Archive for October 15th, 2009

Nifty, Sensex at New Peak Ahead of Diwali :)

Nifty, Sensex at New Peak Ahead of Diwali

Nifty, Sensex at New Peak Ahead of Diwali

As China’s economy showed more signs of revival and weak dollar raises commodity stocks,  Global Stock Markets increased while the Sensex Index gained 204 points to close at 17,231.

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However, on the NSE, the Nifty advanced 64 points to end at 5,118, its highest level since 16 May 2008 when it closed at 5,157.

Moreover, the BSE metal index increased 5.2%  while Sesa Goa rose nearly 14% and JSPL rose 8%.

Additionally, the BSE capital goods index was up 2.4% and the BSE auto index gained 2.3%.

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In the Capital goods space, Punj Lloyd advanced 7.3%, Praj Industries rose 5.7% and Themax ended 4% higher.

Similarly, among the auto stocks, M&M, Bharat Forge and Exide Ind gained over 5% each.

In the Sensex pack, 25 stocks increased while 5 counters decreased.

M&M surged 6.1% to Rs 971 and Sterlite Ind, Hindalco and JP Associates were up over 5% each.

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Moreover, RCom emerged as the top loser while the stock declined 6.5% to Rs 231 in the midst of reports that special auditor has pointed out that the company inflated revenues by
Rs 2,915 crore
in 2007-08 financial year.

Further, Bharti Airtel shed 3.2% while Reliance Infra fell 2.6% and previously, in Asia, China’s Shanghai index jumped 1.2% enhancing more by expectations for better corporate earnings for Q3.

On the other hand, Hong Kong’s Hang Seng rose 2% while Japan’s market was the region’s only major laggard with the Nikkei 225 stock average shedding 0.2% to 10,060.21 in the midst of a stronger yen.

In the meantime, the dollar resumed its slide, falling to a 14-month low against the euro pushing prices for commodities like oil and gold ever higher.

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India’s United Spirits to Sell New Shares to Cut its Debt :)

India's United Spirits set to sell new shares to institutions to help cut its debt

India's United Spirits set to sell new shares to institutions to help cut its debt

India’s United Spirits is set to sell new shares worth about $300-350 million to institutions to help cut its debt, after efforts to sell a stake to private equity firms and Diageo failed.

The world’s third-largest spirits maker by volume is set to place the shares with institutions (QIPs) as early as this week, three sources with direct knowledge of the deal said.

“The market is good enough for a share sale. Why opt for a PE firm that buys at the same price and adds little value otherwise,” one source said.

United Spirits has debt of 65 billion rupees ($1.4 billion), which it took partly to fund the acquisition of scotch whisky maker Whyte & Mackay, and has said it aims to cut this to 40 billion rupees by the end of March 2010.

Chairman Mallya said in early September he planned to cut the firm’s debt by end October.

KINGFISHER FACTOR

In June, United Spirits sold treasury stock, carried on its books from past mergers and acquisitions, at an average 900 rupees a share to raise about $186 million, which it used to repay some of its loans.

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It still has over 8 million shares of treasury stock which it can sell or issue fresh ones.

Sources said United Spirits would opt for the latter. It got shareholders approval last month to raise up to $350 million.

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“Private equity investments through preferential allotment have a lock-in of one year, there’s more due-diligence involved and they also look for board seats,” said Jagannadham Thunuguntla, equity head of investment bank SMC Capitals.

“Institutional investors coming through the QIP route have no such hassles, it is also faster,” he added.

United Spirits’ loss-making group firm and airline operator Kingfisher Airlines which is also looking to raise funds, could be a possible factor in PE firms being hesitant to invest in the company.

United Spirits has pledged shares to secure loans for Kingfisher Airlines.

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Valuation, a major reason for the break-down of talks between it and Diageo is another factor to watch out for as its margins come under pressure from a rise in molasses prices due to the poor sugarcane crop, analysts said.

Shares of United Spirits, valued at $2.1 billion, have risen just 3.3 percent so far this year compared to a 76 percent rise in the main index.

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INTEREST RATE FUTURES – Part 2

Hello Friends, just an extension of our previous blog on interest rates futures where we touched upon the topic of interest rates future and what is it exactly.

Now we would understand that why is there need for interst rate futures and many more related aspects in this regard.

Here we go :

Why Interest rate futures?

Why Interest rate futures?

Why Interest rate futures?

The risk associated with the interest rate is uncertain and it never has been constant in the past, infact it would not remain constant in future also.

The volatility of interest rates has increased manifold in the last couple of years and recorded 17.40% in 2008 as compared to 8.51% in 2007.

This high fluctuation in volatility increases risk and requires tools to manage those risks.

Interest rate futures are the product for managing such interest rate risk.

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Backbone of Interest Rate Future:

NSE, India’s largest stock exchange, began interest rate futures and offers the same reliable features as it provide to its other products with the following advantages:

Standardization and flexibility

•Price transparency and liquidity

•Leverage effect due to a wider collateral management

•Advance trading software and technological edge

•Centralized clearing supported by guaranteed settlement

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Who can be a part of it?

The major market participants of interest rate futures are

•Banks and Primary Dealers

• Mutual Funds and Insurance Companies

• Corporate Houses and Financial Institutions,

•FIIs and NRIs

• Member Brokers and Retail Investors.

In Final part of this topic (which we would cover in our next blog), we would throw light on the benefits of the Interest Rate Futures and the future scenario related to Interest rate futures.

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Stay Tuned 😉

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