Investment Advisor, Ashish Chugh - The focus of the budget has been to boost consumption coupled with keeping inflation under control. This being an election year, some populist measures were expected – the loan waiver scheme for farmers was a measure which the markets were expecting, this may not be good economics though. The reduction in Excise Duty on several sectors/ products will give a boost to consumption. The positive surprise came from the change in Tax Slabs in respect of Personal Income Tax.
However, increase in Short Term Capital Gains Tax from 10% to 15% has come in as a negative surprise, which probably the markets were not prepared for. We believe this was a move which the finance minister could have avoided since the move can dent the market sentiment and may not lead to substantial increase in collections for the government. Moreover, the move to allow STT being allowed as expenditure may not be good news for arbitrageurs and brokerages who were earlier allowed to offset STT against their tax liability. The sectors which would benefit – Healthcare, Hotels and Pharma.
Healthcare – Apollo Hospital, Fortis Healthcare and Kovai Medicare
Hotels – Indian Hotels, and Kamat Hotels
Pharma – Aurobindo Pharma, Natco Pharma
He believe Long Term investment decisions need not be a knee jerk reaction to the budget recommendations. Investment approach should be being proactive rather than being reactive. Investors can choose to wait for markets to stabilize before investing.
Anil Manghnani of Modern Shares & Stockbrokers - The budget is a populas one. However, with markets already in weak position, there was no reason for the FM to touch the STCG. Rest of the budget is good and in line with expectations, he said.
He further said that Pharma will be a sector to watch out for, as it is already a beaten down sector and there is no reason for further downfall in this sector. Also, the budget is favourable to this sector as the FM has cut the customs duty on life saving drugs from 10% to 5%. Another sector to watch out for is Power as there is nothing negative for this sector and is an aggressive one, he added.
Satish Kannav of Arihant Capital - Stock markets will be negatively impacted by the budget but the economy will have positive impact with the loan waiver and increase in the exemption limit.
The budget will not propel growth to 9% but will be maintained at 8.5%. He is bullish on auto and FMCG frontliners. He likes Tata Motors, Ashok Leyland, Maruti. FMCG stocks like ITC and HUL also look good.
R S Iyer of K R Choksey Securities - According to him budget will give good support to market in long run. Short Term Capital Gains Tax (STCG) increase was negative but people will digest this news in some days.
Corporate tax which remained unchanged which had a negative impact on market. He is bullish on Apollo Hospital and also positive on Education sector.
Manish Bhatt of Prabhudas Lilladher - The budget is good. It is beneficial for sectors like Agriculture and infrastructure; even fertilizer stocks will be beneficial.
The short term capital gain tax which has been raised from 10% to 15% is not wrong according to Bhat.
V K Sharma of Anagram Stock Broking - Capital market could have been spared by the additional 5% tax; this was not expected in the Budget. Reduction in tax for the common man is good for an election bound government. This will improve the purchasing power and there could be increase in sale of white goods.
Education is one sector that he is bullish on. He is also bullish water purification company ION Exchange. But overall the budget does not have power to guide the markets overall there are still concerns from global factors.
Technical analyst, Rajat K Bose advised to buy Jain Irrigation. He also advised to buy tractors and tiller stocks like VST Tillers and Punjab Tractors. Amongst the fertiliser stocks like Nagarjuna Fertilisers and also buy Hero Honda.
The strategy would be to buy at lower levels as the increase in the short term capital gains tax impact could be negative. However for investments its not really bad. Manufacturers have been given a boost by reducing excise. Also the tax regime is stable though the increase in the short term capital gains tax could be a negative.
Source: Moneycontrol.com
Friday, February 29, 2008
Next 4-6 months to be difficult for most Markets
Shane Oliver, Head Investment Strategy of AMP Capital Investors said that he expects most markets to retest January lows. However, he added that though markets are in a bearish phase; it may not last for long. Oliver told CNBC-TV 18 that the current inflation driven by high oil and food prices. He estimates that the next 4-6 months would be a difficult time in the financial markets. Asia would benefit from the easing monetary policy around the world, he said. India’s exposure to the US is low as compared to the other Asian countries, he said, Oliver feels that India shows good growth opportunities. Indian markets would see positive trend in H2CY08.
Excerpts of CNBC-TV18’s exclusive interview with Shane Oliver:
Q: What’s your sense? Will global markets go back and retest January lows or do you think the worst is behind us?
A: Currently it’s going to be a bit of a rebound in the markets. I guess basically investors around the world have become too bearish too quickly and so we are due for a bit of a bounce. We seem to be saying that at the moment, it’s not overly strong moment, it could get on for a little bit longer. But I would think that, before we get to the middle of the year, we will see a retest of January lows.
Basically, I think that the flow of data coming out of the US would get worse before it gets better even though the Fed is cutting rate that will help, maybe later this year. But in the meantime, the poor economic data coming out of the US ongoing promising credit markets, I think will result in a retest of the January lows in most markets.
Q: What do you think is happening with most equity markets right now? They seem extremely coupled on the way down. Is that the trend you think that will remain for the next few months?
A: I think basically we are in a bear market. Most of the markets around the world have had falls of 20% or more. Of course they have recovered some of their losses over the last month or so, but I think the broad trend now is done, we are in a bear markets. The bull market which was underway from round about 2003 to the high last year, is over and we are no longer saying that that steady pattern of rising high and rising lows which characterised as a bull market.
By the same token now, I don’t think this bear market will be long and extended one. My feeling is that, because of quick action by the Fed, the fact that most emerging countries are in pretty good shape and I guess Europe is also in reasonably good shape, suggest to me that the economic downturn we are seeing this time around will be relatively short and mild. Also, through the second half of the year conditions should start to improve. But for now, unfortunately we still are in a bear market.
Q: What do you make of this kind of policy action which is coming in, particularly given the expectations of more serial rate cuts going forward juxtaposed against rising inflation and high commodity prices across the board?
A: It’s certainly a high risk situation. The normal cyclical player, I guess this is what Ben Bernanke and other Fed governors are playing on, is that, as economic growth slows, that eventually takes the pressure off inflation. So the fact that inflation figure in the US, and around the world, is still elevated at the moment doesn’t disprove that phase. My feeling is that by the time we get at the end of the year, inflation will have slowed.
The main risk to all of that is that a lot of the inflation we are seeing at the moment is been driven by high oil prices and high food prices. The risk is that those two factors remain high and therefore, we don’t see the normal fall in inflation. So that’s certainly a risk and it’s going to result, I think, in a fairly rough ride over the next few months because we have got the combination of factors, slowing economic growth, but at the same time bad inflation numbers coming through.
A lot of investors will be questioning whether the Fed is doing the right thing? At the end of the day, I do think the Fed is doing the right thing. I think slower growth will rather take pressure off inflation, but I do think that the next four-six months we will see a fairly rough time in most financial markets.
Q: It comes with a lot of risk aversion as well towards the equity markets. If your case is that we go back to test the lows we had in January, how do you think money will trade that. Will that be an opportunity to start buying into equity again or not that soon you think?
A: I think that would be an opportunity to buy into equity markets. So I would tend to think that the next six months are going to throw up great opportunities to buy into markets because I don’t think this will be a longdrawn bear market or economic downturn.
So consequently, as valuation improves, and it’s already looking quite attractive compared to the situation three-four months ago, then the next few months will provide a good buying opportunity, particularly I think in Asia as it will benefit from an environment where easy monetary conditions around the world. Then, as global growth starts to pickup again, maybe towards the end of this year but certainly in 2009, then the Asian share markets and economies will be key beneficiaries of that. Also, as liquidity conditions are becoming easier and easier, I think the Asian markets will take off again.
Q: What’s the prognosis on India from here?
A: Right now, at the current juncture, the India share market has had a decent correction. It’s off about 15% or so from its high last year. But it hasn’t come down as much as other Asian markets and I guess the main thing play against Indian shares at the moment is the valuations are still relatively unattractive on some of measures I look at. The Indian share market is still the most expensive market in Asia outside perhaps of China’s A-shares.
The big thing going in favour of the India though is that the economy is in reasonably good shape. There is not much exposure to the US as compared to the rest of Asia, Indians export exposure to the US economy is fairly low compared to many other Asian countries. On top of all of that, India has one of the brightest prospects in terms of an earnings growth.
So when you try and weigh up all those factors, my feeling is that investors need to be, at least index weight on India. I wouldn’t necessarily be overweight, but I don’t think this is strong case to underweight either, given the stronger earnings outlook.
So overall, the Indian share market will do well, it will probably be dragged lower again over the next four months along with other global markets, but it should have a good rebound through the second half of the year.
Source: Moneycontrol.com
Excerpts of CNBC-TV18’s exclusive interview with Shane Oliver:
Q: What’s your sense? Will global markets go back and retest January lows or do you think the worst is behind us?
A: Currently it’s going to be a bit of a rebound in the markets. I guess basically investors around the world have become too bearish too quickly and so we are due for a bit of a bounce. We seem to be saying that at the moment, it’s not overly strong moment, it could get on for a little bit longer. But I would think that, before we get to the middle of the year, we will see a retest of January lows.
Basically, I think that the flow of data coming out of the US would get worse before it gets better even though the Fed is cutting rate that will help, maybe later this year. But in the meantime, the poor economic data coming out of the US ongoing promising credit markets, I think will result in a retest of the January lows in most markets.
Q: What do you think is happening with most equity markets right now? They seem extremely coupled on the way down. Is that the trend you think that will remain for the next few months?
A: I think basically we are in a bear market. Most of the markets around the world have had falls of 20% or more. Of course they have recovered some of their losses over the last month or so, but I think the broad trend now is done, we are in a bear markets. The bull market which was underway from round about 2003 to the high last year, is over and we are no longer saying that that steady pattern of rising high and rising lows which characterised as a bull market.
By the same token now, I don’t think this bear market will be long and extended one. My feeling is that, because of quick action by the Fed, the fact that most emerging countries are in pretty good shape and I guess Europe is also in reasonably good shape, suggest to me that the economic downturn we are seeing this time around will be relatively short and mild. Also, through the second half of the year conditions should start to improve. But for now, unfortunately we still are in a bear market.
Q: What do you make of this kind of policy action which is coming in, particularly given the expectations of more serial rate cuts going forward juxtaposed against rising inflation and high commodity prices across the board?
A: It’s certainly a high risk situation. The normal cyclical player, I guess this is what Ben Bernanke and other Fed governors are playing on, is that, as economic growth slows, that eventually takes the pressure off inflation. So the fact that inflation figure in the US, and around the world, is still elevated at the moment doesn’t disprove that phase. My feeling is that by the time we get at the end of the year, inflation will have slowed.
The main risk to all of that is that a lot of the inflation we are seeing at the moment is been driven by high oil prices and high food prices. The risk is that those two factors remain high and therefore, we don’t see the normal fall in inflation. So that’s certainly a risk and it’s going to result, I think, in a fairly rough ride over the next few months because we have got the combination of factors, slowing economic growth, but at the same time bad inflation numbers coming through.
A lot of investors will be questioning whether the Fed is doing the right thing? At the end of the day, I do think the Fed is doing the right thing. I think slower growth will rather take pressure off inflation, but I do think that the next four-six months we will see a fairly rough time in most financial markets.
Q: It comes with a lot of risk aversion as well towards the equity markets. If your case is that we go back to test the lows we had in January, how do you think money will trade that. Will that be an opportunity to start buying into equity again or not that soon you think?
A: I think that would be an opportunity to buy into equity markets. So I would tend to think that the next six months are going to throw up great opportunities to buy into markets because I don’t think this will be a longdrawn bear market or economic downturn.
So consequently, as valuation improves, and it’s already looking quite attractive compared to the situation three-four months ago, then the next few months will provide a good buying opportunity, particularly I think in Asia as it will benefit from an environment where easy monetary conditions around the world. Then, as global growth starts to pickup again, maybe towards the end of this year but certainly in 2009, then the Asian share markets and economies will be key beneficiaries of that. Also, as liquidity conditions are becoming easier and easier, I think the Asian markets will take off again.
Q: What’s the prognosis on India from here?
A: Right now, at the current juncture, the India share market has had a decent correction. It’s off about 15% or so from its high last year. But it hasn’t come down as much as other Asian markets and I guess the main thing play against Indian shares at the moment is the valuations are still relatively unattractive on some of measures I look at. The Indian share market is still the most expensive market in Asia outside perhaps of China’s A-shares.
The big thing going in favour of the India though is that the economy is in reasonably good shape. There is not much exposure to the US as compared to the rest of Asia, Indians export exposure to the US economy is fairly low compared to many other Asian countries. On top of all of that, India has one of the brightest prospects in terms of an earnings growth.
So when you try and weigh up all those factors, my feeling is that investors need to be, at least index weight on India. I wouldn’t necessarily be overweight, but I don’t think this is strong case to underweight either, given the stronger earnings outlook.
So overall, the Indian share market will do well, it will probably be dragged lower again over the next four months along with other global markets, but it should have a good rebound through the second half of the year.
Source: Moneycontrol.com
Thursday, February 28, 2008
Markets end in green amid recovery in late trade
It was a very quiet day for the markets as not much excitement was witnessed through out the day despite it being the last day of F&O expiry. The markets traded in red territory for most part of the day with marginal losses before pulling back sharply in late trade on account of some short covering and ended flat but in green.
It was a bad day for the banking, realty and energy stocks, broader markets also traded on weak note through the day giving negative breadth to markets. However, phrmaceutical, metal, capital good and auto stocks performed relatively well. On the volume front, it was quite muted, cash markets performance was extremely abysmal.
Sensex ended down 1.51 points or 0.01% at 17824.48, and the Nifty closed up 16.70 points or 0.32% at 5285.10. About 1398 shares advanced, 1566 shares declined, and 76 shares were unchanged. BSE midcap index ended down 0.15% at 7711.76 and smallcap index closed down 0.06% at 9668.16.
BSE auto index ended up 1.18% at 4829.86. Punjab Tractors, Hero Honda and Bajaj Auto stocks were the leading gainers in this space.
BSE capital goods index closed up 0.56% at 16598.88. Astra Mocrowave, Alfa Laval, BEML and BHEL were among major gainers.
BSE healthcare index closed up 1.70% at 3925.75. Sun Pharma, Dr Reddy's Lab and Biocon and Cipla were the top gainers in pharma space.
BSE metal index ended up 2% at 16972.01. Nalco, Hindalco and Sterlite Industries were the top fliers.
BSE power index closed up 3748.11. In the power space, the star performers were Power Grid, BHEL and Areva T&D.
BSE bankex closed down 0.81% at 10073.91. Union Bank, Bank of baroda and PNB were the top losers in this space.
BSE IT index was down 0.14% at 3967.40. Financial Tech, Patni Computers and i-Flex Solution were the top losers.
BSE oil & gas index closed down 0.84% at 11164.87. Reliance, Petronet LNG and HPCL were the top losers.
BSE realty index ended down 1.47% at 9833.01. In the realty sector, the wors performers were Mahindra Life, Purvankara Projects and DLF.
Markets trading quiet on the last day of F&O expiry
The markets have lost some more points and are trading stable. It seems to be in consolidation phase. Most of the BSE benchmark indices are still in red barring pharmaceutical, metal and auto index. Cues from the Europe is not very encouraging, the markets there are trading mixed.
Banking, oil & gas, realty, IT and consumer durable stocks have given up further. However, pharma and metal stocks are holding their gains. Broader markets have also been performing lacklustre giving negative breadth to the markets. On NSE, advance decline ratio is 3:5.
At 14.50 hrs IST, the Sensex is down 110.34 points or 0.62% at 17715.65, and the Nifty down 29.20 points or 0.55% at 5239.20. About 1222 shares have advanced, 1736 shares declined, and 82 shares are unchanged.
Tulsi Extrusion, Reliance Capital, Manjushree, Reliance Industries, and Reliance Natural are some of the most active stocks today.
On Nifty, major gaiers are Tata Comm, Sun Pharma and BPCL. However, Ambuja Cements, PNB and HCL Tech are among the losers list.
Banking stocks are trading weak since morning today. Major losers in the banking space are Union bank, Kotak Mahindra Bank, IOB and bank Of Baroda.
Mkts still in red: Bank, cement stocks slip; metals up
It has been very quiet session so far as not much excitement is seen since morning. The markets are still trading flat with moderate losses. However, it has gained some points and recovered from day's low. Most of the BSE key indices are trading in red barring pharmaceutical and metal index. Banking, oil & gas and IT stocks have been among the most sundued counters.
Market breadth has been negative since morning today with nearly 500 stocks on the advancing side and over 700 stocks on the downside on NSE. It has been quite muted performance on the volume front.
At 13.51 hrs IST, the Sensex is down 73.91 points or 0.41% at 17752.08, and the Nifty down 18.90 points or 0.36% at 5249.50.
About 1246 shares have advanced, 1714 shares declined, and 79 shares are unchanged.
Some of the key takeaways from the economic survey:
# Maintaining 9% Rate Challenging;Double-Digit Growth Tougher Still
# A decleration was expected this year
# Fundamentals 'Inspire Confidence'; invstment climate 'Full Of Optimism'
# Revenue Deficit unlikely to be Zero next year
# Fiscal Deficit target of 3%~will be met
# Deficit targets for this year to be achieved
# Inflation seen lower at 4.1% this year Vs 5.6% last Year
# 100% FDI Home Appliances, Luxury Brand Chains
# 51% FDI In Rural-Health, Weather-Cover Insurance
# 49% FDI In Other Insurance Sectors
# 100% FDI In New Rural Agricultural Banks
Tulsi Extrusion, Reliance Capital, Manjushree, Reliance Industries, and Reliance Natural are some of the most active stocks today.
On Nifty, major gaiers are Tata Comm, Sun Pharma and BPCL. However, Ambuja Cements, PNB and HCL Tech are among the losers list.
Banking stocks are trading weak since morning today. Major losers in the banking space are Union bank, Kotak Mahindra Bank, IOB and bank Of Baroda.
Mkts recover from day's low; bank, IT stocks down
The markets continue to trade quiet and lacklustre with marginal losses. However, Sensex and Nifty has recovered from it's lows on the back of some positive news from the economic survey. Most of the BSE key indices are trading in red barring pharmaceutical and metal index. Banking, oil & gas and IT stocks have been among the most sundued counters. Market breadth has been negative since morning today with nearly 500 stocks on the advancing side and over 700 stocks on the downside on NSE. It has been quite muted performance on the volume front.
At 12.40 hrs IST, the Sensex is down 16.25 points or 0.09% at 17809.74, and the Nifty up 6.15 points or 0.12% at 5274.55. About 1282 shares have advanced, 1660 shares declined, and 97 shares are unchanged.
Top gainers on the Sensex are Hindalco at Rs 202.50 up 3.34%, Cipla at Rs 205.65 up 2.03% and Satyam at Rs 442.45 up 1.22%.
Top losers on the Sensex are Ambuja Cements at Rs 119.90 down 2.44%, SBI at Rs 2,040 down 2.04% and ACC at Rs 803.75 down 1.51%.
Some key points from Economic survey:
* Maintaining 9% Rate Challenging;Double-Digit Growth Tougher Still
* A decleration was expected this year
* Fundamentals 'Inspire Confidence'; invstment climate 'Full Of Optimism'
* Revenue Deficit unlikely to be Zero next year
* Fiscal Deficit target of 3%~will be met
* Deficit targets for this year to be achieved
* Inflation seen lower at 4.1% this year Vs 5.6% last Year
* 100% FDI Home Appliances, Luxury Brand Chains
* 51% FDI In Rural-Health, Weather-Cover Insurance
* 49% FDI In Other Insurance Sectors
* 100% FDI In New Rural Agricultural Banks
Mkt trades lacklustre: Metal up; IT, cement down
The markets are lacklustre and are trading marginally in red. The cues from Asia were mixed and not very encouraging cues from US. Wall St ended flat after choppy session; Dow was up 9 points. Metal stocks are witnessing some buying today followed by select bank and FMCG stocks. Howeevr trading weak are IT, cement and select energy stocks.
After opening flat Nifty and Sensex showed some recovery and moved in green but slipped again to trade marginally in red. The broader markets were also quiet and the breadth is neutral.
At 11.50 hrs IST, the Sensex is down 90.52 points or 0.51% at 17735.47, and the Nifty down 28.95 points or 0.55% at 5239.45. About 1156 shares have advanced, 1786 shares declined, and 96 shares are unchanged.
Hindalco, Grasim, Cipla, Nalco, Tata Communication are among the top gainers followed by HDFC, HDFC Bank, M&M, TCS, Idea Cellular, Rel Energy, Suzlon and SAIL.
Ambuja, ACC, ABB and Reliance are the top laggards followed by BHEL, Unitech, Maruti, L&T, Ranbaxy, Infosys, Tata Power, Reliance Communication .
Rupee opened at Rs 39.73 per dollar and is trading at 39.815.
Asian markets were trading mixed . Hong Kong's Hang Seng moved in the green, Japan's Nikkei slipped 1.48%, Singapore's Straits Times was down 0.95%.However, South Korea's Seoul Composite was flat at 1,721.76.
Mkt trades flat: HDFC, Rel, HDFC Bank in green
The markets opened flat on the back of mixed cues from Asia nad some lacklustre cues from US. Wall St ended flat after choppy session; Dow was up 9 points. After opening flat Nifty and Sensex showed some recovery and moved in green but slipped again to trade absolutely flat. The broader markets were also quiet and the breadth is inconclusive or neutral.
At 09.58 hrs IST, the Sensex was up 46.13 points or 0.26% at 17872.12, and the Nifty down 2.05 points or 0.04% at 5266.35.
About 1541 shares have advanced, 1395 shares declined, and 102 shares are unchanged.
BHEL, Unitech, Maruti, L&T, Ranbaxy, Infosys, Tata Power, Reliance Communication were among the top laggards
HDFC, Rel, HDFC Bank, M&M, TCS, Idea Cellular, Rel Energy, Suzlon, RPL, SAIL were in green.
Even Hindalco, Nalco has made big move and were up nearly 4%.
Rupee opened at Rs 39.73 per dollar and is trading at 39.74.
Asian markets were trading mixed . Hong Kong's Hang Seng moved in the green, Japan's Nikkei slipped 1.48%, Singapore's Straits Times was down 0.95%.However, South Korea's Seoul Composite was flat at 1,721.76.
Market cues:
* NSE F&O Feb series expiry today
* NSE F&O Open Int up Rs 596 cr at Rs 82,112 crore
* Feb 26, Source: SEBI
* FIIs net buy $21.2 m in equity
* MFs net buy Rs 525.9 cr in equity
F&O cues:
* Futures Open Interest up by Rs 265 crore and Options Open Interest up by Rs 331 crore
* Nifty Feb Futures shed 61 lakh shares in Open Interest
* Nifty Mar Futures add 72 lakh shares in Open Interest
* Nifty March at 30-point discount, Feb at 10-point discount
* Nifty Open Interest Put-Call ratio at 1.04 Vs 1.01
* Nifty Puts add 4.9 lakh shares in Open Interest
* Nifty Calls add 0.9 lakh shares in Open Interest
* Nifty 5000 Put adds 1.5 lakh shares in Open Interest
* Nifty 5400 Put adds 1.1 lakh shares in Open Interest
* Nifty 5300 Put adds 1.1 lakh shares in Open Interest
* Nifty 5500 Call adds 1.5 lakh shares in Open Interest
Source: Moneycontrol.com
It was a bad day for the banking, realty and energy stocks, broader markets also traded on weak note through the day giving negative breadth to markets. However, phrmaceutical, metal, capital good and auto stocks performed relatively well. On the volume front, it was quite muted, cash markets performance was extremely abysmal.
Sensex ended down 1.51 points or 0.01% at 17824.48, and the Nifty closed up 16.70 points or 0.32% at 5285.10. About 1398 shares advanced, 1566 shares declined, and 76 shares were unchanged. BSE midcap index ended down 0.15% at 7711.76 and smallcap index closed down 0.06% at 9668.16.
BSE auto index ended up 1.18% at 4829.86. Punjab Tractors, Hero Honda and Bajaj Auto stocks were the leading gainers in this space.
BSE capital goods index closed up 0.56% at 16598.88. Astra Mocrowave, Alfa Laval, BEML and BHEL were among major gainers.
BSE healthcare index closed up 1.70% at 3925.75. Sun Pharma, Dr Reddy's Lab and Biocon and Cipla were the top gainers in pharma space.
BSE metal index ended up 2% at 16972.01. Nalco, Hindalco and Sterlite Industries were the top fliers.
BSE power index closed up 3748.11. In the power space, the star performers were Power Grid, BHEL and Areva T&D.
BSE bankex closed down 0.81% at 10073.91. Union Bank, Bank of baroda and PNB were the top losers in this space.
BSE IT index was down 0.14% at 3967.40. Financial Tech, Patni Computers and i-Flex Solution were the top losers.
BSE oil & gas index closed down 0.84% at 11164.87. Reliance, Petronet LNG and HPCL were the top losers.
BSE realty index ended down 1.47% at 9833.01. In the realty sector, the wors performers were Mahindra Life, Purvankara Projects and DLF.
Markets trading quiet on the last day of F&O expiry
The markets have lost some more points and are trading stable. It seems to be in consolidation phase. Most of the BSE benchmark indices are still in red barring pharmaceutical, metal and auto index. Cues from the Europe is not very encouraging, the markets there are trading mixed.
Banking, oil & gas, realty, IT and consumer durable stocks have given up further. However, pharma and metal stocks are holding their gains. Broader markets have also been performing lacklustre giving negative breadth to the markets. On NSE, advance decline ratio is 3:5.
At 14.50 hrs IST, the Sensex is down 110.34 points or 0.62% at 17715.65, and the Nifty down 29.20 points or 0.55% at 5239.20. About 1222 shares have advanced, 1736 shares declined, and 82 shares are unchanged.
Tulsi Extrusion, Reliance Capital, Manjushree, Reliance Industries, and Reliance Natural are some of the most active stocks today.
On Nifty, major gaiers are Tata Comm, Sun Pharma and BPCL. However, Ambuja Cements, PNB and HCL Tech are among the losers list.
Banking stocks are trading weak since morning today. Major losers in the banking space are Union bank, Kotak Mahindra Bank, IOB and bank Of Baroda.
Mkts still in red: Bank, cement stocks slip; metals up
It has been very quiet session so far as not much excitement is seen since morning. The markets are still trading flat with moderate losses. However, it has gained some points and recovered from day's low. Most of the BSE key indices are trading in red barring pharmaceutical and metal index. Banking, oil & gas and IT stocks have been among the most sundued counters.
Market breadth has been negative since morning today with nearly 500 stocks on the advancing side and over 700 stocks on the downside on NSE. It has been quite muted performance on the volume front.
At 13.51 hrs IST, the Sensex is down 73.91 points or 0.41% at 17752.08, and the Nifty down 18.90 points or 0.36% at 5249.50.
About 1246 shares have advanced, 1714 shares declined, and 79 shares are unchanged.
Some of the key takeaways from the economic survey:
# Maintaining 9% Rate Challenging;Double-Digit Growth Tougher Still
# A decleration was expected this year
# Fundamentals 'Inspire Confidence'; invstment climate 'Full Of Optimism'
# Revenue Deficit unlikely to be Zero next year
# Fiscal Deficit target of 3%~will be met
# Deficit targets for this year to be achieved
# Inflation seen lower at 4.1% this year Vs 5.6% last Year
# 100% FDI Home Appliances, Luxury Brand Chains
# 51% FDI In Rural-Health, Weather-Cover Insurance
# 49% FDI In Other Insurance Sectors
# 100% FDI In New Rural Agricultural Banks
Tulsi Extrusion, Reliance Capital, Manjushree, Reliance Industries, and Reliance Natural are some of the most active stocks today.
On Nifty, major gaiers are Tata Comm, Sun Pharma and BPCL. However, Ambuja Cements, PNB and HCL Tech are among the losers list.
Banking stocks are trading weak since morning today. Major losers in the banking space are Union bank, Kotak Mahindra Bank, IOB and bank Of Baroda.
Mkts recover from day's low; bank, IT stocks down
The markets continue to trade quiet and lacklustre with marginal losses. However, Sensex and Nifty has recovered from it's lows on the back of some positive news from the economic survey. Most of the BSE key indices are trading in red barring pharmaceutical and metal index. Banking, oil & gas and IT stocks have been among the most sundued counters. Market breadth has been negative since morning today with nearly 500 stocks on the advancing side and over 700 stocks on the downside on NSE. It has been quite muted performance on the volume front.
At 12.40 hrs IST, the Sensex is down 16.25 points or 0.09% at 17809.74, and the Nifty up 6.15 points or 0.12% at 5274.55. About 1282 shares have advanced, 1660 shares declined, and 97 shares are unchanged.
Top gainers on the Sensex are Hindalco at Rs 202.50 up 3.34%, Cipla at Rs 205.65 up 2.03% and Satyam at Rs 442.45 up 1.22%.
Top losers on the Sensex are Ambuja Cements at Rs 119.90 down 2.44%, SBI at Rs 2,040 down 2.04% and ACC at Rs 803.75 down 1.51%.
Some key points from Economic survey:
* Maintaining 9% Rate Challenging;Double-Digit Growth Tougher Still
* A decleration was expected this year
* Fundamentals 'Inspire Confidence'; invstment climate 'Full Of Optimism'
* Revenue Deficit unlikely to be Zero next year
* Fiscal Deficit target of 3%~will be met
* Deficit targets for this year to be achieved
* Inflation seen lower at 4.1% this year Vs 5.6% last Year
* 100% FDI Home Appliances, Luxury Brand Chains
* 51% FDI In Rural-Health, Weather-Cover Insurance
* 49% FDI In Other Insurance Sectors
* 100% FDI In New Rural Agricultural Banks
Mkt trades lacklustre: Metal up; IT, cement down
The markets are lacklustre and are trading marginally in red. The cues from Asia were mixed and not very encouraging cues from US. Wall St ended flat after choppy session; Dow was up 9 points. Metal stocks are witnessing some buying today followed by select bank and FMCG stocks. Howeevr trading weak are IT, cement and select energy stocks.
After opening flat Nifty and Sensex showed some recovery and moved in green but slipped again to trade marginally in red. The broader markets were also quiet and the breadth is neutral.
At 11.50 hrs IST, the Sensex is down 90.52 points or 0.51% at 17735.47, and the Nifty down 28.95 points or 0.55% at 5239.45. About 1156 shares have advanced, 1786 shares declined, and 96 shares are unchanged.
Hindalco, Grasim, Cipla, Nalco, Tata Communication are among the top gainers followed by HDFC, HDFC Bank, M&M, TCS, Idea Cellular, Rel Energy, Suzlon and SAIL.
Ambuja, ACC, ABB and Reliance are the top laggards followed by BHEL, Unitech, Maruti, L&T, Ranbaxy, Infosys, Tata Power, Reliance Communication .
Rupee opened at Rs 39.73 per dollar and is trading at 39.815.
Asian markets were trading mixed . Hong Kong's Hang Seng moved in the green, Japan's Nikkei slipped 1.48%, Singapore's Straits Times was down 0.95%.However, South Korea's Seoul Composite was flat at 1,721.76.
Mkt trades flat: HDFC, Rel, HDFC Bank in green
The markets opened flat on the back of mixed cues from Asia nad some lacklustre cues from US. Wall St ended flat after choppy session; Dow was up 9 points. After opening flat Nifty and Sensex showed some recovery and moved in green but slipped again to trade absolutely flat. The broader markets were also quiet and the breadth is inconclusive or neutral.
At 09.58 hrs IST, the Sensex was up 46.13 points or 0.26% at 17872.12, and the Nifty down 2.05 points or 0.04% at 5266.35.
About 1541 shares have advanced, 1395 shares declined, and 102 shares are unchanged.
BHEL, Unitech, Maruti, L&T, Ranbaxy, Infosys, Tata Power, Reliance Communication were among the top laggards
HDFC, Rel, HDFC Bank, M&M, TCS, Idea Cellular, Rel Energy, Suzlon, RPL, SAIL were in green.
Even Hindalco, Nalco has made big move and were up nearly 4%.
Rupee opened at Rs 39.73 per dollar and is trading at 39.74.
Asian markets were trading mixed . Hong Kong's Hang Seng moved in the green, Japan's Nikkei slipped 1.48%, Singapore's Straits Times was down 0.95%.However, South Korea's Seoul Composite was flat at 1,721.76.
Market cues:
* NSE F&O Feb series expiry today
* NSE F&O Open Int up Rs 596 cr at Rs 82,112 crore
* Feb 26, Source: SEBI
* FIIs net buy $21.2 m in equity
* MFs net buy Rs 525.9 cr in equity
F&O cues:
* Futures Open Interest up by Rs 265 crore and Options Open Interest up by Rs 331 crore
* Nifty Feb Futures shed 61 lakh shares in Open Interest
* Nifty Mar Futures add 72 lakh shares in Open Interest
* Nifty March at 30-point discount, Feb at 10-point discount
* Nifty Open Interest Put-Call ratio at 1.04 Vs 1.01
* Nifty Puts add 4.9 lakh shares in Open Interest
* Nifty Calls add 0.9 lakh shares in Open Interest
* Nifty 5000 Put adds 1.5 lakh shares in Open Interest
* Nifty 5400 Put adds 1.1 lakh shares in Open Interest
* Nifty 5300 Put adds 1.1 lakh shares in Open Interest
* Nifty 5500 Call adds 1.5 lakh shares in Open Interest
Source: Moneycontrol.com
Next 4-6 months to be difficult for most mkts
Shane Oliver, Head Investment Strategy of AMP Capital Investors said that he expects most markets to retest January lows. However, he added that though markets are in a bearish phase; it may not last for long. Oliver told CNBC-TV 18 that the current inflation driven by high oil and food prices. He estimates that the next 4-6 months would be a difficult time in the financial markets. Asia would benefit from the easing monetary policy around the world, he said. India’s exposure to the US is low as compared to the other Asian countries, he said, Oliver feels that India shows good growth opportunities. Indian markets would see positive trend in H2CY08.
Excerpts of CNBC-TV18’s exclusive interview with Shane Oliver:
Q: What’s your sense? Will global markets go back and retest January lows or do you think the worst is behind us?
A: Currently it’s going to be a bit of a rebound in the markets. I guess basically investors around the world have become too bearish too quickly and so we are due for a bit of a bounce. We seem to be saying that at the moment, it’s not overly strong moment, it could get on for a little bit longer. But I would think that, before we get to the middle of the year, we will see a retest of January lows.
Basically, I think that the flow of data coming out of the US would get worse before it gets better even though the Fed is cutting rate that will help, maybe later this year. But in the meantime, the poor economic data coming out of the US ongoing promising credit markets, I think will result in a retest of the January lows in most markets.
Q: What do you think is happening with most equity markets right now? They seem extremely coupled on the way down. Is that the trend you think that will remain for the next few months?
A: I think basically we are in a bear market. Most of the markets around the world have had falls of 20% or more. Of course they have recovered some of their losses over the last month or so, but I think the broad trend now is done, we are in a bear markets. The bull market which was underway from round about 2003 to the high last year, is over and we are no longer saying that that steady pattern of rising high and rising lows which characterised as a bull market.
By the same token now, I don’t think this bear market will be long and extended one. My feeling is that, because of quick action by the Fed, the fact that most emerging countries are in pretty good shape and I guess Europe is also in reasonably good shape, suggest to me that the economic downturn we are seeing this time around will be relatively short and mild. Also, through the second half of the year conditions should start to improve. But for now, unfortunately we still are in a bear market.
Q: What do you make of this kind of policy action which is coming in, particularly given the expectations of more serial rate cuts going forward juxtaposed against rising inflation and high commodity prices across the board?
A: It’s certainly a high risk situation. The normal cyclical player, I guess this is what Ben Bernanke and other Fed governors are playing on, is that, as economic growth slows, that eventually takes the pressure off inflation. So the fact that inflation figure in the US, and around the world, is still elevated at the moment doesn’t disprove that phase. My feeling is that by the time we get at the end of the year, inflation will have slowed.
The main risk to all of that is that a lot of the inflation we are seeing at the moment is been driven by high oil prices and high food prices. The risk is that those two factors remain high and therefore, we don’t see the normal fall in inflation. So that’s certainly a risk and it’s going to result, I think, in a fairly rough ride over the next few months because we have got the combination of factors, slowing economic growth, but at the same time bad inflation numbers coming through.
A lot of investors will be questioning whether the Fed is doing the right thing? At the end of the day, I do think the Fed is doing the right thing. I think slower growth will rather take pressure off inflation, but I do think that the next four-six months we will see a fairly rough time in most financial markets.
Q: It comes with a lot of risk aversion as well towards the equity markets. If your case is that we go back to test the lows we had in January, how do you think money will trade that. Will that be an opportunity to start buying into equity again or not that soon you think?
A: I think that would be an opportunity to buy into equity markets. So I would tend to think that the next six months are going to throw up great opportunities to buy into markets because I don’t think this will be a longdrawn bear market or economic downturn.
So consequently, as valuation improves, and it’s already looking quite attractive compared to the situation three-four months ago, then the next few months will provide a good buying opportunity, particularly I think in Asia as it will benefit from an environment where easy monetary conditions around the world. Then, as global growth starts to pickup again, maybe towards the end of this year but certainly in 2009, then the Asian share markets and economies will be key beneficiaries of that. Also, as liquidity conditions are becoming easier and easier, I think the Asian markets will take off again.
Q: What’s the prognosis on India from here?
A: Right now, at the current juncture, the India share market has had a decent correction. It’s off about 15% or so from its high last year. But it hasn’t come down as much as other Asian markets and I guess the main thing play against Indian shares at the moment is the valuations are still relatively unattractive on some of measures I look at. The Indian share market is still the most expensive market in Asia outside perhaps of China’s A-shares.
The big thing going in favour of the India though is that the economy is in reasonably good shape. There is not much exposure to the US as compared to the rest of Asia, Indians export exposure to the US economy is fairly low compared to many other Asian countries. On top of all of that, India has one of the brightest prospects in terms of an earnings growth.
So when you try and weigh up all those factors, my feeling is that investors need to be, at least index weight on India. I wouldn’t necessarily be overweight, but I don’t think this is strong case to underweight either, given the stronger earnings outlook.
So overall, the Indian share market will do well, it will probably be dragged lower again over the next four months along with other global markets, but it should have a good rebound through the second half of the year
Source: Moneycontrol.com
Excerpts of CNBC-TV18’s exclusive interview with Shane Oliver:
Q: What’s your sense? Will global markets go back and retest January lows or do you think the worst is behind us?
A: Currently it’s going to be a bit of a rebound in the markets. I guess basically investors around the world have become too bearish too quickly and so we are due for a bit of a bounce. We seem to be saying that at the moment, it’s not overly strong moment, it could get on for a little bit longer. But I would think that, before we get to the middle of the year, we will see a retest of January lows.
Basically, I think that the flow of data coming out of the US would get worse before it gets better even though the Fed is cutting rate that will help, maybe later this year. But in the meantime, the poor economic data coming out of the US ongoing promising credit markets, I think will result in a retest of the January lows in most markets.
Q: What do you think is happening with most equity markets right now? They seem extremely coupled on the way down. Is that the trend you think that will remain for the next few months?
A: I think basically we are in a bear market. Most of the markets around the world have had falls of 20% or more. Of course they have recovered some of their losses over the last month or so, but I think the broad trend now is done, we are in a bear markets. The bull market which was underway from round about 2003 to the high last year, is over and we are no longer saying that that steady pattern of rising high and rising lows which characterised as a bull market.
By the same token now, I don’t think this bear market will be long and extended one. My feeling is that, because of quick action by the Fed, the fact that most emerging countries are in pretty good shape and I guess Europe is also in reasonably good shape, suggest to me that the economic downturn we are seeing this time around will be relatively short and mild. Also, through the second half of the year conditions should start to improve. But for now, unfortunately we still are in a bear market.
Q: What do you make of this kind of policy action which is coming in, particularly given the expectations of more serial rate cuts going forward juxtaposed against rising inflation and high commodity prices across the board?
A: It’s certainly a high risk situation. The normal cyclical player, I guess this is what Ben Bernanke and other Fed governors are playing on, is that, as economic growth slows, that eventually takes the pressure off inflation. So the fact that inflation figure in the US, and around the world, is still elevated at the moment doesn’t disprove that phase. My feeling is that by the time we get at the end of the year, inflation will have slowed.
The main risk to all of that is that a lot of the inflation we are seeing at the moment is been driven by high oil prices and high food prices. The risk is that those two factors remain high and therefore, we don’t see the normal fall in inflation. So that’s certainly a risk and it’s going to result, I think, in a fairly rough ride over the next few months because we have got the combination of factors, slowing economic growth, but at the same time bad inflation numbers coming through.
A lot of investors will be questioning whether the Fed is doing the right thing? At the end of the day, I do think the Fed is doing the right thing. I think slower growth will rather take pressure off inflation, but I do think that the next four-six months we will see a fairly rough time in most financial markets.
Q: It comes with a lot of risk aversion as well towards the equity markets. If your case is that we go back to test the lows we had in January, how do you think money will trade that. Will that be an opportunity to start buying into equity again or not that soon you think?
A: I think that would be an opportunity to buy into equity markets. So I would tend to think that the next six months are going to throw up great opportunities to buy into markets because I don’t think this will be a longdrawn bear market or economic downturn.
So consequently, as valuation improves, and it’s already looking quite attractive compared to the situation three-four months ago, then the next few months will provide a good buying opportunity, particularly I think in Asia as it will benefit from an environment where easy monetary conditions around the world. Then, as global growth starts to pickup again, maybe towards the end of this year but certainly in 2009, then the Asian share markets and economies will be key beneficiaries of that. Also, as liquidity conditions are becoming easier and easier, I think the Asian markets will take off again.
Q: What’s the prognosis on India from here?
A: Right now, at the current juncture, the India share market has had a decent correction. It’s off about 15% or so from its high last year. But it hasn’t come down as much as other Asian markets and I guess the main thing play against Indian shares at the moment is the valuations are still relatively unattractive on some of measures I look at. The Indian share market is still the most expensive market in Asia outside perhaps of China’s A-shares.
The big thing going in favour of the India though is that the economy is in reasonably good shape. There is not much exposure to the US as compared to the rest of Asia, Indians export exposure to the US economy is fairly low compared to many other Asian countries. On top of all of that, India has one of the brightest prospects in terms of an earnings growth.
So when you try and weigh up all those factors, my feeling is that investors need to be, at least index weight on India. I wouldn’t necessarily be overweight, but I don’t think this is strong case to underweight either, given the stronger earnings outlook.
So overall, the Indian share market will do well, it will probably be dragged lower again over the next four months along with other global markets, but it should have a good rebound through the second half of the year
Source: Moneycontrol.com
Mkt momentum may continue post-Budget
Naresh Kothari, Edelweiss Capital feels that the markets may rally around the Budget. He is not sure how the Budget would turn out to be - a non-event or a populist one. He feels that unless there is anything that the market senses as 'negative', the markets may sustain its short-term momentum, post-Budget as well.
Excerpts from CNBC-TV18抯 exclusive interview with Naresh Kothari:
Q: Does it look like that we could have a little bit of a rally around the Budget and how much more would you give this move?
A: Definitely seems like there has been a rally around the Budget; I think it is normally the case, the global cues also have been pretty okay. We do not expect there to be any significantly new in the Budget. In that sense, it might end up being a non-event because Budget, which is this close to elections is normally not very structural in nature. It will be probably a lot more populist as we have seen the trend yesterday also. But if the markets do not find anything significantly in the negative, the short-term momentum that we have seen over the last two-three days, will continue forward.
Q: Tactically, how do you approach this expectation of a short-term rally, how long do you expect it to last and would you start investing a little bit more hoping to see a bigger bump up by the time we are done with the Budget?
A: Our view for the last month or so has been that we are going to be in a reasonably rangebound market. I think the upper end of the range could be possibly somewhere between 5,500 and 5,700 and lower end in the 4,500-4,800 kind of a range. When you are somewhere in the middle of the range and your bias is still upwards, I think from a trading perspective, definitely there is an upmove possible.
From a fundamental perspective, I think specially in the largecaps, one is going to make a lot more trading moves. But in the midcaps, you are waiting for some amount of confidence to return into the market. I am not so sure that the confidence in the market is going to be back in the next two-five days. I think the market will take some kind of time to stabilize on the width size.
So I would not be too much in the midcaps right now; especially if they are running up very fast. But things which have been battered badly, where valuations have started looking attractive, we are constantly looking at those stocks and sectors and we are trying to start getting investors to get a little bit more comfortable picking up a few of those stocks. Not that every investor wants to come into these sectors at this point of time, which is always another way of looking at that. Therefore the stocks are coming to a range where they become a lot more attractive because at the worst points of time, it is most difficult to get investors to buy in.
Q: Fundamentally, what is your sense of the cement pack, it has been a big underperforming sector, do you think they could play a bit more of by way of catch up?
A: Surely, short-term catch-ups could be in place. But our view on cement - FY09, we are looking at about 30 million tonne oversupply situation coming into the country and our view is if that is the case, prices will not go anywhere. You will actually have close to 15% so from 100% - you should ideally be down to 85% capital. That is the kind of capacity that is coming through if you want to have a supply-demand match. Since that is not going to happen in a hurry, we will see prices coming down. I think every significant move in cement sector you will start seeing people wanting to reduce their exposure in the sector.
I think fundamentally, we will keep on seeing some kind of supply continuing to come in the cement stocks; it is not that the sector is already very underowned in any significant manner - there is still cement holding in quite a few funds and we will see that thing coming through; in fact, beyond into and also. I think currently, although things look like they will come back on track; it might end up being a shorter-term cycle this year. There are clearly two-three large players who have made some announcements but things do not currently seem to be visible on the ground. So our analysts are still not factoring in those numbers. But if those supply numbers also come in, then things could have an extended two-three year kind of an oversupply situation in the market.
On the very long-term, the view has always been that the largest cement company in China is probably larger than the entire cement sector and so on and so forth. But in the short-term, this oversupply for the next twelve-eighteen months definitely will cause prices to dampen.
Q: Do you track or have coverage on any of these three infrastructure stocks Lanco, GMR Infra or Punj Lloyd?
A: We do cover those stocks fundamentally or overall if you are asking for our view on this sector I think Lanco is the one that we like the most. We obviously also think that there is a lot of value still there in GMR and in Punj but I think our favourite has been Lanco for some time. The stock has got beaten down badly in between. We think there is lot of opportunity-across the infrastructure space I think there is a lot of opportunity that we are constantly looking out for.
Again from a Budget perspective, we are pretty comfortable. I think may be there will be a lot more for the services sector this time around and for the agricultural sector too. But according to us, infrastructure sector itself will not get neglected. There will be a set of SOPs that will keep coming in or there will be a set of things in the Budget for the infrastructure sector.
So companies like this in the very short-term also and otherwise I think will benefit from this.
Q: What is the call on power now?
A: I do not see things running away too much in a hurry from here. I think there has been a reasonably decent shock that the market has got on the sector and on top of it, I believe that there is enough supply of paper, which is around the corner, in case power sector again looks up very strong.
Having said that, I think in the very short-term or in the next six months timeframe, companies which are already there which have raised capital and which have now pulling up projects I think you will start seeing good interest continuing to remain in them. I think at the right valuations, power sector obviously is one of the most important bets that every investor is wanting to make.
So there is long side fundamental strength in the sector. I think the key is, at what levels are you comfortable holding onto the stock? So even Reliance Power for example, on a revised price of close to Rs 300 is very different from a price of Rs 450. You are looking at a 33% lower number for investors and I think at that level, things start becoming a lot more attractive. As is the case with lot of other companies, I think by and large, analysts have been extremely bullish on the sector.
Q: Anything that might be a shocker from the Budget from an equity market perspective?
A: Just a couple of things - one is that if there is any change in STT; specially if they increase that, I think volumes could be in further mess and that would be reasonably bad for the market. that is something that I would be very worried about.
Other than that, I do not think there is anything significant specific sectorwise or anything which is causing sleepless nights for us; we are pretty comfortable otherwise, on a best case that this will be a more populist Budget than an industry supporting Budget. Tax breaks and everything else hopefully will go further towards this thing - the buoyancy tax collections have shown looks like things should be pretty okay.
Disclosures: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Excerpts from CNBC-TV18抯 exclusive interview with Naresh Kothari:
Q: Does it look like that we could have a little bit of a rally around the Budget and how much more would you give this move?
A: Definitely seems like there has been a rally around the Budget; I think it is normally the case, the global cues also have been pretty okay. We do not expect there to be any significantly new in the Budget. In that sense, it might end up being a non-event because Budget, which is this close to elections is normally not very structural in nature. It will be probably a lot more populist as we have seen the trend yesterday also. But if the markets do not find anything significantly in the negative, the short-term momentum that we have seen over the last two-three days, will continue forward.
Q: Tactically, how do you approach this expectation of a short-term rally, how long do you expect it to last and would you start investing a little bit more hoping to see a bigger bump up by the time we are done with the Budget?
A: Our view for the last month or so has been that we are going to be in a reasonably rangebound market. I think the upper end of the range could be possibly somewhere between 5,500 and 5,700 and lower end in the 4,500-4,800 kind of a range. When you are somewhere in the middle of the range and your bias is still upwards, I think from a trading perspective, definitely there is an upmove possible.
From a fundamental perspective, I think specially in the largecaps, one is going to make a lot more trading moves. But in the midcaps, you are waiting for some amount of confidence to return into the market. I am not so sure that the confidence in the market is going to be back in the next two-five days. I think the market will take some kind of time to stabilize on the width size.
So I would not be too much in the midcaps right now; especially if they are running up very fast. But things which have been battered badly, where valuations have started looking attractive, we are constantly looking at those stocks and sectors and we are trying to start getting investors to get a little bit more comfortable picking up a few of those stocks. Not that every investor wants to come into these sectors at this point of time, which is always another way of looking at that. Therefore the stocks are coming to a range where they become a lot more attractive because at the worst points of time, it is most difficult to get investors to buy in.
Q: Fundamentally, what is your sense of the cement pack, it has been a big underperforming sector, do you think they could play a bit more of by way of catch up?
A: Surely, short-term catch-ups could be in place. But our view on cement - FY09, we are looking at about 30 million tonne oversupply situation coming into the country and our view is if that is the case, prices will not go anywhere. You will actually have close to 15% so from 100% - you should ideally be down to 85% capital. That is the kind of capacity that is coming through if you want to have a supply-demand match. Since that is not going to happen in a hurry, we will see prices coming down. I think every significant move in cement sector you will start seeing people wanting to reduce their exposure in the sector.
I think fundamentally, we will keep on seeing some kind of supply continuing to come in the cement stocks; it is not that the sector is already very underowned in any significant manner - there is still cement holding in quite a few funds and we will see that thing coming through; in fact, beyond into and also. I think currently, although things look like they will come back on track; it might end up being a shorter-term cycle this year. There are clearly two-three large players who have made some announcements but things do not currently seem to be visible on the ground. So our analysts are still not factoring in those numbers. But if those supply numbers also come in, then things could have an extended two-three year kind of an oversupply situation in the market.
On the very long-term, the view has always been that the largest cement company in China is probably larger than the entire cement sector and so on and so forth. But in the short-term, this oversupply for the next twelve-eighteen months definitely will cause prices to dampen.
Q: Do you track or have coverage on any of these three infrastructure stocks Lanco, GMR Infra or Punj Lloyd?
A: We do cover those stocks fundamentally or overall if you are asking for our view on this sector I think Lanco is the one that we like the most. We obviously also think that there is a lot of value still there in GMR and in Punj but I think our favourite has been Lanco for some time. The stock has got beaten down badly in between. We think there is lot of opportunity-across the infrastructure space I think there is a lot of opportunity that we are constantly looking out for.
Again from a Budget perspective, we are pretty comfortable. I think may be there will be a lot more for the services sector this time around and for the agricultural sector too. But according to us, infrastructure sector itself will not get neglected. There will be a set of SOPs that will keep coming in or there will be a set of things in the Budget for the infrastructure sector.
So companies like this in the very short-term also and otherwise I think will benefit from this.
Q: What is the call on power now?
A: I do not see things running away too much in a hurry from here. I think there has been a reasonably decent shock that the market has got on the sector and on top of it, I believe that there is enough supply of paper, which is around the corner, in case power sector again looks up very strong.
Having said that, I think in the very short-term or in the next six months timeframe, companies which are already there which have raised capital and which have now pulling up projects I think you will start seeing good interest continuing to remain in them. I think at the right valuations, power sector obviously is one of the most important bets that every investor is wanting to make.
So there is long side fundamental strength in the sector. I think the key is, at what levels are you comfortable holding onto the stock? So even Reliance Power for example, on a revised price of close to Rs 300 is very different from a price of Rs 450. You are looking at a 33% lower number for investors and I think at that level, things start becoming a lot more attractive. As is the case with lot of other companies, I think by and large, analysts have been extremely bullish on the sector.
Q: Anything that might be a shocker from the Budget from an equity market perspective?
A: Just a couple of things - one is that if there is any change in STT; specially if they increase that, I think volumes could be in further mess and that would be reasonably bad for the market. that is something that I would be very worried about.
Other than that, I do not think there is anything significant specific sectorwise or anything which is causing sleepless nights for us; we are pretty comfortable otherwise, on a best case that this will be a more populist Budget than an industry supporting Budget. Tax breaks and everything else hopefully will go further towards this thing - the buoyancy tax collections have shown looks like things should be pretty okay.
Disclosures: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Wednesday, February 27, 2008
Is Market poised for a breakout?
The markets are trading at a slightly higher range than what we have seen over the last 14-20 days. At 5,000 to 5,500 range, we are trading somehow at the highest point in the last two weeks or so. So it is a good time to get a check on the markets internals; especially since we have been in this phase of consolidation after the January corrections.
In the past, looking at some of these internals, first if one takes a look at the breadth - for the markets to breakout, the time we have seen past breakouts since 2003 i.e. since the last five-years, we have seen the markets breadth for 2-3 days at an average about 2.5:1 or 3:1 or even better. So the market breadth definitely improves and trading volumes pick up.
On an average, FII flows at the time of market breakout is between about Rs 700-3,600 crore - this is the combined cumulative FII flows on the average of about 4-5 days when the market has broken out in the last three-years. We have seen stock futures see an OI buildup of about 5-10% over a week and we have also seen the Nifty and the BSE 500, so including your broader markets in a span of 5-15 sessions starting trading over the 10, 20, 50 DMA and 200 DMA,. So both short-term and long-term indicators need to intact on the technical side as well.
The global market correlation - MSCI World Index rallied 1.5-3% a week when our markets broke out of consolidation phase and MSCI Asia Pac Index ex-Japan, rallied 2-8%, on a weekly basis when our markets have rallied. Currently, if one takes a look at the current internal picture, then the advance/decline ratio only drastically improved yesterday where it was at about 2.5:1. Last 5 trading sessions have seen FII inflows of Rs 595 crore if one includes yesterday’s provisional figures as well.
Stock future OI buildup is at 5.8% over a week. The BSE 500 and the Nifty are currently trading over their 10,20 and 200 SMA, but are still trading below their 50 DMA; so they have not broken all those technical indicators. MSCI World Index up 2.9% from last weeks close. MSCI Asia Pacific ex Japan up 3.3% from last weeks close. So market internals are pointing in the positive fray right now. But still not the whole lot; as what has been seen in the past breakouts. But it should be interesting considering volumes have built-up and the rollovers have picked up since yesterday and we are going into that all-important Budget week.
Source: Moneycontrol.com
In the past, looking at some of these internals, first if one takes a look at the breadth - for the markets to breakout, the time we have seen past breakouts since 2003 i.e. since the last five-years, we have seen the markets breadth for 2-3 days at an average about 2.5:1 or 3:1 or even better. So the market breadth definitely improves and trading volumes pick up.
On an average, FII flows at the time of market breakout is between about Rs 700-3,600 crore - this is the combined cumulative FII flows on the average of about 4-5 days when the market has broken out in the last three-years. We have seen stock futures see an OI buildup of about 5-10% over a week and we have also seen the Nifty and the BSE 500, so including your broader markets in a span of 5-15 sessions starting trading over the 10, 20, 50 DMA and 200 DMA,. So both short-term and long-term indicators need to intact on the technical side as well.
The global market correlation - MSCI World Index rallied 1.5-3% a week when our markets broke out of consolidation phase and MSCI Asia Pac Index ex-Japan, rallied 2-8%, on a weekly basis when our markets have rallied. Currently, if one takes a look at the current internal picture, then the advance/decline ratio only drastically improved yesterday where it was at about 2.5:1. Last 5 trading sessions have seen FII inflows of Rs 595 crore if one includes yesterday’s provisional figures as well.
Stock future OI buildup is at 5.8% over a week. The BSE 500 and the Nifty are currently trading over their 10,20 and 200 SMA, but are still trading below their 50 DMA; so they have not broken all those technical indicators. MSCI World Index up 2.9% from last weeks close. MSCI Asia Pacific ex Japan up 3.3% from last weeks close. So market internals are pointing in the positive fray right now. But still not the whole lot; as what has been seen in the past breakouts. But it should be interesting considering volumes have built-up and the rollovers have picked up since yesterday and we are going into that all-important Budget week.
Source: Moneycontrol.com
Mkts slip sharply in late trade; Nifty ends with modest cut
The markets opened on firm note today and proceeded to trade strong through the day but could not maintain the momentum in late trade and slipped sharply on the back weak cues from the European markets. Finally Sensex and Nifty ended on flat note.
It was a day of strength for the capital goods, metal, power, banking and pharmaceutical stocks. BSE midcap and smallcap indices also performed well in line with frontline counters. Heavy profit booking was witnessed in scrips across sectors in the late trade, leading to sharp decline from its day' s high. IT and FMCG stocks remained subdued for most part of the day.
Sensex ended up 19.80 points or 0.11% at 17825.99, and the Nifty was down 1.65 points or 0.03% at 5268.40. About 1543 shares advanced, 1398 shares declined, and 97 shares were unchanged. BSE midcap ended up 0.43% at 7723.56 and smallcap was up 0.26% at 9673.86.
BSE auto index ended up 0.57% at 4773.34. Punjab Tractors, M&M and Maruti Suzuki were some of the majo gainers.
BSE bankex closed in red with a loss of 0.32% at 10156.52. Axis Bank, PNB and Union Bank were some of the major gainers.
BSE capital good index ended up 2.37% at 16506.67. Astra Microwave, Bharat Bijlee and Crompton Greaves were the top gainers in thei space.
BSE FMCG index ended up 0.19% at 2254.98. Godrej Consumer, Bata India and Marico were some top fliers in this counter.
BSE pharma index closed up 1.22% at 3860.02. Glaxo Smithknlime, Sun Pharma and Ranbaxy labs were some of the top gainers in this space.
BSE IT index was down 2.20% at 3973.12. Satyam, Patni Computers and Infosys were some of the top losers in the IT sector.
BSE metal index ended down 0.95% at 16642.01. Ispat industries, Hind Zinc and Jindal Saw were some of the top gainers.
BSE oil & gas index ended up 0.4% at 11259.92. GAIL, Petronet LNG and ONGC were some of the top fliers in energy sector.
BSE power index closed up 0.73% at 3733.77. CESC, Power Grid Corp and Crompton Greaves are top gainers.
MARKET SNAPSHOT:
Markets slip from day's high on nervousness in European market on account of UBS EGM, uncertain economic statements from U.K.'s biggest mortgage lender, HBOS
Market clocks highest turnover of the month for third consecutive day
Sensex up 20 pts at 17826; slip 311 pts from day’s high
Nifty ends almost flat at 5268; slip 100 pts from day’s high
CNX Midcap Index up 0.6%, BSE Small cap Index up 0.3%
BSE Capital Goods Index up 2.4%; Siemens up 3.8%, BHEL up 3.8%, L&T up 3.3%, Suzlon down 3%
BSE Auto Index up 0.6%; M&M up 4.5%, Maruti up 2.4%
BSE Oil & Gas Index up 0.4%; GAIL up 1.5%, ONGC up 1%
BSE IT Index down 2.2%; Satyam down 2.9%, Infosys down 2.6%, TCS down 2.3%
BSE Metals Index down 1%; Nalco down 3.8%, Sterlite down 3.1%
Crude Oil Futures hit a record high of $102.08/bbl
Gold hits a record high of $965/oz
Rupee strengths 30 bps to Rs 39.78/$
Pharma Stocks see buying; Sun Pharma up 5.2%, GSK Pharma up 4.6%, Ranbaxy up 3.5%
Other Index Losers:
Grasim Ind down 4.9%, REL down 3.9%, Tata Comm down 3.8%
Non Index Gainers:
Punjab Tractor up 10.1%, CESC up 7.8%, Shree Renuka up 7%, Indraprastha Gas up 6.6%, Lanco Infra up 6.3%
Non Index Losers:
Gujarat NRE Coke down 8.7%, Bajaj Hind down 8.6%, Gateway Dist down 3.7%, Indian Cement down 3.7%
NSE Advance Decline is 6:5
Source: Moneycontrol.com
It was a day of strength for the capital goods, metal, power, banking and pharmaceutical stocks. BSE midcap and smallcap indices also performed well in line with frontline counters. Heavy profit booking was witnessed in scrips across sectors in the late trade, leading to sharp decline from its day' s high. IT and FMCG stocks remained subdued for most part of the day.
Sensex ended up 19.80 points or 0.11% at 17825.99, and the Nifty was down 1.65 points or 0.03% at 5268.40. About 1543 shares advanced, 1398 shares declined, and 97 shares were unchanged. BSE midcap ended up 0.43% at 7723.56 and smallcap was up 0.26% at 9673.86.
BSE auto index ended up 0.57% at 4773.34. Punjab Tractors, M&M and Maruti Suzuki were some of the majo gainers.
BSE bankex closed in red with a loss of 0.32% at 10156.52. Axis Bank, PNB and Union Bank were some of the major gainers.
BSE capital good index ended up 2.37% at 16506.67. Astra Microwave, Bharat Bijlee and Crompton Greaves were the top gainers in thei space.
BSE FMCG index ended up 0.19% at 2254.98. Godrej Consumer, Bata India and Marico were some top fliers in this counter.
BSE pharma index closed up 1.22% at 3860.02. Glaxo Smithknlime, Sun Pharma and Ranbaxy labs were some of the top gainers in this space.
BSE IT index was down 2.20% at 3973.12. Satyam, Patni Computers and Infosys were some of the top losers in the IT sector.
BSE metal index ended down 0.95% at 16642.01. Ispat industries, Hind Zinc and Jindal Saw were some of the top gainers.
BSE oil & gas index ended up 0.4% at 11259.92. GAIL, Petronet LNG and ONGC were some of the top fliers in energy sector.
BSE power index closed up 0.73% at 3733.77. CESC, Power Grid Corp and Crompton Greaves are top gainers.
MARKET SNAPSHOT:
Markets slip from day's high on nervousness in European market on account of UBS EGM, uncertain economic statements from U.K.'s biggest mortgage lender, HBOS
Market clocks highest turnover of the month for third consecutive day
Sensex up 20 pts at 17826; slip 311 pts from day’s high
Nifty ends almost flat at 5268; slip 100 pts from day’s high
CNX Midcap Index up 0.6%, BSE Small cap Index up 0.3%
BSE Capital Goods Index up 2.4%; Siemens up 3.8%, BHEL up 3.8%, L&T up 3.3%, Suzlon down 3%
BSE Auto Index up 0.6%; M&M up 4.5%, Maruti up 2.4%
BSE Oil & Gas Index up 0.4%; GAIL up 1.5%, ONGC up 1%
BSE IT Index down 2.2%; Satyam down 2.9%, Infosys down 2.6%, TCS down 2.3%
BSE Metals Index down 1%; Nalco down 3.8%, Sterlite down 3.1%
Crude Oil Futures hit a record high of $102.08/bbl
Gold hits a record high of $965/oz
Rupee strengths 30 bps to Rs 39.78/$
Pharma Stocks see buying; Sun Pharma up 5.2%, GSK Pharma up 4.6%, Ranbaxy up 3.5%
Other Index Losers:
Grasim Ind down 4.9%, REL down 3.9%, Tata Comm down 3.8%
Non Index Gainers:
Punjab Tractor up 10.1%, CESC up 7.8%, Shree Renuka up 7%, Indraprastha Gas up 6.6%, Lanco Infra up 6.3%
Non Index Losers:
Gujarat NRE Coke down 8.7%, Bajaj Hind down 8.6%, Gateway Dist down 3.7%, Indian Cement down 3.7%
NSE Advance Decline is 6:5
Source: Moneycontrol.com
Tuesday, February 26, 2008
Is equity investing really risky?
Many a times when individuals say that they want to refrain from investing in equity because it is risky, it seems little amusing. These are the same individuals who ride two wheelers without a helmet or drive a car without the seat belts. What is more risky - investing into equity or riding a two-wheeler without a helmet?
Firstly it is important to note that all forms of investment have inherent risk. The reason we get returns on our investment is because we take the risk of parting with our money. There are some risks, which are transparent while there are few which we do not see.
Equity investing seems risky because the risk is transparent. Investor in equity can see the gain and/or loss made by them based on movement of stock price on the stock exchange. If an investor had purchased stock of Tata Steel at Rs 568 and if the price falls to Rs 523, he/she can see and calculate the loss. This is unlike an investor of fixed deposit who does not see his gain in interest and also does not see the loss he has suffered due to rise in inflation. Simply because fixed deposits are not traded on any exchange and its price movement is not transparent, they seem to feel safer.
Another reason people find equity investing risky is because returns from equity are not linear. Suppose we have invested in bonds yielding 8% p.a., our bonds would generate a fixed 8% returns year on year. In case of equity, it does not work like that. Here, the returns could be 40%, 33%, -3%, 17%, -10% and 2% year on year. Since the returns are not linear it is difficult to predict them and because it is difficult to predict, we find equity investing risky.
Usually we are fairly certain about events that are likely to take place in our lives in near term. We know what we will be doing in next one minute, one hour, one day etc. We also have a good estimate of our activity schedule for the next week or so. However as time horizon increases, our certainty about events in our life decreases e.g. most likely we do not know what will happen in our life after one year. In business it is reverse. Ask a corporate how much goods they will sell in next one minute and they are clueless. Give them an hour and still the same reply. They even cannot guess their daily sales. However ask them to guesstimate their yearly turnover and they would be able to predict almost accurately. As human beings we seek near term certainty. Since that is difficult to come by in equity investing, we find it difficult to absorb the reverse behavior.
Each asset class has different behavioral pattern of return and risk. There isn’t anything like risk-free investing. Just because in equity measurement of risk is transparent, returns are not linear, and it is difficult to predict in short run, it should not be construed as risky.
Lastly, there is a famous line, which says ‘Rome was not built in a day.’ It takes years to build a business. Sometimes, even after the business is built and settled, it can face turbulence. Unfortunately we are not willing to wait for long to earn our returns. In many cases people are not even willing to wait for 2/3 years to get returns. Here I would like to quote legendary investor Warren Buffet who once said “If you aren’t willing to own a share for ten years, then don’t own it for ten minutes.”
If your financial goal is more than 7/9 years away always give consideration to equity as well.
Source: Moneycontrol.com
Firstly it is important to note that all forms of investment have inherent risk. The reason we get returns on our investment is because we take the risk of parting with our money. There are some risks, which are transparent while there are few which we do not see.
Equity investing seems risky because the risk is transparent. Investor in equity can see the gain and/or loss made by them based on movement of stock price on the stock exchange. If an investor had purchased stock of Tata Steel at Rs 568 and if the price falls to Rs 523, he/she can see and calculate the loss. This is unlike an investor of fixed deposit who does not see his gain in interest and also does not see the loss he has suffered due to rise in inflation. Simply because fixed deposits are not traded on any exchange and its price movement is not transparent, they seem to feel safer.
Another reason people find equity investing risky is because returns from equity are not linear. Suppose we have invested in bonds yielding 8% p.a., our bonds would generate a fixed 8% returns year on year. In case of equity, it does not work like that. Here, the returns could be 40%, 33%, -3%, 17%, -10% and 2% year on year. Since the returns are not linear it is difficult to predict them and because it is difficult to predict, we find equity investing risky.
Usually we are fairly certain about events that are likely to take place in our lives in near term. We know what we will be doing in next one minute, one hour, one day etc. We also have a good estimate of our activity schedule for the next week or so. However as time horizon increases, our certainty about events in our life decreases e.g. most likely we do not know what will happen in our life after one year. In business it is reverse. Ask a corporate how much goods they will sell in next one minute and they are clueless. Give them an hour and still the same reply. They even cannot guess their daily sales. However ask them to guesstimate their yearly turnover and they would be able to predict almost accurately. As human beings we seek near term certainty. Since that is difficult to come by in equity investing, we find it difficult to absorb the reverse behavior.
Each asset class has different behavioral pattern of return and risk. There isn’t anything like risk-free investing. Just because in equity measurement of risk is transparent, returns are not linear, and it is difficult to predict in short run, it should not be construed as risky.
Lastly, there is a famous line, which says ‘Rome was not built in a day.’ It takes years to build a business. Sometimes, even after the business is built and settled, it can face turbulence. Unfortunately we are not willing to wait for long to earn our returns. In many cases people are not even willing to wait for 2/3 years to get returns. Here I would like to quote legendary investor Warren Buffet who once said “If you aren’t willing to own a share for ten years, then don’t own it for ten minutes.”
If your financial goal is more than 7/9 years away always give consideration to equity as well.
Source: Moneycontrol.com
Stocks impacted by the Railway Budget
It was Lalu’s last lap (fifth Railway Budget) which saw strong thrust on technology and infrastructure. Stocks from steel, technology, capital goods and infrastructure stocks saw some positive impact.
50 big terminals are being planned in Mumbai, Pune, Gaziabad. Concor will set up 8 depots,which saw the stock move up. The Railway Budget sees annual steel traffic aim of 200 mt in 2011 versus 120 mt now, which saw steel SAIL gaining over 2%. 25-30 tonne axle load trains to be started.
Budget sees strong revenues coming from comoditiy transportation. FY08 coal freight loading seen at 336 mt. The budget has also planned 200 mt tariff from cement in 2011-12. SPV for links to Mundra, Kandla, Krishnapatnam ports. The budget has an ambitious plan to set up 20,000 km high density network. It plans to upgrade infrastructure in 7 years at Rs 75,000 crore.
The budget sees excess freight loading target of 310 mt in next 4 years. To up auto ticket sale machines to 6,000 in 2 years. The Budget plans to produce only stainless steel coaches after FY10. It also plans for new coaches in all Shatabdi trains by 2011. It plans to start making steel coaches from FY09. It also plans new coaches in all rajdhani trains by 2010.
Clear thrust was seen on technology; TCS, Wipro, Satyam were up on account of IT upgradation order. The budget will have online control of trains in 2 years. It plans to link trains via software communication by 2009. It plans to start ticket confirmation via mobile phones. The Budet is planning 'smart card' based ticket system. SMART CARDS will benefit Bartronics.
The other measures to be positively impact stocks are automated signalling to benefit Kernex Micro. ETA display in long-run trains to benefit Mic Electronics. CCTV, metal detectors installation is expected to benefit Zicom . Anti-fire protection to benefit Nitin Fire Protection.
Source: Moneycontrol.com
50 big terminals are being planned in Mumbai, Pune, Gaziabad. Concor will set up 8 depots,which saw the stock move up. The Railway Budget sees annual steel traffic aim of 200 mt in 2011 versus 120 mt now, which saw steel SAIL gaining over 2%. 25-30 tonne axle load trains to be started.
Budget sees strong revenues coming from comoditiy transportation. FY08 coal freight loading seen at 336 mt. The budget has also planned 200 mt tariff from cement in 2011-12. SPV for links to Mundra, Kandla, Krishnapatnam ports. The budget has an ambitious plan to set up 20,000 km high density network. It plans to upgrade infrastructure in 7 years at Rs 75,000 crore.
The budget sees excess freight loading target of 310 mt in next 4 years. To up auto ticket sale machines to 6,000 in 2 years. The Budget plans to produce only stainless steel coaches after FY10. It also plans for new coaches in all Shatabdi trains by 2011. It plans to start making steel coaches from FY09. It also plans new coaches in all rajdhani trains by 2010.
Clear thrust was seen on technology; TCS, Wipro, Satyam were up on account of IT upgradation order. The budget will have online control of trains in 2 years. It plans to link trains via software communication by 2009. It plans to start ticket confirmation via mobile phones. The Budet is planning 'smart card' based ticket system. SMART CARDS will benefit Bartronics.
The other measures to be positively impact stocks are automated signalling to benefit Kernex Micro. ETA display in long-run trains to benefit Mic Electronics. CCTV, metal detectors installation is expected to benefit Zicom . Anti-fire protection to benefit Nitin Fire Protection.
Source: Moneycontrol.com
Rail Budget '08 Vs '07: What's new?
“Mungeri Lal’s dreams have come true” said Railway Minister Lalu Prasad Yadav as he tabled his last Railway Budget in the Parliament today.
Lalu Yadav, in his speech addressed to the Lok Sabha, informed that the railways had a cash surplus of Rs 25000 crore in FY08 with an operating ratio of 76%.
Like all other Budget, this Budget was also pro people. Sleeper fares were cut by 5% as compared to last year’s reduction of 4%. AC first class saw a cut by 7%, AC- 2Tier class by 4%,
AC-3Tier by 2% as against last year's 3%, 2% and 4% respectively.
Initiatives for improvement in freight business:
The industry had been wishing for more trains for common man and coach trains working towards more freight corridors. Freight loading revenue for April-December was at Rs 34,700 crore. In his 2007-08 Rail Budget speech, the Railway Minister had targeted the Freight loading which was 557million tonne in 07-08 is expected to be 790 million tonne in 08-09. The target is 310 million tonnes of additional freight loading in the next 3 years. There will also be Rs 75000 crore in next 7 years to further develop saturated transportation lines.
Facilitating travel:
In the last Budget, the railway minister has emphasised on convenient, comfortable and high capacity new design passenger coaches. This year, he announced the introduction of low maintenance and more comfortable stainless steel coaches from 2010. All Rajdhani Trains will have new coaches by 2010 whereas Shatabdi trains will have new coaches by 2011. Around Rs 250,000 crore will be invested in next 5 years for passenger facilities.
As against 32 new trains and 8 Garib Raths last year, this year saw an introduction of 53 new passenger trains and 10 new Garib Raths from FY08-09. Lifts & elevators will be provided at 50 big stations for convenience of senior citizens. Last Budget also saw some facilities for senior citizens like reservation of lower berths exclusively for them. While 60 years and older passengers get 30% discount, female above 60 will get 50% discount.
Initiatives in passenger business:
Looking at growing network of mobile phones, the railways will look at leveraging telecom boom for ticketing and trials for the same has already started. There will be an increase in ticketing counters to 15,000 in 2 years from the current 3,000 now. The target for ATVM machines has been kept same as last year at 6000 machines in next 2 years. CCTVS and metal detectors will be put up at all stations as against only the sensitive stations.About Rs 4000 crore will be spent on 36000 coaches for green toilets in next 5-year plan.
Source: Moneycontrol.com
Lalu Yadav, in his speech addressed to the Lok Sabha, informed that the railways had a cash surplus of Rs 25000 crore in FY08 with an operating ratio of 76%.
Like all other Budget, this Budget was also pro people. Sleeper fares were cut by 5% as compared to last year’s reduction of 4%. AC first class saw a cut by 7%, AC- 2Tier class by 4%,
AC-3Tier by 2% as against last year's 3%, 2% and 4% respectively.Initiatives for improvement in freight business:
The industry had been wishing for more trains for common man and coach trains working towards more freight corridors. Freight loading revenue for April-December was at Rs 34,700 crore. In his 2007-08 Rail Budget speech, the Railway Minister had targeted the Freight loading which was 557million tonne in 07-08 is expected to be 790 million tonne in 08-09. The target is 310 million tonnes of additional freight loading in the next 3 years. There will also be Rs 75000 crore in next 7 years to further develop saturated transportation lines.
Facilitating travel:
In the last Budget, the railway minister has emphasised on convenient, comfortable and high capacity new design passenger coaches. This year, he announced the introduction of low maintenance and more comfortable stainless steel coaches from 2010. All Rajdhani Trains will have new coaches by 2010 whereas Shatabdi trains will have new coaches by 2011. Around Rs 250,000 crore will be invested in next 5 years for passenger facilities.
As against 32 new trains and 8 Garib Raths last year, this year saw an introduction of 53 new passenger trains and 10 new Garib Raths from FY08-09. Lifts & elevators will be provided at 50 big stations for convenience of senior citizens. Last Budget also saw some facilities for senior citizens like reservation of lower berths exclusively for them. While 60 years and older passengers get 30% discount, female above 60 will get 50% discount.
Initiatives in passenger business:
Looking at growing network of mobile phones, the railways will look at leveraging telecom boom for ticketing and trials for the same has already started. There will be an increase in ticketing counters to 15,000 in 2 years from the current 3,000 now. The target for ATVM machines has been kept same as last year at 6000 machines in next 2 years. CCTVS and metal detectors will be put up at all stations as against only the sensitive stations.About Rs 4000 crore will be spent on 36000 coaches for green toilets in next 5-year plan.
Source: Moneycontrol.com
Mkts end with moderate gains; realty, power stocks up
The markets opened with modest gap up today and traded flat for most part of the day. Sensex and Nifty picked up some momentum in late trade on the back of some short covering before F&O settlement this week and ended with over 1% gain on Nifty and nearly 1% gain on Sensex. It was a day consolidation as not much excitement was witnessed despite favourable cues from the global markets coupled with yet another profitable and forward looking Railway budget 2008-09.
It was more of stocks specific day for the markets. Broader markets outperformed the benchmark indices today. Realty, power, metal, apital good and IT stocks traded firm today, however all the key BSE indices traded in green through the day.
Sensex ended up 155.62 points or 0.88% at 17806.19, and the Nifty was up 69.35 points or 1.33% at 5270.05. About 1749 shares have advanced, 1207 shares declined, and 79 shares are unchanged. BSE midcap ended up 1.27% at 7690.86 and Smallcap was up 1.28% at 9648.49.
BSE auto index ended up 0.54% at 4746.46. Bharat Forge, TVS Motors and Cummins were the major gainers.
BSE bankex was up 0.75% at 10189.48. Bank of India, HDFC Bank and Karnatak Bank were the top gainers in this space.
BSE capital goods index closed up 2.05% at 16124.36. Astra Microwaves, Suzlon Energy and Thermax were the top losers.
BSE FMCG index ended up 0.49% at 2250.79. Godrej Consumer, Glaxo Smith Con and Bata India were major gainers.
BSE IT index closed up 1.76% at 4062.67. HCL Tech, i-Flex Solution and Infosys were top fliers in the IT space.
BSE metal index ended up 1.64% at 16801.01. In the metal segment, the top gainers were NALCO, Jindal Stainles and Guj NRE Coke.
BSE power index closed up 2.65% at 3706.80. Suzlon Energy, Reliance Energy and BHEL were top gainers.
BSE realty index ended up 2.53% at 10016.49. Indiabulls Realestate, Omaxe and Unitech were the top gainers in realty space.
MARKET SNAPSHOT
Global cues and railway budget boost positive sentiment to the market
Market clocks highest turnover of the month for 2nd consecutive day
Sensex up 156 pts at 17806; Nifty up 69 pts at 5270
CNX Midcap Index up 1.5%, BSE Small cap Index up 1.3%
All BSE sectoral indices end in green
BSE Realty Index up 2.5%; Unitech 2.3%
BSE Capital Goods Index up 2.1%; BHEL up 4.5%, L&T up 1.2%, Suzlon up 6%, REL up 4.8%
BSE IT Index up 1.8%; HCL Tech up 4.7%, Infosys up 3%
BSE Metals Index up 1.6%; Nalco up 7.3%, Sterlite up 3.9%, SAIL up 3%
BSE Oil & Gas Index up 1.4%; Cairn up 6%, BPCL up 5.1, HPCL up 4.8%, IOCL up 4.6%
Railway Budget Effect:
Gateway Dist up 6%, Zicom up 5%, Bartronics up 9%, Nitin Fire up 6.2%, HPCL up 4.8%, BPCL up 6.1%, IOCL up 4.7%, Jindal Stainless up 7%, SAIL up 3%, MIC Electronics up 7.1%
Other Index Gainers:
Grasim up 4.8%, Tata Comm up 3.9%, HDFC Bank up 2.3%, GSK Pharma up 2.3%
Non Index Gainers:
Indianbulls Real up 10.6%, Navneet Publications up 9.2%, Nagarjuna Cons up 7.5%, Shree Renuka up 7.5%, GTC Ind up 7.2%, DCB up 7.1%, Lanco Infra up 6.6%
Non Index Losers:
Bk of Mah down 6.9%, Shriram EPC down 5.2%, Jyoti Structures down 4.2%, Dhampur Sugar down 3.9%, Bang Overseas down 3.9%, Deccan Chron down 3.5%
NSE Advance Decline is 5:2
Total Turnover at Rs 72,389 Cr Vs Rs 68,651 Cr on Friday
FNO SNAPSHOT
Nifty rollover at 46%; Marketwide rollover at 45%
Rollover and turnover pick up on the back of stable trade
Select Large Caps see Short Rollovers
Textiles, cement stocks continue to see the strongest rollovers
Energy, Pharma stocks see rollovers pick up
Nifty March ends day at a 38 point discount
Source: Moneycontrol.com
It was more of stocks specific day for the markets. Broader markets outperformed the benchmark indices today. Realty, power, metal, apital good and IT stocks traded firm today, however all the key BSE indices traded in green through the day.
Sensex ended up 155.62 points or 0.88% at 17806.19, and the Nifty was up 69.35 points or 1.33% at 5270.05. About 1749 shares have advanced, 1207 shares declined, and 79 shares are unchanged. BSE midcap ended up 1.27% at 7690.86 and Smallcap was up 1.28% at 9648.49.
BSE auto index ended up 0.54% at 4746.46. Bharat Forge, TVS Motors and Cummins were the major gainers.
BSE bankex was up 0.75% at 10189.48. Bank of India, HDFC Bank and Karnatak Bank were the top gainers in this space.
BSE capital goods index closed up 2.05% at 16124.36. Astra Microwaves, Suzlon Energy and Thermax were the top losers.
BSE FMCG index ended up 0.49% at 2250.79. Godrej Consumer, Glaxo Smith Con and Bata India were major gainers.
BSE IT index closed up 1.76% at 4062.67. HCL Tech, i-Flex Solution and Infosys were top fliers in the IT space.
BSE metal index ended up 1.64% at 16801.01. In the metal segment, the top gainers were NALCO, Jindal Stainles and Guj NRE Coke.
BSE power index closed up 2.65% at 3706.80. Suzlon Energy, Reliance Energy and BHEL were top gainers.
BSE realty index ended up 2.53% at 10016.49. Indiabulls Realestate, Omaxe and Unitech were the top gainers in realty space.
MARKET SNAPSHOT
Global cues and railway budget boost positive sentiment to the market
Market clocks highest turnover of the month for 2nd consecutive day
Sensex up 156 pts at 17806; Nifty up 69 pts at 5270
CNX Midcap Index up 1.5%, BSE Small cap Index up 1.3%
All BSE sectoral indices end in green
BSE Realty Index up 2.5%; Unitech 2.3%
BSE Capital Goods Index up 2.1%; BHEL up 4.5%, L&T up 1.2%, Suzlon up 6%, REL up 4.8%
BSE IT Index up 1.8%; HCL Tech up 4.7%, Infosys up 3%
BSE Metals Index up 1.6%; Nalco up 7.3%, Sterlite up 3.9%, SAIL up 3%
BSE Oil & Gas Index up 1.4%; Cairn up 6%, BPCL up 5.1, HPCL up 4.8%, IOCL up 4.6%
Railway Budget Effect:
Gateway Dist up 6%, Zicom up 5%, Bartronics up 9%, Nitin Fire up 6.2%, HPCL up 4.8%, BPCL up 6.1%, IOCL up 4.7%, Jindal Stainless up 7%, SAIL up 3%, MIC Electronics up 7.1%
Other Index Gainers:
Grasim up 4.8%, Tata Comm up 3.9%, HDFC Bank up 2.3%, GSK Pharma up 2.3%
Non Index Gainers:
Indianbulls Real up 10.6%, Navneet Publications up 9.2%, Nagarjuna Cons up 7.5%, Shree Renuka up 7.5%, GTC Ind up 7.2%, DCB up 7.1%, Lanco Infra up 6.6%
Non Index Losers:
Bk of Mah down 6.9%, Shriram EPC down 5.2%, Jyoti Structures down 4.2%, Dhampur Sugar down 3.9%, Bang Overseas down 3.9%, Deccan Chron down 3.5%
NSE Advance Decline is 5:2
Total Turnover at Rs 72,389 Cr Vs Rs 68,651 Cr on Friday
FNO SNAPSHOT
Nifty rollover at 46%; Marketwide rollover at 45%
Rollover and turnover pick up on the back of stable trade
Select Large Caps see Short Rollovers
Textiles, cement stocks continue to see the strongest rollovers
Energy, Pharma stocks see rollovers pick up
Nifty March ends day at a 38 point discount
Source: Moneycontrol.com
Rail Budget: Cheaper fares, lower freights, easy travel
In his last full Railway Budget presentation, Railways Minister, Lalu Prasad Yadav offered everything from cheaper fares, lower freights to inclusion of technology in everyday rail life. Lalu had maintained that his Budget would focus on the common man. His Budget has promised the aam aadmi facilities such as more passenger trains, faster and easy travel procedures (ticket-booking and transport), reduction in passenger fares and fuel freights, discounts to females and senior citizens; to name a few. His Budget may have been directed to deliver part of his aforementioned promises.
Fare cuts
The Railway Minister has introduced a 5% cut in sleeper class as well as second class fares. Further fares for AC I, AC-II and AC-II have been cut by 7%, 4% and 3%, respectively.
All passengers above 60 years of age will now get a 30% discount, while females above 60 years would get a 50% discount.
Freight – related initiatives
The freight on petrol and diesel has been cut by 5%, while those on fly ash have been cut by 14%. The Railway Minister has cut the highest freight rate classification to 200. He sees the FY08 coal freight loading at 336 metric tonne. Yadav sees the total FY09 freight loading at 790 metric tonne as against 785 metric tonnes in FY08. He estimates around 310 metric tonne of additional freight loading in the next three years.
Easy Travel/ Better facilities
The Railways would be launching the Go-Mumbai Card/ Smart Card facility soon for easier ticketing for commuters. Besides, there will be an increase in ticketing counters to 15,000 in the next two years from the current 3,000 now. The number of auto ticket-sale machines would go up by 6,000 in the next two years. Yadav plans to look at leveraging the telecom boom for ticketing purposes. In this regard, trials for mobile ticketing have already started. The Railways plans to display online information in overnight trains of long distance.
For the convenience of commuters, especially senior citizens, 50 large stations across the country will have lifts and escalators, while 30 bigger stations would have multi-level parking system. The Ministry plans to run the Mother-Child Healthcare Express in alliance with the Rajiv Gandhi Foundation.
Apart from the facilities to the consumers, for those interested in joining the railways, the Group-D railway examinations would be taken in Urdu also, where it is the second language.
Technology updation
Lalu Prasad Yadav announced that the Government would introduce low maintenance and more comfortable stainless steel coaches from 2010. He said that Rs 4000 crore would be spent on green toilets for 36000 coaches in the next 5-year plan. All the trains will be run via online control in the next two years, Yadav promised. The trains would be linked via software communication by 2009.
The Railways need Rs 250,000 crore worth of funds over the next five years for IT upgradation, Yadav said. CCTVs and metal detectors would be put up at all stations, he informed. He will look look at multi model parks for Railways at various locations, he said.
Infrastructure updation
The Railways will start 53 new passenger trains. It will upgrade its infrastructure in the next seven years at the cost of Rs 75,000 crore. These funds would be employed to further develop saturated transportation lines. It plans to set up a 20,000 km high-density network. The work on connecting road for Pipavav Port has been completed, Yadav said. 25 tonne and 30 tonne axle-load trains will now be allowed for iron ore transport, he informed.
The Railway Minister informed that their 100 million tonne-worth business will come from the cement industry; which he targets as 200 million till 2011. Also, he aims to raise the annual steel traffic to 200 metric tonne in 2011 from the current 120 metric tonne.
Further, 50 new terminals would be developed for storage. He announced Special Purpose Vehicles (SPVs) for for links to Mundra, Kandla and Krishnapatnam ports.
The Railways will introduce new coaches in all Rajdhani trains by 2010-11. It will start making steel coaches from FY09. The level of platforms would be upgraded for passenger convenience. It will manufacture 20000 wagons in 2008-09, each having capacity of 22.9 tonnes. Lalu Prasad informed that 50 big terminals have been planned in Mumbai, Pune and Ghaziabad. Concor would set up 8 depots. Railway wagons would be available on lease here on, Yadav said. The Ministry has 15 licensed operators for container trains. It plans to increase container train operators to 50-55 trains. Yadav said that the Railways would have a new wagon leasing policy.
New Bulk handling facilities would be erected for cement, the Rail Minister said. There would not be a busy season surcharge for cement transported in bulk via new facilities, he promised. There would be a new policy for bulk handling terminals, he said. There will be a special focus on door-to-door and value added services. Yadav has planned SBUs (Strategic Business Unit) for cement, steel, coal and container sectors. In addition, Rs 1 lakh crore worth of PPP (Public Private Partnerships) have also been planned over the next five years.
Railways would introduce fire prevention devices in coaches on a pilot basis. The anti-fire gear would cost Rs 7,000 crore, if the pilot is successful, Lalu Prasad Yadav said.
Past Performance
According to the Budget Report, the Railways have a cash surplus of Rs 25000 crore in FY08. Its operating ratio is at 76%. Its work force stood at 14 lakh workers in FY08. The Minister informed that reduced fares increased volumes and profits.
The Railways has earned a cash surplus of Rs 25000 crore in FY08. Its operating ratio is at 76%. Its work force stood at 14 lakh workers in FY08. Yadav informed that reduced fares increased volumes and profits.
The Railways have Rs 68788 crore for five years as cash surplus, Lalu said. The Rail Corporation’s divident stood at Rs 88 he said.
Looking back at last year, the Rail Minister said, that they had offered lean season discounts and also, peak season had attracted surcharges, he said. The Railway Fund Balance is up at Rs 20,480 crore, Lalu informed. The Railways has adopted its tariff to up market share and revenues, he said. The April-December freight loading revenue is up 8-10% at Rs 34,700 crore, he said, adding that revenue from passenger fares has increased by 14%. Its property would fetch Rs 4000 crore in 2008-09, Yadav said. He also informed that 233 million tonne loading was done in the year and its additional earnings of Rs 2000 crore were on freight service.
Some highlights of the Railway Minister's speech:
* Sleeper, II class fares cut 5%
* 10 Garib Raths in FY09
* Fares for AC-I cut by 7%, AC-II 4%, AC-III 3%
* Freight on fuels cut 5%
* Rs 68788 cr for 5 years cash surplus
* Dividend of Rs 88 rupees
* There were lean season discounts offered
* Peak season attracted surcharges
* Railway Fund Balance up at Rs 20,480 cr
* Railways adopted tariff to up market share; revenue
* Apr-Dec freight loading revenue is up 8-10% at Rs 34,700 cr
* Railways will look at leveraging telecom boom for ticketing
* There will be an increase in ticketing counters to 15,000 in 2 years from the current 3,000 now
* Revenue from passenger fares increased by 14%
* FY09 freight loading seen at 790 MT vs 785 MT in FY08
* FY08 rail operating ratio at 76.3%
* Trials for mobile ticketing have already started
* Railways to launch the Go-Mumbai Card/ Smart Card
* Online information display in overnight trains of long distance
* Rs 4000 cr to be spent on 36000 coaches for greent toilets in next 5 year plan
* Low mainenance and more comfortable stainless steel coaches to be introduced from 2010
* To have online control of trains in 2 years
* To link trains via software communication by 2009
* New coaches in all Rajdhani trains by 2010-11
* To start making steel coaches from FY09
* Level of Platforms to be upgraded for passenger convenience
* 30 Bigger stations to have multi level parking system
* 50 large stations to have lifts / escalators- for convenience of senior citizens
* 233 million ton loading was done in the year
* Additional earnings of Rs 2000 cr on freight service
* To upgrade infrastructure in 7 years at Rs 75,000 cr
* 310 mn tonnes of additional freight loading in the next 3 yrs
* 75000 cr in next 7 yrs to further develop saturated transportation lines
* To up auto ticket sale machines to 6,000 in 2 years
* Plan to set up 20,000 km high density network
* FY08 coal freight loading seen at 336 MT
* Work on connecting road for Pipavav Port completed
* 25 tonne and 30 tonne axel load trains allowed for iron ore transport
* 100 mn tonne business from cement industry 200 mn target targeted till 2011
* 50 new terminals to be developed for storage
* SPV for links to Mundra, Kandla, Krishnapatnam ports
* 25-30 tonne axle load trains to be started
* Annual steel traffic aim of 200 mt in 2011 vs 120 mt now
* To manufacture 20000 wagons in 2008-09
* To manufacture wagons having capacity of 22.9 tonnes in 2008-09
* 50 big terminals planned in Mumbai, Pune, Ghaziabad
* Concor to set up 8 depots
* Wagons would be available on lease here on
* Have 15 licensed operators for container trains
* To increase container train operators to 50-55 trains
* To have new wagon leasing policy
* New Bulk handling facilities to be erected for cement
* No busy season surcharge for cement transported in bulk via new facilities
* To have new policy for bulk handling terminals
* Special focus on door to door and value added services
* No busy season surcharge for bulk cement transport via new facilities
* SBUs (Strategic Business Unit) planned for cement, steel, coal, container sectors
* Rs 250,000 cr worth of funds required by the Railways over the next 5 years for IT upgradation
* 1 lakh crore worth of PPP (Public Private Partnerships) planned over the next 5 years
* Will look at multi model parks for Railways at various locations
* Railway property to fetch 4000 crore in 2008-09
* CCTVs and metal detectors to be put up at all stations
* 60 yrs and older passengers get 30% discount, female above 60 get 50% discount
* Plan fire prevention device in coaches on pilot basis
* Anti-fire gear to cost Rs 7,000 cr if pilot successful
* Mother-Child Healthcare Express to be run in alliance with Rajiv Gandhi Foundation
* Group-D railway examinations to be taken in Urdu also, where it is the second language
* To start 53 new passenger trains
Source: Moneycontrol.com
Fare cuts
The Railway Minister has introduced a 5% cut in sleeper class as well as second class fares. Further fares for AC I, AC-II and AC-II have been cut by 7%, 4% and 3%, respectively.
All passengers above 60 years of age will now get a 30% discount, while females above 60 years would get a 50% discount.
Freight – related initiatives
The freight on petrol and diesel has been cut by 5%, while those on fly ash have been cut by 14%. The Railway Minister has cut the highest freight rate classification to 200. He sees the FY08 coal freight loading at 336 metric tonne. Yadav sees the total FY09 freight loading at 790 metric tonne as against 785 metric tonnes in FY08. He estimates around 310 metric tonne of additional freight loading in the next three years.
Easy Travel/ Better facilities
The Railways would be launching the Go-Mumbai Card/ Smart Card facility soon for easier ticketing for commuters. Besides, there will be an increase in ticketing counters to 15,000 in the next two years from the current 3,000 now. The number of auto ticket-sale machines would go up by 6,000 in the next two years. Yadav plans to look at leveraging the telecom boom for ticketing purposes. In this regard, trials for mobile ticketing have already started. The Railways plans to display online information in overnight trains of long distance.
For the convenience of commuters, especially senior citizens, 50 large stations across the country will have lifts and escalators, while 30 bigger stations would have multi-level parking system. The Ministry plans to run the Mother-Child Healthcare Express in alliance with the Rajiv Gandhi Foundation.
Apart from the facilities to the consumers, for those interested in joining the railways, the Group-D railway examinations would be taken in Urdu also, where it is the second language.
Technology updation
Lalu Prasad Yadav announced that the Government would introduce low maintenance and more comfortable stainless steel coaches from 2010. He said that Rs 4000 crore would be spent on green toilets for 36000 coaches in the next 5-year plan. All the trains will be run via online control in the next two years, Yadav promised. The trains would be linked via software communication by 2009.
The Railways need Rs 250,000 crore worth of funds over the next five years for IT upgradation, Yadav said. CCTVs and metal detectors would be put up at all stations, he informed. He will look look at multi model parks for Railways at various locations, he said.
Infrastructure updation
The Railways will start 53 new passenger trains. It will upgrade its infrastructure in the next seven years at the cost of Rs 75,000 crore. These funds would be employed to further develop saturated transportation lines. It plans to set up a 20,000 km high-density network. The work on connecting road for Pipavav Port has been completed, Yadav said. 25 tonne and 30 tonne axle-load trains will now be allowed for iron ore transport, he informed.
The Railway Minister informed that their 100 million tonne-worth business will come from the cement industry; which he targets as 200 million till 2011. Also, he aims to raise the annual steel traffic to 200 metric tonne in 2011 from the current 120 metric tonne.
Further, 50 new terminals would be developed for storage. He announced Special Purpose Vehicles (SPVs) for for links to Mundra, Kandla and Krishnapatnam ports.
The Railways will introduce new coaches in all Rajdhani trains by 2010-11. It will start making steel coaches from FY09. The level of platforms would be upgraded for passenger convenience. It will manufacture 20000 wagons in 2008-09, each having capacity of 22.9 tonnes. Lalu Prasad informed that 50 big terminals have been planned in Mumbai, Pune and Ghaziabad. Concor would set up 8 depots. Railway wagons would be available on lease here on, Yadav said. The Ministry has 15 licensed operators for container trains. It plans to increase container train operators to 50-55 trains. Yadav said that the Railways would have a new wagon leasing policy.
New Bulk handling facilities would be erected for cement, the Rail Minister said. There would not be a busy season surcharge for cement transported in bulk via new facilities, he promised. There would be a new policy for bulk handling terminals, he said. There will be a special focus on door-to-door and value added services. Yadav has planned SBUs (Strategic Business Unit) for cement, steel, coal and container sectors. In addition, Rs 1 lakh crore worth of PPP (Public Private Partnerships) have also been planned over the next five years.
Railways would introduce fire prevention devices in coaches on a pilot basis. The anti-fire gear would cost Rs 7,000 crore, if the pilot is successful, Lalu Prasad Yadav said.
Past Performance
According to the Budget Report, the Railways have a cash surplus of Rs 25000 crore in FY08. Its operating ratio is at 76%. Its work force stood at 14 lakh workers in FY08. The Minister informed that reduced fares increased volumes and profits.
The Railways has earned a cash surplus of Rs 25000 crore in FY08. Its operating ratio is at 76%. Its work force stood at 14 lakh workers in FY08. Yadav informed that reduced fares increased volumes and profits.
The Railways have Rs 68788 crore for five years as cash surplus, Lalu said. The Rail Corporation’s divident stood at Rs 88 he said.
Looking back at last year, the Rail Minister said, that they had offered lean season discounts and also, peak season had attracted surcharges, he said. The Railway Fund Balance is up at Rs 20,480 crore, Lalu informed. The Railways has adopted its tariff to up market share and revenues, he said. The April-December freight loading revenue is up 8-10% at Rs 34,700 crore, he said, adding that revenue from passenger fares has increased by 14%. Its property would fetch Rs 4000 crore in 2008-09, Yadav said. He also informed that 233 million tonne loading was done in the year and its additional earnings of Rs 2000 crore were on freight service.
Some highlights of the Railway Minister's speech:
* Sleeper, II class fares cut 5%
* 10 Garib Raths in FY09
* Fares for AC-I cut by 7%, AC-II 4%, AC-III 3%
* Freight on fuels cut 5%
* Rs 68788 cr for 5 years cash surplus
* Dividend of Rs 88 rupees
* There were lean season discounts offered
* Peak season attracted surcharges
* Railway Fund Balance up at Rs 20,480 cr
* Railways adopted tariff to up market share; revenue
* Apr-Dec freight loading revenue is up 8-10% at Rs 34,700 cr
* Railways will look at leveraging telecom boom for ticketing
* There will be an increase in ticketing counters to 15,000 in 2 years from the current 3,000 now
* Revenue from passenger fares increased by 14%
* FY09 freight loading seen at 790 MT vs 785 MT in FY08
* FY08 rail operating ratio at 76.3%
* Trials for mobile ticketing have already started
* Railways to launch the Go-Mumbai Card/ Smart Card
* Online information display in overnight trains of long distance
* Rs 4000 cr to be spent on 36000 coaches for greent toilets in next 5 year plan
* Low mainenance and more comfortable stainless steel coaches to be introduced from 2010
* To have online control of trains in 2 years
* To link trains via software communication by 2009
* New coaches in all Rajdhani trains by 2010-11
* To start making steel coaches from FY09
* Level of Platforms to be upgraded for passenger convenience
* 30 Bigger stations to have multi level parking system
* 50 large stations to have lifts / escalators- for convenience of senior citizens
* 233 million ton loading was done in the year
* Additional earnings of Rs 2000 cr on freight service
* To upgrade infrastructure in 7 years at Rs 75,000 cr
* 310 mn tonnes of additional freight loading in the next 3 yrs
* 75000 cr in next 7 yrs to further develop saturated transportation lines
* To up auto ticket sale machines to 6,000 in 2 years
* Plan to set up 20,000 km high density network
* FY08 coal freight loading seen at 336 MT
* Work on connecting road for Pipavav Port completed
* 25 tonne and 30 tonne axel load trains allowed for iron ore transport
* 100 mn tonne business from cement industry 200 mn target targeted till 2011
* 50 new terminals to be developed for storage
* SPV for links to Mundra, Kandla, Krishnapatnam ports
* 25-30 tonne axle load trains to be started
* Annual steel traffic aim of 200 mt in 2011 vs 120 mt now
* To manufacture 20000 wagons in 2008-09
* To manufacture wagons having capacity of 22.9 tonnes in 2008-09
* 50 big terminals planned in Mumbai, Pune, Ghaziabad
* Concor to set up 8 depots
* Wagons would be available on lease here on
* Have 15 licensed operators for container trains
* To increase container train operators to 50-55 trains
* To have new wagon leasing policy
* New Bulk handling facilities to be erected for cement
* No busy season surcharge for cement transported in bulk via new facilities
* To have new policy for bulk handling terminals
* Special focus on door to door and value added services
* No busy season surcharge for bulk cement transport via new facilities
* SBUs (Strategic Business Unit) planned for cement, steel, coal, container sectors
* Rs 250,000 cr worth of funds required by the Railways over the next 5 years for IT upgradation
* 1 lakh crore worth of PPP (Public Private Partnerships) planned over the next 5 years
* Will look at multi model parks for Railways at various locations
* Railway property to fetch 4000 crore in 2008-09
* CCTVs and metal detectors to be put up at all stations
* 60 yrs and older passengers get 30% discount, female above 60 get 50% discount
* Plan fire prevention device in coaches on pilot basis
* Anti-fire gear to cost Rs 7,000 cr if pilot successful
* Mother-Child Healthcare Express to be run in alliance with Rajiv Gandhi Foundation
* Group-D railway examinations to be taken in Urdu also, where it is the second language
* To start 53 new passenger trains
Source: Moneycontrol.com
Monday, February 25, 2008
No signs of bear market yet
Rashesh Shah, MD and CEO, Edelweiss Capital, said investors have been cautious on markets as volumes and open interests have come down. Most negatives have been priced in, though one needs to watch out for global cues, he told CNBC-TV18.
According to Shah, a bear market is not in sight till domestic GDP and corporate earnings growth slows significantly.
Excerpts from the exclusive interview with Rashesh Shah:
Q: What is your sense of the market leading up to the Budget this time?
A: I think overall the investors have been very cautious. The market volumes have come down, open interest has come down, So I think a little bit of optimism, our overall feeling is that between 5,000- 5,500, we should consolidate for another 3-4 weeks.
Q: So you are not in the camp, which believes that Nifty will go back and retest the lows of January?
A: As of now, I think everything is in the price, we have all the bad news out there. We are still exposed to global liquidity issues and it is hard to anticipate those because even in the US and other places, people don’t know whether things have gone as bad as they can or get worse.
So barring this unforeseen event, we are in a consolidation zone because of the earnings momentum and this is the quarter when mutual fund and insurance companies will get liquidity inflows for the equity markets.
Q: Is the Budget a material event in your eyes or do you think it may not be such a big trigger for the equity market at least?
A: I think may be a couple of days after the Budget, it will have some impact but on structural basis over the last few years, we have seen the intermediate trend that has continued inspite of whatever came out in the Budget. So overall the Budget is another catalyst for a short-term but on the medium-term basis, it should not have any impact.
Q: When do you see the confidence returning as volumes are still very low? Are you seeing any signs of rebuilding of that conviction level or you think we will have to wait for a long time before that comes back?
A: I think a lot of results in the US especially the investment banks are going to be out in March because they end in February and after that, there will be no Indian results in April and at least until the end of March, things will stabilise. By then people will have some indication of how Indian corporate results would be which are expected to be fairly much on track.
So, on that basis, we think another three-four weeks at least should go into a consolidation zone and overall it will be healthy. The market volumes are low so everybody is upset at this kind of volumes. I think another few weeks going sideways will be very healthy.
Q: You are confident that we’ll get away with this kind of consolidation because some of the experts are turning a bit bearish and they are beginning to mention the bear market word. For 2008, in your eyes is it likely that it gets so bad?
A: Currently there are no signs of that. The only situation in which I can see that happening is the global liquidity crisis and this entire credit crisis, which keeps on getting worse. Unless the GDP growth story and corporate earnings starts slowing down significantly, there is no sign of bull market. Global liquidity has started going away but Indian market should hold because of Indian liquidity and Indian growth.
Q: What did you make of the deal and how do you think these stocks will move going forward now that the deal is announced and the ratio is known?
A: Overall it should be good because consolidation in this industry has been imminent for quite some time as someone said for Centurion Bank to constantly capitalize itself, raise money and maintain this would have been a lot harder and even for HDFC Bank the addition of branches, so overall it should create investor value. Exchange ratios are dependent on market price because if you go back 3 months ago maybe the market prices were not same, so on the whole the market has adjusted fairly well and investors can see value in this over the next 18 month to 3 years because integration will take atleast 18 months if not more.
Q: How has the Reliance Power bonus ratio gone down with the market and what do you see that one doing now and ex-bonus?
A: Overall the market is relieved because everybody was expecting 3:1 and so 2.5:1 is slightly better than that, so the market is slightly relieved, slightly happy and we saw it cross the IPO price though in the morning it was down because quite a few people had accumulated the stock on the bonus rumours and when bonus got announced, quite a few people sold but once all that selling was over, we think people are now seeing this as a good stock at about Rs 280-300 range and this is where it seems to have stabilized on an ex-bonus basis.
Q: REC also went through without a hitch, do you think mood has stabilized in the primary market after all those issues getting pulled out etc or it’s still a bit fragile out there?
A; It isn’t as optimistic or as euphoric as earlier. We have strongly believed that this is not just a primary market issue; this is also the pricing issue. REC has been reasonably priced and keeping in the mind the market environment and the market outlook, the reasonably priced issues will go thorugh and maybe we will not see 100 times subscription etc but I think if issues are over subscribed 8-10 times 18-20 times that is not bad as long as they are reasonably priced.
We think there is investor appetite for reasonably priced issues although no euphoria and I think it’s an ideal situation.
Source: Moneycontrol.com
According to Shah, a bear market is not in sight till domestic GDP and corporate earnings growth slows significantly.
Excerpts from the exclusive interview with Rashesh Shah:
Q: What is your sense of the market leading up to the Budget this time?
A: I think overall the investors have been very cautious. The market volumes have come down, open interest has come down, So I think a little bit of optimism, our overall feeling is that between 5,000- 5,500, we should consolidate for another 3-4 weeks.
Q: So you are not in the camp, which believes that Nifty will go back and retest the lows of January?
A: As of now, I think everything is in the price, we have all the bad news out there. We are still exposed to global liquidity issues and it is hard to anticipate those because even in the US and other places, people don’t know whether things have gone as bad as they can or get worse.
So barring this unforeseen event, we are in a consolidation zone because of the earnings momentum and this is the quarter when mutual fund and insurance companies will get liquidity inflows for the equity markets.
Q: Is the Budget a material event in your eyes or do you think it may not be such a big trigger for the equity market at least?
A: I think may be a couple of days after the Budget, it will have some impact but on structural basis over the last few years, we have seen the intermediate trend that has continued inspite of whatever came out in the Budget. So overall the Budget is another catalyst for a short-term but on the medium-term basis, it should not have any impact.
Q: When do you see the confidence returning as volumes are still very low? Are you seeing any signs of rebuilding of that conviction level or you think we will have to wait for a long time before that comes back?
A: I think a lot of results in the US especially the investment banks are going to be out in March because they end in February and after that, there will be no Indian results in April and at least until the end of March, things will stabilise. By then people will have some indication of how Indian corporate results would be which are expected to be fairly much on track.
So, on that basis, we think another three-four weeks at least should go into a consolidation zone and overall it will be healthy. The market volumes are low so everybody is upset at this kind of volumes. I think another few weeks going sideways will be very healthy.
Q: You are confident that we’ll get away with this kind of consolidation because some of the experts are turning a bit bearish and they are beginning to mention the bear market word. For 2008, in your eyes is it likely that it gets so bad?
A: Currently there are no signs of that. The only situation in which I can see that happening is the global liquidity crisis and this entire credit crisis, which keeps on getting worse. Unless the GDP growth story and corporate earnings starts slowing down significantly, there is no sign of bull market. Global liquidity has started going away but Indian market should hold because of Indian liquidity and Indian growth.
Q: What did you make of the deal and how do you think these stocks will move going forward now that the deal is announced and the ratio is known?
A: Overall it should be good because consolidation in this industry has been imminent for quite some time as someone said for Centurion Bank to constantly capitalize itself, raise money and maintain this would have been a lot harder and even for HDFC Bank the addition of branches, so overall it should create investor value. Exchange ratios are dependent on market price because if you go back 3 months ago maybe the market prices were not same, so on the whole the market has adjusted fairly well and investors can see value in this over the next 18 month to 3 years because integration will take atleast 18 months if not more.
Q: How has the Reliance Power bonus ratio gone down with the market and what do you see that one doing now and ex-bonus?
A: Overall the market is relieved because everybody was expecting 3:1 and so 2.5:1 is slightly better than that, so the market is slightly relieved, slightly happy and we saw it cross the IPO price though in the morning it was down because quite a few people had accumulated the stock on the bonus rumours and when bonus got announced, quite a few people sold but once all that selling was over, we think people are now seeing this as a good stock at about Rs 280-300 range and this is where it seems to have stabilized on an ex-bonus basis.
Q: REC also went through without a hitch, do you think mood has stabilized in the primary market after all those issues getting pulled out etc or it’s still a bit fragile out there?
A; It isn’t as optimistic or as euphoric as earlier. We have strongly believed that this is not just a primary market issue; this is also the pricing issue. REC has been reasonably priced and keeping in the mind the market environment and the market outlook, the reasonably priced issues will go thorugh and maybe we will not see 100 times subscription etc but I think if issues are over subscribed 8-10 times 18-20 times that is not bad as long as they are reasonably priced.
We think there is investor appetite for reasonably priced issues although no euphoria and I think it’s an ideal situation.
Source: Moneycontrol.com
Budget could improve mkt sentiment
Dipan Mehta, Member, BSE & NSE, said the main contribution of the Budget could be in terms of improving the sentiment and confidence. "Even minor reductions in direct and indirect taxes can suddenly change the mood of investors and corporates. A good Budget and some thumping statements by the FM could resolve some issues relating to confidence. That could enable the market to hold these levels, perhaps a base could get created, and maybe then at higher levels we could see emergence of fresh buying, which has not been happening so far," he told CNBC-TV18.
Excerpts from CNBC-TV18's exclusive interview with Dipan Mehta:
Q: Does it seem that we have a got a bit of pre-Budget mood going or is it just short covering today?
A: It is more of short covering and lot of liquidity waiting on the sidelines also getting into the market, considering that global cues are positive. Confidence is gradually coming back into the market.
At the same time, the Budget will also have a role to play. It generally excites a lot of short-term traders. They will also be taking positions prior to the Budget. It is more to do with fresh liquidity coming in and short covering.
Q: What do you think the money is riding on right now? The fact that sentiment might make some kind recovery by the time we get to Friday or that the Budget will more or less be a positive event in the sense that even if it is neutral, it will be okay and out of the system?
A: The main contribution of the Budget could be in terms of improving the sentiment and confidence. Even minor reductions in direct and indirect taxes can suddenly change the mood of investors and corporates. A good Budget and some thumping statements by the FM could resolve some issues relating to confidence. That could enable the market to hold these levels, perhaps a base could get created, and maybe then at higher levels we could see emergence of fresh buying, which has not been happening so far.
So, it is more to do with softer aspects of the market rather than actual difference in dollar and rupee terms.
Q: At Rs 450, what would you do with Reliance Power?
A: Technicals suggests that it can go up another Rs 10-15. These are levels once should look at exiting. Again the strategy would be to try and spread out the sale of that stock and not just do it one shot today, because it is getting into some kind of momentum zone at this point of time. There is a chance that it could go closer to Rs 500. It is more to do with momentum, volumes, and trading activity than fundamentals.
Q: CBoP collapsed in trade today, even below the Rs 50 mark. How have you read the swap ratio that has come out for both banks?
A; It will be disappointing from CBoP point of view. May be shareholders over there could have got a raw deal. A bank like CBoP, which has delivered such fantastic performance over the past few quarters, has relatively clean balance sheet, and was growing at rates higher than the industry average, could have been able to extract little bit higher value. But then the deal is done and that is something the investors have to reconcile with.
So, the selling which we are seeing right now is more to do with sell on news kind of syndrome and not as much the fundamentals. At the end, both prices will quote at the ratio at which the merger has been decided.
In the long-term, a lot of analysts and we also feel that it will benefit the combined entity. HDFC Bank would at least be able to maintain 35-40% growth rates, which it has been able to deliver over the past several years. That is important because there were questions being raised on growth rates whether they were sustainable going forward or not.
Q: Did you have a chance to study the two new listings - Tulsi Extrusions or IRB Infra?
A: No, we have stayed away from both the IPOs. Similar business is available at more attractive valuations in the secondary market. Therefore, we would not cover them at all. Even at these levels, we maintain the view that in case of IRB Infra, which is the larger of the two, there are more interesting businesses that the company is engaged in and more value-added work than what they are in at this point of time. It is available at reasonable to rather attractive valuations and therefore we are staying away from them.
Q: What about OnMobile?
A: The story is extremely interesting and the space in which it is engaged is a high growth area. Going forward, a lot of revenues for the mobile telecom company should come from value-added services and this company exists in that particular space.
But the valuation over there is significantly higher than the other listed players who are engaged in similar businesses, like Tanla Solutions or some of the other companies engaged in telecom software products like Geodesic, Subex Systems or Megasoft. So, the business is great and it has a fantastic track record.
The valuation was higher than the peer group companies. Therefore, at these levels, we feel that investors could remain underweight or even exit out of the stock. Opportunities may come at lower levels.
Q: A lot of analysts voiced the grouse that the acquisition premium was more or less built into what CBoP was trading at. Do you think that is the case with most of these smaller private banks?
A: If you look at the entire spectrum, there are only two-three similar banks which could get acquired. What comes to my mind is DCB and maybe even Yes Bank could fall into that play. There are a host of old, private sector banks where there is no clear promoter group. The problem with the old private sector banks is that they are not deriving as much revenue from banking fees. The growth rates over there have been slow.
In new private sector banks there are only one-two which come to mind. Maybe in CBoP, which was a clear case of corporate action, the premium was built in. But in case of a lot of the other banks I do not think the premium has been built in. Even for Axis Bank, it is still trading at valuations which are close to its peer group like ICICI Bank or HDFC Bank.
Apart from this particular acquisition of private sector banks, we do not really see any such activity taking place at least in the near future. So, this kind of analysis is not really relevant at this point of time.
Q: When do you think trade on sugar will start settling down in any direction?
A: It is very difficult to make a guess at this point of time. They continue to bleed. Even for the March quarter, the results will not be that excited at all and the losses may persist.
But globally, sugar prices are at multi-month highs. Sooner than later, we should see an uptick in sugar prices in the domestic markets as well. If there is little bit of imbalance created in the supply as well, then we could see the entire cycle turning.
Whenever the first signs of a revival come in the sugar industry, we will see these stocks moving in a phenomenal manner. They could easily double in a fortnight or in a month’s time as well. That is the kind of lack of participation or short positions, which are there in this industry. So, if you are a contrarian player, sugar could be the industry for 2008 given that perhaps the worst is over for them.
Q: What is your own sense of the markets in the next series?
A: I am on the optimistic side. I think more than 5,400 is the likely scenario from our point of view. The reason for that is that we have adequate short positions in the futures market and that could be a trigger.
A lot of new fund offerings have been made and lot of mutual funds are sitting on cash. For insurance companies, the month of March is anyway good for collection because that is when the maximum premium does come in.
Some of the long-term FIIs may be interested in increasing their exposure. So, all these factors together kind of lead us to a more positive view in the next series.
Q: Is there anything that you would look at from the cement pack, with the Budget around the corner?
A: There is always a case for cement excise duty to come down, considering that is amongst the highest in the world. It is not ad valorem; it is based on the fixed rate. So, there could be some relief given to the cement industry over there.
At the same time, the cement companies are being faced with price increases. On the other hand, the government has been trying to control cement prices by persuading cement companies not to increase prices. So, there is a case over there. If cement prospects do look up, then some of the companies with large players especially are the best bets, like ACC, Gujarat Ambuja, and Jaiprakash Associates. Our disclosure is that we may have investments or recommendations on these stocks.
Disclosure: It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Excerpts from CNBC-TV18's exclusive interview with Dipan Mehta:
Q: Does it seem that we have a got a bit of pre-Budget mood going or is it just short covering today?
A: It is more of short covering and lot of liquidity waiting on the sidelines also getting into the market, considering that global cues are positive. Confidence is gradually coming back into the market.
At the same time, the Budget will also have a role to play. It generally excites a lot of short-term traders. They will also be taking positions prior to the Budget. It is more to do with fresh liquidity coming in and short covering.
Q: What do you think the money is riding on right now? The fact that sentiment might make some kind recovery by the time we get to Friday or that the Budget will more or less be a positive event in the sense that even if it is neutral, it will be okay and out of the system?
A: The main contribution of the Budget could be in terms of improving the sentiment and confidence. Even minor reductions in direct and indirect taxes can suddenly change the mood of investors and corporates. A good Budget and some thumping statements by the FM could resolve some issues relating to confidence. That could enable the market to hold these levels, perhaps a base could get created, and maybe then at higher levels we could see emergence of fresh buying, which has not been happening so far.
So, it is more to do with softer aspects of the market rather than actual difference in dollar and rupee terms.
Q: At Rs 450, what would you do with Reliance Power?
A: Technicals suggests that it can go up another Rs 10-15. These are levels once should look at exiting. Again the strategy would be to try and spread out the sale of that stock and not just do it one shot today, because it is getting into some kind of momentum zone at this point of time. There is a chance that it could go closer to Rs 500. It is more to do with momentum, volumes, and trading activity than fundamentals.
Q: CBoP collapsed in trade today, even below the Rs 50 mark. How have you read the swap ratio that has come out for both banks?
A; It will be disappointing from CBoP point of view. May be shareholders over there could have got a raw deal. A bank like CBoP, which has delivered such fantastic performance over the past few quarters, has relatively clean balance sheet, and was growing at rates higher than the industry average, could have been able to extract little bit higher value. But then the deal is done and that is something the investors have to reconcile with.
So, the selling which we are seeing right now is more to do with sell on news kind of syndrome and not as much the fundamentals. At the end, both prices will quote at the ratio at which the merger has been decided.
In the long-term, a lot of analysts and we also feel that it will benefit the combined entity. HDFC Bank would at least be able to maintain 35-40% growth rates, which it has been able to deliver over the past several years. That is important because there were questions being raised on growth rates whether they were sustainable going forward or not.
Q: Did you have a chance to study the two new listings - Tulsi Extrusions or IRB Infra?
A: No, we have stayed away from both the IPOs. Similar business is available at more attractive valuations in the secondary market. Therefore, we would not cover them at all. Even at these levels, we maintain the view that in case of IRB Infra, which is the larger of the two, there are more interesting businesses that the company is engaged in and more value-added work than what they are in at this point of time. It is available at reasonable to rather attractive valuations and therefore we are staying away from them.
Q: What about OnMobile?
A: The story is extremely interesting and the space in which it is engaged is a high growth area. Going forward, a lot of revenues for the mobile telecom company should come from value-added services and this company exists in that particular space.
But the valuation over there is significantly higher than the other listed players who are engaged in similar businesses, like Tanla Solutions or some of the other companies engaged in telecom software products like Geodesic, Subex Systems or Megasoft. So, the business is great and it has a fantastic track record.
The valuation was higher than the peer group companies. Therefore, at these levels, we feel that investors could remain underweight or even exit out of the stock. Opportunities may come at lower levels.
Q: A lot of analysts voiced the grouse that the acquisition premium was more or less built into what CBoP was trading at. Do you think that is the case with most of these smaller private banks?
A: If you look at the entire spectrum, there are only two-three similar banks which could get acquired. What comes to my mind is DCB and maybe even Yes Bank could fall into that play. There are a host of old, private sector banks where there is no clear promoter group. The problem with the old private sector banks is that they are not deriving as much revenue from banking fees. The growth rates over there have been slow.
In new private sector banks there are only one-two which come to mind. Maybe in CBoP, which was a clear case of corporate action, the premium was built in. But in case of a lot of the other banks I do not think the premium has been built in. Even for Axis Bank, it is still trading at valuations which are close to its peer group like ICICI Bank or HDFC Bank.
Apart from this particular acquisition of private sector banks, we do not really see any such activity taking place at least in the near future. So, this kind of analysis is not really relevant at this point of time.
Q: When do you think trade on sugar will start settling down in any direction?
A: It is very difficult to make a guess at this point of time. They continue to bleed. Even for the March quarter, the results will not be that excited at all and the losses may persist.
But globally, sugar prices are at multi-month highs. Sooner than later, we should see an uptick in sugar prices in the domestic markets as well. If there is little bit of imbalance created in the supply as well, then we could see the entire cycle turning.
Whenever the first signs of a revival come in the sugar industry, we will see these stocks moving in a phenomenal manner. They could easily double in a fortnight or in a month’s time as well. That is the kind of lack of participation or short positions, which are there in this industry. So, if you are a contrarian player, sugar could be the industry for 2008 given that perhaps the worst is over for them.
Q: What is your own sense of the markets in the next series?
A: I am on the optimistic side. I think more than 5,400 is the likely scenario from our point of view. The reason for that is that we have adequate short positions in the futures market and that could be a trigger.
A lot of new fund offerings have been made and lot of mutual funds are sitting on cash. For insurance companies, the month of March is anyway good for collection because that is when the maximum premium does come in.
Some of the long-term FIIs may be interested in increasing their exposure. So, all these factors together kind of lead us to a more positive view in the next series.
Q: Is there anything that you would look at from the cement pack, with the Budget around the corner?
A: There is always a case for cement excise duty to come down, considering that is amongst the highest in the world. It is not ad valorem; it is based on the fixed rate. So, there could be some relief given to the cement industry over there.
At the same time, the cement companies are being faced with price increases. On the other hand, the government has been trying to control cement prices by persuading cement companies not to increase prices. So, there is a case over there. If cement prospects do look up, then some of the companies with large players especially are the best bets, like ACC, Gujarat Ambuja, and Jaiprakash Associates. Our disclosure is that we may have investments or recommendations on these stocks.
Disclosure: It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Should you exit REPL before or after 3:5 bonus issue?
On Sunday, the Reliance Power Board approved a bonus issue of 3:5 shares, which essentially means that the company will issue 3 shares for every 5 held. Chairman, Anil Ambani said that the bonus share issue is only for non-promoters. The company said that the number of retail shareholders have increased in the last 10 days. The bonus is said to reduce IPO cost to Rs 269 for retail investors, to protect dilution of REL stake in Reliance Power. REL will be compensated by making up 2.6% from Ambani's own stake.
Ambani said that his personal stake in Reliance Power has been diluted to 40% versus 45%. He added that the public will hold 15% in Reliance Power.
There are two possible scenarios for retail investors to exit pre and post the Reliance Power bonus. One is to sell before the bonus itself or wait for the bonus to hit the markets.
If they sell before the bonus - let’s say if price touches about Rs 450 and the cost of acquisition per share is about Rs 430, they were making a profit of Rs 20 on each share and most of them are allotted about 15 shares. So net income profit is about about Rs 300.
But if you take a scenario of post bonus issue, one of the unknown is out of the question - which is the bonus issue. Now, one has to have a fair assumption of what the fair price is going to be. Let's assume that the fair price is about Rs 350, pre-bonus issue. Thereby post-bonus issue, the price will come to around Rs 330. Thereby the profit - on a per share basis the profit is going to be Rs 61.
So if assuming somebody has got allotment of 15 shares, the number of shares will go to 24. So 24 multiplied by 61 would give a profit of about Rs 1460. If you assume that the fair price is Rs 300, then the market price is going to be around Rs 283, which is about 14% profit per share - that will come to around Rs 330 or Rs 336.
So people have to fairly assume the fair price and then see whether they want to sell it right now or whether they want to sell it after the post-bonus issue. But the cut-off price for somebody to make a profit on this particular stock, is Rs 285 on a current market price basis.
Should you exit pre-bonus or post-bonus?
Pre-bonus exit
-If price touches Rs 450,retail investor profit at Rs 20/sh
-For 15 shares, total profit made at Rs 300
Ex-bonus Exit
a) For Rs 350 pre-bonus price, retail investor profit at Rs 61/sh
-For 24 shares, total profit made at Rs 1,464
b) For Rs 300 pre-bonus price, retail investor profit at Rs 14/sh
-For 24 shares, total profit made at Rs 336
c) For Rs 285 pre-bonus fair price should be the cut off to avoid losses
Source: Moneycontrol.com
Ambani said that his personal stake in Reliance Power has been diluted to 40% versus 45%. He added that the public will hold 15% in Reliance Power.
There are two possible scenarios for retail investors to exit pre and post the Reliance Power bonus. One is to sell before the bonus itself or wait for the bonus to hit the markets.
If they sell before the bonus - let’s say if price touches about Rs 450 and the cost of acquisition per share is about Rs 430, they were making a profit of Rs 20 on each share and most of them are allotted about 15 shares. So net income profit is about about Rs 300.
But if you take a scenario of post bonus issue, one of the unknown is out of the question - which is the bonus issue. Now, one has to have a fair assumption of what the fair price is going to be. Let's assume that the fair price is about Rs 350, pre-bonus issue. Thereby post-bonus issue, the price will come to around Rs 330. Thereby the profit - on a per share basis the profit is going to be Rs 61.
So if assuming somebody has got allotment of 15 shares, the number of shares will go to 24. So 24 multiplied by 61 would give a profit of about Rs 1460. If you assume that the fair price is Rs 300, then the market price is going to be around Rs 283, which is about 14% profit per share - that will come to around Rs 330 or Rs 336.
So people have to fairly assume the fair price and then see whether they want to sell it right now or whether they want to sell it after the post-bonus issue. But the cut-off price for somebody to make a profit on this particular stock, is Rs 285 on a current market price basis.
Should you exit pre-bonus or post-bonus?
Pre-bonus exit
-If price touches Rs 450,retail investor profit at Rs 20/sh
-For 15 shares, total profit made at Rs 300
Ex-bonus Exit
a) For Rs 350 pre-bonus price, retail investor profit at Rs 61/sh
-For 24 shares, total profit made at Rs 1,464
b) For Rs 300 pre-bonus price, retail investor profit at Rs 14/sh
-For 24 shares, total profit made at Rs 336
c) For Rs 285 pre-bonus fair price should be the cut off to avoid losses
Source: Moneycontrol.com
Good deal for Reliance Power shareholders
SP Tulsian of sptulsian.com said, “I think it is a good deal because there has been price correction of the effective cost - those who got the shares allotted at Rs 450 would be about Rs 280 and to the retail category, it is about Rs 270, which seems to be the legitimate and right correction into the aggressive pricing made by the company earlier.”
Source: Moneycontrol.com
Source: Moneycontrol.com
Stocks to watch: Rel Ind, Guj NRE Coke, Unitech
Technical analyst Ashwani Gujral said that if he had to accumulate at around 5,100 levels, a good way to approach the current market strength is that around 5,050-5,100 the market was looking little short. "The March futures were at a 50% discount and February still trading at about 15-20 point discount. So probably this is just a sharp pullback rally which needs to get sold into. In this market, one will anytime get 250 points on the upside. I think it’s a good time to go short probably with a 100 point Nifty stop. I think the maximum this rally could go up to is around 5,240-5,250,” Gujral explained.
Here's how Gujral views the stocks on board:
On Reliance Industries:
Every time the market has to pullback 100 points on the Nifty, Reliance has to do its bit. Probably it needs to cross above Rs 2,650 for us to say that it’s now heading back up to previous highs. But this is really a range bound move from the bottom of the range. One is just having 2-4% kind of pullback in most stocks.
On JP Associates & Balrampur Chini:
JP Associates now needs to sustain above Rs 250-255, that’s the 200 day moving average. It would really gain strength only once it can go pass Rs 290-300. So it means a lot of base building, it’s still probably the weakest stock in the F&O list.
Balrampur Chini is sort of rangebound Rs 78-80 as a support. On the upside it’s unable to go pass Rs 105. Sugar overall looks better than other sectors but because of the market its more range bound and trending upwards.
On power stocks:
Most power stocks are sideways. One shouldn’t expect that they will get back to new highs this year at least because most are over owned, selling is visible at all higher level. This year the under owned stuff, things like pharma, technology and to some extent sugar will move up. So people need to stay away from last year’s hero. We have seen what happened with JP Associates, it’s not the news, it’s nothing, its just that so many people have it that buyer fatigue is setting into all of these stocks.
On cement sector:
Cement has a typical problem that there is a lot of government interference, so people have sort of ignored that sector. But if one had to look at the downside, cement is something which has low downside and could probably have, if not too much upside, some potential for upside because it’s not so over owned as many of the other sectors.
On Gujarat NRE Coke and Unitech:
Gujarat NRE Coke was the weekend pick, so it’s good that it’s done well. It got support around Rs 150. Once the stock makes new highs and comes back and retests the previous high, that’s a good point to get into any stock. I think it should go to about Rs 200-210 levels.
I think Unitech is quite sideways:
Rs 320-330 is the 200 day moving average around here. It needs to get pass Rs 400-410 convincingly to restart some kind of a move. Most of the real estate stocks are now moving sideways, they have probably stopped getting punishment, but it will be a while before they can move up.
On Triveni Engineering:
I think Triveni has good support around Rs 110-115 and if that can hold up, it can get back up to Rs 165-170. But broadly, most sugar stocks are now range bound as the news has been coming on both sides.
On Bajaj Auto:
Bajaj Auto is between ranges of Rs 2,000-2,500, it’s consistently trading below its 200 EMA (Exponential Moving Average) which is around Rs 2,500. It has those 150 points up and down moves but broadly, it doesn’t seem to be going anywhere.
Disclosure: We have some long positions on Nifty
Source: Moneycontrol.com
Here's how Gujral views the stocks on board:
On Reliance Industries:
Every time the market has to pullback 100 points on the Nifty, Reliance has to do its bit. Probably it needs to cross above Rs 2,650 for us to say that it’s now heading back up to previous highs. But this is really a range bound move from the bottom of the range. One is just having 2-4% kind of pullback in most stocks.
On JP Associates & Balrampur Chini:
JP Associates now needs to sustain above Rs 250-255, that’s the 200 day moving average. It would really gain strength only once it can go pass Rs 290-300. So it means a lot of base building, it’s still probably the weakest stock in the F&O list.
Balrampur Chini is sort of rangebound Rs 78-80 as a support. On the upside it’s unable to go pass Rs 105. Sugar overall looks better than other sectors but because of the market its more range bound and trending upwards.
On power stocks:
Most power stocks are sideways. One shouldn’t expect that they will get back to new highs this year at least because most are over owned, selling is visible at all higher level. This year the under owned stuff, things like pharma, technology and to some extent sugar will move up. So people need to stay away from last year’s hero. We have seen what happened with JP Associates, it’s not the news, it’s nothing, its just that so many people have it that buyer fatigue is setting into all of these stocks.
On cement sector:
Cement has a typical problem that there is a lot of government interference, so people have sort of ignored that sector. But if one had to look at the downside, cement is something which has low downside and could probably have, if not too much upside, some potential for upside because it’s not so over owned as many of the other sectors.
On Gujarat NRE Coke and Unitech:
Gujarat NRE Coke was the weekend pick, so it’s good that it’s done well. It got support around Rs 150. Once the stock makes new highs and comes back and retests the previous high, that’s a good point to get into any stock. I think it should go to about Rs 200-210 levels.
I think Unitech is quite sideways:
Rs 320-330 is the 200 day moving average around here. It needs to get pass Rs 400-410 convincingly to restart some kind of a move. Most of the real estate stocks are now moving sideways, they have probably stopped getting punishment, but it will be a while before they can move up.
On Triveni Engineering:
I think Triveni has good support around Rs 110-115 and if that can hold up, it can get back up to Rs 165-170. But broadly, most sugar stocks are now range bound as the news has been coming on both sides.
On Bajaj Auto:
Bajaj Auto is between ranges of Rs 2,000-2,500, it’s consistently trading below its 200 EMA (Exponential Moving Average) which is around Rs 2,500. It has those 150 points up and down moves but broadly, it doesn’t seem to be going anywhere.
Disclosure: We have some long positions on Nifty
Source: Moneycontrol.com
Don't expect new highs in power stocks
Technical Analyst, Ashwani Gujral is of the view that one shouldn’t expect power stocks will get back to new highs this year at least because most are over owned, selling is visible at all higher level.
Gujral told CNBC-TV18, "Most power stocks are sideways and one shouldn’t expect that they will get back to new highs this year at least because most are over owned, selling is visible at all higher level. This year the under owned stuffs will move up; things like pharma, technology to some extent sugar so people need to stay away from last year’s hero; one has seen what happened with JP Associates; it’s not the news, its nothing; its just that so many people have it that its buyer fatigue that’s setting into all of these stocks."
Source: Moneycontrol.com
Gujral told CNBC-TV18, "Most power stocks are sideways and one shouldn’t expect that they will get back to new highs this year at least because most are over owned, selling is visible at all higher level. This year the under owned stuffs will move up; things like pharma, technology to some extent sugar so people need to stay away from last year’s hero; one has seen what happened with JP Associates; it’s not the news, its nothing; its just that so many people have it that its buyer fatigue that’s setting into all of these stocks."
Source: Moneycontrol.com
Market end strong; oil & gas, IT, pharma stocks surge
The markets opened with decent gap up today but could not sustain the momentum and slipped in red in early trade on the back of some profit booking witnessed across the sectors led by banking, auto and metal. During second half of trade, the markets recovered amid volatility and ended with handsome gains. Good amount of short covering were also witnessed in the late trade today. Cues from the Asain and European markets were encouraging.
It was good day for the Oil & gas, IT and pharma stocks which traded firm through the day. Broader markets underperformed the frontline counters once again and on the volume front, it was a modest day.
Sensex ended up 301.50 points or 1.74% at 17650.57, and the Nifty closed up 89.95 points or 1.76% at 5200.70. About 1211 shares have advanced, 1737 shares declined, and 87 shares are unchanged. BSE midcap ended flat at 7594.41 and smallcap was down 0.72% at 9526.28.
BSE auto index ended up 0.29% at 4721.15. TVS Motor, Maruti Suzuki, hero Honda and Escorts were the top gainers in the auto sector.
BSE bankex was down 0.37% at 10113.14. Karnataka Bank, Kotak Mahindra Bank and Andhra Bank were the top gainers.
BSE capital goods index ended up 0.92% at 15800.27. Carborundum, Triveni Engineering, Thermax were the top gainers in this space.
BSE FMCG index closed up 0.39% at 2239.84. Tata Tea, Colgate, Marico and Godrej Consumer were the top fliers today.
BSE pharma index was up 1.26% at 3792.07. IPCA Labs, Sun Pharma and Wyeth gained most in this counter.
BSE IT index was up 1.90% at 3992.54. In the IT sector, the leading gainers were Wipro, HCL Tech, Satyam and Infosys.
BSE metal index ended up 0.98% at 16530.16. Guj NRE Coke, Nalco and Shree Precoated were the top gainers.
BSE oil & gas index closed up 3.6% at 11057.38. Reliance GAIL, RNRL and Cairn India were the top gainers.
BSE power index ended up 1.09% at 3611.18. Reliance Energy, NTPC and Siemens were the top gainers.
BSE realty index closed up 1.12% at 9769.31. In the realty index, the top gainers were Unitech, Omaxe and Ansal Properties.
Cash Market:
* Relief Rally for the Markets in line with global peers; Clocks highest turnover for the month
* Sensex up 302 pts at 17651; Recovers over 500 pts from day’s lows
* Nifty up 90 pts at 5201; Recovers over 140 pts from day’s lows
* Market Breadth weak with NSE Advance Decline ratio of 2:3
* CNX Midcap Index down 0.1%, BSE Small cap Index down 0.7%
* BSE Oil & Gas Index up 3.6%; Reliance up 4.8%, GAIL up 4.5%, Cairn up 2.7%
* BSE IT Index up 1.9%; HCL Tech up 4.1%, Wipro up 3%, Satyam up 2.9%
* BSE Realty Index up 1.1%; Unitech up 3.3%
* BSE Metals Index up 1%; Nalco up 3.9%, Hindalco up 2.4%, Sterlite Ind up 1.7%
* Reliance Power closes above the issue price for the first time; Stock up 8%, REL up 4%
* Cements stocks see buying interest; ACC up 5.7%, Grasim up 4%, Ambuja Cem up 3.9%
* Other Index Gainers:
* Maruti up 4.5%, Sun Pharma up 3.5%, Idea up 3.5%, Hero Honda up 2.9%
* Other Index Losers:
* Bajaj Auto down 4.1%, HDFC Bank down 3.6%, Suzlon down 2.4%
* NSE Advance Decline is 2:3
* Total Turnover at Rs 68,651 Cr Vs Rs 51,253 Cr on Friday
Futures & Options:
* Turnover picks up in F&O space on the back of stable trade in second half
* Marketwide rollover at 32%
* Nifty rollover at 32%
* Nifty short rollover cost at around 25 points
* Long rolls seen in Cement, Metal stocks.
* It Stocks see rollovers pick up; Rollover cost remains flattish
* Reliance Power: Feb Series sheds 14.73 lakh shares; Fresh Shorts seen in April CoC fluctuates between 10-14 point discount
* Short Rollovers seen in Unitech, ONGC
Source: Moneycontrol.com
It was good day for the Oil & gas, IT and pharma stocks which traded firm through the day. Broader markets underperformed the frontline counters once again and on the volume front, it was a modest day.
Sensex ended up 301.50 points or 1.74% at 17650.57, and the Nifty closed up 89.95 points or 1.76% at 5200.70. About 1211 shares have advanced, 1737 shares declined, and 87 shares are unchanged. BSE midcap ended flat at 7594.41 and smallcap was down 0.72% at 9526.28.
BSE auto index ended up 0.29% at 4721.15. TVS Motor, Maruti Suzuki, hero Honda and Escorts were the top gainers in the auto sector.
BSE bankex was down 0.37% at 10113.14. Karnataka Bank, Kotak Mahindra Bank and Andhra Bank were the top gainers.
BSE capital goods index ended up 0.92% at 15800.27. Carborundum, Triveni Engineering, Thermax were the top gainers in this space.
BSE FMCG index closed up 0.39% at 2239.84. Tata Tea, Colgate, Marico and Godrej Consumer were the top fliers today.
BSE pharma index was up 1.26% at 3792.07. IPCA Labs, Sun Pharma and Wyeth gained most in this counter.
BSE IT index was up 1.90% at 3992.54. In the IT sector, the leading gainers were Wipro, HCL Tech, Satyam and Infosys.
BSE metal index ended up 0.98% at 16530.16. Guj NRE Coke, Nalco and Shree Precoated were the top gainers.
BSE oil & gas index closed up 3.6% at 11057.38. Reliance GAIL, RNRL and Cairn India were the top gainers.
BSE power index ended up 1.09% at 3611.18. Reliance Energy, NTPC and Siemens were the top gainers.
BSE realty index closed up 1.12% at 9769.31. In the realty index, the top gainers were Unitech, Omaxe and Ansal Properties.
Cash Market:
* Relief Rally for the Markets in line with global peers; Clocks highest turnover for the month
* Sensex up 302 pts at 17651; Recovers over 500 pts from day’s lows
* Nifty up 90 pts at 5201; Recovers over 140 pts from day’s lows
* Market Breadth weak with NSE Advance Decline ratio of 2:3
* CNX Midcap Index down 0.1%, BSE Small cap Index down 0.7%
* BSE Oil & Gas Index up 3.6%; Reliance up 4.8%, GAIL up 4.5%, Cairn up 2.7%
* BSE IT Index up 1.9%; HCL Tech up 4.1%, Wipro up 3%, Satyam up 2.9%
* BSE Realty Index up 1.1%; Unitech up 3.3%
* BSE Metals Index up 1%; Nalco up 3.9%, Hindalco up 2.4%, Sterlite Ind up 1.7%
* Reliance Power closes above the issue price for the first time; Stock up 8%, REL up 4%
* Cements stocks see buying interest; ACC up 5.7%, Grasim up 4%, Ambuja Cem up 3.9%
* Other Index Gainers:
* Maruti up 4.5%, Sun Pharma up 3.5%, Idea up 3.5%, Hero Honda up 2.9%
* Other Index Losers:
* Bajaj Auto down 4.1%, HDFC Bank down 3.6%, Suzlon down 2.4%
* NSE Advance Decline is 2:3
* Total Turnover at Rs 68,651 Cr Vs Rs 51,253 Cr on Friday
Futures & Options:
* Turnover picks up in F&O space on the back of stable trade in second half
* Marketwide rollover at 32%
* Nifty rollover at 32%
* Nifty short rollover cost at around 25 points
* Long rolls seen in Cement, Metal stocks.
* It Stocks see rollovers pick up; Rollover cost remains flattish
* Reliance Power: Feb Series sheds 14.73 lakh shares; Fresh Shorts seen in April CoC fluctuates between 10-14 point discount
* Short Rollovers seen in Unitech, ONGC
Source: Moneycontrol.com
Sunday, February 24, 2008
Reliance Power OKs bonus share issue
Reliance Power Ltd on Sunday set a 3-for-5 bonus share issue in an attempt to cheer shareholders after a miserable debut following a record $3 billion initial public offer.
Shareholders other than the founders will receive three bonus shares for every five held, effectively reducing the cost of the shares to Rs 269 for retail shareholders compared to a discounted IPO price of Rs 430.
For institutions, the bonus issue would cut the price to Rs 281 a share compared to an IPO price of 450 rupees.
Chairman Anil Ambani on Sunday said he was also giving up 2.6 percent of his shareholding in Reliance Power to Reliance Energy Ltd, which owns about 45 per cent in Reliance Power, so its ownership structure remains intact.
A proposed IPO for another group company was on track subject to market conditions, he said.
"We've seen very turbulent conditions in the global and Indian capital Markets," he said at a news conference.
"The Reliance Power IPO closed at a time when the market was close to an all-time high. But clearly, since then there has been turbulence in the Markets," he said.
"After considering these adverse changes, we have decided on a bonus issue to protect the interests of long-term investors."
The Reliance Power offer was fully subscribed within a minute of its opening and had attracted bids worth $190 billion from over 4 million investors in January, just days before stock Markets worldwide went into a tailspin.
India's benchmark 30-share BSE index is down 18 per cent from a record high of 21,206.77 hit on Jan. 10.
Shares in Reliance Power dived 17 per cent on their trading debut on Feb. 11.
News that the company would consider bonus shares or other measures had lifted sentiment last week. But at Friday's close they were still more than 7 per cent below the IPO price.
The slump in Reliance Power, a unit of the Anil Dhirubhai Ambani group, had irked investors who complained they were lured to invest by promises from the firm, which has no operating power plants and is unlikely to report strong profits for five years.
The company has reminded investors that there were risks attached to equity investments, and has said its shares were hit by weak market sentiment. It also blamed unidentified rivals.
The turbulent market has recently forced three firms to shelve their IPOs, including a $1.6.
Source: Financialexpress.com
Shareholders other than the founders will receive three bonus shares for every five held, effectively reducing the cost of the shares to Rs 269 for retail shareholders compared to a discounted IPO price of Rs 430.
For institutions, the bonus issue would cut the price to Rs 281 a share compared to an IPO price of 450 rupees.
Chairman Anil Ambani on Sunday said he was also giving up 2.6 percent of his shareholding in Reliance Power to Reliance Energy Ltd, which owns about 45 per cent in Reliance Power, so its ownership structure remains intact.
A proposed IPO for another group company was on track subject to market conditions, he said.
"We've seen very turbulent conditions in the global and Indian capital Markets," he said at a news conference.
"The Reliance Power IPO closed at a time when the market was close to an all-time high. But clearly, since then there has been turbulence in the Markets," he said.
"After considering these adverse changes, we have decided on a bonus issue to protect the interests of long-term investors."
The Reliance Power offer was fully subscribed within a minute of its opening and had attracted bids worth $190 billion from over 4 million investors in January, just days before stock Markets worldwide went into a tailspin.
India's benchmark 30-share BSE index is down 18 per cent from a record high of 21,206.77 hit on Jan. 10.
Shares in Reliance Power dived 17 per cent on their trading debut on Feb. 11.
News that the company would consider bonus shares or other measures had lifted sentiment last week. But at Friday's close they were still more than 7 per cent below the IPO price.
The slump in Reliance Power, a unit of the Anil Dhirubhai Ambani group, had irked investors who complained they were lured to invest by promises from the firm, which has no operating power plants and is unlikely to report strong profits for five years.
The company has reminded investors that there were risks attached to equity investments, and has said its shares were hit by weak market sentiment. It also blamed unidentified rivals.
The turbulent market has recently forced three firms to shelve their IPOs, including a $1.6.
Source: Financialexpress.com
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