Posts Tagged ‘stake sale’

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 πŸ™‚

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.

πŸ™‚

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.

πŸ™‚

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.

πŸ™‚

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.

πŸ™‚

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.

πŸ™‚

Positive Undertones in the Economy – Part 2 :)

Positive Undertones In The Economy

Extending to the yesterday’s post on the positive undertones of the economy in the markets and investors tips, here we coming up with the more factors which investors should use for picking up fundamentally good stocks.

πŸ™‚

1. Reality companies hike rates by 15%

Reality sector is witnessing a substantial demand, especially in the mature markets, after the prices dropped a few months ago.

πŸ™‚

With the gradual return of residential property buyers, prices in NCR and Mumbai areas have moved up 10-15%.

How long these prices will sustain is hard to determine, but this indicates the confidence of investors.

πŸ™‚

2. India..in Better Position

India can be considered as β€œbalanced” in terms of investment and consumption with savings rate of 35% and consumption of 65% of its GDP.

πŸ™‚

The fastest growing China leans towards investment, whereas most of the western countries are weighted more towards consumption.

πŸ™‚

If we compare India’s Sensitive Index with its other Asian peers, Sensex is valued at 17.6 times estimated earnings where as China’s Shanghai Composite Index trades at 22 times earnings and the MSCI Asia Pacific Index is valued at 24 times.

πŸ™‚

So, India remains very attractive and it is an opportune time for Indian companies to grab market share.

πŸ™‚

3. Developments in the rest of the economy πŸ™‚

If we see the positive economic numbers across the globe, it seems that world economy is moving towards recovery.

πŸ™‚

Australian economy surprised with a jump in growth in the second quarter.

US have witnessed a growth in the current quarter GDP, US manufacturing and housing sectors appears to be gathering pace, quarter’s results came better than expected.

πŸ™‚

European economies like France and Germany continued their gradual emergence from the worst crisis in decades and company results showed an upturn.

πŸ™‚

4. Concerns Over Weak Monsoon!

Everyone is expecting that poor rains would push up food prices in the short-term, due to the reduced yield of kharif crop and it would add to inflationary pressures.

😦

But at the same time, we should also know that Indian agriculture is not limited to agro commodities only, but it is well diversified into horticulture, livestock and fisheries and their share in total output of the agricultural sector is increasing.

πŸ™‚

Total agricultural output accounts for only 18.5 % of the gross domestic product and the kharif crops like cereals, pulses and oilseeds account for only 20% of it.

Moreover, government spending in rural areas will mitigate the effect of diminished monsoon rains.

πŸ™‚

So, Looking at the above factors, India growth story remains strong in the long run.

πŸ™‚

So, one can go for the companies, which will benefit from β€œEconomic growth” like power plants, roads, service providers like banking and engineering sector.

Thanks πŸ™‚

Positive Undertones in the Economy – Part 1 :)

positive undertones of economy

We had a positive Q1FY10 result, which boosted the sentiments of investors regarding the economic recovery.

πŸ™‚

But are we actually out of it?

Though the earnings were encouraging but if we analyze it, the results had a β€œbottom-line growth”… may be because of the lower costs of raw material, huge cost cutting, profit from other sources like stake sale or stock market trading etc.

πŸ™‚

With lower interest rates, government spending in rural areas and lower base year, I am very much optimistic for Q2FY10 that these results would be β€œrevenue driven”.

πŸ™‚

Top line growth is not only good for the company and stock market but also for the economy as a whole.

πŸ™‚

Apart from the Q2FY10 numbers, there are positive undertones in the markets and investors should use these undertones for picking up fundamentally good stocks.

πŸ™‚

Those are :

1. Measures for fiscal deficit

The GoI is taking several measures to reduce the fiscal deficit.

Disinvestment is high on the priority list.

πŸ™‚

As private spending is increasing, Govt. is reducing need for stimulus.

A large part of deficit is contributed by the oil subsidy.

For this, the ministry of petroleum is lowering the subsidy burden in Kerosene and LPG.

Recently, improved tax compliance with new tax code and enforcement through the recently initiated Unique Identification Project are other steps to control the deficit.

πŸ™‚

2. Accelerating production

India’s industrial production posted the fastest pace in the last 16 months in June, which shows that India has endured the worst of the global recession.

The reason can be low interest rates, which has given confidence to the consumers to borrow to buy vehicles or other factory-made goods.

πŸ™‚

3. Capital flows to India

Another positive trigger can be the capital flows to India, which is expected to increase because of better medium-term growth and faster recovery prospects.

πŸ™‚

The Q1FY10 early indicators suggest that NRI deposits, FII portfolio inflows and inward FDI flows have generally been strong, as compared to the net capital outflows witnessed in the last two quarters of 2008-09.

πŸ™‚

4. Exports seen at $167 bn in FY10

For Indian Export Organisations, India’s exports are expected to touch around $167 billion, almost the same level of last year in FY10.

The commerce ministry looks ambitious and optimistic and has come up with foreign trade policy for the next 5 years, whereby; it aims to have an export of $ 200 billion by FY11.

πŸ™‚

This will ultimately improve the declining trend of exports and will give thrust to employment-oriented sector like Textiles and Gem Jewellery.

πŸ™‚

5. The New Tax Code

The new tax code has simplified the tax laws and will result in better compliance and a broader tax base.

The resulting incremental tax revenues will first reduce the fiscal deficit. This is a net positive.

πŸ™‚

People, there are many other factors and Positive undertones in the economy which indicates towards the betterment of the economy and stock market.

We would come up with the rest of factors in Part 2 of the topic in next blog. πŸ™‚

Stay Tuned πŸ˜‰

India’s industrial production posted the fastest pace in the last 16 months in June, which shows that India has endured the worst of

the global recession. The reason can be low interest rates, which has given confidence to the consumers to borrow to buy vehicles

or other factory-made goods.

Did IPO Grading Fail to Catch the Fancy of Investors??

ipo grade system

The grading system of initial public offers (IPO) is in need of an upgrade, say market participants.

πŸ™‚

Two years after it was first introduced by market regulator SEBI, the system has failed to catch the fancy of investors as share price trends of newly listed companies have shown little or no correlation to the grading given by rating agencies.

😦

“IPOs with grading 4 have shown returns that are much lower than IPOs with grades 1 and 2.
So, this is raising the question whether it is time to look at amendments to the existing structure or maybe SEBI can think of completely scrapping the system,” said Jagannadham T, equity head of SMC Capitals.

πŸ™‚

However, one can’t deny the importance of the IPO grading system not only is it beneficial for retail investors who don’t have the time or skills to go through an entire prospectus but it also acts as a deterrent for fly by night promoters who wish to access the primary market solely for their gains.

πŸ™‚

Not only financials of a company is looked at but also people at the business head level are contacted to see what the company is up to.

πŸ™‚

As per few experts, IPO grading doesn’t have anything to do with the price post listing. A lot of things apart from fundamentals drive the stock.

The reservation of comment on pricing is a sore point, but even more, is the grading of a SEBI barred company like Austral Coke at Grade 2 by CARE above Orbit Corporation at 1 by the same rating agency.

:O 😦

And this makes one wonder if a thorough due diligence is done by all rating agencies that’s ground enough for a review.

πŸ™‚

NHPC IPO subscribed over 16 times :)

NHPC IPO

The issue received bids for over 2,762.99 crore shares against 167.73 crore shares on offer, as per the data available on the National Stock Exchange.

πŸ™‚

The initial public offer of hydro power producer NHPC got subscribed over 16 times with most of the bids coming in from institutional investors.

πŸ™‚

The offer, which is expected to mobilize up to Rs6,000 crore making it the second largest IPO in the country till date after Reliance Power’s, will close on Wednesday.

πŸ™‚

Marketmen said the portion reserved for qualified institutional investors and high networth individuals got subscribed nearly 20 times each, while the retail investors portion was subscribed over three times the shares on offer.

πŸ™‚

β€œThe subscription by institutional investors is likely to go up further and the retail participation would also increase towards the end of bid timing,” SMC Capitals equity head Jagannadham Thunuguntla said.

πŸ™‚

Analysts said being a public sector firm, NHPC is getting attention from various categories of investors.

πŸ™‚

This is the first stake sale by a state-run company in the last one and a half years, after REC raised over Rs 1,600 crore in February.

πŸ™‚

TheΒ  of the issue has been fixed between Rs 30 -36.

πŸ™‚

Promoter stake reduction could raise Rs.159,000 crore :O

Promoter stake reduction could raise Rs.159,000 crore :O

Listed companies could raise over Rs.159,000 crore if Finance Minister Pranab Mukherjee’s proposal to reduce promoter stake in all listed companies to 75 percent becomes a policy , a report released Wednesday said.

πŸ™‚

Of this, state-owned firms alone will contribute as much as Rs.138,000 crore, the report by broking firm SMC Capitals said.

Among the listed companies, there are about 180 firms where promoters hold more than 75 percent of the equity.

Of these, 28 are public sector units (PSUs),while the remaining 152 are private companies,said the SMC report.


β€œTo comply with the proposal of reducing the promoters’ stake to 75 percent, the total value of stake that needs be offloaded is a whopping Rs.159,263 crore,” said SMC Capitals equity head Jagannadham Thunuguntla.

πŸ™‚

β€œOf this amount, stake sale in PSU companies will aggregate to about Rs.138,075 crore, and that of non-PSUs will be Rs.21,188 crore,” he added.

Mukherjee had said in his budget proposal July 6 that the government would look at increasing public stake in all listed companies to 25 percent, which currently is about 15 percent.

πŸ™‚

The chairman of the markets watchdog, Securities and Exchange Board of India (SEBI), has however proposed to the government that the increase in public holding be done in a phased manner and companies given time to dilute promoter holding to 75 percent.

πŸ™‚

β€œKeeping this account, it will be more practical and sensible to implement this regulation in a phased manner by the finance ministry, facilitating smoother implementation,” said the report. πŸ™‚