Posts Tagged ‘SMC capital’

RIL See Retail Sector as Major Value Creator : Ambani

RIL See Retail Sector as an Major Value Creator : Ambani

Reliance Industries has identified retail sector as an important component of its five-platform roadmap for value creation.

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The other value creators include conventional and renewable energy space, innovation and rural transformation, RIL chairman Mukesh Ambani said.


Reliance’s efforts would be on expanding the edifice created by Reliance Retail at the customer end and reinforcing supply chain and logistics,” the chairman said.

Ambani added that Reliance Retail would expand to new cities, markets and form strategic alliances.

This would be done through nearly 1,000 stores, while it has 900 stores across 86 cities.

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The retail company has run up losses over Rs 450 crore in last fiscal.

Ambani said RIL would diversity its conventional energy space with new accumulations in three years.

RIL proposes to accelerate their campaign in the Krishna-Godavari basin,as per the chairman.


Meanwhile, the gas production levels have crossed six billion cubic metres and the D6 field is slated for plateau production by the second half of the year 2010.

Oil production from the D26 field has 2.8 million barrels with daily peak production expected by the end of the year.


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With current cash balance of nearly Rs 19,420 crore, the company expects to be debt free in 21 months, Ambani said.

Even in difficult economic environment, RIL’s capital expenditure was Rs 24,713 crore ($4.9 billion).

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However, the stock market was not enthused.


On the BSE, RIL stock saw a marginal drop of 0.65 per cent to close at Rs 2,133.75 per share.

“Whatever Mr Ambani has said is old. There is nothing to cheer investors.However, overall sentiment is positive.”

Jagannadham Thunuguntla, head, SMC Capital, and other market analysts feels so.

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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.

IFAs tying up with Brokerage Houses to turn Sub-Broker :)

IFAs - Sub-Broker

IFAs tying up with Brokerage Houses to turn Sub-Broker

 

Independent financial advisors (IFAs) are tying up with large distributors and brokerage houses to act as sub-brokers, to keep themselves afloat after the entry load ban on mutual funds.

Earlier, IFAs used to make most of their earnings by selling fund schemes.

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A sub-broker is a person who acts on behalf of a stock-broker as an agent, or otherwise for assisting the investors in buying, selling or dealing in financial products through stock-brokers.

Many independent financial advisors have approached the company asking it to create a platform through which they can offer advisory services to their clients.

There is a plan by companies also to launch such a platform in coming weeks.

Broking industry representatives said that IFAs have been left with no option but to tie up with large brokerage houses after they have been denied of their basic source of income (2.25 per cent entry fee on mutual fund investment).

Brokerage Houses are set to provide them with basic infrastructure and resources to provide investors advisory services.

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IFAs are now required to charge a fee for providing their advisory services, instead of a commission on each transaction that they received earlier.

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The Securities and Exchange Board of India (Sebi) had asked mutual fund distributors not to charge any entry load with effect from August 1. It had instead asked them to charge as per the service provided.

It means that a distributor cannot charge any fee for merely selling a product but can charge only if they offer advisory services to investors.

The new norm has queered the pitch for thousands of independent financial advisors, who used to make their earnings by merely selling mutual fund products.

Jagannadham Thunuguntla, equity head of Delhi-based brokerage house SMC Capital, said that the entry load ban has come as blessing in disguise for large brokerage and distribution houses.

“Most of the mutual fund business would now be routed through big distribution houses as IFAs struggle to provide the necessary advisory service on their own.

The sub-broker model is one of the few viable options available with the small financial advisors,” he added.

When asked if IFAs approached SMC showing their interest in becoming sub-brokers, Thunuguntla said that though inquiries were not so aggressive, they expect more IFAs to come seeking their help as the time passes.

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Downward Movement Hits Indian Equities Markets

Downward Movement Hits Indian Equities Markets

Downward Movement Hits Indian Equities Markets

Indian equities markets entered into a consolidation zone with analysts terming the downward movement as long expected.

A benchmark index fell 5.44 percent from its last weekly close and ended trade below the 16,000-mark.

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The 30-share sensitive index (Sensex) ended 914.53 points, or 5.44 percent lower, at 15,896.28 points at the weekly close Friday, as opposed to the previous week’s close at 16,810.81 points.

The broader S&P CNX Nifty of the National Stock Exchange (NSE), too slipped, closing at 4,711.7 points, down 5.7 percent from its last weekly close.

However, companies with large-to-medium market capitalization saw greater selling with the BSE midcap index ending 7.36 percent lower and the BSE smallcap index losing 8.01 percent over the last week.

“This consolidation was expected anyways as the valuations were not commensurate with the earnings of corporates. To an extent a correction in valuations was warranted,” said Jagannadham Thunuguntla, equities head of brokerage and capital markets consultancy SMC Capital.

The markets started on a cautious note Monday ahead of the Reserve Bank of India‘s mid-year policy review Tuesday.

The Sensex ended a volatile day at 16,740.50 points — 70.31 points or 0.42 percent lower than Friday’s close.

The Nifty followed a similar trajectory and ended in negative at 4,970.9 points, down 0.52 percent.

Both benchmark indices nosedived Tuesday as the RBI indicated in its policy review that it would start tightening the monetary policy and look at exiting the stimulus measures.

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Data with markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net sellers during the week, having sold scrips worth $12.8 million.

The top gainers this week on the Sensex were

Tata Motors (up 7.2 percent),
Ranbaxy Labs (up 4.8 percent),
Wipro (up 2.9 percent),
Grasim (up 1.6 percent) and
Hindustan Unilever (up 1 percent).

The top losers were :

DLF (down 18.5 percent),
Reliance Capital (down 14.5 percent),
Reliance Infrastructure (down 14.2 percent),
Hindalco (down 13.9 percent) and
Reliance Power (down 12.9 percent).

“Broadly speaking only about one percent of the quarterly results show a sound top line growth. Profits might have increased, but that is not because of increase in core operations – cost cutting and other income have contributed towards it,” said Thunuguntla.

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Bharti Airtel’s Scrip Fell 6% Down !

 

 

Bharti Airtel’s scrip Friday fell 6.38 percent

Bharti Airtel’s scrip Friday fell 6.38 percent lower at the Bombay Stock Exchange (BSE)

Telecom major Bharti Airtel’s scrip Friday fell 6.38 percent lower than its previous close at the Bombay Stock Exchange (BSE) as investors dumped the stock because of disappointing second quarter results.

The scrip, which had fallen to an intra-day low of Rs. 290.30 from Thursday’s closing figure of Rs. 312.05, ended the day at Rs. 292.15.

Bharti Airtel said its net profit, according to US accounting rules, increased 13.4 percent to Rs. 2,321 crore (495 million) for the quarter ended Sep 30 from Rs. 2,046 crore in the like quarter of previous fiscal.

This was, however, a decline of 8 percent over the previous quarter of current fiscal.

Revenues were up 9 percent to Rs. 9,846 crore from Rs. 9,020 crore reported a year earlier.

“The industry is seeing entry of many players and this is bound to have a bearing on the fortunes of existing companies,” said Jagannadham Thunuguntla, equities head of brokerage and capital markets consultancy SMC Capital.

“In the short term, the stock could see some more pressure, though it is coming within range of a good buy, at least for the long term investor,” Thunuguntla added.

The Bharti scrip has lost as much as 30.2 percent over October and at current levels is the lowest in seven  months.

Market to Go Volatile This Week, Due to Host of Factors

Market to Go Volatile This Week, Due to Host of Factors

The Market is likely to remain volatile this week as a host of triggers are set to guide investor sentiments. These factors are :

1. Expiry of the October series of derivatives contracts,

2. September quarter results of some key companies such as Reliance Industries and

3. the RBI money policy review.

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Global cues may also induce some choppiness in the market.

Noted Market analyst, Jagannadham Thunuguntla, head of equities at SMC Capital quoted that;

“The market is facing heavy pressure.  There a wide gap between fundamentals and stock valuations.  The second quarter results have come up less than what most investors had anticipated”.

He also added “though the average profits of companies, which have so far reported second quarter results, have grown 30-40 per cent on cost-cutting measures, growth in net sales has been sluggish“.

Also Thunuguntla said that “we have huge liquidity in the market thanks to the 100 per cent rally and this has helped the market sustain at this level till now. No doubt, fundamentals are catching up with valuations slowly”.

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Thunuguntla said the market was in a consolidation phase.

“It may remain volatile this week ahead of the expiry of near-month futures and options contracts and the RBI policy review.”

On the global front, the US will disclose its third quarter GDP figures on Thursday.

Meanwhile, the rate of inflation jumped to 1.21 per cent for the week ended October 10 against 0.92 per cent a week ago.

The BSE Sensex slipped 512.01 points, or 2.96 per cent, last week to close at 16,810.81.01.

The Nifty index on the NSE dipped 145.10 points, or 2.82 per cent, to end the week at 4,997.05.

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According to other observers, Nifty has a support at 4,900.
Market sentiment may get hurt if this level is breached.

Thunuguntla also said investors would keenly follow the quarterly results of Reliance Industries as well as global cues.

“Amid the fight between the Ambani brothers, investors will watch the RIL results keenly.  Global cues will also be followed after a few bad economic numbers from the US last week,” he said.

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Foreign institutional investors (FIIs) on Friday remained net sellers, offloading equities worth Rs 295.70 crore, according to figures available at the website of market regulator Sebi.

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Retail Investors Lying Low Despite Spate of IPOs/Market Surge

Retail Investors Lying Low despite IPOs and market surge

Retail Investors Lying Low despite IPOs and market surge

Despite the spate of initial public offerings and the surge in the equity market, demat accounts have not shown any acceleration in growth in August or September.

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Demat accounts rose at a steady rate of 1.34 per cent both in August and September, show data collated from depositories NSDL and CDSL.

Fresh additions — at around 2 lakh every month for the last four months — might seem substantial, but are not commensurate with the bullish sentiment for stocks, said marketmen.

The total number of Demat accounts stands at 155.67 lakh accounts as on September against 153.61 lakh accounts as on August-end.

The increase in new demat accounts is not substantial, given the rising interest in equities, both from existing and new investors.

Experts have cited the reason this is because retail investors are still not entering the market in a big way, it is just a trickle.

There is no significant change in retail investor sentiment during the past few months.

Typically, there is a big surge in new investors during the IPO season, but this time the pattern is different.

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One of the reasons is that this time the IPOs, unlike earlier, are not crowd pullers.

Maybe because the issues were rather aggressively priced.

As even the bigger IPOs have not given any remarkable returns on listing, retail investors are shying away from them, said some brokers.

The retail investor appears to be unsure about the sustainability of the rally in the equity markets, said Mr Jagannadham Thunuguntla, Equity Head, SMC Capital.