Posts Tagged ‘MMTC’

SILVER……GROWING AVENUE OF INVESTMENT

Recently silver, known as poor’s gold, is gaining not only against the dollar and other old world currencies but also outperforming gold. Due to high prices gold is loosing its own attraction from common man and importance of silver as precious metals is gaining momentum. The declining trend of gold/silver ratio indicate that silver become better destination for investment. Like gold, silver has retained rally momentum due to recent poor economic data that has caused investors to purchase Silver as a “safe haven” alternative investment. The pickup of silver industrial demand due to the emergence and growth of a number of new end uses, and continued strong investment demand is pushing silver prices sharply higher.

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Like all metals, London Bullion Market is the global hub for silver trading, while the New York’s Comex Futures dominate the solver fund activity. The world’s largest silver backed exchange-traded fund, the i Shares Silver Trust, said its holdings rose to 9,280.40 tonnes by Sept. 1 from 9,151.03 tonnes on August 5.

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Global demand- supply of silver According to World Silver Survey 2010 , global silver mine production rose last year, by almost 4%, its seventh straight annual increase to reach a record high of 22,072 ton.Peru is the world’s largest silver producing country followed by Mexico, China, Australia and Bolivia. GFMS is forecasting a further mine production rise of 3 per cent this year.

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According to GFMS, In the last ten years, the world jewellery demand was down 8 per cent and silverware as much as 38 per cent. And because of technology changes silver use in photography sector had suffered a major fall of 62 per cent. But as strengthening of belief in silver as a precious metal is the 145 per cent demand gain since 2000. The industrial application of silver is almost 48 per cent of total silver use.

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Indian demand- supply of silver Though India is generally believed to have a great appetite for gold, Indians also love to possess silver in their homes for jewellery. India is voluminous importer of silver. Of the 4,000 tonnes that India used to import annually, around 2,600 tonnes was used to make jewellery and ornaments. MMTC is the largest importer of gold in the country. The firm’s silver imports fell by more than 44% in the fiscal year to end March 2010, as high prices dented demand. More than 60% of India’s silver demand comes from farmers.

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Last year silver demand dipped because the country experienced one of the worst monsoon seasons in over four decades. However, with much better monsoon this year, the situation is set to reverse and India’s appetite for silver has also been boosted because gold has become too expensive at current prices. According to official data, India’s silver imports in the first six months of 2010 are up 579%.

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From April this year, India has also started hallmarking of the white precious metal to ensure purity. With increasing amounts of impurities in jewellery being sold across the country, public sector trading major, Minerals and Metals Trading Corporation (MMTC) is banking on its branded jewellery, silverware gift items and coins to push up its market share.

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Like gold, silver has not enjoyed equal recognition from hedge funds, pension and retirement funds, insurance companies, and sovereign wealth funds– but this is likely to change as fund managers recognize silver’s relative value and simply wish to diversify their precious metals exposure.

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Outlook

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Good monsoon, high gold prices and global trends may help silver outperform the yellow metal in India. Better harvesting will underpin demand from the farming community this year. Since gold prices are trading over `19,000 per 10 gm, many rural families are now switching to silver.The weakening of rupee also supporting the prices.

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More and more people here are using silver as a speculative commodity play as many others are looking at it as a safe haven asset. The overall market sentiment is bullish for silver. So it could be a more decisive silver price breakout before the year ends to touch the level of `33500.

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SEBI’s Auction Move on FPOs Impresses Marketmen :)

 

SEBI's Auction Move on FPOs Impresses Marketmen

SEBI's Auction Move on FPOs Impresses Marketmen

SEBI’s has planned to remove the cap price for the follow-on public offerings and this idea seems to be impressing market players.

SEBI has said that  it would introduce “pure auction as an additional book building mechanism for institutional investors for follow-on public offerings (FPOs).”

Analysts and market men feel that this is going to generate loads of excitement and fun for market players, as those investors who are convinced about a particular issue will invest at a higher price to seek allotment and those not-so-convinced can invest at a lower price.

Merchant bankers said it will be interesting to see how this will work as there are a few PSU FPOs likely to hit the market soon.

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PSUs likely to come out with FPOs include NMDC, MMTC, Neyveli Lignite Corporation, Rashtriya Chemicals and Fertilizers, National Fertilizers, Coal India and Engineers India

As of now, the IPO price is determined through a price band (which has a lower and upper level).

An auction or floor price is the minimum price at which bids can be made for an IPO.

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Meanwhile, merchant bankers welcomed SEBI’s announcement on Monday that exchanges could have a separate platform for Small and Medium Enterprises (SME).

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As the primary market size grows, the smaller companies are getting lost amid the big ticket IPOs.
Having such exclusive guidelines for SMEs is definitely a good idea, said merchant bankers.

SME platform SEBI on the lines of the AIM on the London Stock Exchange will be better.

Those SMEs with a paid-up capital of between Rs 10 crore and Rs 25 crore have an option of either being on the SME exchange or the main bourses.

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According to the new guidelines, SMEs should have a maximum paid up capital of Rs 25 crore for listing.

For an investor the minimum application size in an SME IPO will now be Rs 1 lakh.

Though such a limit might seem like it will prevent the retail investor of small means from investing in SME IPOs, merchant bankers said that it is a good move.

“This will allow retail investors to take more informed decisions. It will protect these investors as the chances of manipulation with respect to smaller companies are much higher. Those investors with the right amount of knowledge and liquidity will be the ones investing in these IPOs,” said Mr Jagannadham Thunuguntla, Head of Equity at SMC Capital.

Having the merchant bankers underwriting the IPO will make sure that they price the issue properly and also provide proper valuations.

Merchant bankers are also happy that for an SME issue the minimum number of investors is only 50 for a particular issue.

“For an issue, as of now, there has to be a minimum of 1,000 investors,” said Mr Thunuguntla.

IDFC, KRIBHCO Buy 5% Stake Each in ICE :)

IDFC-KRIBHCO-buy-5%-stake

IDFC and Krishak Bharati Cooperative Limited (KRIBHCO)have purchased a stake of  5% each in Indian Commodity Exchange, which jointly promoted by Indiabulls Financial Services and MMTC.

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According to sources, the bourse will apply to Forwards Markets Commission, the regulator, after the completion of the formalities of the shareholding agreement.

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With the latest divestment, the current holding of Indiabulls stood at 40% while MMTC has 26%. The other shareholders include HDFC Bank, Yes Bank and Indian Potash.

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FMC guidelines stipulate a maximum shareholding of 40% in a commodity exchange by an anchor investor.
This has to be reduced to 26% within a period of two years starting with the fourth year from the date of exchange’s recognition.

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Earlier, FMC (Forward Markets Commission) rejected United Stock Exchange’s proposal to pick up 10% stake in Indian Commodity Exchange since it was yet to receive full recognition from capital markets regulator SEBI.

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The bourse is the latest entrant into the commodity futures space and will vie with the predominantly metals and energy bourse MCX and agri bourses NCDEX and NMCE.

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In August, FMC had directed the exchange, which had received recognition from the Ministry of Commerce over a year ago, to offer 10 per cent equity of USE to other competent partners and re-submit the application by September-end.

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