Archive for the 'SBI' Category

Market Matrix – Nifty and Sensex lost 33 pc in Oct 08 series

October 29, 2008

Friends,

The Oct 08 series has closed today in a quiet manner but the losses seen by it are enormous. Market turnover is good for the day at Rs 69000 cr. The loss in a single month have been between 20 to 70 pc even for the leading corporates some of which by the way posted the best ever quarterly profits. The Nifty and Sensex lost 33 pc in Oct 08 series.

Unitech has arranged to sell 60 pc stake in its wireless business arm to Telenor through further issue of capital for Rs 6120 crs and will see debt of Rs 1900 cr paid back by the subsidiary.

US Fed is likely to cut rate by 50 bps and probably will follow up with another 50 bps later.

BoJ would consider cutting rate in its next Friday meeting.

China has cut rates by 27 bps on both ie deposits and advances.

SBI says it is receiving Rs 1000 crs a day as deposits for last 10 days.

Auto loan growth is 6 pc against 12 pc last year.

The European markets are trading higher but DAX is an exception.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix as on 11 Feb 2008

February 11, 2008

By krsna Khandelwal – A veteran market

Friends,

SEBI is considering reduction in disclosure requirements for the listed companies at the time of debt issuance so that the debt issues are done with ease and without too much time leg. Since banks are not reducing spreads why should not the most efficient platforms of stock exchanges be made use of for bringing the lenders and borrowers together and give the nation’s economy a boost, while not letting the portion of capital pie fall out of hands of savers and users of capital.

Indian MFs have maintained the quantum of AUM(Assets Under Management) in Jan ‘08 even though the Nifty suffered 16% fall. Of the 32 fund houses , 14 posted an increase in AUM in Jan ‘08 . Despite fall in January MFs bought Rs 7 K crs worth of equity, MFs had bought only Rs 3 K crs worth of equities in Dec ‘07. This speaks of the high savings rate in India and that too in hands of younger people largely who have no aversion to equity investment. The following is the table giving AUM of 5 top MFs:

Reliance Rs 77200 crs

ICICIPRU Rs 64100 crs

UTI Rs 52700 crs

HDFC Rs 43800 crs

Birla Sunlife Rs 36000 crs

IPOs are being called off due to slack response. Its is a pity that the IPOs are not being offered at prices attractive enough. The promoter greed is at its worse. There was a time when CCI (Controller of Capital Issues) used to fix premiums in a fashion where intrinsic value used to be much more but it used to be OK with CCI to give OK for the par issues and some tricky issuers used to cheat public of their money by being successful in raising money for dubious purposes. There has be a balanced approach and the merchant banker have a duty to discharge here.

Sixth Pay Commission may hike basic salaries of the Govt. Servants by over 150%. Basic pay for the Section Officer would rise to Rs 20000/month from Rs 8000/month. I think that the new salaries including allowances, will make govt. staffers more honest. They would have no room to complain about not making two ends meet comfortably. India therefore is about to enter an era where the corruption is less rampant.

SBI Rights issue is to open on 18th Feb ‘08. Govt. holds about 60% of SBI equity capital and would invest about Rs 10 K crs in acquiring right shares. My advice to SBI shareholders is to sell the share on ex-right basis without thinking twice.

It is once again that the Steel and Mines Minister has asked the steel companies to keep the steel prices low. It is pity that the same minister hasn’t done a thing to see the new capacity being brought at a better speed. I don’t understand when the ministers would understand their duties in right way.

UK’s growth rates has dwindled to 0.5% , a two year low.

Economists estimate US economy to grow just at 0.5% during Jan-Mar ‘08 quarter. Some say US economy is on the cusp of recession.

Warren Buffet sees ‘poetic justice’ for bankers who designed and sold complex investment instruments that have gone sore and have made the banks themselves suffer a lot.

Inflation has inched up to 4.11% , a high for 6 months.

Govt. unreserved 79 item from the list of Small Scale Sector exclusive domain and only 35 items remain there. This is step in right direction. There are areas where small scale survives better and in other areas it is not cost efficient. The natural market forces act and keep overall industrial competitiveness of India alive , if only the RBI Chief looks at the economy’s needs from the angle of an entrepreneur and reduces interest rates. It is a pity that the people in the business and industry have no say in the making of monetary policy as a bureaucrat may never understand the imperatives of finance policy. There concern gets over with control of inflation which the govt. itself usually is not serious about.

Auto component industry has lowered the export target for 07-08 to Rs 14460 crs against earlier estimate of Rs 15172 crs due to strong rupee and lower custom duties. I am sure the auto component industry would do better in coming years due mainly to the low cost manufacturing base in India, only the govt. has to make the capital available at the international interest rates and bring the long overdue labour reforms.

‘NANO’ may have to be priced higher by Tats eventually but it has put a cap on other category car prices for years to come. Nobody would dare keep the price gap higher and risk loosing market.

Automobile Industry declined to 829569 units in Jan ‘08 from 89844 units in Jan ‘07. It was passenger car segment that kept the tempo up and it grew to 113899 unit in Jan ‘08 (104501 units in Jan ‘07).

Scooters account for 20% of total two-wheeler sales in India.

Nifty closed the week on 8th Jan ‘08 at 5120 points.

India now officially claims to be member of $ one trillion economy club of the world, it is fact no small achievement for India.

Southern chain of stores ‘Subhiksha’ is to raise Rs 500 crs through IPO shortly.

George Soros has acquired 3% of Reliance Entertainment, a wholly owned company of Anil Ambani. He spent $100 million for this much stake in the company.

America’s $20 bn generic market is awaiting entry by Indian players . Some of the largest selling drugs in US are going off patent shortly.

Interest rate differential has been responsible for giving a philip to Indian markets when it kept coming down during 2002 tp 2007 from a peak difference of 5% in 2002 to a low of under 1% at a point in 2007. Now it has gone back to 4% in a sudden move and has unnerved the markets. This co relationship may easily be seen. People think that the capital will flow to India but since the cheaper interest would open doors of more investment in US why would the capital move in to India and be at risk of exchange parity changing for disadvantage. Secondly , if the cheap capital flows in to India the established companies may have face competition from newly created capacities at lesser capital costs. For the time being the interest differential has opened doors for the sharp shooting business houses to have free lunches which is being ensured by the RBI by keeping the rupee value under leash. The 90 day rate here is 7.2% while in US it is under 2%. Would not the schemers take advantage , it is hardly understandable why the RBI Chief is keeping this artificial pocket of making money thriving. Is there sinister connection somewhere, only time will tell.

Mumbai’s Nariman Point has 2 million sq ft of office space while Bandra-Kurla has 12 million sq ft of office space. On top of it there is going to be additional office spaces coming up in Mumbai’ suburbs. This additional office space would be no less than 10 million sq ft and would come up in an year’s time. I have a feeling that the rentals for office space in Mumbai would be far lower than prevailing rates.

Tata Chemicals has acquired US based soda ash company for $ one billion. Tata Chem would become second largest manufacturer in its line of business behind only the FMC Chemicals of US. As told to you many times earlier Tatas theme remains to housed more out of India than in side India. Seems Tatas have fear of Indian politicians who have since independence given sleepless nights to the Tatas. Indira once had threatened the senior Tata with her sword of nationalisation on some pretext or the other and the brave men still did not bow to her wishes. Naturally when the govt. today has made the exiting of capital possible for the business house why would they not secure their future. If need be they may bring back the capital as foreign owned which would at least be treated in a better way.

GDP growth at 9.6% in 06-07 has been the highest in 18 years . This translates in to Rs 1700/- additional per capita income which now stands at 22552/-.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix as on 19 Jan 2008

January 19, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

FIIs are reported to have increased their holding in leading IT companies like Infosys, TCS and Wipro etc. during Q3 Dec 07. After having suffered fall in values in 2007 by about 30% to 40% from their peak levels, these stocks offer good values to FIIs as they now have pretty reasonable discounting while their future prospects are not all that bleak. Who then is supplying stock is the question that comes to mind. As earlier mention on these columns , the promoters are selling as also the ESOP holders. I recommend regularly buying in to Indian IT sector and would you believe that I have for the first time since 1998 have had the courage to recommend IT stock buying in general.

Muthuraman of Tata Steel is a worried man. He expects the steel imports of 5 m/t this year. According to him the raw material sources of the country are just enough to give 10 kg steel per capita to Indians and India is wrongly perceived to be raw material rich country. He said Brazil and Australia have the capacity to offer 333 tonnes and 2000 tonnes to their citizens on per capita basis. This is an interesting piece of information and suggests that before long India will have to import iron ore and other raw material and minerals.

Nagpur and Kunnur airports have been given green signal by govt to commence work . Nagpur Airport will be international passenger and cargo hub.

A new research by Institute of International Finance says that the assets of gulf countries will rise to $2000 bn in 2008 which added $215 bn in 2007 and would add $250 bn in 2008. These assets are mostly managed by sovereign wealth funds.

Reliance Energy has just 1000 mw capacity at present and its 50% subsidiary will set up projects of 28000 mw capacity for which the IPO has just been brought out.

SBI would offer right shares at a price of 1590/- each to shareholders on in the ratio of one to five, the proceeds of Rs.16500 crs will raise its Tier-I capital to 11% by Mar 08.

National Housing Board has suggested to govt to give 5% subsidy on interest for five years to urban poor on loans for purchase of houses. It has also suggested to provide houses of 25 sq mtrs plinth area in cities to poor at Rs one lac cost. These ideas are in right direction and reflect my thinking too.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Branding and interest rates

January 8, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

Grasim is entering personal care products segment with its own brands. This seems strange that a company in to commodities should decide to do so but there is some benefit to it in diversifying this way. Brands require a lot of expenditure to develop and this expenditure can be written off against the profits of a company. Grasim is in a position to afford it and save on tax. Grasim may eventually spin off the consumer care product business , but it will have shun ‘marwari’ mindset and leave brand building in hands of a professional team. Brand building is possible with deep pocket and with long haul.

SBI has decided to raise interest on deposits by about 25 bps to 175 bps for different maturities. In the mean time FM has reportedly said that the deposit as well as lending rates should be brought down. I don’t think its just now possible in India. India is a capital starved nation inspite of foreign dollars pouring in. The foreign capital comes with the a fickle character and may not entirely replace Indian capital. Banks are seeing reduced flows toward themselves as a percentage of savings which are being attracted by IPOs, MFs, secondery markets, and insurance companies. Also the banks have hit ceiling as far as advances go , in terms of percentage of deposits. Banks are being pressed for lowering of charges too besides the competition is growing . In this light the banking sector may not improve upon past performance by a greater degree. I am noticing reports to the contrary which seem to be delusion and with motive behind it.

The world market cap at $ 60682 billion allows India a share of 3.06 %. The three percent mark has been crossed for the first time. Indian enterprise and public are capable of achieving 10% share in a decade or so provided right type of govt policies are ensured in the mean time.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: The markets, Fed rates, Nuke deal etc.

August 23, 2007

By krsna Khandelwal – A veteran market analyst

Friends,

On Friday last i.e. 17 Aug 07 the US Fed slashed rate at which it lends to banks and resultantly the US markets edged up. Back home the markets have been under pressure. In fact, the left’s stand on the Nuke deal has more to do with it now than the sub-prime crisis in US. The political scene has unfolded as it always does when the coalition govts. pass their three years period and the shadow of the next elections cast over the political scene. One thing or the other has to be found to upset the apple cart. How else the sworn enemies would explain the nearness in spite of the basic ideological differences. The solidarity this time emanated from the need of keeping the NDA alliance from getting in to drivers seat of which the BJP is the first party. In fact, the last regime delivered too under Vajpayee’s leadership. In fact, the SEZ initiative of UPA govt. itself was enough to spoil the party but some how the left itself was not above the criticism. About the Nuke deal with the US, nothing much and nothing concrete has come to light. The deal puts the country in to some kind of compromise is beyond doubt. Had the deal been for a certain period after which the review might have been done then of course, the practical advantages would have been talked about in favour. Let us see how things unfold.

JSW Steel is out to buy some US company for an outlay of Rs. 4000 crs. Again, the steel profits are going to be parked outside the country, like the Tata Steel’s case. Benefits to the nation can hardly be seen here too. Who can actually perceive the hidden agenda of the big players who suddenly come in to grab money?

Indian BPO exports have crossed $ 4 .5 billion mark in 06-07, going up by 47% over the year.

SBI subsidiary SBI LIFE INSURANCE has become profitable for the past two years and would be eligible for listing next year due to consecutive profits for three years otherwise ten-year period would have been required. It is being valued at over $4.5 billion and SBI’s 14000 strong branch network may give it a big push at the banks instance. SBI is very well placed with such a subsidiary in tow.

ICICI Bank would set up holding company for its insurance and MF businesses. Though cleared by IRDA and FIPB, it may get stuck with RBI as in fact the whole scheme has many contours, which may infringe RBI guidelines on Para banking. When it does see the light of the day, it will be big thing for the ICICI Banks scrip on the bourses.

The three-month low for the Sensex should be an eye opener for the optimists. It may actually test the bottom at the twelve-month low, breach of which will bring disastrous times for the equity investors.

Govts’ direct tax kitty has swollen with Rs 59 k crs until 15 Aug and is up by 44%. Govt aims at collecting a total of Rs 5.48 lac crs this year (+17%).

STT collected stands at Rs. 2495 crs until 15 Aug 07 and represents huge trading volumes at bourses.

Indian Pharma market would be about $20b by 2010 according to McKinsey and the pharma companies have better chance of surviving the present
troubled times.

India and Japan have agreed to sign a bilateral agreement on currency swaps. This will help in providing emergency financial liquidity in times of turbulent currency markets. India and Japan have to and in fact are coming near in many ways.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market