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Saturday, May 31, 2008

Reliance Power - no cheer despite bonus

Reliance Power, which turned ex-bonus on Friday, closed down at Rs 235.85, reflecting the expanded capital of the company. According to analysts, the ex-bonus price was below the market expectation.

Opening at Rs 308.95, the scrip touched an intra-day low of Rs 231.71 on the BSE, before closing 42 per cent lower from the cum-bonus price of Rs 409.55 on Thursday.

The company had announced bonus issue of three shares for every five shares held, excluding the promoter group. This was done to compensate investors as the shares got listed at a discount to the offer price. On the first day, the shares closed at Rs 372 against the issue price of Rs 430(for retail investors).

Following the bonus issue, the cost of acquisition of Reliance Power stock was expected to come down by 40 per cent for retail shareholders to Rs 269 per share. In the same way, for institutional investors, the acquisition cost will be reduced by 37 per cent to Rs 281, as the issue price was fixed at Rs 450.

The Reliance Power stock managed to close above issue price of Rs 450 only once on February 25.

“We were expecting the shares to quote at around Rs 256; butthe price dipped to Rs 230 today as a lot of short positions were created,” said the head of research at a brokerage.

The company’s project will become operational only after four years and the stock is priced high, even after the bonus issue. So those investors who are not happy with the price seem to be exiting now, said Mr Sanjay Someshwar, a sub-broker with Ventura Securities.

“A lot of High Networth Individuals (HNI) seem to be exiting now. For the HNIs, who had bought the shares at the IPO price of Rs 275-280, even after the ex-date, the price hasn’t gone up. So, today they booked their losses and exited the stock,” added Mr Someshwar.

The shares recorded a total turnover of Rs 92.3 crore on the BSE and NSE together on Friday. The face value of scrip is Rs 10 per share. “The value of the share for the retail investor was set at Rs 270. And today, the stock is available at Rs 235, which means those who buy the stock now can get it cheaper than before. Those who missed the bus on the IPO or who did not get the bonus shares get it much cheaper, which makes the scrip a good buy at the moment,” said the director of research at a stock broking firm.

Eveninger - May 30 2008

Eveninger - May 30 2008

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Weekly Stock Picks - May 30 2008

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Weekly Newsletter - May 30 2008

While GDP numbers were better than expected, inflation continues to haunt the bulls. For the coming week, there are no firm triggers except domestic handling of the oil prices. While some decisions could be expected over the weekend, a lot will depend on how the political parties react. Given the current political situation, it is unlikely that the government will take a tough call. The markets will continue to swing at start more to the global beats. Over the day domestic issues and stock specific action will dominate. Any voices on monsoon could improve sentiment. Else bulls may have to wait longer before some stability sets in

Mumbai slips in global office rent sweepstakes

London's West End continues to be the world's most expensive location for hiring commercial space while Moscow and Tokyo have risen two places each, pushing Mumbai to the fourth spot, according to the latest survey of global office rents by CB Richard Ellis.

Office space in Moscow costs an average of US $232.37 per square foot per year compared with US $299.54 in the West End of London, CB Richard Ellis said in the survey. The other costliest markets are Inner Central Tokyo, Mumbai and Outer Central Tokyo.

Office rents in the Russian capital jumped by an average of 93% in dollar terms in the 12 months ended March 31, the second-biggest gain among 173 cities tracked by CB Richard Ellis. Moscow overtook Mumbai, where rents gained 41%.

"Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch as they rise faster than global inflation," Raymond Torto, CB Richard Ellis's chief economist, said in today's report.

The cost of occupancy, which includes service charges and taxes, jumped 94% in Vietnam's Ho Chi Minh City, more than any other location. It was followed by Moscow, Singapore, Nicosia and Oslo.

Inflation spurts as fuel price hike looms

India's inflation, based on the Wholesale Price index (WPI), climbed further in the third week of May even as the Government remained in a soup over high crude oil prices and its adverse impact on public sector oil marketing companies. The annual point-to-point inflation rose to 8.1% in the week ended May 17 from 7.82% in the previous week, the Commerce & Industry Ministry said. Economists had expected a reading of 7.95-8%. Meanwhile, the Government revised the inflation rate for the week ended March 22, to 7.85% from the provisional forecast of 7%. Inflation may accelerate further as the Government may revise preliminary estimate in two months. Also, with the Government almost making up its mind on effecting a small hike in fuel prices, inflation is bound to go up.

The impending fuel price hike was postponed till the weekend. Prime Minister Dr Manmohan Singh finalised details of the package to bail out public sector oil marketing companies (OMCs), who are suffering due to surging crude oil prices. The Prime Minister discussed the issue with External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Petroleum Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia. "We discussed the various options... hopefully, by tomorrow or by day after tomorrow, we will have a solution," Deora told reporters on May 29 after two rounds of talks with the Prime Minister.

Though Deora refused to say what transpired in the meetings, reports suggested that a combination of a hike in petrol and diesel prices along with a minor duty rationalisation and according SLR status to oil bonds could form part of the package. It would be a climb down from the proposed increase of Rs10 a litre in petrol, Rs5 per litre in diesel and Rs50 per LPG cylinder sought by the Petroleum Ministry, along with a cut in customs duty on crude oil and lower excise duty.

"International prices touching US$135 a barrel has forced down our throat Rs2.25 trillion revenue loss on the sale of petrol, diesel, LPG and kerosene. Unless we act, companies will not be left with cash to import crude," Deora said. "The Prime Minister and Finance Minister saw papers of projected revenue loss and options thereof. They realise very much that we need to help PSU oil firms on a war footing," he said.

Meanwhile, there was some relief for the bleeding oil PSUs as the Reserve Bank of India (RBI) came to their rescue. The central bank allowed banks to lend more money to them. The central bank told banks they can lend up to 25% of their capital funds to the cash-starved state-run oil marketing companies as against 20% earlier. This limit can be increased to 30% on board approval.

Indian economy grows faster than expected

The Congress-led Government, humbled by the recent electoral setback in Karnataka and reeling under three-and-a-half-year high inflation, got something to cheer about. The Indian economy did much better in the third and fourth quarter than what was widely anticipated. As against expectations of a sharp dip (some even predicted below 8% growth), GDP in the January-March quarter came in ahead of expectations, prompting the Government to revise up its estimate for the entire year. The bigger than expected growth was mainly due to revision in agriculture production.

Fourth-quarter GDP grew by 8.8% in the quarter ended March versus 9.7% in the same quarter last year. The number is much higher than most economists' estimates, who had forecast expansion of anywhere between 8-8.5%. The Government revised GDP growth for the October-December quarter, to 8.8% from 8.4%. The stronger than expected GDP growth in the third and fourth quarter enabled the Government to hike FY08 growth to 9% from the initial estimate of 8.7%. In FY07, the Indian economy had grown by 9.6%.

Sector-wise break up shows that growth in manufacturing, mining and agriculture decelerated in the fourth quarter while construction, electricity and services improved their performance. Manufacturing grew by just 5.8% in Q4 FY08 as against 12.8% in the year-ago period, while farm sector growth fell to 2.9% from 4.9% in the same quarter last year. Construction expanded by 12.6% versus 12.2%; trade, hotels, transport and telecom rose by 12.4% compared to 11.6% and finance, insurance and real estate grew by 10.5% versus 13.4%.

NSE Bulk Deals to Watch - May 31 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
30-MAY-2008,GOLDINFRA,Goldstone Infratech Ltd.,D K JAIN,BUY,142511,70.65,-
30-MAY-2008,GSSAMERICA,GSS America Infotech Limi,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,BUY,86994,371.36,-
30-MAY-2008,KOHINOOR,Kohinoor Foods Limited,SURABHI JAIN,BUY,140000,77.96,-
30-MAY-2008,MAXWELL,Maxwell Industries Ltd.,SUNIL JAYKUMAR PATHARE,BUY,1267250,17.90,-
30-MAY-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,BUY,2308276,47.87,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,AMBIT SECURITIES BROKING PVT. LTD.,BUY,128973,287.87,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,DINESH MUNJAL,BUY,150752,288.39,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,MANSUKH SECURITIES & FINANCE LTD,BUY,162987,291.57,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,RELIANCE MUTUAL FUND,BUY,200000,303.40,-
30-MAY-2008,PRAENG,Prajay Engineers Syndicat,BSMA LIMITED,BUY,323728,219.00,-
30-MAY-2008,RALLIS,Rallis India Ltd.,FIDELITY TRUSTEE CO PVT LTD,BUY,203511,420.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,DEMURIC HOLDING PVT LTD,BUY,1250000,44.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,MATTERHORN SINGAPORE,BUY,1175775,44.00,-
30-MAY-2008,GSSAMERICA,GSS America Infotech Limi,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,SELL,82410,370.40,-
30-MAY-2008,KOHINOOR,Kohinoor Foods Limited,IDBI TRUSTEESHIP SERVICES LTD,SELL,425000,75.99,-
30-MAY-2008,LLOYDELENG,Lloyd Electric & Engg Ltd,MERILL LYNCH CAPITAL MARKETS ESPANA S A SV,SELL,256000,109.34,-
30-MAY-2008,MAXWELL,Maxwell Industries Ltd.,SHOBHA JAIPAL REDDY,SELL,1267250,17.90,-
30-MAY-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,SELL,2309276,47.89,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,AMBIT SECURITIES BROKING PVT. LTD.,SELL,128973,288.15,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,DINESH MUNJAL,SELL,150752,289.38,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,MANSUKH SECURITIES & FINANCE LTD,SELL,162987,291.47,-
30-MAY-2008,PRAENG,Prajay Engineers Syndicat,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,324654,219.00,-
30-MAY-2008,RALLIS,Rallis India Ltd.,HDFC M F A/C INDIA TAX SAVER,SELL,152115,420.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,MORGAN STANLEY MAURITIUS COMPANY LTD,SELL,382000,44.00,-