Posts Tagged ‘market capitalisation’

India’s Wealth Lies in Its Cities

It was once believed that India lives in its villages.

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Now it is clear that India’s wealth lies in its cities, or more specifically, Mumbai.

 

India's Wealth Lies in Its Cities

A study conducted by Delhi-based SMC Global classified companies geographically on the location of their registered offices.

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It reveals that Mumbai-registered companies account for 36.28% of the total BSE 500 market cap.

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Some of the prominent names based out of Mumbai are Reliance Industries, L&T, HDFC and SBI.

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Also, out of the market capitalisation ascribed to Maharashtra which has the highest market capitalization among the states — more than 90% originates from Mumbai.

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In fact, Mumbai and six other cities account for 85.71% of the total market capitalisation of BSE 500.

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With Delhi NCR (National Capital Region, which includes satellite cities such as Gurgaon and Noida along with the capital) contributing 27.82%.

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After the financial and political capitals, state capitals take the fore.

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Bangalore lays claim to 7.10%,

Hyderabad to 4.86% and Kolkata accounts for 3.83%,

while Ahmedabad and Chennai account for 3.35% and 2.47%, respectively.

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On a state-wide basis, five states in combination with Delhi NCR and Maharashtra account for 94.20% of the total market cap.

A total of 66.17% of the index’s market cap can be traced to Maharashtra and Delhi NCR.

While the latter accounts for 38.35%, Delhi accounts 27.82%.

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Karnataka accounts for 7.74%, Gujarat, 7.48%, Andhra Pradesh is at 4.95% and Tamil Nadu at 4.02%, while Bengal has 3.83%.

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Though the big Indian companies have a pan-India presence with factories or plants located across the country, they tend to have registered offices in metros.

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That is because of the ease of operations and presence of other corporate houses, suggested the study.

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“The traditional metro cities have accumulation advantage.

Its ultimately the money which brings in more money.

As the Indian economy keeps evolving, tier-2 and tier-3 cities may catchup gradually, to bring-in more equitable distribution of wealth across the country.”

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…said Jagannadham Thunuguntla, equity head at SMC Capitals.

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SEBI Allows Auctions for QIBs in FPOs :)

SEBI Allows Auctions for QIBs in FPOs

Market regulator, SEBI has introduced a significant change in the way institutional bidders invest in follow-on public offers by allowing allotments through auctions.

 

The Securities and Exchange Board of India (Sebi) has amended the Issue of Capital and Disclosure Requirements Regulations (ICDR) to allow pure auctions for qualified institutional investors (QIBs) in follow-on public offerings to begin with.


The method may be later extended to initial public offerings.

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Under the new method, bidders will be free to bid at any price above the floor price.

At present, allotments are made at the floor price.

Retail investors, however , will be allotted shares at the floor price.

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The board also decided that the issuer is free to place a cap either in terms of the number of shares or percentage to issued capital of the company so that a single bidder does not garner all the shares on offer, ensuring a wider distribution of shareholding.

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Jagannadham Thunuguntla, Equity Head,ย  SMC Capitals, said this means an institutional investor can continue to bid above the floor price and the QIB allotment will be made to the highest bidder.


โ€œThe intent is to enable companies to mop up more funds. Earlier, even when there were huge subscriptions and huge demand for an issue, the company could not get more money. This becomes more relevant in the context of the recently announced divestment plans and FPOs by the government for public sector units,” he said.

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Auction for QIBs is welcome as it would allow risk-taking entities and not just the promoters to be a part of the price discovery process, other analyst said.


A SEBI release issued after the board meeting also said the minimum market capitalisation required by listed firms to sell shares in follow-on offerings has been halved to Rs.5,000 croresย  from Rs 10,000 crore.

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Moreover, the market regulator has also made it a mandatory that all listed companies would have to furnish audited or un-audited balance sheets on a half-yearly basis within 45 days from the end of the quarter instead of the current yearly basis.

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This would imply that Indian companies will be required to disclose balance sheet items.


Shareholders would be able to access the statement of assets and liabilities of the company and its solvency position on a half-yearly basis.


Shareholders would receive immense help in making informed investment decisions now and would be in better position to assess the financial health of the companies, with the implementation of this SEBI regulation of mandating frequent disclosure of the asset-liability position of companies by companies.

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Stock Markets to be Propelled by the NTPC Stake Sale :)

stake sale in NTPC is expected to propel the stock markets :)

Stake sale in NTPC is expected to propel the stock markets ๐Ÿ™‚

The government’s nod for stake sale in state-run power utilitiesNTPC and SJVNL – is expected to bolster investor sentiment and propel the stock markets in days to come, experts said.

The Cabinet Committee on Economic Affairs (CCEA) has approved five and 10 per cent disinvestments in NTPC and SJVNL respectively.

Government seems to be confident and ready to adopt a more liberalised economic policy and looks like committed to increase investors’ wealth, experts said.

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Marketmen believe, a follow-on public offer (FPO) of NTPC, the second most valued public sector unit with a market capitalisation of over Rs 1.77 lakh crore, would help increase trading volumes at the counter.

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PSU stocks generally have less volume and low volatility.
The market would now look at the issue price of the FPO and an increase in demand would help to shore up supply,” SMC Global Vice President Rajesh Jain said.

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Meanwhile, it is expected that the stake dilution would increase liquidity in the scrip and would help in reducing the fiscal deficit of the economy, but it may at the same time, act as a dampener on the stock price.

However, experts are waiting for the entire structure of the issue to be released for further clarity.

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NTPC shares are currently trading around Rs 216 a share levels.

Given the current market conditions, the company would be able to mop up around Rs 8,500 crore through the stake sale.

After five per cent stake dilution, the government’s holding in NTPC would come down to 84.5 per cent from the current 89.5 per cent.

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Greed and Fear : Factors that Drive the Stock Market !

fear and greed are the two key factors that drive the stock market :)

Everyone knows that fear and greed are the two key factors that drive the stock market.

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If you talk to any seasoned investors in the market, they would tell you of the stories of how people got carried away by greed and lost all their money in the process.

Stories about people spooked by โ€˜fear factorโ€™ also do the rounds of Dalal Street at regular intervals.

According to a study by SMC Capitals, โ€œthe elements of fear and greed are clearly apparent in the trends of allocation of assets by the investors in terms of cash and stocks.โ€™โ€™

The trend, says the study, can be seen at the levels of market cap and bank deposits in the economy.

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When there is fear among the investing community, the bank deposits go up.

And, when there is widespread optimism, the market cap levels go up.

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โ€œIf you look at investor behavior in the last three years,
the pattern is very clear:

the first year was of over-optimism,

the second was of over-pessimism and

now itโ€™s the recovery period.

This trend is clearly visible if you look at the market cap and bank deposits (or the real wealth),โ€™โ€™ says Jagannadham Thunuguntla, equity head of New Delhi-based SMC Capitals.

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In the study, SMC has compared the BSE market cap from the period starting January 2007, with the aggregate bank deposits in the bank deposits.

The relative measure of the entire market capitalisation of BSE as a percentage of aggregate bank deposits in the entire banking system demonstrates the mindset of the investor community.

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Read the Full Story on The Economic Times

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