Sharekhan Investor's Eye dated November 10, 2006

PULSE TRACK

• September 2006 IIP up 11.4%

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STOCK UPDATE

Mahindra & Mahindra

Cluster: Apple Green
Recommendation: Buy
Price target: Rs870
Current market price: Rs830

Extending Renault partnership

• Mahindra and Mahindra (M&M) and Renault have signed a memorandum of understanding (MoU) to set up a greenfield passenger car manufacturing plant with a total capacity of 500,000 vehicles. Nissan too may join the venture and the decision regarding the same is expected in the next four months.
• We view the development as a positive for M&M as it deepens the relationship between the two companies. M&M would also benefit from the strong technical skills and wide product portfolio of Renault.
• Nissan too is expected to join the venture and the decision regarding the same is expected to be taken in the next four months. In case Nissan decides to join the venture, the scope of the project would widen further. It would also bolster the exports of the company.
• This plant would have the capability to make the Mahindra range of products as well as the Mahindra-Renault range of products, ie the various versions of Logan. Renault has also announced plans to set up a power-train plant through a wholly-owned subsidiary in India.
• We maintain our Buy recommendation on the stock with our sum-of-parts price target of Rs870, at which it would quote at 12.9x its FY2008E consolidated earnings.

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SECTOR UPDATE

Automobiles

Double digit growth continues
The automobile sector continued to grow at double digits in October though the sales were affected due to high inventory build-up with the dealers and a higher number of holidays during the month that affected production. The car segment performed well with a 16.3% domestic growth, while the domestic two-wheeler sales grew at a lower rate of 9.5%. The overall automobile sales volume rose by 11.7% with the domestic and export sales rising by 10.4% and 30.1% respectively.

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MUTUAL GAINS

Sharekhan's top equity fund picks

We have identified the best equity-oriented schemes available in the market today based on the following parameters: the past performance as indicated by the returns, the Sharpe ratio and Fama (net selectivity).

The past performance is measured by the returns generated by the scheme. Sharpe indicates risk-adjusted returns, giving the returns earned in excess of the risk-free rate for each unit of the risk taken.

FAMA measures the returns generated through selectivity, ie the returns generated because of the fund manager's ability to pick the right stocks. A higher value of net selectivity is always preferred as it reflects the stock picking ability of the fund manager.

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MUTUAL FUNDS: WHAT’S IN—WHAT’S OUT

Fund Analysis: November 2006

An analysis has been undertaken on equity and mid-cap funds' portfolios, indicating the favourite picks of fund managers for the month of October 2006. Equity funds comprise of all diversified, index, sector and tax planning funds, whereas mid-cap funds include a universe of 17 funds such as Reliance Growth, Franklin India Prima Fund, HDFC Capital Builder, Birla Mid-cap Fund etc.

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Pioneer Reports

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Sharekhan Eagle Eye - Nov 13 -A positive week

The Nifty witnessed sideways moves in early trades, but substantial buying in front-line stocks in the afternoon saw the index test its all-time high and close the trading session near the 3840 level...

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Week Ahead - Market to consolidate

The market is expected to consolidate after finishing at a lifetime high of 13,295.36 on Friday (10 November), as profit-booking may emerge at the higher level. The barometer index, the BSE Sensex, has gained 41.50% for the calendar year 2006. Any further increase in crude oil price may, however, cap the upside.

The downside may be shielded on strong buying support from FIIs, who have been key drivers in the recent rally. FII-inflow in calendar 2006 so far has reached $7.14 billion. The inflows are strong, coming as they are on top of record annual inflow of $ 10.7 billion in 2005. The inflow totaled $6.59 billion 2003 and $8.5 billion in 2004. The fund-flows into India are due to strong earnings growth of India Inc coupled with increasing recognition of India’s long-term growth prospects.

The market sentiment remains strong due to strong FII-inflow and robust Q2 September 2006 corporate results.

Sugar companies Shree Renuka Sugars, Mawana Sugars and Balrampur Chini Mills are announcing September quarterly results next week. Sterlite Industries, SSI, Thermax and Automotive Axles will also be announcing their results in the same week.

Sharekhan Top Equity Fund Picks

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Movers & Shakers

• Punj Lloyd, which announced that it has bagged an EPC order worth Rs803.70 crore from Qatar Petroleum, logged significant gains.
• Vertex Spinning moved up on reports that the company is developing an integrated textile park at Dhule, Maharashtra with a total investment of Rs3,060 crore.
• Indian Hotels ended with modest gains after the company executed the final share purchase agreement with the owners of Hotel Ritz Carlton, Boston.
• Simplex Infrastructures, which received a contract from Delhi Metro Rail Corporation worth Rs212.11 crores, moved up sharply.
• Raymond notched up gains on reports that the company has signed a joint venture agreement with Grotto SpA, Italy.

Banking, CG stocks propel Sensex to new high

Fresh optimism in heavyweight, banking, capital goods and oil & gas stocks triggered a major rally in the afternoon that lifted the Sensex to a new intra-day high of 13304.
The Sensex began the trading session with a positive gap of 50 points at 13188, but declined on selling pressure to touch an intra-day low of 13105. However the market
gained momentum in the afternoon and bounced from lower levels as the sentiment turned extremely bullish on healthy buying in heavyweight, banking, capital goods and oil & gas stocks that lifted the index to a new intra-day high of 13304. The Sensex ended the session with gains of 145 points at 13283, while the Nifty added 38 points to close at 3835.

The breadth of the market was positive. Of the 2,583 stocks traded on the BSE, 1,261 stocks advanced, 1,227 stocks declined and 95 stocks ended unchanged. On the sectoral front, the BSE Bankex surged 2.43% at 6737 followed by the BSE CG index (up 1.53% at 8831), the BSE Oil & Gas index (up 1.25% at 6264) and the BSE CD index (up 1% at 3264).

Among the major gainers ICICI Bank soared 4.08% at Rs832, BHEL surged 3.03% at Rs2,456, HDFC Bank jumped 2.65% at Rs1,044, Gujarat Ambuja Cements advanced 2.63% at Rs135, L&T rose 2.02% at Rs1,337 and Dr Reddy's was up 2.02% at Rs789. Reliance Industries, Tata Motors, ACC, Hero Honda and REL gained 1.5-2% each. However, Cipla shed 1.22% at Rs268. Satyam was down 0.89% at Rs424, ITC slipped 0.56% at Rs186 and HDFC closed weaker by 0.54% at Rs1,495. Maruti, Bajaj Auto and Ranbaxy closed with marginal losses.

Over 2.13 crore Silverline Technologies shares changed hands on the BSE followed by Pentamedia Graphics (1.18 crore shares), Vishal Exports (79.10 lakh shares), Development Credit Bank (49.82 lakh shares) and GTL Infrastructure (47.99 lakh shares).

Value-wise Reliance Industries registered a turnover of Rs338.59 crore on the BSE followed by Indiabulls (Rs166.02 crore), Tech Mahindra (Rs106.92 crore), HDFC (Rs78.57 crore) and Hindustan Zinc (Rs67.09 crore).

BSE, NSE settle at lifetime high

The market witnessed across the board buying and the Sensex kept on advancing as trading progressed. India’s premier index, the BSE Sensex, struck an all-time high of 13,303.85 while the S&P CNX Nifty touched a high of 3,842.40, during the late-afternoon session of trade. The Sensex’s previous all-time high was at 13,000.69, on 7 November 2006. The market was banking on a strong set of industrial production figures, and a dip in inflation.

The BSE Sensex surged 145.42 points (1.11%), to end at 13,295.36. This is also its all-time closing high, the low for the day being 13,104.98.

The S&P CNX Nifty rose 45.25 (1.19%), to settle at 3,841.65.

The market-breadth, which was strong in opening trade, kept on easing, but ended marginally positive. On BSE, 1,274 shares advanced, compared to 1,255 that declined. As many as 88 scrips remained unchanged.

The total turnover on BSE amounted to Rs 4,541 crore, higher than Thursday’s Rs 4,263 crore.

Among the 30-Sensex pack, 23 advanced while the rest declined.

Banking stocks were in flavour on renewed buying. The BSE Bankex surged 159.70 points (2.43%), to 6,736.57. Private sector ICICI Bank was the top gainer, up 4.35% to Rs 834, on a volume of 5.82 lakh shares, after its ADR rose more than 3% on the New York Stock Exchange (NYSE) on Thursday. It had struck an all-time high of Rs 838, while its low was Rs 795. Centurion Bank of Punjab (up 7.33% to Rs 28.55), HDFC Bank (up 2.54% to Rs 1,043), SBI (up 0.24% to Rs 1,133.20), UTI Bank (up 1.67% to Rs 445), Kotak Mahindra Bank (up 1.68% to Rs 361.15), Union Bank of India (up 1.63% to Rs 130.65) and Union Bank of India (up 1.59% to Rs 130.60) also advanced.

Index heavyweight Reliance Industries (RIL) surged 2.13%, to Rs 1,288.25, on a volume of 26.62 lakh shares. Reliance Industries (RIL) said on Thursday, its board had approved raising up to $2 billion through loans and bond issues, or a combination of fund-raising instruments.

Software major Infosys rose 0.51%, to Rs 2,148.90. The stock rose for the fourth day in a row today, after shareholders on Tuesday approved a sponsored ADR issue.

Aluminium maker Hindalco Industries was up 0.25% at Rs 183.20, and its state-run counterpart Nalco gained 0.62%, to Rs 200 after three-month aluminium futures rose 4% on the the London Metal Exchange, on Thursday.

Cipla was the top loser, down 1.29% to Rs 267.75, on a volume of 2.28 lakh shares.

Bajaj Auto slipped 0.37% to Rs 2,595. It has ventured into the $ 6 billion Indonesian bike market with its flagship model, the 180 cc Bajaj Pulsar. The company also plans to set up a regional production base in Indonesia by investing $50 million over the next three years in a production base and distribution network.

Reliance Industries (RIL) was the top-traded counter on BSE with a total turnover of Rs 338.09 crore.

Indiabulls Financial Services followed with a turnover of Rs 164.48 crore. It surged 6.81% to Rs 509 on a high volume of 32.02 lakh shares. It spurted to a lifetime high of Rs 527.40, in opening trade.

Oil refining and marketing companies declined after US crude oil futures in Asian trade touched $ 61 a barrel. HPCL (down 2.07% to Rs 299.65), BPCL (down 2.10% to Rs 364) and Indian Oil Corporation (down 0.76% to Rs 485) declined.

Punj Lloyd (PLL) jumped 6.43% to Rs 932, after it bagged an EPC order worth Rs 803.70 crore for the Doha Urban Pipeline Relocations Project (DUPRP) from Qatar Petroleum. With this, the order backlog for PLL group is Rs 13,394 crore. This is the total value of unexecuted orders as of 30 September 2006, and new orders received till date.

Simplex Infrastructures jumped 7.95% to Rs 387, on bagging a Rs 212 crore contract from Delhi Metro Rail Corporation.

Indian Hotels rose 1.48% to Rs 150.80, after it acquired a luxury hotel in the US. Taj Hotels Resorts and Palaces, a unit of Indian Hotels Company, said on Thursday it had agreed to buy The Ritz-Carlton Boston hotel, the longest continuously operated Ritz-Carlton hotel in the United States, for $170 million. The 273-room luxury hotel will be renamed Taj Boston.

Bulk drug maker Granules India gained 2.50% to Rs 91.30. Its board approved raising up to $20 million through convertible securities, or through overseas issues.

Hindustan Zinc rose 1.21% to Rs 964.45, as three-month zinc futures touched a record high of $ 4,545 a tonne on the LME, on Thursday.

India's wholesale price index rose 5.09%, in the 12-months to 28 October, lower than the previous week's 5.41% due to a fall in the prices of manufactured products, data showed on Friday.

India's industrial production rose 11.4% in September from a year earlier due to robust manufacturing and electricity output, government data showed on Friday. Output had grown at 9.9% in August. Manufacturing production rose 12% in September from a year earlier, compared with 11.1% in August.

The Nikkei booked its lowest close in more than a month on Friday, slipping 0.53% after Japanese machinery orders data came in weaker than expected and heightened concern about the outlook for the world's second-largest economy. Investors punished machinery companies such as Kubota. The Nikkei finished down 86.14 points, at 16,112.43, its lowest close since 4 October 2006.

The Hang Seng index lost 61.72 points (0.33%), to 18,891.14.

FIIs were net equity sellers to the tune of $ 1.40 million on 8 November, while mutual funds were net sellers of Rs 275 crore in equities for the same day.

US stocks fell for the first time in three days on Thursday, led by a drop in the shares of big drug makers and health-care companies as investors worried that a Democrat-controlled Congress may curb prices. A jump of more than 2% in crude price and a weaker-than-expected reading in a gauge of consumer sentiment, added to the weaker tone. The Dow Jones industrial average was down 73.24 points, or 0.60%, to close at 12,103.30. The Nasdaq Composite Index was down 8.93 points, or 0.37%, to end at 2,376.01.

Oil was steady above $61 a barrel after surging more than 2% on Thursday. OPEC is lowering output and members have said it may cut supply further in December -- as demand is nearing its seasonal peak due to the Northern winter.

Sharekhan HighNoon

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Premium News - Punj LLoyd

India's Punj Lloyd Ltd. said on Friday it had won a contract worth 8.03 billion rupees ($180.9 million) from Qatar Petroleum.

The firm has been awarded an engineering and construction deal for the Doha Urban Pipeline Relocations project, a statement said.

Its shares were up 4 percent in afternoon trade in a firm Mumbai market.

Commodities Buzz

Following the RBA, the Bank of England raised interest rates by another 0.25% yesterday. The University of Michigan's preliminary index of consumer sentiment slid to 92.3 this month from 93.6 in October. This has put the dollar on the back foot against the other currency majors lifting the prices of metals.

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Breaking Premium News - Ansal Housing

Ansal Housing & Construction Ltd. said on Friday it would invest 2 billion rupees to develop a residential project in Indore, Madhya Pradesh.

Market may exhibit strong volatility

A look at how the indices fared at their closes: Sensex 13137.49 (+0.50%); Nifty 3796.40 (+0.51%); Nasdaq 2376.01 (-0.37%); Dow 12103.30 (-0.60%). On Nov 08 2006, FIIs were net sellers of stocks to the tune of Rs 6.20 crore (purchases worth Rs1960.80 crore and sales of Rs1967.00 crore) while domestic mutual funds were net sellers of stocks to the tune of Rs274.92 crore (purchases worth Rs387.17 crore and sales of Rs662.09 crore).

The market is likely to remain under pressure and may exhibit strong volatility following an overnight fall on the US market and weakness among major Asian indices in the ongoing trades. On the technical front, the Nifty in the short term could test 3780 on the upside and has a support in the 3805-3820 range. The Sensex may face resistance at 13158 and could test lower levels at 12950.

U.S. indices fell for the first time in three days on Thursday, as investors worried that a Democrat-controlled Congress may move to curb prices, with the Dow Jones moving down by 73 points at 12103, the Nasdaq dropping by nine points to close at 2376.

Most of the Indian floats trading on the US bourses closed in the green. ICICI Bank was the major gainer and advanced over 3% followed by Infosys and and VSNL which were up over 2% each. HDFC Bank rose nearly 2% while Patni Computers & Satyam gained 1% each. However, Rediff dropped over 1.5% while Dr Reddy's, Tata Motors Wipro and MTNL ended marginally lower.

Crude oil prices edged higher, with the Nymex Light Crude oil for December delivery gaining $1.33 to close at $61.16 a barrel, while the London Brent crude added $1.11 to close at $59.59 per barrel. In the Commodity space, the Comex gold for December series moved up $18.50 to settle at $636.80 an ounce.

Rides high on milestone anticipations

Asthma molecule GRC 3886 has already placed Glenmark among global innovators, now its turn for the other R&D pipeline.


Glenmark Pharmaceuticals Limited (Glenmark), subsequent to its Q2FY2007 results, held an analyst meet. The takeaways from the meeting are discussed below.

* Glenmark believes that the creation and ownership of intellectual property (IP) are critical for differentiation and value creation; therefore it plans to focus on building IP assets and out-licencing these to drive its growth.

* The company expects to receive $30 million from Forest Laboratory in FY2008. As per the company, the said milestone payment is already due, but has been delayed. Currently, the company is scouting for a partner in Europe to out-licence the GRC 3886 molecule for the European market, which would also trigger a milestone payment.

* In October 2006, the company signed an out-licencing agreement with Germany's Merck KgaA for its prospective diabetes molecule GRC 8200 for a total of €190 million (approximately Rs1,110 crore), including an up-front payment of €25 million (approximately Rs146 crore).

* For the USA, the company believes that to maintain the growth momentum it must continuously expand its product basket either by its own product filings or by product development alliances or by licencing marketing rights or by acquiring registrations in the USA.

* For Europe, Glenmark plans to focus on select branded generic markets like Spain, Italy and Eastern European countries. It is looking to acquire a company in Europe (having sales of 8-12 million euros and a strong product pipeline) to establish a front end. It plans to conclude the acquisition by the end of FY2007.

* Glenmark has a target for a 100% growth in Latin America in FY2007.

* Glenmark currently has 6 new chemical entity (NCE) molecules in its pipeline; 2 in Phase II trials, 3 entering the Phase I trials shortly and one in the pre-clinical stages. Its target is to take one molecule into the clinical trials every year. The company plans to conclude one more out-licencing deal in the current financial year.

*The company is upbeat on its growth prospects for the next two years. It has raised its growth guidance and its profit guidance for FY2007 and FY2008. As per the company's projections, it is planning to grow at a compounded annual growth rate (CAGR) of 52% over FY2006-08E, with profits growing at a CAGR of over 137% over the same period. It has raised its earnings per share (EPS) guidance from Rs36 earlier to Rs42. But the projected EPS has been powered largely by the anticipated milestone payments of $31 million in FY2007 and $69 million in FY2008. Considering the uncertainty of the milestone receipts, if we remove them from the projected earnings of Glenmark, the revised EPS would reduce by 50%.

* At the current market price (CMP) of Rs437, the stock is trading at 18.9x its consensus FY2008 earnings.

Research and development--the prime focus
Glenmark believes that the creation and ownership of intellectual property are critical for differentiation and value creation. Accordingly it plans to focus on building IP assets and out-licencing these to drive its growth.

The company currently has 6 NCE molecules in its pipeline; 2 in Phase II trials, 3 entering the Phase I trials shortly and one in the pre-clinical stages. Its target is to take one molecule into the clinical trials every year. It also plans to conclude one more out-licencing deal in the current financial year (ie FY2007).

In line with its strategy to emerge as a global research-based company, Glenmark has set up a biologics research centre in Switzerland. It plans to start research on bio-improvics and has a target to start Phase I trials on the first lead molecule by 2009.

Update on molecule GRC 3886 (Oglemilast)
The anti-asthma molecule—GRC 3886 (Oglemilast), which has been out-licenced to Forest Laboratory for the US market and to Teijin for the Japanese market--is under Phase II trials in the USA. The Phase II (b) trials are likely to begin in early 2008. So far as the milestone payment for the molecule is concerned, Glenmark expects to receive $30 million from Forest Laboratory in FY2008. As per the company, the said milestone payment is already due but has been delayed.

A survey by research and development (R&D) Directions of the USA classified GRC 3886 as one of the great 100 investigational drugs in the world. Currently, the company is scouting for a partner in Europe to out-licence the GRC 3886 molecule for the European market, which would also trigger a milestone payment.

Brief on diabetes molecule GRC 8200
In October 2006, the company signed an out-licencing agreement with Germany's Merck KgaA for its prospective diabetes molecule GRC 8200 for a total of €190 million (approximately Rs1,110 crore), including an up-front payment of €25 million (approximately Rs146 crore), besides the milestone payments upon the successful development and launch of mono-therapy and combination products based on GRC 8200. Merck KGaA will bear the cost of the ongoing studies on GRC 8200 and will be responsible for planning, managing and sponsoring all development activities in the future.

Merck KGaA will develop, register and retain commercial marketing rights for GRC 8200 in North America, Europe and Japan while Glenmark will retain the commercialisation rights for India for the molecule.

Expects consistency in milestone payments
Driven by its focus to create intellectual property, the company anticipates a series of milestone payments at regular intervals going forward. In FY2007, it would get the up-front milestone payment worth €25 million (approximately Rs146 crore) from Merck KgaA, and a milestone payment worth $69 million (including $30 million from Forest Laboratory) is expected in FY2008. Beyond FY2008, the company anticipates more milestone payments from the progress of its out-licenced molecules and from the out-licencing of new leads.

US branded generics on steady growth path
With the focused branded generics in the US market, Glenmark reported an outstanding 594% jump in its US formulation sales to Rs56.89 crore in H1FY2007. The company believes that to maintain the growth momentum it must continuously expand its product basket either by its own product filings or product development alliances or by licencing marketing rights or by acquiring registrations in the USA.

For its US branded generics from its own development, Glenmark plans to focus on products with greater margins/sustainability like dermatology, and modified release and controlled substances. In order to counter the pricing pressures in the US market and to enhance its profitability, Glenmark plans to integrate its formulations with its own DMFs and commercialise its field force.

As of now, Glenmark markets 10 abbreviated new drug applications (ANDAs), while 25 are under approval, leading to a total of 35 ANDAs (including partner filings of 14 ANDAs).

Europe--the new source of earnings
For Europe, Glenmark plans to focus on select branded generic markets like Spain, Italy and Eastern European countries. It is looking to acquire a company in Europe (having sales of 8-12 million euros and a strong product pipeline) to establish a front end. It plans to conclude the acquisition by the end of FY2007.

Also, it has plans to file and launch branded generics through its own front-ends and to provide dossiers to partners for non-core markets.

Targets 100% growth from Latin America in FY2007
In Latin Amarica, the company has integrated activities of its recently acquired company, Servycal with Glenmark operations, and has launched multiple Servycal products into Brazil. It has expanded its field force and has also commenced commercial operations in 8 additional countries including Brazil and Argentina in Latin America. With all its initiatives, the H1FY2007 revenues witnessed an 89.4% growth to Rs45.27 crore.

In order to achieve its target of a 100% growth in Latin America, Glenmark plans to expand its presence in the oncology segment to the other Latin American markets apart from Argentina and Brazil, and expects to file additional 10 dossiers in the markets across Latin America in H2FY2007. The company also plans to launch 10 new products in Brazil.

Guidance for domestic formulation sales increased from 10% to 15% in FY2007
The company has enhanced its guidance for the domestic formulations growth from 10% to 15%. In line with its plan to expand the domestic business, the company plans to strengthen its presence in respiratory, pain management and metabolic diseases segments. Also, it has plans for new launches from its own product pipeline, raising the in-licencing efforts for novel products and to improve cost-efficiencies and cash-cycle management.

View and valuation
Glenmark is upbeat about its growth prospects for the next two years. It has raised its growth guidance and its profit guidance for FY2007 and FY2008. As per the company's projections, it is planning to grow at a CAGR of 52% over FY2006-08E, with the profits growing at a CAGR of over 137% over the same period. It has raised its EPS guidance from Rs36 earlier to Rs42. But the projected EPS has been powered largely by the anticipated milestone payments of $31 million in FY2007 and $69 million in FY2008. Considering the uncertainty of the milestone receipts, if we remove them from the projected earnings of Glenmark, the revised EPS would reduce by 50%.

At the CMP of Rs437, the stock is trading at 18.9x its consensus FY2008 earnings.

Market to remain steady to firm on FII inflow

Continued FII inflow may keep the market firm. However, a section of the market advocates caution as the market has run up sharply over the past few months. The market has been witnessing an uptrend since late-July 2006. The Sensex is up almost 40% in calendar 2006, so far.

Small-cap and mid-cap stocks may remain in focus. There has been a surge in small-cap and mid-cap stocks on a selective basis since the past few days. Market men say that small-cap and mid-cap stocks are catching up with the surge in blue-chips since the past few days.

FII-inflow in calendar 2006 so far has reached $7.14 billion. The inflows are strong, coming on the top of record annual inflow of $ 10.7 billion in 2005. The inflow totaled $6.59 billion 2003 and $8.5 billion in 2004.

The fund-flows into India are due to strong earnings growth of India Inc coupled with increasing recognition of India’s long-term growth prospects. India’s growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation. Prime Minister Mahmohan Singh has promised a complete policy on infrastructure, including regulatory and institutional framework, to make it attractive for private participation in the near future.

Continued inflows from FIIs are notwithstanding apprehensions regarding stretched valuations of Indian equities.

A weaker-than-expected reading in a gauge of US consumer sentiment weighed on Asian stocks on Friday. Key benchmark indices in Hong Kong, Japan, and South Korea were down by 0.17% to 0.3%. Key benchmark indices in Taiwan and Singapore were up by between up by between 0.02% to 0.09%.

US stocks fell for the first time in three days on Thursday, led by a drop in the shares of big drug makers and health-care companies as investors worried that a Democrat-controlled Congress may move to curb prices. A jump of more than 2 percent in crude oil prices and a weaker-than-expected reading in a gauge of consumer sentiment added to the weaker tone. The Dow Jones industrial average was down 73.24 points, or 0.60 percent, to close at 12,103.30. The Standard & Poor's 500 Index was down 7.39 points, or 0.53 percent, to finish at 1,378.33. The Nasdaq Composite Index was down 8.93 points, or 0.37 percent, to end at 2,376.01.

Oil was steady above $61 a barrel after surging more than 2 percent on Thursday. Producer cartel OPEC is lowering output and some members have said it may cut supply further in December -- as demand is nearing its seasonal peak in the Northern winter.

Anand Rathi - Ray Ban & Hind Dorr Oliver

Ray Ban

Hind Dorr Oliver

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Way2Wealth - Glenmark

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Way2Wealth - Indian Hotels

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Bombay Rayon

Asian Paints

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Yatra to launch second art fund

Buoyed by the success of its first art fund, which saw an appreciation of 38 per cent in value terms in about an year’s time, Yatra Art Fund is launching its second art fund next month.

The fund size of Yatra-2 would be bigger at Rs 75-100 crore compared with Yatra-1’s Rs 11 crore, raised in September 2005. The investment objective of the second fund also varies slightly from the first fund.

While the first fund invested in the works of masters, the mandate of Yatra-2 art fund is to invest in the works of established contemporary artists, said V Sanjay Kumar, trustee of Yatra Art Fund.

“We are looking at the next level of artists. But, we will buy only those works that have an established re-sale market,” he said.

There are only 3-4 art funds in the country, the most recent one being the Osian’s Art Fund, promoted by auction house Osian’s Connoisseurs of Art Pvt Ltd. Osian’s Art Fund had raised Rs 102 crore in August this year, becoming the largest Asian art fund.

The Yatra-2 fund, which would raise funds through invitation from high networth individuals (HNIs), would also look at select investment opportunities in Chinese art.

Sanjay Kumar, who is also the co-owner of Sakshi Gallery and Synergy Art Foundation, said Yatra-2 will be a four-year close ended fund. In the West, where art funds are very well established, the tenure is higher at 10 years.

Nipun Mehta, co-founder and CEO of Unitis Tower Wealth Advisors Pvt Ltd, which will find the prospective investors for the fund, said the minimum investment amount for the Yatra-2 is pegged at Rs 10 lakh. This is lower compared with its first fund, where the minimum investment by investors was set at Rs 20 lakh.

“We are trying to attract more investors. We are asking HNIs to allocate 2-5 per cent of their investible allocation into art,” Mehta said.

Though the 38 per cent returns given by the first fund in the 12-month period matched the returns in the stock markets, there would be periods in the future when the returns may become more conservative.

“Art as an asset class tend to grow along with the Indian economic growth. There was similar interest for Chinese art (coinciding with the Chinese economic growth),” he said, explaining the current boom.

According to him the organised art auction market in India is estimated at Rs 1,000 crore while the private auction industry would be similar in size if not bigger.

Business Today - Money Column

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Man Impact Analysis (India Strategy & L&T)

India Strategy - Lust & Dust - Implications of Democrats winning Senate & House

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Motilal Oswal- Pharma

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Motilal Oswal - Sasken

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Motilal Oswal - Bajaj Auto

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Sharekhan Eagle Eye - Nov 10

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