Okay. So the bull has been pushed into the ring. But, can you bear it? I could not help myself against that pun!
Some of the basic questions that you should ask yourself, if you have not really asked this to yourself before:
"When am I going to need that money that i invested in the markets?"
If your answer is "soon", then, fellow, you can disinvest. Yes, sell your holdings- as you are getting definite returns right now. The stock prices are not attractive enough to buy right now- which means, they should be attractive enough to sell. And if you have a reason to sell, that is, you are going to need that money for whatever purpose- it's better to get out and put it into the bank/make an FD.
"But my portfolio is still in the red/I have not recovered my losses."
Now, you are in a precarious situation. If you really need that money, go ahead and sell. It may be possible that the stocks that you hold- and given the recent bull run where most of the folks are back in the green, and you haven't, the stocks that you hold aren't really worth the wait if they're penny stocks. If they are index stocks or good fundamental companies, you may wait, but if it's the pennies- one cannot be sure to say when they'll bounce. It's odd, but penny stocks and long term investments don't go together. If you didn't know this, now you do- and you're a lot wiser, trust me. Coming back to the money, if you do not require that money for a few quarters, you can stay invested, and earn a bit more- do not freak out when the markets correct in the next month- it's October, baby!
"Okay, I don't need that money for now, not even for the year."
You should re-analyse your situation before you come to this answer. As a rule, you should invest only that portion of your savings which you are sure you're never going to need- ever.
"Yes, I'm sure."
Then you should ask yourself.
"What is my risk appetite?"
Basically, this question asks you whether you want to make a killing at the stock markets- risking your investment to the edge, or you want to play safe, and still get better returns than that normal bank fixed deposit, the post office scheme or that mutual fund manager. In order to facilitate a better answer, I'll name the two fellows. The first case would be Jack Sparrow. And the second would be Vito Corleone. Okay, you may not agree with the analogies, but anyways, that's the names i would employ.
If you're Jack Sparrow, ie, you are ready to go whatever distance- to get a killing, which would also imply that you're ready to hold your stocks for verrrry long, you can do a couple-a things.
First and foremost, and this is the general rule that both Jack Sparrow and Vito Corleone follow- do not go by market speculation or punters. Do not go for penny stocks/tips and the like. You would never know when to get out since you did not know when you went in- trust me on this one. Your portfolio should have stocks that have tremendous potential on the upside. Okay, I knew this, how do i identify such stocks? That's tricky, but if you had followed some of my earlier posts/mails, you would know what stocks i'm talking about. I'll suggest a few, but bear in mind that the portfolio i model below is very risky.
1. Bharati Shipyard [CMP: 205, 52wk low: 45, reco: 51.1]
This should comprise of around 15-20% of your holding. The stock had gone to highs of 800, and considering that, it is at tremendous discount at the moment. Also, the company is gearing up to take over Great Offshore, and the battle is being fiercely contested by ABG Shipyard.
2. Spanco [CMP: 63.5, 52wk low: 16, reco:45]
This should be around 10-15% of your holding, depending on your risk appetite for S group stocks and smallcaps.
3. Asian Electronics [CMP: 48.05, 52wk low:17.2]
This is a punter's call. The company is recuperating, after going down hard. If the company gets back on its feet, the stock may easily test 500. It should be 5% of your portfolio, not more given the extremity of the risk involved.
4. Wire & Wireless [CMP: 22.05, 52wk low:7.8]
A loss making unit of Subhash Chandra- this saw highs of 100+ on the bourses when the sensex was at 21000 the last time it was. Fund raising is on, and if, if this manages to break even, all hell may break loose on this one- it'ld boom like anything. 10% is what you can bet on this one.
5. Vikash Metal & Power [CMP:21.8, 52wk low:4.8]
This saw highs of around 50, and this time it may go even further. It was planning a big power project in Bihar which is said to be operational by 2011. Another 5% here.
6. Technocraft Industries [CMP:42.2, 52wk low:17]
This hasn't really seen great heights till now, and is a good contender for big bull runs. A dividend paying company, with increasing toplines, this is a favorite for long term investors, and one of my personal favorite. Keep 15-20% here. This is a good bet.
7. The rest of the portfolio should be cash/contrarian stocks such as the FMCG ones- HUL, ITC, Castrol, etc. or pharma stocks which you can use to sell and average out (do not avg out Asian Electronics- that's a total gamble) one of the above, when they flunk.
If you think you're Vito Corleone, the reverse would apply, albeit even more moderately:
1. Clariant Chemicals [CMP: 362] - 20 to 25%
An MNC paying good dividends. Good fundamentals, and great balance sheet. Negative? At the all time high right now.
2. Lupin [CMP: 1136] - 10-15%
Again, great fundamentals. It's been doing some good M&As lately, and may surprise you with its results.
3. HUL - 20-25%
The safety net of HUL is a must for Vito Corleone, who would insist on investing rather not too rash!
4. Rei Agro - 5%
Beaten down stock, will roar when it gets into the groove.
5. Pfizer/Lakshmi Machine Works/Bharti Airtel/Biocon/Punj Lloyd/TCS
These 6 should make up the rest of your portfolio considering your choice.
Notice the sectors i'm bullish upon. It's the same as i discussed before, much before this bull rally. I'm still bullish on the same! If you know what you're doing, and it's contrary to what others are saying, you're probably doing the right thing. And that's what being Vito Corleone is, isn't it!?
And yes, tighten your seat belts, it can go anyway from here!
Interesting Article: Another 50% Crash Prediction!
BAM Investor's financial model has an uncanny record of calling specific, key market movements. When crude oil was trading rapidly up to an all-time high of $147 per barrel, BAM predicted a crash to $36 over the next 12-18 months; 8 months later, it crashed to exactly $36. When corn and wheat were trading near historic lows in 2007, BAM told investors to buy; the next year corn and wheat hit a 26 year high. When Ford was trading near this year's lowest point in February, BAM recommended a buy; it then called a sell in August for a 400% gain.
Read the full article at the original place here:
http://www.prweb.com/releases/twitter/marketpredictions/prweb2896604.htm
StocksCenter View:
I doubt this will happen. If it does, the trillions spent in the bail out would count for nothing, and it'll be the W shape recovery, if it IS a recovery, making the current bounce a dead cat bounce. I don't know how many Vs are there here, but in the longer run, the capitalist economy would be of many Vs, each climbing up- because of the inflation. Asset bubbles are inevitable in a capitalist economy, why then, are we worried about recoveries and crashes? Survival of the fittest is the rule in any game. Bet on the fit, and you'll stay fit! After all, the saying- health is wealth, is purely symmetric!
Read the full article at the original place here:
http://www.prweb.com/releases/twitter/marketpredictions/prweb2896604.htm
StocksCenter View:
I doubt this will happen. If it does, the trillions spent in the bail out would count for nothing, and it'll be the W shape recovery, if it IS a recovery, making the current bounce a dead cat bounce. I don't know how many Vs are there here, but in the longer run, the capitalist economy would be of many Vs, each climbing up- because of the inflation. Asset bubbles are inevitable in a capitalist economy, why then, are we worried about recoveries and crashes? Survival of the fittest is the rule in any game. Bet on the fit, and you'll stay fit! After all, the saying- health is wealth, is purely symmetric!
Investment Pick: Koutons Retail India Ltd
Koutons [BSE: 532901, NSE: KOUTONS] is a mass market apparel retailer, with hundreds of stores across the nation. Koutons operates stores under three brand names: Koutons, Charlie Outlaw and Les Femme. These stores offer apparel, accessories and footwear for men, women and children. A new product line KZone2 (footwear products) was launched in the last quarter of FY09 with a target of 50 Koutons to support it. The production for this is said to have been outsourced. It is also pursuing the concept of 'Family stores', which will have apparels for men, women and children at the same place. The company started 182 'family stores' in FY09. It is also converting existing outlets into family stores.
Koutons went public in 2007. The IPO was priced at Rs. 415. The Current Market Price is much lower than the IPO price. On Sep 25 2009, the stock closed at Rs. 330 on the BSE. One would think, why would i invest in a sector highly affected by recession? There are many answers.
First, Koutons follows the franchisee mode of business. It has stores in all big (a massive network of more than 1,400 stores across the country covering 496 cities) and not so big cities in the country. But it doesn't own them. This mode of business, although reduces margins, but remains a defense against rising rentals, unnecessary inventory buildups, and other such problems plaguing the big retailers. With economies of scale, Koutons has been able to sustain the recession courtesy its business model. While designing, manufacturing and distribution is being done in-house, the franchisee model for retail has helped it control costs. Also, the products of Koutons are not very expensive, and are affordable to the masses. And thus, it manages conversion of 80-85% footfalls into sales. Koutons showed a 32 per cent increase in sales for the full year 2008-09 versus the last year with an equal increase in operating profit of more than 30%. Koutons is a good performer at operating margin levels, maintaining a steady growth on an annual basis in a span of three years; operating margins for H1FY09 were at 18 per cent.
Also, Koutons is expanding. About 90% of retail expansion is carried out through franchisees. The average agreement period of a franchise is of around 8-10 years, and Koutons' franchisees have remained loyal in most of the places i have seen, at least. This is another positive for such a company- if the franchisees are staying, it means they're making money- which means Koutons can have a better topline. Capex requirement is low. Rentals and employee costs, which have been a key drag on margins and funding requirements of many retailers in India- are to be borne by the shop owners. This makes rapid expansion possible. Koutons now plans to raise Rs. 100 cr by a QIP issue for the same.
Negatives for the company? Debt at high interest. It owes money to foreign banks which charge more for the loans. However, debt restructuring has led it to transfer the debt to PSU banks that charge lower rates.
The valuations are attractive, top line is increasing and so is the operating profit margin. What is killing the net is the high interest rates. At Rs. 330 a share, Koutons is still a good investment proposition (although it doesn't give good dividends) given the fact that it has not yet inflated to higher levels as have its peers. It has an impressive book value of 140 and an EPS of around 26. That makes it trade at P/E of 12.6 with a market cap of 1008 cr. Its peers Pantaloons and Provogue trade at P/Es of 43 and 26 respectively.
Historic Price of Koutons:
In the short term, an upward correction is possible.
Koutons went public in 2007. The IPO was priced at Rs. 415. The Current Market Price is much lower than the IPO price. On Sep 25 2009, the stock closed at Rs. 330 on the BSE. One would think, why would i invest in a sector highly affected by recession? There are many answers.
First, Koutons follows the franchisee mode of business. It has stores in all big (a massive network of more than 1,400 stores across the country covering 496 cities) and not so big cities in the country. But it doesn't own them. This mode of business, although reduces margins, but remains a defense against rising rentals, unnecessary inventory buildups, and other such problems plaguing the big retailers. With economies of scale, Koutons has been able to sustain the recession courtesy its business model. While designing, manufacturing and distribution is being done in-house, the franchisee model for retail has helped it control costs. Also, the products of Koutons are not very expensive, and are affordable to the masses. And thus, it manages conversion of 80-85% footfalls into sales. Koutons showed a 32 per cent increase in sales for the full year 2008-09 versus the last year with an equal increase in operating profit of more than 30%. Koutons is a good performer at operating margin levels, maintaining a steady growth on an annual basis in a span of three years; operating margins for H1FY09 were at 18 per cent.
Also, Koutons is expanding. About 90% of retail expansion is carried out through franchisees. The average agreement period of a franchise is of around 8-10 years, and Koutons' franchisees have remained loyal in most of the places i have seen, at least. This is another positive for such a company- if the franchisees are staying, it means they're making money- which means Koutons can have a better topline. Capex requirement is low. Rentals and employee costs, which have been a key drag on margins and funding requirements of many retailers in India- are to be borne by the shop owners. This makes rapid expansion possible. Koutons now plans to raise Rs. 100 cr by a QIP issue for the same.
Negatives for the company? Debt at high interest. It owes money to foreign banks which charge more for the loans. However, debt restructuring has led it to transfer the debt to PSU banks that charge lower rates.
The valuations are attractive, top line is increasing and so is the operating profit margin. What is killing the net is the high interest rates. At Rs. 330 a share, Koutons is still a good investment proposition (although it doesn't give good dividends) given the fact that it has not yet inflated to higher levels as have its peers. It has an impressive book value of 140 and an EPS of around 26. That makes it trade at P/E of 12.6 with a market cap of 1008 cr. Its peers Pantaloons and Provogue trade at P/Es of 43 and 26 respectively.
Historic Price of Koutons:
| Year | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | ||
| H - L | C - O | |||||||||
| 2007 | 515.00 | 1,055.00 | 515.00 | 1,006.85 | 11030257 | 211558 | 7,327,714,088.00 | 540.00 | 491.85 | |
| 2008 | 1,018.70 | 1,098.00 | 380.50 | 508.25 | 1684573 | 32268 | 1,223,324,945.00 | 717.50 | -510.45 | |
| 2009 | 529.90 | 548.90 | 324.10 | 330.00 | 2412134 | 49178 | 958,485,748.00 | 224.80 | -199.90 | |
| * Spread H - L -> High - Low C - 0 -> Close - Open | ||||||||||
In the short term, an upward correction is possible.
Short Term Gaps/Opportunities
1) Mahindra Ugine Steel Company
CMP: 41.5
Target: 45-47
Timeframe: 3-4 weeks
After a sharp upmove to the levels of 46-47, the stock witnessed an immediate correction. With sentiments improving, this stock can again show upside movement.
2) Rajesh Exports
CMP: 75
Target: 80
Timeframe: 2-3 weeks
This one is tricky. After having risen at a scorching pace, it slowed down today. Before going to the levels of 80-81, the stock may correct further. The head says it should correct further, but the bull in me says it'll stay risen.
3) MRPL (Mangalore Refineries)
CMP: 85
Target: 94
Timeframe: 1-1.5 months
This stock saw strong support at the level of 80, and severe resistance at 90. This time, we forecast an upward shift in the trading range, with 87 being pivotal being extremely bullish. If it breaks 80, and sentiments deteriorate, exit. Else, if the sentiments do not deteriorate, keep holding this one. It is well poised to breakout.
4) Spanco
CMP: 62
Target: 67
Timeframe: 1-2 weeks
The stock's been slow recently after a spurt from 45 to 75, going down again to the 60s. An upward revision is highly possible.
CMP: 41.5
Target: 45-47
Timeframe: 3-4 weeks
After a sharp upmove to the levels of 46-47, the stock witnessed an immediate correction. With sentiments improving, this stock can again show upside movement.
2) Rajesh Exports
CMP: 75
Target: 80
Timeframe: 2-3 weeks
This one is tricky. After having risen at a scorching pace, it slowed down today. Before going to the levels of 80-81, the stock may correct further. The head says it should correct further, but the bull in me says it'll stay risen.
3) MRPL (Mangalore Refineries)
CMP: 85
Target: 94
Timeframe: 1-1.5 months
This stock saw strong support at the level of 80, and severe resistance at 90. This time, we forecast an upward shift in the trading range, with 87 being pivotal being extremely bullish. If it breaks 80, and sentiments deteriorate, exit. Else, if the sentiments do not deteriorate, keep holding this one. It is well poised to breakout.
4) Spanco
CMP: 62
Target: 67
Timeframe: 1-2 weeks
The stock's been slow recently after a spurt from 45 to 75, going down again to the 60s. An upward revision is highly possible.
The markets are doing the unpredictable .. Again!
Whew! What a week it was. As we had discussed earlier, the markets were choosy between scrips again this week. Most of stocks that had risen a lot the week before last, slowed down, while new ones took speed. Let me exemplify. On the SENSEX itself, Tata Steel, Ranbaxy, Grasim, Hindalco and Hero Honda (who's up more than 20 % over this month) were traded higher, while Reliance (who got beat due to the selling of 1.5 cr shares in the open market by the promoters), BHEL, HDFC, ICICI Bank, L&T and ONGC slowed down.
The current scenario of the market is such that it would make one comfortable with the situation- every one is happy, and every one is winning (i'm talking about the bulls here!). And from here again, two things are possible. The bulls may beat the bears in a protracted breakout, or otherwise, the bears may maul the bulls in a much awaited correction. But the general sense is that with a lot of FII money having flown in in the last week, the bulls are going to have a larger say in the market. Have a look at the inflows: (data from Bseindia.com)
The volumes in the cash market have risen, and the current sentiment makes one do wishful thinking about the highs of 2007 and the 21000 on the Sensex.
The current movement in the market is characteristic. This has happened a lot of times, but I remember it happening twice, as significant events took place then. First, the great bull run. If you're a bull, you're going to like this! There are downsides in individual stocks- on bad news, and profit booking, but these downsides are masked by upward moves in the other stocks. In the general sense, the increase in the premiums mask the increase in the discounts- over the broader market. Operators seem to have stepped in in most of those smallcaps where one would see potential, but that would, of course be- a mistake. Of course, those stocks would be launched to levels of 5x or even 10x, or God knows where, but they would not create wealth. A hint of bad news, or sentiment, or when the operators' job would be done, and the stock price would come tumbling down. Punters would die, and the investors- the real ones would survive. Darwin's law stays here as well, but we have to modify it a bit. Survival of the rational. That drives me to the second event when we saw such movement in the markets, albeit on the downside. When markets rose to unimaginable levels in Jan '08, there were similar movements in stocks. People were not booking profits, and were under the impression that they were creating wealth. When the bubble burst, their wealth disappeared, and we know the cause and effects.
This time, you would think, you are smarter. You would think that you're mature. But when greed takes over, you lose your rationality.
My personal opinion is that one should not start looking for the stocks labeled as multibaggers/penny stocks/rocket stocks/tips and the like. Stick to the basics, stick to good companies and you'll have good returns in the longer term. I remember talking to a person who booked profit in L&T when it was at the levels of 300 rs/a share some years ago. The company then gave bonus shares twice, and is now at 1600+. The person had booked profit in the company at that level and reinvested the money elsewhere. If he had kept that money there, in L&T, (he knew the company had a lot of potential- given the large infrastructure plans of the country) he would have been a crorepati now. But that also doesn't mean that history would repeat. L&T can die in a year (I don't like the sound of this), and the world may end (I don't like the sound of this either!). The point is, invest in a good company if you're a long term investor, and if you are a short termer, know when to get out, and get out then. Love the cash, don't love the share.
You should know what your company is doing, and know the risks involved in the business- and if possible, the risks that your company is taking. Develop that risk appetite, while being rational. If something can go wrong, it probably will go wrong.
The current scenario of the market is such that it would make one comfortable with the situation- every one is happy, and every one is winning (i'm talking about the bulls here!). And from here again, two things are possible. The bulls may beat the bears in a protracted breakout, or otherwise, the bears may maul the bulls in a much awaited correction. But the general sense is that with a lot of FII money having flown in in the last week, the bulls are going to have a larger say in the market. Have a look at the inflows: (data from Bseindia.com)
| (Rs. crore) | ||||||
| FII | DII | |||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 18/9/09 | 4,155.40 | 2,669.32 | 1,486.08 | 1,213.82 | 1,719.20 | -505.38 |
| 17/9/09 | 6,122.95 | 3,363.49 | 2,759.46 | 1,820.48 | 1,634.24 | 186.24 |
| 16/9/09 | 3,631.16 | 2,525.52 | 1,105.64 | 1,723.46 | 1,580.01 | 143.45 |
| Sep, 09 | 41,795.68 | 34,567.12 | 7,228.56 | 20,005.15 | 19,058.66 | 946.49 |
| Since 1/1/09 * | 402,325.45 | 389,557.21 | 12,768.24 | 215,326.89 | 191,363.46 | 23,963.43 |
The volumes in the cash market have risen, and the current sentiment makes one do wishful thinking about the highs of 2007 and the 21000 on the Sensex.
The current movement in the market is characteristic. This has happened a lot of times, but I remember it happening twice, as significant events took place then. First, the great bull run. If you're a bull, you're going to like this! There are downsides in individual stocks- on bad news, and profit booking, but these downsides are masked by upward moves in the other stocks. In the general sense, the increase in the premiums mask the increase in the discounts- over the broader market. Operators seem to have stepped in in most of those smallcaps where one would see potential, but that would, of course be- a mistake. Of course, those stocks would be launched to levels of 5x or even 10x, or God knows where, but they would not create wealth. A hint of bad news, or sentiment, or when the operators' job would be done, and the stock price would come tumbling down. Punters would die, and the investors- the real ones would survive. Darwin's law stays here as well, but we have to modify it a bit. Survival of the rational. That drives me to the second event when we saw such movement in the markets, albeit on the downside. When markets rose to unimaginable levels in Jan '08, there were similar movements in stocks. People were not booking profits, and were under the impression that they were creating wealth. When the bubble burst, their wealth disappeared, and we know the cause and effects.
This time, you would think, you are smarter. You would think that you're mature. But when greed takes over, you lose your rationality.
My personal opinion is that one should not start looking for the stocks labeled as multibaggers/penny stocks/rocket stocks/tips and the like. Stick to the basics, stick to good companies and you'll have good returns in the longer term. I remember talking to a person who booked profit in L&T when it was at the levels of 300 rs/a share some years ago. The company then gave bonus shares twice, and is now at 1600+. The person had booked profit in the company at that level and reinvested the money elsewhere. If he had kept that money there, in L&T, (he knew the company had a lot of potential- given the large infrastructure plans of the country) he would have been a crorepati now. But that also doesn't mean that history would repeat. L&T can die in a year (I don't like the sound of this), and the world may end (I don't like the sound of this either!). The point is, invest in a good company if you're a long term investor, and if you are a short termer, know when to get out, and get out then. Love the cash, don't love the share.
You should know what your company is doing, and know the risks involved in the business- and if possible, the risks that your company is taking. Develop that risk appetite, while being rational. If something can go wrong, it probably will go wrong.
Spectacular FII activity seen on NSE and BSE today
FIIs bought (net) equities worth Rs. 2,759 cr on the bourses today. This is significant buying seen on the bourses.
| (Rs. crore) | ||||||
| FII | DII | |||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 17/9/09 | 6,122.95 | 3,363.49 | 2,759.46 | 1,820.48 | 1,634.24 | 186.24 |
| 16/9/09 | 3,631.16 | 2,525.52 | 1,105.64 | 1,723.46 | 1,580.01 | 143.45 |
| 15/9/09 | 2,856.46 | 2,080.36 | 776.10 | 1,541.45 | 1,408.01 | 133.44 |
| Sep, 09 | 37,640.28 | 31,897.80 | 5,742.48 | 18,791.33 | 17,339.46 | 1,451.87 |
| Since 1/1/09 * | 398,170.05 | 386,887.89 | 11,282.16 | 214,113.07 | 189,644.26 | 24,468.81 |
* Data for DII turnover is since 16/4/07 | ||||||
First: Bharati Shipyard owned Dhanashree Properties buys an additional 3% stake in Great Offshore
An official disclosure on this buy is due any time this week now.
Dhanashree Properties, owned by Bharati Shipyard bought 1,116,267 shares of Great Offshore from BSE and NSE today. This amounts to 3% stake increase in Great Offshore. Dhanashree Properties bought 360,000 shares in the NSE, and 756,267 shares in the BSE.
On NSE:
Videocon sold 223,600 in the NSE today, and we assume they were bought by Bharati Shipyard's company. This buy increases Bharati Shipyard's stake in Great Offshore to 23%. ABG Shipyard and Bharati Shipyard are in a race to acquire Great Offshore. ABG has around 8% holding in Great Offshore. Bharati Shipyard seems to have sealed the managerial control (which it can assume after having 26% holding), with its (now) 23% holding.
At the moment, Great Offshore has book closure period running.
Bharati Shipyard and ABG Shipyard had announced open offers for Great Offshore. The offers hit roadblock, as we had informed. Now Bharati seems to be in an impressive lead to take over Great Offshore, however, ABG cannot be written off. The battle has just intensified.
Bharati Shipyard's stock closed flat today, at Rs. 208, whereas ABG's stock closed up a percent at 265.15 on the BSE. Great Offshore was up 4.93% on the BSE with turnover clocking Rs. 58 crores on the BSE. More news from the Shipbuilding sector!!
Incidentally, Videocon's Dhoot owned 3% stake in Great Offshore. It is possible that he has sold his entire stake to Bharati. There were rumours that he had sided with ABG, but they can be proven false, if this is true.
On BSE:
Dhanashree Properties, owned by Bharati Shipyard bought 1,116,267 shares of Great Offshore from BSE and NSE today. This amounts to 3% stake increase in Great Offshore. Dhanashree Properties bought 360,000 shares in the NSE, and 756,267 shares in the BSE.
On NSE:
Videocon sold 223,600 in the NSE today, and we assume they were bought by Bharati Shipyard's company. This buy increases Bharati Shipyard's stake in Great Offshore to 23%. ABG Shipyard and Bharati Shipyard are in a race to acquire Great Offshore. ABG has around 8% holding in Great Offshore. Bharati Shipyard seems to have sealed the managerial control (which it can assume after having 26% holding), with its (now) 23% holding.
At the moment, Great Offshore has book closure period running.
Bharati Shipyard and ABG Shipyard had announced open offers for Great Offshore. The offers hit roadblock, as we had informed. Now Bharati seems to be in an impressive lead to take over Great Offshore, however, ABG cannot be written off. The battle has just intensified.
Bharati Shipyard's stock closed flat today, at Rs. 208, whereas ABG's stock closed up a percent at 265.15 on the BSE. Great Offshore was up 4.93% on the BSE with turnover clocking Rs. 58 crores on the BSE. More news from the Shipbuilding sector!!
Incidentally, Videocon's Dhoot owned 3% stake in Great Offshore. It is possible that he has sold his entire stake to Bharati. There were rumours that he had sided with ABG, but they can be proven false, if this is true.
On BSE:
| 16/9/2009 | 532786 | GREAT OFFSH | DHANASHREE PROPERTIES PVT. LTD | B | 756267 | 558.80 |
Lakshmi Machine Works: Up 36% in a month over good volumes
Lakshmi Machine Works, our investment pick (click here for fundamental analysis) has soared 36% over the past month, and that too in good volumes. The stock, trading now at P/E of 26 touched the 52 week high of 1449 today on the NSE. The scrip had impressive volumes, not only today, but over the whole month, when a significant amount of buying has happened. LMW had seen significant deterioration of the topline in the past quarter, and had the stock price hammered down to the levels of 400. Now, at 1449, it is still seen as an investment candidate by many.
BSE Data:
So, if you had missed the stock at 400 when it was at its lows, and again, at 1000 when I pointed it out to you, my suggestion to you is not to chase this stock. There will be opportunities ahead, and dips when one can buy. Invest sensibly, and invest according to your appetite. If you are ready to hold this for the longer term, this will reap good returns. Otherwise, you'll be losing your money punting on the market's sentiment.
BSE Data:
| Month | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | ||
| H - L | C - O | |||||||||
| July 2009 | 951.00 | 1,040.00 | 760.00 | 993.15 | 345746 | 26745 | 316,259,237.00 | 280.00 | 42.15 | |
| August 2009 | 1,020.00 | 1,153.95 | 951.05 | 1,101.15 | 377164 | 27984 | 399,947,553.00 | 202.90 | 81.15 | |
| September 2009 | 1,114.90 | 1,449.00 | 1,060.00 | 1,402.90 | 356538 | 24871 | 461,369,702.00 | 389.00 | 288.00 | |
| * Spread H - L -> High - Low C - 0 -> Close - Open | ||||||||||
So, if you had missed the stock at 400 when it was at its lows, and again, at 1000 when I pointed it out to you, my suggestion to you is not to chase this stock. There will be opportunities ahead, and dips when one can buy. Invest sensibly, and invest according to your appetite. If you are ready to hold this for the longer term, this will reap good returns. Otherwise, you'll be losing your money punting on the market's sentiment.
Mallya to float sports assets?
With the Formula One Force India team starting to perform well this season, liquor baron and airlines tycoon Vijay Mallya plans to float his sports assets in the stock exchanges.
Vijay Mallya owns the Indian Premier League team Royal Challengers' Bangalore and the Formula One team Force India. He also has stakes in Kolkata based Mohun Bagan and East Bengal soccer clubs. According to a news report by Reuters, these assets may be consolidated into a single company after restructuring and floated on the bourses. The company's name can be UB Sports, according to the report (click here to read the report).
StocksCenter View:
This would be the first such listing in India. In the stock market, investing/ buying or selling shares of the company is essentially betting on the prospects of the company. Trading the shares of such a company as UB Sports would be a result of betting on the prospects of that company which would rely heavily on the prospects of the performance of the teams held by the sports company. The stock would be subject to tremendous speculation and betting. Initial shareholders may benefit, but then this stock would become one of the most difficult to read. It would be very interesting to see this particular stock trade. Since a variety of teams would be the underlying assets, the price would be affected by the performance each of them, but the major influence would be of Force India and RCB. I am simply opinionating here, and it's all too early to tell. After all, investing is slightly more than betting.
Vijay Mallya owns the Indian Premier League team Royal Challengers' Bangalore and the Formula One team Force India. He also has stakes in Kolkata based Mohun Bagan and East Bengal soccer clubs. According to a news report by Reuters, these assets may be consolidated into a single company after restructuring and floated on the bourses. The company's name can be UB Sports, according to the report (click here to read the report).
StocksCenter View:
This would be the first such listing in India. In the stock market, investing/ buying or selling shares of the company is essentially betting on the prospects of the company. Trading the shares of such a company as UB Sports would be a result of betting on the prospects of that company which would rely heavily on the prospects of the performance of the teams held by the sports company. The stock would be subject to tremendous speculation and betting. Initial shareholders may benefit, but then this stock would become one of the most difficult to read. It would be very interesting to see this particular stock trade. Since a variety of teams would be the underlying assets, the price would be affected by the performance each of them, but the major influence would be of Force India and RCB. I am simply opinionating here, and it's all too early to tell. After all, investing is slightly more than betting.
Last week's analysis and Forecast for the next
According to our previous analysis (click here), the week before last had seen some major up moves based on very less volumes. The last week was a direct consequence of what happened in the week before last. The markets managed to stay in the green, although the bears fought fiercely. Even though the Sensex ended up about 252 points, the mid and small caps did not quite hold up to the gains.
The bulls have seen to be stock specific, and at the right places, to keep the index up. Let me extrapolate. The top 5 scrips that affect the movement of the Sensex the most are (weighted) Reliance Ind, Infosys, ICICI Bank, L&T and HDFC. Now let us see how they have fared:
The other scrips that have less weights on the Sensex have not fared quite well. The same holds with the Nifty50. Two things are possible from here on. Either the markets break out of the current levels- chances of which, i think are bleak. The second, and more probable case is that the markets would be shedding most, read most, of their recent gains.
The stocks that can go down now big time may not include all the 5 mentioned above. RIL has been quiet for some time, and now it can drive the markets. Infy has a lot of good news coming in. ICICI may see some selling in the week ahead, and HDFC may hold still. We foresee a 250-400 point correction on the Sensex in the coming week, which may also be recovered in the week as well. If it does not get recovered, the September series may close in the green after a bear ambush AND the markets would become normal. If it recovers, then there is a case for a sharper fall in the later half of the month, with Sep being in the red.
The first case, again. If it breaks out of this trend, we see some higher levels for a while, and then a deeper correction- sensibly talking, the markets cannot just sustain this rally the way it has in the past week if some major buying doesn't happen. The broader market may also find some resistance for a while, and will be guided by the major Indices (ie the Sensex and the Nifty).
The bulls have seen to be stock specific, and at the right places, to keep the index up. Let me extrapolate. The top 5 scrips that affect the movement of the Sensex the most are (weighted) Reliance Ind, Infosys, ICICI Bank, L&T and HDFC. Now let us see how they have fared:
- Reliance Industries Ltd (up from 1980 to 2140) 8%
- Infosys (up from 2223 to 2266) 1.4%
- ICICI Bank (up from 744 to 835) 12%
- Larsen &Toubro (up from 1568 to 1628) 3.8%
- HDFC (up from 2461 to 2521) 2.4%
The other scrips that have less weights on the Sensex have not fared quite well. The same holds with the Nifty50. Two things are possible from here on. Either the markets break out of the current levels- chances of which, i think are bleak. The second, and more probable case is that the markets would be shedding most, read most, of their recent gains.
The stocks that can go down now big time may not include all the 5 mentioned above. RIL has been quiet for some time, and now it can drive the markets. Infy has a lot of good news coming in. ICICI may see some selling in the week ahead, and HDFC may hold still. We foresee a 250-400 point correction on the Sensex in the coming week, which may also be recovered in the week as well. If it does not get recovered, the September series may close in the green after a bear ambush AND the markets would become normal. If it recovers, then there is a case for a sharper fall in the later half of the month, with Sep being in the red.
The first case, again. If it breaks out of this trend, we see some higher levels for a while, and then a deeper correction- sensibly talking, the markets cannot just sustain this rally the way it has in the past week if some major buying doesn't happen. The broader market may also find some resistance for a while, and will be guided by the major Indices (ie the Sensex and the Nifty).
Bank of Maharashtra | Capital raising activities
Bank of Maharashtra has informed BSE that the Bank has decided to raise capital upto Rs 300 crore, during the current financial year, by issuing Innovative Perpetual Debt Instruments, Upper Tier II and Lower Tier II Debt Instruments to augment the capital funds.
Further the Bank has informed that the Bank have approached the Government of India for capital support by way of preference share capital and the Bank expect to get first tranche of preference share capital of about Rs 500 crore under the recapitalisation scheme of the government during the current year (... from BSEindia.com)
Bank of Maharashtra has sought 1500 crore rupees of additional capital from the government over the next three years to meet its asset growth, according to various news bodies. The state-run bank with a capital adequacy of slightly more than 12 % plans to raise around 1 to 2 billion (100 to 200 cr) rupees via Tier-II capital in the second half of the current fiscal.
Bank of Maharashtra also recruited around 150 undergraduates, gave them training and assigned them routine, non core tasks some months ago. The PSU bank is in some serious expansion mode, and the government is seen to help the funding requirements of this bank, since it also focuses on rural and agro banking solutions.
The stock closed up 3.69% on the BSE at 42.2. The total traded quantity on the BSE was 1,135,311 up significantly from the 2 week average quantity of 239,227. At 42.4, the stock trades at a P/E of under 5, and a dividend yield of around 2.8% (on CMP and latest paid div Rs 1.5). The stock has broken into a new trading range from the earlier range of 39-41. If the stock sustains the levels of 42-43, the stock will possibly move up to the trading range of 45-47. An opportunity for short termers and long termers alike, given the expansion plans of the PSU.
Further the Bank has informed that the Bank have approached the Government of India for capital support by way of preference share capital and the Bank expect to get first tranche of preference share capital of about Rs 500 crore under the recapitalisation scheme of the government during the current year (... from BSEindia.com)
Bank of Maharashtra has sought 1500 crore rupees of additional capital from the government over the next three years to meet its asset growth, according to various news bodies. The state-run bank with a capital adequacy of slightly more than 12 % plans to raise around 1 to 2 billion (100 to 200 cr) rupees via Tier-II capital in the second half of the current fiscal.
Bank of Maharashtra also recruited around 150 undergraduates, gave them training and assigned them routine, non core tasks some months ago. The PSU bank is in some serious expansion mode, and the government is seen to help the funding requirements of this bank, since it also focuses on rural and agro banking solutions.
The stock closed up 3.69% on the BSE at 42.2. The total traded quantity on the BSE was 1,135,311 up significantly from the 2 week average quantity of 239,227. At 42.4, the stock trades at a P/E of under 5, and a dividend yield of around 2.8% (on CMP and latest paid div Rs 1.5). The stock has broken into a new trading range from the earlier range of 39-41. If the stock sustains the levels of 42-43, the stock will possibly move up to the trading range of 45-47. An opportunity for short termers and long termers alike, given the expansion plans of the PSU.
Pipavav Shipyard IPO | All that you wanted to know
Issue Open: Sep 16, 2009 - Sep 18, 2009
Issue Size (shares): 86,850,000 Equity Shares of Rs 10
Issue Size (Rs Crore): 477.68 - 521.10
Face Value: Rs 10 Per Equity Share
Issue Price: Rs 55 - Rs 60 Per Equity Share
Market Lot and Minimum Order Quantity: 100 Shares
Issue Size (shares): 86,850,000 Equity Shares of Rs 10
Issue Size (Rs Crore): 477.68 - 521.10
Face Value: Rs 10 Per Equity Share
Issue Price: Rs 55 - Rs 60 Per Equity Share
Market Lot and Minimum Order Quantity: 100 Shares
Punj Lloyd: Private Placement after QIP
Funds raised via private placement: Rs. 425 cr
Funds raised by QIP: Rs. 670.18 cr
Punj Lloyd Ltd has informed BSE that the committee of directors of the Company, on September 10, 2009 has allotted 1750 (one thousand seven hundred and fifty only) Secured Redeemable Non Convertible Debentures of Rs 10,00,000 (Rupees ten lac) each aggregating to Rs 175,00,00,000 (Rupees one hundred and seventy five Crore only) and 42,500 (forty two thousand five hundred only) Secured Redeemable Non Convertible Debentures of Rs 1,00,000 (Rupees one lac) each aggregating to Rs 425,00,00,000 (Rupees four hundred and twenty five Crore only) on private placement basis.
Earlier, Punj Lloyd Ltd had informed BSE that the Committee of Directors at its meeting held on August 10, 2009, d approved the allotment of 2,79,00,920 (Two Crore Seventy Nine Lakh Nine Hundred Twenty) equity shares of Rs 2/- each at a price of Rs 240.20 per share, including a premium of Rs 238.20 per equity share, aggregating Rs 670,18,00,984 (Rupees Six Hundred Seventy Crore Eighteen Lakh Nine Hundred Eighty four Only).
Funds raised by QIP: Rs. 670.18 cr
Punj Lloyd Ltd has informed BSE that the committee of directors of the Company, on September 10, 2009 has allotted 1750 (one thousand seven hundred and fifty only) Secured Redeemable Non Convertible Debentures of Rs 10,00,000 (Rupees ten lac) each aggregating to Rs 175,00,00,000 (Rupees one hundred and seventy five Crore only) and 42,500 (forty two thousand five hundred only) Secured Redeemable Non Convertible Debentures of Rs 1,00,000 (Rupees one lac) each aggregating to Rs 425,00,00,000 (Rupees four hundred and twenty five Crore only) on private placement basis.
Earlier, Punj Lloyd Ltd had informed BSE that the Committee of Directors at its meeting held on August 10, 2009, d approved the allotment of 2,79,00,920 (Two Crore Seventy Nine Lakh Nine Hundred Twenty) equity shares of Rs 2/- each at a price of Rs 240.20 per share, including a premium of Rs 238.20 per equity share, aggregating Rs 670,18,00,984 (Rupees Six Hundred Seventy Crore Eighteen Lakh Nine Hundred Eighty four Only).
Gateway Distriparks: Wild Movements
Have a look at some numbers: Gateway Distriparks touched a high of Rs. 135.95 on the BSE yesterday, and today it came down with a great fall to a low of Rs. 110.55. The stock closed down 7% today, with low volumes as compared to yesterday(212002 vs 638182 on the BSE). So what exactly was behind this movement? Along from our "smart money" hypothesis, there was speculation that aided, or rather profited the smarter money. What speculation?
There were reports that the company was looking to sell 25% stake in its subsidiary Gateway Rail Freight, in which it owns 95%. The company later clarified that nothing substantial has yet been formalized, although it did not deny the possibility. Now what propelled the sentiment was a view that the divestment would be used for GDL's expansion plans, ie setting up more container depots. The rail container business is yet to break even, and the company sees great potential.
The clarification:
With reference to news item appearing in leading web portal titled "Gateway Distriparks to sell up to 25% in subsidiary Gateway Rail Freight; to raise Rs 300 cr via stake sale in PE firm", Gateway Distriparks Ltd has clarified to BSE as under :
"To fund the growth / expansion plans of our group, we engage in discussions with potential investors from time to time. This is an on-going exercise and we have so far not concluded any arrangement with any investor.
Accordingly, we wish to state that the news report is speculative in nature and not founded on any concrete developments / public statements made by the Company."
A similar movement in GDL was seen a few months earlier when Allcargo Global had bought Temasek's block, only to later book profit on a considerable fraction of the block. Consequently, a lot of shares floated freely in the market- which, as you would guess, provided resistance to the stock's price. Now the stock has moved up in the last few weeks, in sync with our forecast from the levels of Rs. 88-90 to Rs. 100-105, breaking that level and quickly moving on to Rs. 110-120, and then the blitzkrieg.
Now what? Would one ask. One would have to observe thoroughly the daily movements as well as the delivery positions to come to a concrete solution. Although, as we had suggested earlier, we suggest again, this one is a good long term investment opportunity that should not be missed.
There were reports that the company was looking to sell 25% stake in its subsidiary Gateway Rail Freight, in which it owns 95%. The company later clarified that nothing substantial has yet been formalized, although it did not deny the possibility. Now what propelled the sentiment was a view that the divestment would be used for GDL's expansion plans, ie setting up more container depots. The rail container business is yet to break even, and the company sees great potential.
The clarification:
With reference to news item appearing in leading web portal titled "Gateway Distriparks to sell up to 25% in subsidiary Gateway Rail Freight; to raise Rs 300 cr via stake sale in PE firm", Gateway Distriparks Ltd has clarified to BSE as under :
"To fund the growth / expansion plans of our group, we engage in discussions with potential investors from time to time. This is an on-going exercise and we have so far not concluded any arrangement with any investor.
Accordingly, we wish to state that the news report is speculative in nature and not founded on any concrete developments / public statements made by the Company."
A similar movement in GDL was seen a few months earlier when Allcargo Global had bought Temasek's block, only to later book profit on a considerable fraction of the block. Consequently, a lot of shares floated freely in the market- which, as you would guess, provided resistance to the stock's price. Now the stock has moved up in the last few weeks, in sync with our forecast from the levels of Rs. 88-90 to Rs. 100-105, breaking that level and quickly moving on to Rs. 110-120, and then the blitzkrieg.
Now what? Would one ask. One would have to observe thoroughly the daily movements as well as the delivery positions to come to a concrete solution. Although, as we had suggested earlier, we suggest again, this one is a good long term investment opportunity that should not be missed.
McNally Bharat recommends dividend and rights issue
After receiving a slew of orders, McNally Bharat has announced that it has recommended dividend of Rs. 1.25 per share.
It has recommended rights in the ratio of 1 share for every 10 held.
The stock itself is expensively priced at the moment, at a P/E of 17, but is a high growth potential stock. If you have the appetite for a long term hold, this is one of those you wouldn't want to miss.
It has recommended rights in the ratio of 1 share for every 10 held.
The stock itself is expensively priced at the moment, at a P/E of 17, but is a high growth potential stock. If you have the appetite for a long term hold, this is one of those you wouldn't want to miss.
Rei Agro to consider Rights issue
Rei Agro Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on September 09, 2009, to consider the following:
1. I of right shares (equity shares) to existing shareholders of the Company.
2. To decide the ratio of the issue .
The stock was up more than 10%, closing at 52.8 on the Bombay Stock Exchange (BSE). Total Traded Quantity was 2,516,707 as against a weekly average of 653,195. With the stock being much more nearer to the year lows (being 38) than most of the stocks on the bourses, this is an inexpensive buy in my opinion. The rights issue just adds more spice to the basmati rice producers' share. The stock was down due to the bad monsoons, and the related sentiments. The sentiment is seen to improve as we go ahead.
1. I of right shares (equity shares) to existing shareholders of the Company.
2. To decide the ratio of the issue .
The stock was up more than 10%, closing at 52.8 on the Bombay Stock Exchange (BSE). Total Traded Quantity was 2,516,707 as against a weekly average of 653,195. With the stock being much more nearer to the year lows (being 38) than most of the stocks on the bourses, this is an inexpensive buy in my opinion. The rights issue just adds more spice to the basmati rice producers' share. The stock was down due to the bad monsoons, and the related sentiments. The sentiment is seen to improve as we go ahead.
The Week Ahead, and Before
The last week was, well, volatile. Volumes were particularly low, and the rally of Friday did not have much to it than the gains. Provisional data released by NSE/BSE shows that FIIs were net sellers on the day the main index of the BSE, the Sensex, rose 290 points.
Volumes traded by the Domestic Institutional Investors weren't very impressive either on Friday.
In the whole week, the scenario was as follows:
Friday's rally makes one think. Was it smart money pushing up the index, when the big players were actually net sellers? Or was there buying in the proper places that had outsmarted the selling in the proper places? Have a look at the charts:
The movement of the index was particular, the smart money coming in at around 12:10 and 2 pm. Whether there was smart money involved would be clear the next week. If the index rises further, there would be the implication that the game has changed, and a similar condition a la the post Election results bull run, would arise. In other words, very less volumes, very high gains. Some one would be missing the rally, and then buying not so cheap. Someone would be booking profits then and there would be a correction. Let's see what happens.
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 04-Sep-2009 | 1912.07 | 2311.99 | -399.92 |
Volumes traded by the Domestic Institutional Investors weren't very impressive either on Friday.
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 04-Sep-2009 | 986.9 | 992.25 | -5.35 |
In the whole week, the scenario was as follows:
| (Rs. crore) | ||||||
| FII | DII | |||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 4/9/09 | 1,912.07 | 2,311.99 | -399.92 | 986.90 | 992.25 | -5.35 |
| 3/9/09 | 1,924.30 | 1,996.99 | -72.69 | 1,381.35 | 998.86 | 382.49 |
| 2/9/09 | 1,525.10 | 2,213.41 | -688.31 | 1,307.15 | 1,233.36 | 73.79 |
| Sep, 09 | 7,805.68 | 9,602.54 | -1,796.86 | 5,434.47 | 4,616.66 | 817.81 |
Friday's rally makes one think. Was it smart money pushing up the index, when the big players were actually net sellers? Or was there buying in the proper places that had outsmarted the selling in the proper places? Have a look at the charts:
The movement of the index was particular, the smart money coming in at around 12:10 and 2 pm. Whether there was smart money involved would be clear the next week. If the index rises further, there would be the implication that the game has changed, and a similar condition a la the post Election results bull run, would arise. In other words, very less volumes, very high gains. Some one would be missing the rally, and then buying not so cheap. Someone would be booking profits then and there would be a correction. Let's see what happens.
NHPC sheds 4 percent, Adani power 5 in its debut week
As the Sensex gained nearly a percent last week, NHPC shares fell close to 4% on the BSE. Adani Power followed suit, with a loss of more than 5% on the BSE, closing at Rs. 98.6. NHPC closed at Rs. 35.25.
So, does one have the option to buy? Considering Adani Power- one may want to wait, as a better bargain is still possible. In the case of NHPC (where the price band was Rs. 30-36), any price at the moment is a good price for a long term investment. However, the share would be a MUST buy at the levels of Rs. 20-25, or even less- in the case of a meltdown in the markets.
So, does one have the option to buy? Considering Adani Power- one may want to wait, as a better bargain is still possible. In the case of NHPC (where the price band was Rs. 30-36), any price at the moment is a good price for a long term investment. However, the share would be a MUST buy at the levels of Rs. 20-25, or even less- in the case of a meltdown in the markets.
JSW posts 53% increase in crude steel production in August, 2009
The company achieved highest ever monthly crude steel production of 0.521 million tonnes. The company has registered 4% growth in Crude Steel production sequentially, according to a press release.
Big transactions in Grasim, Chambal
According to a disclosure (Substantial Acquisition of Shares and Takeovers) to the BSE, Aberdeen Asset Management Asia has bought 25,000 shares of Grasim on 2/9/2009 from the open market. On 2/9/09, Grasim shares traded in the range of Rs. 2594-2640.
According to another disclosure by Chambal Fertilizers, Earthstone Holdings sold 318,000 shares of Chambal Fertilizers on 25/8.
According to another disclosure by Chambal Fertilizers, Earthstone Holdings sold 318,000 shares of Chambal Fertilizers on 25/8.
Short Term Gap Opportunities
1. Rashtriya Chemicals and Fertilizers (RCF)
CMP: Rs. 67.45
Current Trading Range: 66-67.5
Target: Rs. 74
Target Trading Range: 73-76
Time: 1 month
Reason for gap: Bad monsoons, sentiment
Reason for correction: Improved sentiment, reduced bad news, strong support at Rs. 63
2. Bank of Maharashtra (MAHABANK)
CMP: Rs. 40.25
Current Trading Range: Rs. 39-41
Target: Rs. 45
Time: 1 month
Target Trading Range: 43-47
Reason for correction: Strong support at the 40 rs level seen in coming days- the stock has not moved since a long time, and an upward move in sync with the sentiments is expected. The company has also decided to raise Rs. 300 cr via bonds.
3. Biocon (BIOCON)
CMP: Rs. 227.5
Current Trading Range: Rs. 220-230
Target: Rs. 248
Time: 1-1.5 months
Target Trading Range: Rs. 240-255
Reason for correction: Strong speculation saw good upmoves lately, which are seen to return.
CMP: Rs. 67.45
Current Trading Range: 66-67.5
Target: Rs. 74
Target Trading Range: 73-76
Time: 1 month
Reason for gap: Bad monsoons, sentiment
Reason for correction: Improved sentiment, reduced bad news, strong support at Rs. 63
2. Bank of Maharashtra (MAHABANK)
CMP: Rs. 40.25
Current Trading Range: Rs. 39-41
Target: Rs. 45
Time: 1 month
Target Trading Range: 43-47
Reason for correction: Strong support at the 40 rs level seen in coming days- the stock has not moved since a long time, and an upward move in sync with the sentiments is expected. The company has also decided to raise Rs. 300 cr via bonds.
3. Biocon (BIOCON)
CMP: Rs. 227.5
Current Trading Range: Rs. 220-230
Target: Rs. 248
Time: 1-1.5 months
Target Trading Range: Rs. 240-255
Reason for correction: Strong speculation saw good upmoves lately, which are seen to return.
Pfizer-Wyeth (India) Merger Possibility
On Jan 26, 2009, Pfizer and Wyeth announced that they have entered into a definitive merger agreement under which Pfizer will acquire Wyeth in a cash-and-stock transaction. Now as this merger gets effective, the universal subsidiaries will also merge- as Pfizer has done in the past- especially in the Indian stock market. The combined (parent) company will create one of the most diversified companies in the global health care industry, with product offerings in numerous growing therapeutic areas, a strong product pipeline, and leading scientific and manufacturing capabilities.
Now, what does this mean for the shareholders in India? In India, both Pfizer USA and Wyeth USA have partnerships with the local shareholders in the respective companies. Before Wyeth, Pfizer had taken over Pharmacia, Warner Lambert and Parke Davis. All three had similar positions in the Indian stock exchanges. And the fate of all three was becoming a part of Pfizer India, via a merger. The same can, and most probably will happen with Wyeth India. The Pfizer promoters had increased their shareholding in Pfizer India (via an open offer priced at Rs. 830 per share). When the open offer came, there was speculation that the parent company may ultimately want to delist the Indian arm from the bourses a la Cadburys'. But in our opinion, this actually has the potential to be a signal to the merger that is possible. A merger could dilute the shareholding of the promoters, and therefore, they increased their holding beforehand.
Wyeth India has a topline of close to Rs. 400 cr and a market cap of close to Rs. 1450 cr. Pfizer India has a topline of Rs. 700 cr (profit Rs. 300 cr as of FY0809) and a market cap of around Rs. 2500 cr. Pfizer currently trades in the range of 775-810 (closed at Rs 838 on Sep 3, 2009). Wyeth trades at Rs. 630. So, the news of the merger would be the next triggers for these two stocks. Pfizer is one of the world's largest pharmaceutical companies, and the merger with Wyeth would create a pharma behemoth with large R&D capabilities and a long product pipeline.
Now if this merger happens, the Pfizer share in India may trade at the levels of around Rs. 1000 with considerable support. This is mostly due to the better value associated with the stock due to the merger of Wyeth acting as a premium, and the dilution of capital acting as a discount.
StocksCenter verdict: Buy Pfizer on dips
Now, what does this mean for the shareholders in India? In India, both Pfizer USA and Wyeth USA have partnerships with the local shareholders in the respective companies. Before Wyeth, Pfizer had taken over Pharmacia, Warner Lambert and Parke Davis. All three had similar positions in the Indian stock exchanges. And the fate of all three was becoming a part of Pfizer India, via a merger. The same can, and most probably will happen with Wyeth India. The Pfizer promoters had increased their shareholding in Pfizer India (via an open offer priced at Rs. 830 per share). When the open offer came, there was speculation that the parent company may ultimately want to delist the Indian arm from the bourses a la Cadburys'. But in our opinion, this actually has the potential to be a signal to the merger that is possible. A merger could dilute the shareholding of the promoters, and therefore, they increased their holding beforehand.
Wyeth India has a topline of close to Rs. 400 cr and a market cap of close to Rs. 1450 cr. Pfizer India has a topline of Rs. 700 cr (profit Rs. 300 cr as of FY0809) and a market cap of around Rs. 2500 cr. Pfizer currently trades in the range of 775-810 (closed at Rs 838 on Sep 3, 2009). Wyeth trades at Rs. 630. So, the news of the merger would be the next triggers for these two stocks. Pfizer is one of the world's largest pharmaceutical companies, and the merger with Wyeth would create a pharma behemoth with large R&D capabilities and a long product pipeline.
Now if this merger happens, the Pfizer share in India may trade at the levels of around Rs. 1000 with considerable support. This is mostly due to the better value associated with the stock due to the merger of Wyeth acting as a premium, and the dilution of capital acting as a discount.
StocksCenter verdict: Buy Pfizer on dips
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