Posts Tagged ‘SMC capitals Ltd.’

CHANGE IS FOR BETTER

With great pleasure we announce that we have changed our online trading portal to http://www.smctradeonline.com for better. Experience a new level of online trading with more information, better aesthetics, advanced technology, world class financial tools & user friendly console on our new broking site.

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Come june 22nd and http://www.smcindiaonline.com , our corporate site will also come in its new avatar providing detailed information about SMC Group & its wide array of financial services.

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For any query, email us at brand@smcindiaonline.com

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Are Retail Investors Staging a Comeback in Country’s Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

In what could be viewed as a sign of revival of retail interest in the country’s primary market, the initial public offering of Indiabulls Power has received over 31,000 applications from retail investors on the first day of its issue.

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Although the retail portion of the offering remained under subscribed, the interest was more than what was seen in three major IPOs of the fiscal — NHPC, Oil India and Adani Power.

According to an analysis, NHPC‘s over Rs 6,000 crore issue received 30,474 retail applications on the first day.

Adani Power‘s Rs 3,610 crore issue got only 15,000 such applications.

The Rs 4,982 crore issue of OIL received 7,700 applications.

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“Retail investors are gradually staging a comeback and it is a pleasant surprise for the primary market,” SMC Capital Equity Head Jagannadham Thunuguntla said.

The Rs 1,700-crore initial public offer of Indiabulls Power, which hit the market yesterday, got subscribed nearly six times, as flooded the counter with maximum number of bids.

However, bids from retail investors on the first day of subscription accounted for only 37 per cent of the shares reserved for them.

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Stock Markets Reversed Early Losses, Sensex & Metal Stocks..Up :)

India’s benchmark stock index rose the most in a week, reversing earlier losses.

India’s benchmark stock index rose the most in a week, reversing earlier losses.

India’s benchmark stock index rose the most in a week, reversing earlier losses.

Sterlite Industries (India) Ltd. and Hindalco Industries Ltd. led commodity producers higher after metals prices jumped.

Sterlite, the nation’s largest copper producer jumped 3.1 percent after the price of the metal gained and the stock’s rating was lifted at Nomura Holdings Inc.

Hindalco Industries leapt 6.2 percent after aluminum soared.

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The market reversed early losses helped by metal stocks.

Also, gains in Asian and European markets boosted sentiment here.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, added 92.13, or 0.6 percent, the most since Sept. 30, to 16,958.54.

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The gauge had earlier declined as much as 1.5 percent.

The S&P CNX Nifty Index on the National Stock Exchange rose 0.5 percent to 5,027.40.

The BSE 200 Index advanced 0.4 percent to 2,072.31.

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European and Asian stocks gained as higher commodities lifted metal producers, while financial shares advanced after Bank of America Merrill Lynch Global Research recommended European banks.

Europe’s Dow Jones Stoxx 600 Index gained 1.4 percent to 239.19 at 12:26 p.m. in London, while futures on the Standard & Poor’s 500 Index rose 0.8 percent.

The MSCI Asia Pacific Index advanced for the first time in four days today, adding 1.5 percent.

Overseas funds bought a net 13.7 billion rupees ($286.7 million) of Indian stocks on Oct. 1, the Securities and Exchange Board of India said.

The funds have bought 615 billion rupees of Indian stocks this year to date, compared with record net sales of 530 billion rupees for the whole of 2008.

However, Reliance Communications Ltd., India’s second-largest mobile phone operator, led declines by telecom companies on concern lower call charges will cut earnings.

“The price war can impact the revenues of telecom companies by 15 percent to 20 percent,” said Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi.

Kotak Securities removed Bharti from its list of 10 most recommended stocks following yesterday’s downgrade.

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On Energy front, Oil & Natural Gas Corp., the biggest energy explorer, added 1.3 percent to 1,184.8 rupees after saying its in talks with Iran’s state-owned Petropars Ltd. to buy a stake in South Pars, the country’s largest natural gas field.

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Reliance Comm. Leads the Decline among India Phone Stocks !

Reliance Communications Ltd. turned as a leading declines among India’s telecommunications stocks

Reliance Communications Ltd. turned as a leading declines among India’s telecommunications stocks

Reliance Communications Ltd. fell the most in nine months in Mumbai trading, leading declines among India’s telecommunications stocks, on speculation a price war may hurt earnings after the company cut its call charges.

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Reliance tumbled 11 percent to close at 268.30 rupees, the biggest decline since Jan. 7.

Larger rival Bharti Airtel Ltd. declined 10 percent to 359.35 rupees.

The two stocks were the worst performers today on the benchmark Sensitive Index, which climbed 0.6 percent.

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Sales have been slowing at Reliance and Bharti as competition from Vodafone Group Plc’s Indian unit and new entrants such as NTT DoCoMo Inc. intensifies in the world’s largest wireless market by users after China.

Revenue growth is also easing as wireless subscriptions in urban areas approach saturation level, forcing the companies to target low-spending rural customers for the bulk of their new additions.

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A “price war can impact the revenues of telecom companies by 15 to 20 percent,” said Jagannadham Thunuguntla, head of equities at SMC Capitals Ltd. in New Delhi.

Reliance has said that it will charge a uniform 0.50 rupee (1 U.S. cent) per minute for local and long-distance calls, to simplify tariffs.

The new rates will help the company gain market share for its services based on the global system for mobile communications platform.

“The cut in tariffs by Reliance will distort the revenue structure for companies in the sector,” market experts said.

“It could prompt other companies to follow with cuts” they added.

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QIPs Outstripped PE Funding & IPOs in Fund Raising Process ;)

QIP-investments-outpace-PEfunds

Qualified institutional placements (QIPs) have outstripped private equity (PE) funding since January by at least eight times, making it by far the most popular fund-raising route for firms this year.

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QIPs raised at least Rs. 21,209 crore since January this year, while PE funds invested only Rs. 2,574 crore in listed firms.

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QIPs have almost raised more than twice of initial public offerings.

A QIP is a private placement by a listed company of shares or securities convertible to equity with qualified institutional buyers approved by market regulator Securities and Exchange Board of India(SEBI).

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Data from Delhi-based investment bank SMC Capitals Ltd shows another 48 QIPs worth Rs.43,891 crore are in the pipeline.

But analysts do not expect a significant rise in the number of, or funds through, PE deals this year.

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Typically, PE investments take up to six months to complete, whereas a QIP can be done in up to four weeks, making the fund-raising process faster and more reliable since the institutional buyers are selected carefully.

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Also, in a QIP, the institutional buyers rarely seek a seat on the company board, or management control, a common practice in large PE deals.

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Since PE is perceptionally intrusive for promoters, QIP serves as a good alternative.

However this QIP structure is liked by investors and firms as in a QIP the window is shorter and money can be raised quickly.

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While real estate firms typically prefer QIPs for their need of capital at short notice, the companies currently waiting to do QIPs are across sectors, including telecom, entertainment, retail and information technology.

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In line for QIPs are Reliance Communications Ltd, Pyramid Saimira Theatre Ltd, Pantaloon Retail (India) Ltd  and few more.

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Some firms, though, have taken both routes for their funding needs.

Historically, PE investments in India have been in the form of private investments in public enterprises, or PIPEs, which also happen to the only firms eligible for QIPs.

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“Private equity investors have missed the boat,” Jagannadham Thunuguntla, head of SMC Capitals, said in a statement.

Companies that are in the pipeline for QIPs may also look for American depository receipts or global depository receipts for funds, he  added.

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As IPO Market Falters,Companies Eye New Funds !!

Market falters

The post-listing dismal performance of the initial public offering ( IPO) of public sector power major NHPC Ltd is set to force many companies to rework their fund- raising strategies in the coming months.

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Qualified institutional placements (QIPs), global depository receipts (GDRs) or those shares issued to overseas investors and listed on exchanges abroad are likely to be the most favoured means for these purposes, leading investment bankers said.

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Some of the companies are already planning to revise their issue prices downwards to ensure that offerings will not fall through.

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Oil India Ltd (OIL), which is open for subscription now, is the first to draw lessons from the NHPC episode and revise its issue price.

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OIL has revised their price band to Rs 950- 1,050 per share, from Rs 1,250- 1,400, after the NHPC episode as per few bankers.

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NHPC fixed the price of its IPO at Rs 36 per share last month.

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Though the stock listed on September 1 at eight per cent premium to the issue price, at Rs 39, it closed just 70 paise or 1.94 per cent above the issue price.

Over the last two days, the premium further narrowed to just 10 paise.

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Jagannadham Thunuguntla, equity head of SMC Capitals Ltd, cites heavy selling, coupled with no follow- up buying as the reasons for the lacklustre listing of NHPC.

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NHPC’s IPO price was 30 times its earnings per share (EPS).

“In fact, well- established companies like NTPC are available at much lower valuations. Hence, there was no follow- up buying from the investors on NHPC listing,” Thunuguntla explained.

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Further, majority of the oversubscription is not due to genuine investor interest but is due to the borrowed funding through ‘IPO financing“.

Naturally, all such investors were forced to sell on the day of listing as these involve a lot of interest cost. This resulted in heavy selling on the day of the listing,” he added.

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After the market rebound since March 2009, fundstarved companies started tapping the market.

And when the elections gave a more convincing victory to the UPA combine, the market gathered greater strength.

Since March, companies were able to raise funds to the extent of Rs 21,191 crore through 22 QIPs; and $ 1.88 billion through four GDRs/ ADRs (funds raised from US- based investors and listed in the US).

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However experts maintained that these are the sources of funds for which few institutional investors are to be convinced, rather than working on creating confidence among the whole investor community.

At the same time such companies should have a high corporate governance track- record as well.

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price band

India May Trigger $39 Billion of Share Sales With Ownership Cap :)

India Shines

India may trigger as much as 1.9 trillion rupees ($39 billion) in stock sales, equivalent to five years of equity offerings, with a proposal to limit stakes of controlling shareholders.

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Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded.

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The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.

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The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong.

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The 25 percent minimum would be good for the long-term Indian market. There are many very attractive companies with small floats that investors would like to be able to invest in.

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The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steel making, oil and electricity supply.

The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.

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Sensex Surges :

The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg.

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Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.

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International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.

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The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.

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No Minimum :

Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.

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The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia.

Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering.

New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.

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Government Control :

India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer.

The stake would fetch 120 billion rupees at current prices.

The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.

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“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview.

“The capital market may find it difficult to absorb such heavy equity” he added.

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The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.

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‘Phased Manner’

The proposal “should be positive for markets if introduced in a phased manner,”

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Such a change is a welcome one.

Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. This would constitute a positive structural change.

🙂

India may trigger as much as 1.9 trillion rupees ($39 billion) in stock sales, equivalent to five years of equity offerings, with a proposal to limit stakes of controlling shareholders.

Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded. The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.

The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong, said Anshul Krishan, the Mumbai-based head of Goldman Sachs Group Inc.’s India financing group. The sales, equal to about 4 percent of India’s $1 trillion stock market, probably won’t affect prices if they’re staggered over time, said Purav Jhaveri, senior investment strategist at Franklin Global Advisers.

“The 25 percent minimum would be good for the long-term Indian market,” Seth Freeman, chief executive officer of EM Capital Management LLC in San Francisco, which advises investors on emerging markets and runs the EM Capital India Gateway Fund, said in an e-mail response to questions. “There are many very attractive companies with small floats that investors would like to be able to invest in.”

The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steelmaking, oil and electricity supply. The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.

Sensex Surges

The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg. Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.

International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.

Finance Minister Pranab Mukherjee said in his July 6 budget speech that a rule requiring a public float of at least 25 percent for listed companies should be enforced uniformly, even for state-run enterprises that had been exempted. The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.

No Minimum

Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.

“The average public float in Indian listed companies is less than 15 percent,” Mukherjee said. “Deep, non-manipulable markets require larger and diversified public shareholdings.”

The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia. Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering. New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.

Government Control

India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer, Steel Secretary Pramod Rastogi said Aug. 5. The stake would fetch 120 billion rupees at current prices, he said. The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.

“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview. “The capital market may find it difficult to absorb such heavy equity.”

GMR Infrastructure Ltd., based in Bangalore, scrapped a $500 million international sale on June 30 as at least 40 companies announced plans to sell more than 350 billion rupees of shares, mostly to foreign institutional investors.

The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.

‘Phased Manner’

The proposal “should be positive for markets if introduced in a phased manner,” Franklin’s Jhaveri said in an e-mail response to questions. Franklin Templeton Investments in San Mateo, California manages $482.4 billion worldwide, including more than $3 billion in Indian stocks.

The Finance Ministry sought public comment on the plan on its Web site July 9. Singh’s administration plans to take up the issue after completing 100 days in office, Junior Finance Minister Namo Narain Meena said in a written statement to parliament in New Delhi on Aug. 4. Singh was sworn in on May 22.

The changes are important for protecting shareholders in India, said Andrew Foster, who oversees $2 billion in assets, including Indian securities, at Matthews International Capital Management LCC in San Francisco.

“Such a change is a welcome one,” Foster said in an e- mailed response to questions. “Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. So I think this would constitute a positive structural change.”