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Wednesday, October 17, 2007
Sun TV’s Malaysia partner Astro cuts investment
Astro All Asia Networks Plc., the Malaysian partner in Sun Direct—the direct-to-home (DTH) venture of SunTV Network Ltd’s main promoter Kalanithi Maran—has revised downward the price it will pay for its stake in the company.
Astro says it will now pay Rs549 crore for a 20% stake (for 69 million shares), as against the Rs747 crore agreed upon when the original agreement was signed in April. This brings down the estimated enterprise value of Sun Direct to Rs2,745 crore from the earlier Rs3,735 crore.
And, instead of making the entire investment in one go, Astro will initially buy 39.7 million shares of Sun Direct for Rs79.57 each. It will buy the remaining 29.3 million shares between 1 January and 31 July. This essentially means that it is bringing in only 60% of its proposed investment now, and could make the rest of the investment as late as July.
These details are available in documents filed by Astro with the Malaysian Stock Exchange on 24 September, a few days after Sun Direct launched its subscription drive in Tamil Nadu, offering 75 channels for Rs75 per month, with an installation charge of around Rs1,200. The filing also says that both Astro and Maran would be free to enter alliances with other companies in the “same field” other than DTH. It was not immediately clear what “same field” constitutes. This provision was not present in the original agreement between the two companies.
Both Kalanithi Maran, who is also the chairman and managing director of publicly listed Sun TV Network, and Astro All Asia Networks did not respond to a questionnaire sent to them by fax and email.
The market for DTH services in India is projected to increase rapidly over the next few years. Consulting and research firm Media Partners Asia Ltd has estimated that the penetration of pay TV in India will cross 90% by 2015, from the current level of 61%. This is likely to bring 37.6 million households into the market.
Already, Dish TV from the Zee Networks Ltd, and Tata Sky, a joint venture between the Tata Group and Star Network, offer DTH services (so does state-owned broadcaster Prasar Bharati, but it offers free channels). Currently, there are around three million DTH subscribers between the two companies. Apart from Sun, Reliance—Anil Dhirubhai Ambani Group and the Bharti Group have got licences to launch DTH service in India.
While the rupee’s appreciation from Rs45 to the dollar to Rs40 could explain why Astro’s investment, in rupee terms, has come down, it still does not account for the extent of the reduction.
However, the new agreement between the two partners retains the clause by which Astro can provide financial assistance of up to Rs242 crore, or $54 million, to Sun Direct.
Kalanithi Maran and his wife, Kavery Maran, will subscribe to around 126 million shares paying Rs126 crore, a price of Rs10 per share, while Astro’s investment, even after the downward revision would be at Rs79.57 per share. The Marans had originally invested Rs150 crore for 150 million shares in February 2005. The total number of paid up shares in Sun Direct is 345 million.
FIIs can rollover PNs up to 18 months
In a bid to calm the investors, market regulator Securities and Exchange Board of India (Sebi) today said Foreign Institutional Investors would be allowed rollover Participatory Notes in derivatives market, provided it does not exceed the 18-month limit.
“It is made clear that there is no proposal to bar an Overseas Derivative Instrument (ODI) contract expiring this month or in the following months, being renewed provided the renewal does not go beyond 18 months,” Sebi said in a clarification to its draft discussion paper on ODI that includes Participatory Notes (PNs).
The Sebi clarification clears the air of uncertainty over the fate of renewal of PNs that are due to expire this month or will expire in the coming months.
SEBI had yesterday invited public comments on its proposal to restrict with immediate effect, issuance of PNs in derivative markets by FIIs and their agents.
As per the proposals, FIIs and their sub-accounts are required to wind up the current ODI position over 18 months, during which Sebi will review the position from time to time.
Sebi has sought comments from public by 20 October on its discussion paper, which Finance Minister P Chidambaram today said will become regulations “with or without some modifications.”
Sebi’s clarification came after the Sensex crashed by over 1,700 points within minutes of commence of trading, leading to closure of the markets for an hour. The markets, however, have recovered considerably after an assurance by the Finance Minister that there is no proposal to completely ban Participatory Notes.
10 biggest Sensex falls
Here are the 10 biggest falls in the Indian stock market history:
Oct 17 2006, Sensex falls 1744 points, recovers by 391 points
May 18, 2006: The Sensex registered a fall of 826 points (6.76 per cent) to close at 11,391, it's biggest ever, following heavy selling by FIIs, retail investors and a weakness in global markets.
April 28, 1992: The Sensex registered a fall of 570 points (12.77 per cent) to close at 3,870, it's second-largest, following the coming to light of the Harshad Mehta securities scam.
May 17, 2004: Another Monday. Sensex dropped by 565 points, its third biggest fall ever, to close at 4,505. With the NDA out of power and the Left parties, part of the UPA coalition government, flexing their muscle, the Sensex witnessed its second-biggest intra-day fall of 842 points, twice attracting suspension of trading. At close, however, it regained some of its lost ground.
May 15, 2006: The market fell by 463 points to 11,822 points.
May 22, 2006: Sensex slumped by 457 points to 10,482.
May 19, 2006: Sensex slumped by 453 points to 10,939.
April 4, 2000: Sensex slumped by 361 points to 4,691.
May 12, 1992: Indian stock markets plunged 334 points to fall to 3,086.
May 14, 2004: Sensex lost 330 points to fall to 5,070.
May 6, 1992: Losing 327 points, the Sensex fell to 3,561 po
Foreign inflow won't rely on P-notes
“There will be no change in the outlook of foreign investors. People were worried and took extreme steps,” Arun Kejriwal of Kejriwal Investment Securities said of Wednesday’s steep fall in equities.
Securities and Exchange Board of India’s discussion paper on participatory notes, seeking to clampdown on the foreign funds inflows into the country, saw the stock market buckle down early today.
The Sensex, which gained over 1,000 points in four sessions to scale 19,000, lost over 1,700 points in a few minutes of trade opening. The Nifty lost over 500 points from 5,600 levels.
However, the steep fall was on thin volumes. One shouldn’t read much in the fall and recovery as the fall, Kejriwal said.
Volumes were negligible due to lack of participation. Turnover in BSE cash market was Rs 122 crore before trade was suspended while that on NSE was Rs 48 crore.
The fall was more due to lack of clarity among investors over the future of foreign fund inflows which have been driving the Indian markets to new highs recently.
“Retail investors could not obviously quantify the effect of SEBI’s clampdown on P-notes but they knew that something adverse would happen. So they decided to book profits. FIIs, on the other hand, were going to be affected by the clampdown, so until they could get a good grasp of the effect, they would have sold a bit,” said Vinay Bhandari, options trader with trading firm Olam International.
“The crash in the morning would have been on very thin volumes, which is why it eventually recovered,” Bhandari said.
As the indices hit lower circuit filters, trading was suspended for an hour till 10:55 am. And as traders waited for the market to open fearing the worst, relief came from Finance Minister P Chidambaram, who said SEBI’s move was aimed at “moderating the copious capital inflows” into the country and had not banned participatory notes.
“Investors, through participatory notes are certainly welcome to invest in India, but for the present it is important to moderate these capital inflows. If some investor wishes to register in India as an FII and invest, he is most welcome,” the finance minister said.
Chairman M Damodaran also sought to allay fears of a ban on P-notes, saying that authorities did not want to ban foreign funds coming into the country, but wanted transparent flows through registration of investors.
“...there is no proposed bar on overseas derivatives instruments contracts, expiring this month or in the following months, being renewed provided the renewal does not go beyond 18 months,” SEBI said in a statement.
Damodaran said a disproportionate amount of participatory notes were being issued by a limited number of people.
These statements and the hour’s break helped control the damage done, and the indices rebounded with vengeance. The Sensex recovered nearly 1,400 points and Nifty rebounded 450 points.
Going ahead, experts said capital inflows won’t depend on P-notes but on the economy. As long as economy is strong inflows will continue.
“FIIs will not change their outlook on Indian markets since the regulatory framework for foreign investments will not affect the fundamentals of the growth story,” said Bhandari of Olam International.
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OVERALL - 161 votes
Wow, the 16% who cashed out yesterday, let us know when you sell !
Post Market Commentary
The market ended with humble loss after facing a dwindling situation at the initial stage of the trading session as a result of which the trading was suspended for an hour within few minutes of the start. At last the BSE Sensex closed lower by 336.04 points at 18,715.82 and Nifty fell 108.75 points to close at 5559.30. The market got the momentum to cover up most of the looses after the statement by Finance minister that there is no proposal for the banning of participatory notes. Also the SEBI''s chairman also later comment that the Participatory notes are not being banned. Only the IT index ended on a positive note but Metal, bank PSU and reality index declined drastically. The market created a history with a fall of more than 1700 points in a single day. Overall, the market breadth was weak as 1,757 stocks closed lower while 922 stocks closed higher. The BSE Mid Cap and Small Cap closed lower by 181.73 points and 154.55 points at 7,600.94 and 9,201.58 respectively.
BSE Bankex index fell 366.52 points to close at 9,607.61. Pulling it down are BOI (6.38%), Allahabad bank (6.65%), SBI (4.98%), ICICI bank (3.45%), HDFC bank (2.99%) closed lower.
The Reality index slipped by 356.19 points to close at 9,831.12. Drifting it down are Omaxe ltd (7.91%), HDIL (7.65%), Sobha developers (5.63%), Parsvnath (5.83%) and Unitech (3.51%) closed in negative.
BSE Metal index closed lower by 436.87 points at 15,719.80. Pulling it down are JSW steel (6.40%), Jindal stainless (5.37%), Nalco (5.09%), Tata steel (4.19%) and SAIL (1.90%) closed lower.
BSE Capital Goods index fell 289.40 points to close at 16,824.54 as BHEL (4.69%), Punj Lloyd (4.58%), Praj industries (3.86%), BEML (3.51%) and L&T (1.58%) closed in red.
The IT index grew by 47.40 points to close at 4,676.90 as TCS (2.53%), HCL tech (2.18%), Satyam (1.63%), I-Flex (1.46%) and Infosys (1.16%) closed in green.
Market Close: Recovered after clarity on P-notes..
It was a dramatic day for market and ended with remarkable recovery. The impact of the SEBI regulations regarding the ban of P-Notes to FII's created havoc on the Indian bourses in the morning trades. Heavy selling intensified the market to hit lower circuit and was forced to stop trading for an hour within minutes of opening trades. Support from the Asian counter part failed to have any impact on the Indian indices. Further clarification from the FM and the SEBI chairman regarding the P-notes after the reopening of the session provided guidance for the investors not to be panic. This prompted for value buying which led to the remarkable recovery in the last hour of trading after a steep fall of 1700 points. However, all the major sectors continued to be in the negative territory. The top losers for the day were on the Banking, Reality, Metals and Auto counters. The only exception being the IT stocks which continues to rise because of rupee depreciation. Mid caps failed to attract buyers at the lower levels. European indices continue to trade mixed after a start in green.
The clamp down on the P-Notes was just an attempt to stem the dollar flow which has been coming in quite rapidly. Another issue which came out was unwinding of p-notes to be completed in 18 months. One can guess that the unwinding would be quite disastrous for the markets but if seen in other way this will not be as big a catastrophe as the funds will now get registered with Sebi and the shares from the P-Notes will see an easy transfer. However some funds may lower positions as the tax benefits they were enjoying with P-notes is now blocked. So one can see that the funds will have the inflow but not at the same pace as it was so far from 17K to 19K.
Sensex ended down by 391 points at 18,661 levels. Supporting the indices were gains in TCS (+2.80%), Reliance (+1.88%), Satyam (+1.86%), Infosys (+0.52%) and Wipro (+0.13%). Restricting the gains were the losses in REL (-8.18%), BHEL (5.66%), NTPC (-5.30%), SBI (-5.27%) and ACC (-4.95%).
Mold Tek Technologies Ltd delivered a good set of numbers for the ended of Sept quarter. Mold Tek is one of the leaders in packaging and an emerging player in the Structural Engineering KPO Services segment. Mold Tek managed a growth of 12 % yoy with total turnover of Rs. 28 cr as against Rs. 25 cr during last year. Sales in the Packaging Division rose by 4% from Rs. 22.28 cr to Rs.23.12 cr and that from the IT Division increased from Rs. 4.23 cr to Rs.5 cr with an impressive more than 18% growth sequentially. The overall net profit for the 2Q FY08 registered a growth of 66% from Rs. 2.2 cr of previous year to Rs. 3.7 cr for the current year. The profits from the IT division jumped from Rs. 1.57 cr to Rs. 2.69 cr, thus registering a 71 % growth yoy while profits from Plastic division grew by 55% to Rs 0.99cr. The stock has seen good volumes after long time. We are positive on this one for long term. There could be some triggers from a probable acquisition. The company has been working towards such for some time now. Do read the detailed result analysis of the latest quarter results to know more about the company.
Chennai-based Dhanus Technologies (DTL) got listed in capital market with 1% premium over its issue price of Rs295 amid high volatility at the bourses. DTL came with Public issue of 3835000 equity shares of Rs 10 each. The IPO of the company was subscribed by about 28 times. The company intended to expand its infrastructural facilities and equipment base and would be constructing its new corporate office and network operating centre. Dhanus Technologies offers telecommunication services and unified messaging and enhanced logistics services. The company also has a BPO operation of telemarketing services to the US, UK and Australia markets. The stock ended the day with 5.5% premium against the issue price of Rs 295.
Technically Speaking: Sensex traded between a broad range of 1,300 points and witnessed an intra day high of 18,841 and low of 17,544. Declines outnumbered Advaces in the ratio of 2:1. Volume of Rs10159 cr was churned through out the day. Sensex has given a weak close. The trend remains up untill the close is below 18400.
Sensex recovers after crashing by 1,744 points
The BSE Sensex opened with a negative gap of 1,014 points at 18,038 on the back of the Sebi's discussion paper to clamp down on participatory notes, while the NSE Nifty opened marginally ten points down and dipped to 524 points. Although the market remained in negative territory throughout the trading session, yet the Sensex pared some of the losses and wrapped up the session with a loss of 336 points at 18715 while the Nifty shed 109 points to close at 5559.
The market breadth was extremely weak. Of the 2,724 stocks traded on the BSE, 1,753 stocks declined, 925 stocks advanced and 46 stocks remained unchanged. All the sectoral indices plummeted sharply. The BSE PSU Index dropped 3.84%, the BSE Bankex shed 3.67%, the BSE Reality Index declined 3.50%, the BSE Metal Index dropped 2.70%, the BSE CD Index was down 2.45% and the BSE Auto Index declined 2.19%. The remaining indices were down around 1-2% each.
Among the Sensex gainers, TCS leads with a gain of 2.53% at Rs1,095, Satyam Computer Services moved up 1.63% at Rs457, and Reliance, Infosys Technologies and Hindalco also gained marginally. While Reliance Energy tumbled 7.46% at Rs1,762, ACC plunged 5.05% at Rs1,202, SBI slumped 4.98% at Rs1,828, BHEL dropped 4.69% at Rs2,283, NTPC shed 4.52% at Rs221, Mahindra and Mahindra lost 4.23% at Rs780 and Tata Steel declined 4.18% at Rs869. The other front-line stocks were also down 2-3% each.
Dhanus Technologies was listed on the BSE at Rs295. Hectic activity saw the counter lose momentum and touch a low of Rs251. The counter closed at Rs311 on strong volumes of over 39.71 lakh shares on the BSE.
Over 4.76 crore Power Grid shares changed hands on the BSE followed by RNRL (3.68 crore shares), RPL (2.67 crore shares), Tata Teleservices (2.21 crore shares) and IFCI (1.22 crore shares).
Grey Market - Mudra Port, Reliance Power and more
Reliance Power 48 to 49
Mudra Port & Sez 300 to 310
Supreme Infra 108 78 to 73
Saamya Biotech (I) Ltd. 10 14 to 15
MAYTAS Infra 370 155 to 160
Circuit Systems (India) Ltd. 35 6 to 8
Rathi Bars 35 8 to 9
Allied Computers 123 to 4
Market recovers after initial bloodbath; Sensex sheds 336 points
After an initial jolt, the market staged a solid rebound from lower level today even as it ended in the red. Securities & Exchange Board of India (Sebi) Chairman M Damodaran assured that participatory notes (PNs) are not being banned. The market had earlier recovered after Finance Minister’s comments that there is no proposal to ban participatory notes. Earlier the market regulator Sebi’s proposals to clamp down participatory notes to restrict foreign inflows, announced after trading hours on Tuesday, 16 October 2007, created havoc on the bourses today. Trading was halted just within minutes of opening, as market wide circuit filters were triggered by a steep fall. European markets were in the green.
IT stocks edged higher. Metal, realty, banking stocks declined heavily. Reliance Industries gained ground, with the stock staging a solid rebound from lower level. Reliance Energy recovered from lower level. Most of the Sensex stocks recovered from their lower levels after an initial setback. Asian markets were mixed. Market breadth was weak.
The BSE 30-share Sensex ended down 336.04 points, or 1.76%, to 18,715.87. It opened with a downward gap of 1,013.96 points at 18,037.90. When the trading was halted at 09:57 IST, Sensex was down 1,743.96 points or 9.15% to 17,307.90.
The broader based S&P CNX Nifty ended down 108.75 points, or 1.92%, to 5,559.30. When the trading was halted at 09:57 IST, Nifty was down 524.15 points or 9.25% to 5,143.90.
Nifty October 2007 futures were at 5,552.20, a discount of 7.1 points over the spot price of 5,559.30.
Finance Minister P Chidambaram said on Wednesday, 17 October 2007, the proposals to moderate portfolio investment by foreign investors were part of a series of steps to moderate capital inflows.
Chidambaram told a news conference that foreign investors were still welcome to invest in India through participatory notes but it was important to moderate inflows at present and the decision was good for markets in the long term.
After market hours on Tuesday, 16 October 2007, market regulator Securities & Exchange Board of India (Sebi) proposed a number of restrictions that will effectively spell doom for the thriving participatory note (PN) activity in the stock market. All this was done to slam brakes on the flows of anonymous foreign capital.
PNs are financial instruments used by investors or hedge funds that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.
Once the Sebi proposals are operationalised, only FIIs whose outstanding notes do not exceed 40% of their total asset holding in India will be allowed to issue fresh ones. For instruments already issued by FII sub-accounts, Sebi has given a window of 18 months to wind up existing positions.
Securities & Exchange Board of India (Sebi) Chairman, M Damodaran, clarified to television media that participatory notes (PN) are not being banned and there will be no bar on FII inflows. But it is important to differentiate between PN underlyings, he added. He said that 18 months for unwinding will be enough and during this time, serious investors can register themselves. PNs can be renewed post unwinding the equal amount. Sebi is looking at encouraging more FII registrations and therefore it may look at simpler FII registration norms. He also clarified that Sebi is not proposing a ban on offshore derivatives.
As per reports, the notional value of investments through PN’s route grew almost ten times to Rs 3.53 lakh crore at the end of August 2007 from just Rs 31, 875 crore three years ago
BSE clocked a turnover of Rs 10,159 crore today compared to Tuesday (16 October 2007)'s Rs 9,794.35 crore. NSE futures & options (F&O) segment clocked a turnover of Rs 98,395.58 crore today, 16 October 2007 compared to a turnover of Rs 90751.74 crore crore on Tuesday,16 October 2007.
Turnover on BSE was a mere Rs 122.02 crore when trading was halted on the bourses at about 9:57 IST. It was just Rs 48 crore on NSE by that time. NSE's futures & options segment had clocked a turnover of Rs 4347 crore by that time.
Of the 30 shares of the Sensex, 5 had moved up, while the remaining were trading down. The market breadth was weak: 922 scrips advanced, 1,733 declined, while 378 remained unchanged.
BSE Mid Cap index lost 2.34% to 7,600.94 and underperformed Sensex. BSE Small Cap index declined 1.65% to 9,201.58 and outperformed Sensex.
BSE Auto index (down 2.19% to 5,476), BSE Bankex (down 3.67% to 9,60761), BSE Metal index (down 2.7% to 15,719.80) and BSE Realty index (down 3.5% to 9,831.12) underperformed Sensex.
BSE Capital Goods index (down 1.69% to 16,824.54), BSE IT index (up 1.02% to 4,676.49) and BSE FMCG index (down 1.66% to 2,100.38) outperformed Sensex.
India’s largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) rose 1.59% to Rs 2,690.30. The stock came off session's low of Rs 2,278.60. Volume in the stock was a huge 37.65 lakh shares on BSE.
Reliance Energy (REL) declined 7.46% to Rs 1,762.40 and was the top loser from Sensex pack. It recovered sharply from session's low of Rs 1,532 in afternoon trade. Reliance Energy’s net profit jumped 34.17% to Rs 250.08 crore on 13.65% rise in total Income to Rs 1799.92 crore in Q2 September 2007 over Q2 September 2006. REL announced the results today during the market hours today.
ACC (down 5.05% to Rs 1,202.65) , Bharat Heavy Electricals (down 4.69% to Rs 2,283.50) and NTPC (down 4.52% to Rs 220.80) were the major losers from Sensex pack.
Larsen & Toubro was down 1.58% to Rs 3,293.50. It recovered sharply from session's low of Rs 3,000.
Metal shares lost ground. Tata Steel (down 4.19% to Rs 869.10), Steel Authority of India (down 1.9% to Rs 247.25) edged lower. Hindalco Industries rose 0.25% to Rs 197.95.
Realty shares dropped. DLF (down 2.45% to Rs 896), Indiabulls Real Estate (down 4.06% to Rs 577.60) and Unitech (down 3.51% to Rs 341.30) edged lower.
Banking stocks declined but recovered from lower levels. ICICI Bank down 3.45% to Rs 1,116.85. It recovered from session's low of Rs 1,012.15. HDFC Bank (down 2.99% to Rs 1,459.60) and State Bank of India (down 4.98% to Rs 1,828.50) edged lower.
Buying was witnessed in IT stocks at lower level. BSE IT index was the lone gainer from sectoral indices on BSE. TCS (up 2.53% to Rs 1,095.10), Infosys (up 1.16% to Rs 1,889.90), Satyam Computer Services (up 1.63% to Rs 457.25) edged higher. Wipro was down 0.07% to Rs 485.90.
The Indian rupee was trading at 39.52 against the dollar, weaker than yesterday’s closing of 39.35/39.36. A firm rupee impacts margins of IT firms, as they earn a lion’s share of revenue from export to US markets.
Bhati Airtel declined 0.52% to Rs 1,104.05. It recovered from its intraday low of Rs 985.
Deccan Chronicle Holdings surged 3.49% to Rs 176.25 after it scheduled a meeting of the board of directors on 26 October 2007 to consider a proposal for buy-back of equity shares.
Temptation Foods jumped 4.37% to Rs 257 after the company said it would acquire the food-processing unit of Chambal Fertilisers and Chemicals.
Jubilant Organosys jumped 6.14% to Rs 310.95 after it posted 106.09% spurt in net profit in Q2 September 2007 over Q2 September 2006.
Alembic soared 1.69% to Rs 87.20 after the company said it has entered into a deal with Inorbit Malls for sale of land in Vadodara, Gujarat.
State Trading Corporation of India was locked at upper limit of 5% of to Rs 565.55 on BSE after the company said its board would meet on 31 October 2007 to consider a bonus issue of shares.
Dhanus Technologies ended at Rs 311.15, a premium of 5.47% over the IPO price of Rs 295 on its debut today.
Side counters SKP securities (up 19.92% to Rs 58.70), S E Investments (up 19.91% to Rs 529), GSB Finance (up 19.97% to Rs 15.26) and Gajra Bevel (up 20% to Rs 13.86) edged higher.
Era E-Zone India (down 12.41% to Rs 54) and Tata Power Company (down 14.22% to Rs 1,175.95) edged lower.
Power Grid Corporation of India was the volume topper on BSE, notching total volume of 4.76 crore shares. The stock surged 6.62% to Rs 135.20. Reliance Natural Resources clocked the second highest volume of 3.68 crore. The scrip rose 1.2% to Rs 96.90.
Reliance Petroleum declined 1.41% to Rs 181.15 and clocked third highest volume of 2.26 crore. Tata Teleservices Maharashtra declined 7% to Rs 41.20. It clocked 2.21 crore shares on BSE. IFCI declined 5.45% to Rs 81.60 and clocked fifth highest volume of 1.22 crore shares on BSE.
European markets opened on a positive note. France’s CAC 40 (up 0.78% to 5,819.57) and UK’s FTSE 100 (up 0.94% to 6,676.80) and Germany’s DAX (up 0.04% to 7,965.61) edged higher.
Asian markets were trading lower today, 17 October 2007. Japan's Nikkei (down 1.07% at 16,955.31), South Korea's Seoul Composite (down 1.09% at 1,983.94), and Taiwan's Taiwan Weighted (down 0.32% at 9,52.14) edged lower. Hong Kong's Hang Seng (up 1.19% at 29,298.71) and Singapore's Straits Times (up 0.76% at 3,839.73)edged higher.
Crude oil slipped slightly on Wednesday, 17 October 2007, staying within sight of its record high amid renewed investor appetite built on fears of rapidly tightening supplies this winter and a revived Middle East risk premium. US crude slipped 13 cents to $87.48 a barrel. It hit record high of $88.20 on Tuesday, 16 October 2007.
The Sensex rose 3,382.74 points or 21.58 % to 19,051.86 on 16 October 2007 since the US Federal Reserve cut interest rates on 18 September 2007, driven by large foreign fund flows. Sensex was at 15,669.12 on 18 September 2007.
The S&P CNX Nifty rose 1,121.85 points or 24.67% to 5,668.05 on 16 October 2007 since the U.S. Federal Reserve cut interest rates on 18 September 2007, driven by large foreign fund flows. Nifty was at 4,546.20 on 18 September 2007.
FIIs were net buyers of shares worth Rs 22,175.20 crore in this month, till 15 October 2007. FII inflow in calendar year 2007 totaled Rs 73,341.30 crore (till 15 October 2007).
There are a total of 1,113 FIIs registered with the Securities & Exchange Board of India (Sebi) as on 15 October 2007.
Important Notes for the day!
Don't panic if Udayan tries to scare you :) .. Ooh Aaah, he will squeal
Remember
Don't watch CNBC, the more you see, the worse it is for your body :)
Sell on rises, not on dips
No doubt, its a huge negative looking at the amount of money invested through P-Notes
Funny situation for hedge funds, first they short, then they panic cover, now they have to panic sell
It's a Chidu induced correction, made enough money I suppose
It's only recommendations, Chidu may ask SEBI to reconsider
If you are a newbie who invested on tips, you will pay the market the 'fees' for doing so, you will come out a better investor
Don't PANIC seeing RED
PASS this on to friends who you think are at risk of a heart attack :)
Chidambaram speaks...
Is Good ... for the markets
Not banning Participatory Notes
Capping money coming through PN
SEBI is doing a good job
Moderate capital inflow
Interest of the investors
No need to be alarmed
Market moved from 18K to 19K in 4 days .. (hmm, you made enough money right ?)
Consultation paper, with or without some modifcations, become a rule on 25th October
PE ratios are lower than in China (what he means, let me cover, you guys can buy again and take it to China levels)
FIIs are buying!! Where ?? Let them buy some of my stock!!
What's next now
We expect
SEBI to issue clarification
Chidambaram to come and smile ;-), and be stubborn
If Chidu is stubborn and SEBI comes up with a lame clarification, one more circuit down at 15%
Market to open at 10.55 AM
Asian markets fall looking at India Circuit Down
Market to tumble as Sebi action
The market is expected to see severe unwinding as the Securities and Exchange Board of India (Sebi) on Tuesday after market hours, 16 October 2007, proposed a number of restrictions that will effectively spell doom for the thriving participatory note (PN) activity in the stock market. All this was done to slam brakes on the flows of anonymous foreign capital. Also the volatility is expected to be intense.
PNs are financial instruments used by investors or hedge funds that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.
Once the Sebi proposals are operationalised, only FIIs whose outstanding notes do not exceed 40% of their total asset holding in India will be allowed to issue fresh ones. As per market talks, a lot of politicians’ monies, and those of promoters often find their way back through PNs in India. For instruments already issued, Sebi has given a window of 18 months to wind up existing positions.
As per reports, the notional value of investments through PN’s route grew almost ten times to Rs3.53 lakh crore at the end of August 2007 from just Rs 31, 875 crore three years ago.
Asian markets were trading lower today, 17 October 2007. Japan's Nikkei (down 1.05% at 16,958.40), Hong Kong's Hang Seng (down 0.62% at 28,774.79), South Korea's Seoul Composite (down 1.77% at 1,970.33), Singapore's Straits Times (down 0.78% at 3,780.81) and Taiwan's Taiwan Weighted (down 0.24% at 9,569.92) edged lower.
US stocks slipped on Tuesday, 16 October 2007, as oil prices rallied to record highs amid heightened tensions between Turkey's government and Kurdish rebels located in northern Iraq. The Dow Jones Industrial Average declined 71.86 points or 0.51% at 13,912.94. The Nasdaq Composite slid 16.14 points or 0.58% to 2,763.91 while the broad-market Standard & Poor's 500 index fell 10.18 points or 0.66% to a close of 1,538.53.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 234.32 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 10.05 crore on Tuesday, 16 October 2007. They have turned net sellers for the first time since the US federal reserve cut its funds and discount rates by 50 basis points on 18, September 2007.
The BSE 30-share Sensex declined 6.81 points, or 0.04%, to 19,051.86. It hit all-time high of 19,174.45, in intra-day trade. The broader based S&P CNX Nifty was down 2.35 points, or 0.04%, to 5,668.05. It hit all-time high of 5,708.35 in early trade.
The Sensex has surged 22.88% in one month to 19,051.86 on 16 October 2007.
The index-based market-wide circuit breaker market that currently exist applies at three stages: when the index moves up or down by 10%, 15% and 20%. When triggered, these circuit breakers bring all buying and selling of shares in the country to a halt. In case of a 20% movement of the index (at whatever time), trading is halted for the rest of the day.
Uday Kotak - Good for long term
Uday Kotak says
Short Term pain
Long term Gain
Wants all FIIs to register rather than invest through PNotes
Our notes
Terrorists investing in the stock market ?
SEBI clampdown because of this ?
Dubai based institutions linked to terrorist groups investing ?
Kotak seems to make sense
Once more, Don't PANIC!
Wednesday woes...Bears check in
The lofty pine is oftenest shaken by the winds; High towers fall with a heavier crash; And the lightning strikes the highest mountain. And the lightning strikes the highest mountain
It’s set to be One Fine Day for the bears who have all it takes for things to go their way. Liquidity may see a pipe burst as SEBI’s paper suggests foreign institutional investors may not be allowed to issue or renew offshore derivative instruments. In fact they may be required to extinguish existing participatory notes in 18 months. The regulator has sought a response to proposals by Oct. 20.
The rupee is set to fall from near a 9 1/2-year high. Who knows, the optimists may look at some IT counters at lower levels.
Federal Reserve Chairman Ben Bernanke warned in a speech that weakness in the housing market would likely drag on growth through early next year. Federal Reserve Chairman Ben Bernanke said the central bank's rate cut in September has shown signs of success, but cautioned that lenders and investors must bear responsibility for financial decisions that caused the subprime mortgage meltdown.
The Nasdaq and Dow are down less than a percent.
Among the Indian ADR’s, HDFC Bank was the major loser, it fell by over 10%. Others like ICICI Bank, Satyam Computer, Sterlite Industtries and Patni Computers declined over 5% each.
Japanese stocks slipped after Wells Fargo & Co. said it lost almost $900 million on home equity and consumer loans, renewing concern the U.S. subprime mortgage crisis will reduce earnings at financial companies.
Volatility to continue!
Volatility was back on the bourses as markets closed on a flat note. Alternate bouts of buying and selling often tossed the key indices in positive and negative terrain. However, after hitting a low of 18,777, benchmark Sensex recovered over 250 points to end almost unchanged.
Among the BSE sectoral indices, BSE IT index (down 1.77%), BSE FMCG index (down 0.96%) and BSE Auto index (down 0.26%). However, BSE Bank index held firm (up 2.7%). Even the Mid-Cap and the Small-Cap indexes added 0.5% higher each.
Finally, BSE 30-share benchmark Sensex ended 6 points lower to close at 19,051. NSE Nifty ended flat at close at 5,668.
IDBI slipped by 4% to Rs141. The company announced its Q2 net profit at Rs1.56bn (up 12.2%) and revenue at Rs23.6bn (up 43.9%). The scrip touched an intra-day high of Rs149 and a low of Rs141 and recorded volumes of over 17,00,000 shares on NSE.
HDIL gave up its gains as the scrip lost 1% to close at Rs757. Reports stated that the company won the bid for developing 276 acres of slum land near
IFCI slipped 2% to Rs86. According to reports the company decided to offer 30-odd banks and financial institutions, which helped in restructuring its liabilities, the option to convert a part of their debt worth Rs14.8bn into equity. The scrip touched an intra-day high of Rs92 and a low of Rs85 and recorded volumes of over 4,00,00,000 shares on NSE.
Patel Engineering rallied by over 16% to Rs764 after reports stated that the company has entered into a MoU with Arunachal Pradesh government for setting up 100MW Gongri Hydel project in West Kameng district. The scrip has touched an intra-day high of Rs777 and a low of Rs660 and has recorded volumes of over 10,00,000 shares on NSE.
ONGC dropped 1.2% to Rs1175. Media reports stated that the company has tied up with Ocean Rig (a Norwegian company) for supply of two rigs on a nomination basis for a sum of Rs81.8bn. The scrip touched an intra-day high of Rs1220 and a low of Rs1150 and recorded volumes of over 22,00,000 shares on NSE.
IT stocks continued its down run as rupee continues to strengthen against the USD. Infosys slipped 3% to Rs1866, Wipro was down 1.3% to Rs485 and TCS slipped 0.6% to Rs1068.
Banking stocks were in demand led by gains in the index heavyweights like ICICI Bank, the scrip was up by over 5.5% to Rs1159, PNB advanced 2.6% to Rs539 and HDFC Bank added 0.6% to Rs1507.
Realty stocks were also among the major gainers. Akruti Nirman rose over 3.5% to Rs1013, DLF advanced 2.5% to Rs918, Parsvnath gained 1.8% to Rs392, Unitech was up 1.8% to Rs353 and Sobha added 5.3% to Rs1050.
Volatile session ended on a flat note. After opening with strong gains, key indices witnessed wild intra-day gyrations. Alternate bouts of buying and selling often tossed the key indices in positive and negative terrain. However, after hitting a low of 18,777, benchmark Sensex recovered over 250 points to end almost unchanged.
Stocks in News:
Petronet LNG is diversifying into power sector by setting up a gas based power plant to generate 1,100 MW of power.
ONGC has tied up with Ocean Rig (a Norwegian company) for supply of two rigs on a nomination basis for a sum of Rs81.8bn.
RIL is in discussions with four global players for partnerships to explore new regions in the US, South America and West Asia.
TCS is targeting 20 large deals which are above $50mn.
Apollo Tyres is likely to be the after-sales partner for Tata’s 1 lakh car.
Wockhardt is set to acquire US drug maker Morton Grove Pharmaceuticals Inc for $70mn.
UCO Bank is planning to raise Rs4.5bn via FPO during Q4 FY08.
Future Group is planning a 50:50 JV with Mauritius based Aeoterm Logistics.
HDIL has won the bid for developing 276 acres of slum land near Mumbai International Airport.
IFCI has decided to offer 30-odd banks and financial institutions, which helped in restructuring its liabilities, the option to convert a part of their debt worth Rs14.8bn into equity.
JSW Steel has received a permit to mine iron ore for its planned 10mn ton plant in Jharkhand.
Kinetic Motors plans to issue 8.71 lakh preferential shares to San Yang Motors, post which the latter’s holding in the company will increase to 16%.
Ashok Leyland is planning a 49:51 JV with a Black Economic Empowerment Partner to introduce products like 4x4s and luxury buses in South Africa.
HDFC is likely to finalize Ergo, the insurance arm of Munich Re, as its 26% foreign partner for the general insurance business.
Prime Minister Manmohan Singh has formally conveyed to US President George Bush about difficulties to push through the nuclear deal.
The Government is planning to keep the equity raised from ADRs and GDRs out of the FDI cap for select sectors.
The Delhi Government has slashed electricity rates by one rupee for domestic consumption up to 150 units a month.
The DoT is planning to freeze the amount of spectrum per operator. Also, operators might be asked to pay for more than 10Mhz capacity.
Sugar production in India is estimated to increase by 3.9% yoy to 29.3mn tons in 2007-08.
Fund Activity:
FIIs were net buyers of Rs28.69bn (provisional) in the cash segment on Monday while the local institutions pulled out Rs2.81bn. In the F&O segment, foreign funds were net buyers at Rs5.79bn.
FIIs were net buyers of Rs7.81bn in the cash segment on Friday. With this, their net investment in the month has crossed US$4.5bn and year-to-date the same is US$16.74bn.
Major Bulk Deals:
Abn Amro has bought Bank of Rajasthan; Lehman Brothers has sold Genus Powers; Morgan Stanly has purchased Hindustan Construction; Goldman Sachs has picked up Lok Housing; Reliance Capital has sold Trent Ltd.
Upper Circuit:
RIIL, Rei Agro, McNally Bharat, Marathon Nextgen, IID Forgings, Prakash Industries, Jai Corp, Rap Media, Assam Company, BF Utilities and Vakran Software.
Lower Circuit:
BREAKING - Chidambaram Update on SEBI recommendations
FM will "comment" on SEBI recommendations at 10.30 AM IST
What the heck ? Wants a circuit down and then wants to comment on it ?
P-Notes clampdown
| The Securities and Exchange Board of India (Sebi) today proposed to tighten the rules for purchase of shares and bonds in Indian companies through the participatory note (PN) route. |
| The move is aimed at arresting the surge in foreign inflows through PNs, which are offshore derivative instruments that allow foreign investors to invest indirectly in a country’s stock market, which has seen the benchmark BSE Sensex zoom more than 5,000 points in two months. |
| The market regulator has proposed that foreign institutional investors (FIIs) and their sub-accounts cannot issue or renew PNs with underlying as derivatives with immediate effect. They have to unwind their current position within 18 months. |
| Sebi Chairman M Damodaran told Business Standard that the proposals were against PNs but not against FIIs. The procedures for registering FIIs were in fact being simplified, he said. |
| Sebi has also proposed a ban on all PN issuances by sub-accounts of FIIs with immediate effect. They also will be required to wind up the current position over 18 months, during which period the capital markets regulator will review the position from time to time. |
| Sebi has also proposed an incremental rate of 5 per cent for issue of PNs for FIIs with less than 40 per cent of assets in PNs. Those with over 40 per cent of assets in PNs can issue PNs only against redemptions or cancellations. |
| PNs are issued by Sebi-registered FIIs that do not want to disclose their identity, or those who are in a rush to buy stocks and derivatives without waiting for Sebi registration. |
| The proposals, which have been framed in consultation with the government, will be “implemented urgently”, after receiving comments from market participants within four days. The Sebi board is meeting on October 25 to take a final decision. |
| The big five FIIs — Morgan Stanley, Merrill Lynch Capital Markets Espana, Citigroup Global Markets, Goldman Sachs and CLSA Merchant Bankers — account for 60 per cent of PNs issued in India. |
| The Sebi release, issued late this evening said, “The year-on-year increase in PNs, the anonymity that they provide to investors and the copious inflows into the country from foreign investors have been engaging the attention of the government.” |
| “There is an unprecedented surge of liquidity in the emerging markets. And apart from Brazil, the Indian equity markets are favoured the most by foreign institutional investors. However, it would be too premature to make any judgments now,” said head of Korean mutual fund Mirae Asset Management Arindam Ghosh. |
Market expects huge selloff; ADRs dip
The proposed restrictions on participatory notes (PNs) are expected to trigger a sell-off by hedge funds, and other short-term players, experts said. As a result, the Sensex, which has risen nearly 35 per cent in the last two months, may also feel the heat when the markets open on Wednesday morning.
Indications from the kerb (unofficial deals) and the fall in Indian share prices in the US markets suggest that the NSE’s Nifty Index may open at a discount of at least 150 points from today's closing of 5,668.05, said dealers.
At 9.45 pm, Dr Reddy's Lab ADR was down 5 per cent to $15.25, HDFC Bank was down 6 per cent to $111.34, ICICI Bank nearly 4 per cent to $53.32 and Infosys was down 5.8 per cent to $48.02.
Hedge funds, which account for at least 30 per cent of PN issuance, may be the first ones to exit, said dealers.
When restrictions were proposed on PNs on January 22, 2004, the Nifty closed 3 per cent lower to 1,770.
Former NSE Chairman R H Patil said, "The market is being manipulated right now and a bubble was growing rapidly. Although the Sebi proposals are late, they would help avoid a greater disaster. It is very important to know the identity of foreign investors, who have been manipulating this market."
Chidu was warning all of us that he was going short on the market 2-3 days ? How many of you did ?
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