP lost 0.97 per cent. the broader indices saw the BSE100, BSE200 and BSE500 gain 1.23 per cent, 1.01 per cent and 0.83 per cent respectively.

Oil's well The top sectoral gainer was BSEOIL&GAS up 3.48 per cent followed by BSEBANKEX 3.46 per cent and BSEMETAL 2.10 per cent. The top loser was BSEHEALTHCARE down 3.55 per cent followed by BSEPOWER 1.8 per cent and BSECONDUR 1.40 per cent. In individual stocks the top gainer was ICICI Bank up 9.06 per cent followed by Asian Paint 7.44 per cent and Hind Petro 7.31 per cent. The top loser was Sun Pharma down 9.94 per cent followed by Ambuja Cement 9.02 per cent and Dr Reddy 5.78 per cent. Dow Jones gained 568.66 points or 2.29 per cent to close at 24,831.17 points. The Indian Rupee was under pressure and lost 47 paisa or 0.70 per cent to close at Rs 67.33 to the dollar.

Chinese State Councillor Wang Yi meets Iranian Foreign Minister M Javad Zarif. Pic/AP/PTI
Chinese State Councillor Wang Yi meets Iranian Foreign Minister M Javad Zarif. Pic/AP/PTI

The race
In primary market news, the 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 crore and an offer for sale of 2 crore 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. The present board at Fortis Hospitals has selected the bid from Burman-Munjal for the company. The board is already under pressure for having first negotiated with Manipal for the sale who had revised the bid on more than one occasion. This time, the shareholders have to vote on the issue. The voting could go against the board. Secondly, nothing prevents the unsuccessful bidder from mounting an open offer to acquire shares from the shareholders and the same becoming a hostile bid subsequently. It is very early days for Fortis and the likely suitors of this company. The race for the hospital chain is far from over.

Tender offer
PC Jeweller preponed its board meeting to announce a buyback through the tender offer. The company would be buying 121.14 lakh shares constituting 3.07 per cent 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 per cent of the shares would not be participating in the tender offer. These measures to shore up the share price will be damaging to the company in the long term. Stay away from controversial shares.

Karnataka calling
Elections to Karnataka state assembly were held on Saturday, May 12. Exit polls by seven different agencies predicted a close call with just one of them calling in favour of BJP. Either way, with such a close verdict expected markets would be super volatile when they resume trading on Monday. This would extend into Tuesday when results for the polls are announced. The markets rose on Friday on expectations that the BJP would make it in Karnataka. Any adverse result could see markets correcting. If results are on expected lines, markets would have a sharp rally before profit taking would set in.

The indices
This is the fifth month in the current calendar year. With last week's rise, the benchmark indices are a mere 2.5 per cent and 3.5 per cent negative from the highs of the year made on January 29. If one were to consider on a year to date mode, BSESENSEX is up 4.16 per cent while NIFTY is up 2.55 per cent. Considering the headwinds of rising crude prices, depreciating rupee and global uncertainty about Iran and US-China relations, we seem to have done reasonably well. Use any sharp dips to buy into the market.

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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