It was a quiet session for the markets. The indices moved within a tight range and closed the day absolutely flat. The Nifty ended the day at 5,233, up 11 points. The Sensex shut shop at 17,462, up 50 points. The Midcap index also ended marginally in the green. The gap between the advance and declines narrowed through the session to end at 1:1.
The mood on Dalal Street is getting optimistic. But does that mean a big rally is on its way or will global cues play spoilsport?
Naresh Kothari, President, Edelweiss Capital, sees some amount of optimism returning to the market over the last 3-5 days. "At lower levels, we are seeing continuous buying interest. At 4700-4800, we saw very good interest come in. I guess this continues to remain a period when people are sort of coming out of their shell and starting to look at opportunities and ideas."
He asks investors to be cautious around 5,300-5,400 levels. "The global phenomenon continues to be an overhang on the market. Also, the second half might not be as good as the first half. I think the market is a little bit more cautious on the upside. These two factors are actually ensuring that this will not be a runaway market. I would start buying more of Puts and build some amount of cash in the portfolio."
Ambareesh Baliga of Karvy Stock Broking expects the Nifty to continue in a 5,200-5,300 range. "Crossing this level will be quite difficult. Inspite of all the good news, whether it is advance tax figures, IIP (Index of Industrial Production) data, monsoons, GDP (gross domestic product) estimates, if you are not able to convincingly cross these levels, it clearly shows that there is no conviction in the market. Over the next two-three months, we will be in the broad range of 4,700-4,800 and to around 5,300."
However, Sudarshan Sukhani of Technical Trends feels the market can see a 70-80 or 100 point correction. He advises investors to buy on dips.
Phani Sekhar, Fund Manager, Angel Broking, too asks investors to buy on dips. But unlike Sukhani he sees another 4-5% upside. "Individual midcaps and stocks will be doing much better than indices and that is where a lot of money is there to be created."
How should you play stocks from the Reliance pack?
On Reliance:
Baliga sees huge upside potential in Reliance Industries. "We have been talking of Rs 1400 levels, which it is refusing to go towards in the last six-eight months. But by January- February next year, once all these things settle down, it should trade over Rs 1400. At these levels, we are quite bullish on Reliance Industries."
Sekhar is betting on Reliance Industries and Reliance Infrastructure from the Mukhesh Ambani stable.
On the ADAG pack:
Reliance Communications, Baliga said, has already moved up decently from lower levels. "I don't think it can move much more looking at the way the telecom sector is doing." On the other stocks in the pack, he feels they are more of a speculative move than a fundamental move. "It is more of traders' pick at this point of time than a fundamental buy."
From the ADAG group, Sekhar likes Reliance Infrastructure. "This is a very young engineering company. The numbers that you see now are not really reflective of the potential numbers that you will see in a couple of years’ time when majority of its current projects come onstream. Valuationswise, it looks pretty attractive. We will give a pass to the rest of the stocks and pick Reliance Infrastructure."
Wednesday, June 16, 2010
Wednesday, June 9, 2010
Loss in equities? Don't fall prey to investment myths-
Once bitten twice shy investors often fall victims to popular myths about investing rather than learning from their mistakes.
In the bargain, they lose out on other opportunities.
Here we took a look at some of the myths that are prevalent in the minds of those who have lost money
Investors feel that they do not need investment advisors and can make investment decisions on their own using their trusted sources. However, one must remember that markets today are far more complex.
It is virtually impossible for any one individual to track all asset classes. Hence choosing a good advisor, helps.
“An advisor is equipped to look at your changing needs and risk profile, and offer appropriate solutions given the market conditions and basket of products available.
"They are experts and will help you navigate the journey towards financial freedom with a high degree of certainty,” says Ashish Kehair, business head, private wealth management at ICICI Securities.
The NAV is the total value of all the securities in its portfolio, less any liabilities, divided by the number of units outstanding.
The NAV does not signal an entry or an exit point. Instead, one should look at the portfolio quality of the fund, see whether it is a large cap, mid-cap or small-cap oriented, the fund manager, the past performance and the style of investing.
“Individuals should look at the return on investment rather as a pure number to the NAV has no meaning”, says Anil Chopra, Group CEO, Bajaj Capital.
Bonds or debt mutual funds carry interest rate risk.
In a rising interest rate scenario, the value of your bond falls and you lose money and vice versa. Besides, there is a credit risk with bonds of private companies.
Hence investors must factor in that before making an investment in debt.
his works for a lot of people, but this is not sacrosanct.
For example, if you are 30 years old and have a loan and are the only working member in your family, and barely manage to meet your monthly expenses, it may be risky for you to put 70% of your assets in equities.
Alternatively, if you are an HNI and 60 years old, with your retirement nest built and well taken care of, then you can still afford to invest more than 40% in equities.
Hence, it is best that you discuss the same with a financial planner before taking a final decision.
A lot of investors are constantly trying to find the next multi-bagger. First, in an individual capacity it is not easy to spot one.
Even if you have a multi-bagger but it constitutes a small percentage of your portfolio then it does not make significant difference to your returns.
“In the process of identifying a multi-bagger, investors accumulate as many as 15 small-cap stocks, 14 of which would go down, so it is not really worth the effort,” says Radhika Gupta, director and founder of Forefront Capital.
Most investors think that they will buy at the bottom and sell at the top, in short they want to time the market. However, during their investment journey sooner or later they realise that timing the market is not possible and in the process they miss out on many opportunities.
“There is no best time to invest, but there is a best time horizon to invest. If you have the time horizon to live the shocks of the particular asset class, you will make money,” says AV Srikanth, executive director, Anand Rathi Wealth Managers.
Investors should build a portfolio over a period of time, depending on the risk that he can take.
Financial advisors advise diversification of portfolio to increase returns and reduce risk.
However, diversification does not mean buying stocks and funds at random.
“Overall we believe that investors should not have more than 20 instruments be it stocks, mutual funds or fixed deposits in their portfolio as diversification beyond that reduces returns without reducing risk”, says Sandeep Raichura, business head, wealth management at Pioneer Wealth Management.
In the bargain, they lose out on other opportunities.
Here we took a look at some of the myths that are prevalent in the minds of those who have lost money
Investors feel that they do not need investment advisors and can make investment decisions on their own using their trusted sources. However, one must remember that markets today are far more complex.
It is virtually impossible for any one individual to track all asset classes. Hence choosing a good advisor, helps.
“An advisor is equipped to look at your changing needs and risk profile, and offer appropriate solutions given the market conditions and basket of products available.
"They are experts and will help you navigate the journey towards financial freedom with a high degree of certainty,” says Ashish Kehair, business head, private wealth management at ICICI Securities.
The NAV is the total value of all the securities in its portfolio, less any liabilities, divided by the number of units outstanding.
The NAV does not signal an entry or an exit point. Instead, one should look at the portfolio quality of the fund, see whether it is a large cap, mid-cap or small-cap oriented, the fund manager, the past performance and the style of investing.
“Individuals should look at the return on investment rather as a pure number to the NAV has no meaning”, says Anil Chopra, Group CEO, Bajaj Capital.
Bonds or debt mutual funds carry interest rate risk.
In a rising interest rate scenario, the value of your bond falls and you lose money and vice versa. Besides, there is a credit risk with bonds of private companies.
Hence investors must factor in that before making an investment in debt.
his works for a lot of people, but this is not sacrosanct.
For example, if you are 30 years old and have a loan and are the only working member in your family, and barely manage to meet your monthly expenses, it may be risky for you to put 70% of your assets in equities.
Alternatively, if you are an HNI and 60 years old, with your retirement nest built and well taken care of, then you can still afford to invest more than 40% in equities.
Hence, it is best that you discuss the same with a financial planner before taking a final decision.
A lot of investors are constantly trying to find the next multi-bagger. First, in an individual capacity it is not easy to spot one.
Even if you have a multi-bagger but it constitutes a small percentage of your portfolio then it does not make significant difference to your returns.
“In the process of identifying a multi-bagger, investors accumulate as many as 15 small-cap stocks, 14 of which would go down, so it is not really worth the effort,” says Radhika Gupta, director and founder of Forefront Capital.
Most investors think that they will buy at the bottom and sell at the top, in short they want to time the market. However, during their investment journey sooner or later they realise that timing the market is not possible and in the process they miss out on many opportunities.
“There is no best time to invest, but there is a best time horizon to invest. If you have the time horizon to live the shocks of the particular asset class, you will make money,” says AV Srikanth, executive director, Anand Rathi Wealth Managers.
Investors should build a portfolio over a period of time, depending on the risk that he can take.
Financial advisors advise diversification of portfolio to increase returns and reduce risk.
However, diversification does not mean buying stocks and funds at random.
“Overall we believe that investors should not have more than 20 instruments be it stocks, mutual funds or fixed deposits in their portfolio as diversification beyond that reduces returns without reducing risk”, says Sandeep Raichura, business head, wealth management at Pioneer Wealth Management.
Nifty ends at 5K amid volatility; Bharti up 5%, ITC dips 4Nifty ends at 5K amid volatility; Bharti up 5%, ITC dips 4%
The benchmark Nifty closed with modest gains, after witnessing a consolidation throughout session. It settled at 5,000 level, after struggling to hold the same level since beginning of trade today.
The markets consolidated today after previous two-day sell-off on back of weak global cues. The Sensex shot up more than 200 points after European markets opened 1% higher but that could not sustain for long.
The 30-share BSE Sensex closed at 16,657.89, up 40.79 points or 0.25% and the 50-share NSE Nifty rose 13.20 points or 0.26% to settle at 5,000.30. Nifty June futures turned into premium of 7 points from 20 points discount.
Telecom, oil & gas, metal, capital goods, private banking and realty companies' shares helped indices to remain in positive terrain. However, the sell-off in technology and FMCG companies' shares along with NTPC, Tata Power, Tata Motors, SBI, Power Grid, Hero Honda and Siemens added to volatility.
Bharti Airtel was the top gainer on Nifty; shot up 5.3%. The telecom major was in focus as it closed the Zain Africa acquisition on Tuesday. However, rating agency Standard & Poor's tried to play party pooper and cut Bharti's rating to BB+ from BBB-. The downgrade was on account of worsening leverage and cash flow ratios.
Akhil Gupta, Deputy Group CEO and MD, Bharti Enterprises, said he absolutely disagrees with S&P's assessment. "We see no reason why our business will go down. We have built up net cash positions in the past for major acquisitions. Every good company should have a reasonable amount of debt."
Among other telecom players, Reliance Communications was up 1.5% and Idea Cellular up 0.3%.
ONGC from oil & gas space was the leading counter; gained 2.23% and heavyweight Reliance Industries rose 1%. Cairn India, GAIL and BPCL went up 0.66-1.66%.
The most beaten down metal space also bounced back today; SAIL, Sterlite Industries and Tata Steel gained 1.6-3.3%. Hindalco was up 0.6% and Jindal Steel up 0.4%.
In the financial pack, HDFC Bank, ICICI Bank, PNB, Axis Bank and IDFC were up 0.9-1.7% while SBI lost 0.5%.
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L&T from capital goods space rose 0.9% and BHEL was up 0.7%. ABB went up 0.3% while Siemens fell 0.6%.
Unitech from realty segment moved up 2.4% and DLF gained 0.35%. ACC from cement pack rose 1.9% while Ambuja Cements was flat.
In auto space, M&M and Maruti were up 0.7-1.3% while Hero Honda and Tata Motors declined 0.5-1%.
On the other side, Wipro and TCS from technology pack slipped 2% each. Infosys was down 1% and HCL Tech down 0.5%.
ITC was the biggest loser on Nifty; plunged over 4%. HUL was down 0.7%.
In the midcap space, Marico, Bajaj Holdings, Bombay Rayon, Anant Raj Industries and Kwality Dairy gained 5-6% while Thomas Cook, Rajesh Exports, Gujarat Mineral, Info Edge and Pantaloon Retail fell 3-5.5%.
However, KPIT Cummins was locked at 20% upper circuit. The company formed joint venture with Bharat Forge to manufacture an indigenously developed hybrid technology solution for automobiles.
Ashapura Mine, Titagarh Wagons, DCM Shriram Consolidated and Diamond Power went up 6-9%. However, Shristi Infra, Kanani Industries, Alcobex Metals, Money Matters and Timken lost 5-11.5%.
The market breadth was positive; about 1624 shares advanced while 1458 shares declined on BSE. Nearly 225 shares remained unchanged.
Volume remained above Rs 1 lakh crore mark; the markets reported total turnover of Rs 1,08,677.93 crore. This included Rs 11,735.54 crore from NSE cash segment, Rs 93,058.52 crore from NSE F&O and the balance Rs 3,883.87 crore from BSE cash segment.
On the global front, Shanghai surged 2.78% post Chinese exports in May grew about 50% from a year earlier, sources told Reuters on Wednesday.
Hang Seng gained 0.7% while Nikkei and Taiwan fell 1% each.
At 14:07 hours IST, the benchmark Sensex turned volatility again after witnessing sharp upmove in the last one hour of trade. The Nifty was consistently facing resistance at around the 5000 level. European markets also came off their day's high, were trading flat with positive bias.
Heavyweights slipped from their day's high and some financials came under pressure. Technology and FMCG companies' shares were down along with NTPC, SBI, Tata Motors, Sun Pharma, Hero Honda, Jaiprakash Associates, Power Grid, HDFC, DLF, Siemens and Kotak Mahindra Bank.
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* See how Global Markets are trading
* Indian ADRs
RSS feed for news
Click here
However, buying continued in telecom, metal, private banking and oil & gas companies' shares.
The Sensex was trading at 16614, down 2 points and the Nifty was at 4986, down 0.45 points.
Sesa Goa, Tata Steel, SBI, Tata Motors and Hindalco were the most active shares on bourses.
In the midcap space, Marico, Bombay Rayon, Kwality Dairy, Bajaj Finserv and Anant Raj Industries gained 4-7% while Rajesh Exports, Gujarat Mineral, Thomas Cook, Hindustan National Glass and M&M Financial fell 2-5%.
In the smallcap space, KPIT Cummins surged 19.5%. Ashapura Minechem was up 12.10%. Thiru Arooran, Diamond Power and Thinksoft went up 5%. However, Sundram, Kanani Industries, Maharashtra Polybutenes, Alcobex Metals and Money Matters lost 4-5%.
Nifty holds 5K; ONGC, Bharti, RIL, ICICI Bk, BHEL lead
At 13:30 hours IST - the benchmark Nifty was trading higher on back of short covering and was consistently holding the 5000 level, after seeing sell-off in previous two sessions. Positive European cues were quite supportive today, which were down for last three days; CAC, DAX and FTSE gained more than 0.5%.
Metal, oil & gas, realty, banking, pharma, capital goods and telecom companies' shares were helping the Sensex to trade with more than 100 points gains; respective sectoral indices rose 1-2%.
However, there was a bit of volatility due to selling in heavyweight ITC, which was down 3.4%. Tata Power, Wipro, Infosys, NTPC,Tata Motors, HUL, Power Grid and Jaiprakash Associates were other losers in trade.
The Sensex was trading at 16756, up 139 points and the Nifty was at 5031, up 44 points. However, the Nifty June future trimmed its discount to 11 points from 20 points.
Among Asian markets, Shanghai surged 2.8%. Chinese exports in May grew about 50% from a year earlier, sources said on Wednesday, a figure that blew past expectations and fuelled a big jump in domestic stocks.
Hang Seng gained 0.7% while Nikkei and Taiwan fell 1% each.
The market breadth was positive; about 913 shares advanced while 343 shares declined on NSE.
Top gainers - Bharti Airtel was trading at Rs 271.05, up 4.92%; Sterlite Industries was at Rs 624.50, up 2.50%; Reliance Infrastructure was at Rs 1,081, up 2.20%; ACC was at Rs 860.30, up 2.13%; SAIL was at Rs 193.10, up 2.12% and ICICI Bank was at Rs 831.85, up 1.83%.
(With inputs from Reuters)
Sensex trading strong; oil & gas, realty, pharma up
At 11.54 hrs IST, the Sensex was trading strong with 100 points gains at 16,719. Buying was seen in oil & gas, realty, pharma, metal, banking and auto stocks. However, FMCG stocks witnessed selling pressure. Stocks like Reliance, ICICI Bank, L&T, HDFC and HDFC Bank were the positive contributors to the Sensex while Infosys, ITC, HUL, Tata Motors and NTPC were the negative contributors.
The Sensex was up 102.44 points or 0.62% at 16719.54, and the Nifty was up 38.85 points or 0.78% at 5025.95.
About 1738 shares advanced, 1115 shares declined, and 453 shares were unchanged.
Top gainers on the Sensex were Bharti Airtel at Rs 270.50 up 4.93%, ONGC at Rs 1,198 up 2.78%, Reliance Infra at Rs 1,078 up 2.01%, ACC at Rs 857.65 up 1.95% and M&M at Rs 580.65 up 1.69%.
Index heavyweight Reliance was trading at Rs 1,010.50 up 1.41% from its previous close of Rs 996.45.
Refinery major HPCL was trading at Rs 358 up 2.89% from its previous close of Rs 347.95.
However, Top losers on the Sensex were ITC at Rs 280.60 down 3.14%, Tata Power at Rs 1,227.25 down 1.2%, Wipro at Rs 641.90 down 0.31%, Infosys at Rs 2,649 down 0.23% and HUL at Rs 251.25 down 0.1%.
Cigarette major ITC was trading at Rs 280.60 down 3.14% from its previous close of Rs 289.70.
Markets Outlook
Markets, globally, continue to witness a bout of turbulence leading to massive volatility since the past many trading sessions. However, Raamdeo Agrawal of Motilal Oswal Financial Securities feels the current fall is not alarming yet but he does agree to the fact that the cyclicals have been impacted more by the recent correction.
Concentrating on specific stocks and sectors rather than the global scenario, which, according to him, is unlikely to have any catastrophic impact on Indianmarkets in the near term, he says he is bullish on public sector banks. "The State Bank of India (SBI) looks attractive from that pack," he adds.
Suresh Mahadevan of UBS Securities "Maintaining a target of 22,000 for the Sensex by March FY11. If the markets rebound, metal stocks will do very well. He is positive on banks, pharma, real estate and power. “Also, steel stocks look attractive. In fact we have upgraded SAIL to buy,” he adds.
Sensex consolidates; Bharti, ONGC, BPCL top gainers
At 10:23 hours IST - the benchmark Sensex was consolidating at current levels, after previous two-day sell-off on weak global cues. On the one side, oil & gas, telecom, realty and bankingcompanies' shares were helping the markets.
However, selling continued in ITC, Wipro, Infosys, Tata Motors, Tata Power, L&T, Hero Honda, Sun Pharma, Jaiprakash Associates, HCL Tech, HDFC, Power Grid, Hindalco, Jindal Steel and Cipla.
The Nifty continued to face resistance at 5000 level and was trading at 4999, up 12 points. The Sensex rose just 38 points to 16655. However, the Nifty June futures have been in discount since the beginning of series; it was trading at 16 points discount.
The broader indices were outperforming the benchmark indices; about 866 shares advanced while 320 shares declined on NSE.
Top gainers - Bharti Airtel was top gainer on bourses; shot up nearly 6%. The company has made an announcement on Tuesday that it has taken control of Zain Assets.
BPCL was trading at Rs 558.50, up 2.71%; ONGC was at Rs 1,194.25, up 2.57%; Idea Cellular was at Rs 54.20, up 1.78%; M&M was at Rs 577.60, up 1.20%; Reliance Communications was at Rs 169.40, up 1.04%; HDFC Bank was at Rs 1,878, up 0.95% and DLF was at Rs 259.70, up 0.87%.
In the midcap space, Bajaj Finserv, Marico, Kwality Dairy, Simplex Infra and Redington gained 4-7.5% while Rajesh Exports, Triveni Engg, Thomas Cook, M&M Financial and KS Oils fell 2-3.5%.
In the smallcap space, KPIT Cummins, Shrenuj & Company, Shirpur Gold, Thinksoft and Jindal Worldwid went up 5-7% while Kanani Industries, Maharashtra Polybutenes, Ferro Alloys, Henkel India and Oscar Investment lost 3-5%.
Nifty flat with positive bias; oil & gas, metals up
The benchmark Nifty started the day on a flat note following quiet trade in Asian markets. It was facing resistance at around 5000 mark. Oil & gas, metal, realty, financials and auto sectors were on the buyers' radar.
At 9:03 hours IST, the Nifty was trading at 4998, up 112 points and the Sensex was at 16650, up 30 points.
The CNX Midcap rose 55 points to 7796 and BSE Smallcap gained 32 points at 8501. About 513 shares advanced while 161 shares declined on NSE.
Among the frontliners, ITC (went ex-dividend today), HCL Tech, Tata Power, Infosys, HDFC, Reliance Communications and NTPC were under pressure.
However, BPCL, Bharti Airtel, Hindalco, Cairn India, SAIL, Sterlite Industries, ICICI Bank, Reliance Industries, Unitech, ONGC and DLF were gainers in early trade.
Midcap & Smallcap space:
Bajaj Finserv shot up 10%; Berkshire Hathway arm is in preliminary talks with the company, reports CNBC-TV18 quoting sources.
M&M Financial gained just 0.6% on rumours that PE companies may buy some stake in the company.
Rana Sugars rose 2%, as the company is considering demerger of hotel, sugar business.
Texmo Pipes rose 5% and Marico shot up 6%.
Fortis Healthcare, Lakshmi Vilas Bank, Sesa Goa and Ashok Leyland gained 1.2-1.5%.
Global cues:
Asian markets were a bit soft in trade. Nikkei fell 1%. Hang Seng, Jakarta, Kospi and Taiwan lost 0.3-0.4%. Shanghai and Straits Times were flat.
Market cues:
FIIs were net sellers of USD 45.7 million in equities on June 7
NSE F&O Open Int was up Rs 3564 crore at Rs 1.25 lakh crore
As per provisional data of June 8, FIIs were net sellers of Rs 243 crore; DIIs were net buyers of Rs 41 crore in cash markets. FIIs were net buyers of Rs 169 crore in F&O.
F&O cues:
Futures Open Int up Rs 734 crore
Options Open Int up Rs 2830 crore
Nifty Futures add 18 lakh shares in Open Int
Nifty Futures at 18-point discount
Nifty Open Int PCR at 1.32 versus 1.37
Nifty Puts add 14 lakh shares in Open Int
Nifty Calls add 31 lakh shares in Open Int
Nifty 4500 Put adds 4.8 lakh shares in Open Int
Nifty 4900 Put adds 4 lakh shares in Open Int
Nifty 5000 Put sheds 6 lakh shares in Open Int
Nifty 5000 Call adds 8.9 lakh shares in Open Int
Nifty 5100 Call adds 6 lakh shares in Open Int
Stock Futures add 1 cr shares in Open Int
The markets consolidated today after previous two-day sell-off on back of weak global cues. The Sensex shot up more than 200 points after European markets opened 1% higher but that could not sustain for long.
The 30-share BSE Sensex closed at 16,657.89, up 40.79 points or 0.25% and the 50-share NSE Nifty rose 13.20 points or 0.26% to settle at 5,000.30. Nifty June futures turned into premium of 7 points from 20 points discount.
Telecom, oil & gas, metal, capital goods, private banking and realty companies' shares helped indices to remain in positive terrain. However, the sell-off in technology and FMCG companies' shares along with NTPC, Tata Power, Tata Motors, SBI, Power Grid, Hero Honda and Siemens added to volatility.
Bharti Airtel was the top gainer on Nifty; shot up 5.3%. The telecom major was in focus as it closed the Zain Africa acquisition on Tuesday. However, rating agency Standard & Poor's tried to play party pooper and cut Bharti's rating to BB+ from BBB-. The downgrade was on account of worsening leverage and cash flow ratios.
Akhil Gupta, Deputy Group CEO and MD, Bharti Enterprises, said he absolutely disagrees with S&P's assessment. "We see no reason why our business will go down. We have built up net cash positions in the past for major acquisitions. Every good company should have a reasonable amount of debt."
Among other telecom players, Reliance Communications was up 1.5% and Idea Cellular up 0.3%.
ONGC from oil & gas space was the leading counter; gained 2.23% and heavyweight Reliance Industries rose 1%. Cairn India, GAIL and BPCL went up 0.66-1.66%.
The most beaten down metal space also bounced back today; SAIL, Sterlite Industries and Tata Steel gained 1.6-3.3%. Hindalco was up 0.6% and Jindal Steel up 0.4%.
In the financial pack, HDFC Bank, ICICI Bank, PNB, Axis Bank and IDFC were up 0.9-1.7% while SBI lost 0.5%.
Watch CNBC-TV18 live only on MYTV >>
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Click here
L&T from capital goods space rose 0.9% and BHEL was up 0.7%. ABB went up 0.3% while Siemens fell 0.6%.
Unitech from realty segment moved up 2.4% and DLF gained 0.35%. ACC from cement pack rose 1.9% while Ambuja Cements was flat.
In auto space, M&M and Maruti were up 0.7-1.3% while Hero Honda and Tata Motors declined 0.5-1%.
On the other side, Wipro and TCS from technology pack slipped 2% each. Infosys was down 1% and HCL Tech down 0.5%.
ITC was the biggest loser on Nifty; plunged over 4%. HUL was down 0.7%.
In the midcap space, Marico, Bajaj Holdings, Bombay Rayon, Anant Raj Industries and Kwality Dairy gained 5-6% while Thomas Cook, Rajesh Exports, Gujarat Mineral, Info Edge and Pantaloon Retail fell 3-5.5%.
However, KPIT Cummins was locked at 20% upper circuit. The company formed joint venture with Bharat Forge to manufacture an indigenously developed hybrid technology solution for automobiles.
Ashapura Mine, Titagarh Wagons, DCM Shriram Consolidated and Diamond Power went up 6-9%. However, Shristi Infra, Kanani Industries, Alcobex Metals, Money Matters and Timken lost 5-11.5%.
The market breadth was positive; about 1624 shares advanced while 1458 shares declined on BSE. Nearly 225 shares remained unchanged.
Volume remained above Rs 1 lakh crore mark; the markets reported total turnover of Rs 1,08,677.93 crore. This included Rs 11,735.54 crore from NSE cash segment, Rs 93,058.52 crore from NSE F&O and the balance Rs 3,883.87 crore from BSE cash segment.
On the global front, Shanghai surged 2.78% post Chinese exports in May grew about 50% from a year earlier, sources told Reuters on Wednesday.
Hang Seng gained 0.7% while Nikkei and Taiwan fell 1% each.
At 14:07 hours IST, the benchmark Sensex turned volatility again after witnessing sharp upmove in the last one hour of trade. The Nifty was consistently facing resistance at around the 5000 level. European markets also came off their day's high, were trading flat with positive bias.
Heavyweights slipped from their day's high and some financials came under pressure. Technology and FMCG companies' shares were down along with NTPC, SBI, Tata Motors, Sun Pharma, Hero Honda, Jaiprakash Associates, Power Grid, HDFC, DLF, Siemens and Kotak Mahindra Bank.
Watch CNBC-TV18 live only on MYTV >>
Also Read
* See Key Market Stats - Top Gainers/ Losers, Most Actives, Highs/Lows
* See how Global Markets are trading
* Indian ADRs
RSS feed for news
Click here
However, buying continued in telecom, metal, private banking and oil & gas companies' shares.
The Sensex was trading at 16614, down 2 points and the Nifty was at 4986, down 0.45 points.
Sesa Goa, Tata Steel, SBI, Tata Motors and Hindalco were the most active shares on bourses.
In the midcap space, Marico, Bombay Rayon, Kwality Dairy, Bajaj Finserv and Anant Raj Industries gained 4-7% while Rajesh Exports, Gujarat Mineral, Thomas Cook, Hindustan National Glass and M&M Financial fell 2-5%.
In the smallcap space, KPIT Cummins surged 19.5%. Ashapura Minechem was up 12.10%. Thiru Arooran, Diamond Power and Thinksoft went up 5%. However, Sundram, Kanani Industries, Maharashtra Polybutenes, Alcobex Metals and Money Matters lost 4-5%.
Nifty holds 5K; ONGC, Bharti, RIL, ICICI Bk, BHEL lead
At 13:30 hours IST - the benchmark Nifty was trading higher on back of short covering and was consistently holding the 5000 level, after seeing sell-off in previous two sessions. Positive European cues were quite supportive today, which were down for last three days; CAC, DAX and FTSE gained more than 0.5%.
Metal, oil & gas, realty, banking, pharma, capital goods and telecom companies' shares were helping the Sensex to trade with more than 100 points gains; respective sectoral indices rose 1-2%.
However, there was a bit of volatility due to selling in heavyweight ITC, which was down 3.4%. Tata Power, Wipro, Infosys, NTPC,Tata Motors, HUL, Power Grid and Jaiprakash Associates were other losers in trade.
The Sensex was trading at 16756, up 139 points and the Nifty was at 5031, up 44 points. However, the Nifty June future trimmed its discount to 11 points from 20 points.
Among Asian markets, Shanghai surged 2.8%. Chinese exports in May grew about 50% from a year earlier, sources said on Wednesday, a figure that blew past expectations and fuelled a big jump in domestic stocks.
Hang Seng gained 0.7% while Nikkei and Taiwan fell 1% each.
The market breadth was positive; about 913 shares advanced while 343 shares declined on NSE.
Top gainers - Bharti Airtel was trading at Rs 271.05, up 4.92%; Sterlite Industries was at Rs 624.50, up 2.50%; Reliance Infrastructure was at Rs 1,081, up 2.20%; ACC was at Rs 860.30, up 2.13%; SAIL was at Rs 193.10, up 2.12% and ICICI Bank was at Rs 831.85, up 1.83%.
(With inputs from Reuters)
Sensex trading strong; oil & gas, realty, pharma up
At 11.54 hrs IST, the Sensex was trading strong with 100 points gains at 16,719. Buying was seen in oil & gas, realty, pharma, metal, banking and auto stocks. However, FMCG stocks witnessed selling pressure. Stocks like Reliance, ICICI Bank, L&T, HDFC and HDFC Bank were the positive contributors to the Sensex while Infosys, ITC, HUL, Tata Motors and NTPC were the negative contributors.
The Sensex was up 102.44 points or 0.62% at 16719.54, and the Nifty was up 38.85 points or 0.78% at 5025.95.
About 1738 shares advanced, 1115 shares declined, and 453 shares were unchanged.
Top gainers on the Sensex were Bharti Airtel at Rs 270.50 up 4.93%, ONGC at Rs 1,198 up 2.78%, Reliance Infra at Rs 1,078 up 2.01%, ACC at Rs 857.65 up 1.95% and M&M at Rs 580.65 up 1.69%.
Index heavyweight Reliance was trading at Rs 1,010.50 up 1.41% from its previous close of Rs 996.45.
Refinery major HPCL was trading at Rs 358 up 2.89% from its previous close of Rs 347.95.
However, Top losers on the Sensex were ITC at Rs 280.60 down 3.14%, Tata Power at Rs 1,227.25 down 1.2%, Wipro at Rs 641.90 down 0.31%, Infosys at Rs 2,649 down 0.23% and HUL at Rs 251.25 down 0.1%.
Cigarette major ITC was trading at Rs 280.60 down 3.14% from its previous close of Rs 289.70.
Markets Outlook
Markets, globally, continue to witness a bout of turbulence leading to massive volatility since the past many trading sessions. However, Raamdeo Agrawal of Motilal Oswal Financial Securities feels the current fall is not alarming yet but he does agree to the fact that the cyclicals have been impacted more by the recent correction.
Concentrating on specific stocks and sectors rather than the global scenario, which, according to him, is unlikely to have any catastrophic impact on Indianmarkets in the near term, he says he is bullish on public sector banks. "The State Bank of India (SBI) looks attractive from that pack," he adds.
Suresh Mahadevan of UBS Securities "Maintaining a target of 22,000 for the Sensex by March FY11. If the markets rebound, metal stocks will do very well. He is positive on banks, pharma, real estate and power. “Also, steel stocks look attractive. In fact we have upgraded SAIL to buy,” he adds.
Sensex consolidates; Bharti, ONGC, BPCL top gainers
At 10:23 hours IST - the benchmark Sensex was consolidating at current levels, after previous two-day sell-off on weak global cues. On the one side, oil & gas, telecom, realty and bankingcompanies' shares were helping the markets.
However, selling continued in ITC, Wipro, Infosys, Tata Motors, Tata Power, L&T, Hero Honda, Sun Pharma, Jaiprakash Associates, HCL Tech, HDFC, Power Grid, Hindalco, Jindal Steel and Cipla.
The Nifty continued to face resistance at 5000 level and was trading at 4999, up 12 points. The Sensex rose just 38 points to 16655. However, the Nifty June futures have been in discount since the beginning of series; it was trading at 16 points discount.
The broader indices were outperforming the benchmark indices; about 866 shares advanced while 320 shares declined on NSE.
Top gainers - Bharti Airtel was top gainer on bourses; shot up nearly 6%. The company has made an announcement on Tuesday that it has taken control of Zain Assets.
BPCL was trading at Rs 558.50, up 2.71%; ONGC was at Rs 1,194.25, up 2.57%; Idea Cellular was at Rs 54.20, up 1.78%; M&M was at Rs 577.60, up 1.20%; Reliance Communications was at Rs 169.40, up 1.04%; HDFC Bank was at Rs 1,878, up 0.95% and DLF was at Rs 259.70, up 0.87%.
In the midcap space, Bajaj Finserv, Marico, Kwality Dairy, Simplex Infra and Redington gained 4-7.5% while Rajesh Exports, Triveni Engg, Thomas Cook, M&M Financial and KS Oils fell 2-3.5%.
In the smallcap space, KPIT Cummins, Shrenuj & Company, Shirpur Gold, Thinksoft and Jindal Worldwid went up 5-7% while Kanani Industries, Maharashtra Polybutenes, Ferro Alloys, Henkel India and Oscar Investment lost 3-5%.
Nifty flat with positive bias; oil & gas, metals up
The benchmark Nifty started the day on a flat note following quiet trade in Asian markets. It was facing resistance at around 5000 mark. Oil & gas, metal, realty, financials and auto sectors were on the buyers' radar.
At 9:03 hours IST, the Nifty was trading at 4998, up 112 points and the Sensex was at 16650, up 30 points.
The CNX Midcap rose 55 points to 7796 and BSE Smallcap gained 32 points at 8501. About 513 shares advanced while 161 shares declined on NSE.
Among the frontliners, ITC (went ex-dividend today), HCL Tech, Tata Power, Infosys, HDFC, Reliance Communications and NTPC were under pressure.
However, BPCL, Bharti Airtel, Hindalco, Cairn India, SAIL, Sterlite Industries, ICICI Bank, Reliance Industries, Unitech, ONGC and DLF were gainers in early trade.
Midcap & Smallcap space:
Bajaj Finserv shot up 10%; Berkshire Hathway arm is in preliminary talks with the company, reports CNBC-TV18 quoting sources.
M&M Financial gained just 0.6% on rumours that PE companies may buy some stake in the company.
Rana Sugars rose 2%, as the company is considering demerger of hotel, sugar business.
Texmo Pipes rose 5% and Marico shot up 6%.
Fortis Healthcare, Lakshmi Vilas Bank, Sesa Goa and Ashok Leyland gained 1.2-1.5%.
Global cues:
Asian markets were a bit soft in trade. Nikkei fell 1%. Hang Seng, Jakarta, Kospi and Taiwan lost 0.3-0.4%. Shanghai and Straits Times were flat.
Market cues:
FIIs were net sellers of USD 45.7 million in equities on June 7
NSE F&O Open Int was up Rs 3564 crore at Rs 1.25 lakh crore
As per provisional data of June 8, FIIs were net sellers of Rs 243 crore; DIIs were net buyers of Rs 41 crore in cash markets. FIIs were net buyers of Rs 169 crore in F&O.
F&O cues:
Futures Open Int up Rs 734 crore
Options Open Int up Rs 2830 crore
Nifty Futures add 18 lakh shares in Open Int
Nifty Futures at 18-point discount
Nifty Open Int PCR at 1.32 versus 1.37
Nifty Puts add 14 lakh shares in Open Int
Nifty Calls add 31 lakh shares in Open Int
Nifty 4500 Put adds 4.8 lakh shares in Open Int
Nifty 4900 Put adds 4 lakh shares in Open Int
Nifty 5000 Put sheds 6 lakh shares in Open Int
Nifty 5000 Call adds 8.9 lakh shares in Open Int
Nifty 5100 Call adds 6 lakh shares in Open Int
Stock Futures add 1 cr shares in Open Int
Here are the top 5 mistakes people do in their financial life-Courtesy Manish chauhan
Here are the top 5 mistakes people do in their financial life:
Buying products from close one's
Will you sell a junk product to yourself if there's a 35% commission and it will be a burden to you all your life? I don't think so!. But if you had to sell it to your friend, colleague, brother-in-law, sister-in-law, father's friend etc, you'd consider it, wouldn't you? That's what happens in real life too. Most times, the "Best plan" comes from one of your relatives or someone known.
A simple 'NO' might hurt your relations with said person, but it will save you, your hard-earned money, rather than waste it on idiotic products, which you'll regret for life. It's just common sense that there are better advisers and consultants than your relatives or a close ones, unless they themselves are known and respected in the field (of finance). Most of the investors have their bitter personal experiences, where they bought products because it came from their relatives, uncle's et al.
This happens a lot with young guys yet to start working, and their fathers have bought policies for them and then delegated the premium paying responsibility to them once they start earning, it's a real "burden of legacy".
Spending more than they should
With many people, savings occur, only if they are left with any money at the end of the month. This needs to change - start saving first, then spend on what's necessary and then spend on your desires - last.
Sometimes, people spend impulsively, on things which they do not really need. Just because, your plastic card is in your wallet and you "might" need it in future makes you believe that you need to get it right now.
A brand new camera, with a 100 megapixel sensor and a 2000 x zoom is available at an EMI of just 1999 per month - and suddenly you're interested in Photography! An EMI of 2500 a month, for that magical million colour, anorexic Flat Screen TV creates a magical belief in you that your normal TV at home is now really blurry these days (not to mention really fat!).
Is there a need, to splurge on Movies and eat out, every weekend? A regular meal at home, with a movie on TV is also a good weekend, at times. It's all about knowing what you need and what you don't, & knowing it well!
No financial education to spouse and kids
Most people are not comfortable talking about 'FINANCE' to kids. They don't feel the need to tell their children that they have bought life insurance, in case they be hit by a bus tomorrow (the parents, not the kids). Once children reach an age of maturity like 16 or 17; when they can understand things & reason well and can take on responsibilities to some extent, parents can start telling them about money and finances.
Kids should know how much you earn. They should be clear on how you are saving money to fund their education, bike, trips etc. Once they know about all these things, chances are they will be a lot more supportive, would be realistic in their demands & stay well within their limits. Kids don't know sometimes, how much pain you take in earning money. Most of the times, kids know your salary and your designation at company and assume the family to be a "higher middle class" one.
Once you tell them about Home loan EMI, Car Loan, other liabilities, Retirement Savings, Education Expenses, Marriage expenses and the medical emergencies for which you are saving, they will have a better idea about the current situation and they will act responsibly. The same applies to spouses.
Imbalanced asset allocation
A lot of people have a tendency to start working and then never look at, or review their finances. Tax Planning is nothing more than a "signature" on some form for them. When they finally look back at their finances, they find that they have huge money in Fixed Deposit's and much more lying in Bank earning them pennies.
This happens a lot with NRI's working outside the country, who are in middle 30-40's and have huge cash in debt or Cash. On the other hand, there are investors who have no PPF, no FD, no Debt Funds, no bonds; they just do share trading, buy direct stocks, invest in just Mutual funds (pure equity).
Their imbalanced Asset allocation is responsible for the huge ups and downs their portfolio takes. One year the worth of their portfolio will be 10 lacs, the next year it will be 7, then suddenly it will be 14 lacs the next year. The numbers dance with huge fluctuations, but at the end of let's say, a decade, they look back & find they are nowhere better than their "High debt Instrument" kind of Investor brothers.
Unrealistic returns
Risk free returns, in our country are amongst the highest in the world. In countries like US, the interest rates are 1-2%. Equity markets in our country continue to provide 12-15% annual returns. But how much do investors expect from equity these days? A lot! No one is ready to settle below 20-25%? This happens when you look at short-term returns.
Investors who started in 2004 started thinking that they are all "Warren Buffet" and can leave their jobs in some years! Whereas all investors who started in 2007 end or 2008 start compare equity with their mother-in-laws, they just can't stand it. Think long-term, and timing will just not matter much.
For retirement and child education, which is 15-20+ years away, just start a SIP in an Index fund and then go into a COMA, come back once in a while and just review it every 6 months to a year. That's all.
Buying products from close one's
Will you sell a junk product to yourself if there's a 35% commission and it will be a burden to you all your life? I don't think so!. But if you had to sell it to your friend, colleague, brother-in-law, sister-in-law, father's friend etc, you'd consider it, wouldn't you? That's what happens in real life too. Most times, the "Best plan" comes from one of your relatives or someone known.
A simple 'NO' might hurt your relations with said person, but it will save you, your hard-earned money, rather than waste it on idiotic products, which you'll regret for life. It's just common sense that there are better advisers and consultants than your relatives or a close ones, unless they themselves are known and respected in the field (of finance). Most of the investors have their bitter personal experiences, where they bought products because it came from their relatives, uncle's et al.
This happens a lot with young guys yet to start working, and their fathers have bought policies for them and then delegated the premium paying responsibility to them once they start earning, it's a real "burden of legacy".
Spending more than they should
With many people, savings occur, only if they are left with any money at the end of the month. This needs to change - start saving first, then spend on what's necessary and then spend on your desires - last.
Sometimes, people spend impulsively, on things which they do not really need. Just because, your plastic card is in your wallet and you "might" need it in future makes you believe that you need to get it right now.
A brand new camera, with a 100 megapixel sensor and a 2000 x zoom is available at an EMI of just 1999 per month - and suddenly you're interested in Photography! An EMI of 2500 a month, for that magical million colour, anorexic Flat Screen TV creates a magical belief in you that your normal TV at home is now really blurry these days (not to mention really fat!).
Is there a need, to splurge on Movies and eat out, every weekend? A regular meal at home, with a movie on TV is also a good weekend, at times. It's all about knowing what you need and what you don't, & knowing it well!
No financial education to spouse and kids
Most people are not comfortable talking about 'FINANCE' to kids. They don't feel the need to tell their children that they have bought life insurance, in case they be hit by a bus tomorrow (the parents, not the kids). Once children reach an age of maturity like 16 or 17; when they can understand things & reason well and can take on responsibilities to some extent, parents can start telling them about money and finances.
Kids should know how much you earn. They should be clear on how you are saving money to fund their education, bike, trips etc. Once they know about all these things, chances are they will be a lot more supportive, would be realistic in their demands & stay well within their limits. Kids don't know sometimes, how much pain you take in earning money. Most of the times, kids know your salary and your designation at company and assume the family to be a "higher middle class" one.
Once you tell them about Home loan EMI, Car Loan, other liabilities, Retirement Savings, Education Expenses, Marriage expenses and the medical emergencies for which you are saving, they will have a better idea about the current situation and they will act responsibly. The same applies to spouses.
Imbalanced asset allocation
A lot of people have a tendency to start working and then never look at, or review their finances. Tax Planning is nothing more than a "signature" on some form for them. When they finally look back at their finances, they find that they have huge money in Fixed Deposit's and much more lying in Bank earning them pennies.
This happens a lot with NRI's working outside the country, who are in middle 30-40's and have huge cash in debt or Cash. On the other hand, there are investors who have no PPF, no FD, no Debt Funds, no bonds; they just do share trading, buy direct stocks, invest in just Mutual funds (pure equity).
Their imbalanced Asset allocation is responsible for the huge ups and downs their portfolio takes. One year the worth of their portfolio will be 10 lacs, the next year it will be 7, then suddenly it will be 14 lacs the next year. The numbers dance with huge fluctuations, but at the end of let's say, a decade, they look back & find they are nowhere better than their "High debt Instrument" kind of Investor brothers.
Unrealistic returns
Risk free returns, in our country are amongst the highest in the world. In countries like US, the interest rates are 1-2%. Equity markets in our country continue to provide 12-15% annual returns. But how much do investors expect from equity these days? A lot! No one is ready to settle below 20-25%? This happens when you look at short-term returns.
Investors who started in 2004 started thinking that they are all "Warren Buffet" and can leave their jobs in some years! Whereas all investors who started in 2007 end or 2008 start compare equity with their mother-in-laws, they just can't stand it. Think long-term, and timing will just not matter much.
For retirement and child education, which is 15-20+ years away, just start a SIP in an Index fund and then go into a COMA, come back once in a while and just review it every 6 months to a year. That's all.
Is Warren Buffet drawn towards Bajaj FinServ
Warren Buffett Chairman and Chief Executive Officer of Berkshire Hathaway may look at investing in Bajaj FinServ, through a subsidiary, reports CNBC-TV18 quoting sources.
It is being learnt that Berkshire Hathway’s arm is in preliminary talks with Bajaj FinServ, the holding company of Bajaj Allianz Life Insurance Co Ltd and Bajaj Allianz General Insurance Co Ltd.
Sources also inform that Bajaj FinServ's Managing Director, Sanjiv Bajaj is expected to visit the US by this month end. Commenting on the issue, Bajaj said private equity funds and other investors have shown interest to invest. However, he denied the news of being in talks with any Warren Buffet companies.
It is being learnt that Berkshire Hathway’s arm is in preliminary talks with Bajaj FinServ, the holding company of Bajaj Allianz Life Insurance Co Ltd and Bajaj Allianz General Insurance Co Ltd.
Sources also inform that Bajaj FinServ's Managing Director, Sanjiv Bajaj is expected to visit the US by this month end. Commenting on the issue, Bajaj said private equity funds and other investors have shown interest to invest. However, he denied the news of being in talks with any Warren Buffet companies.
Monday, June 7, 2010
Experts see mkts trading ranged ahead on weak global cues
The week began with a sharp fall on Dalal Street. The indices tanked in line with global markets. The Nifty just about managed to hold on to the 5,000 mark, ending the session at 5,034, down 101 points. The Sensex shut shop at 16,781, down 336 points. The advance-decline was expectedly poor at 1:4.
Will Nifty revisit 4,800?
Nischal Maheshwari, Head of Research, Edelweiss, is not sure if the Nifty will re-test 4,800 levels in June or July. But he is confident that the markets will remain volatile for the next 3-6 months. "This is a kind of situation we had seen in the US, a similar kind of situation is there is Europe today. If a Hungary kind of a situation happens, it will create panic among the market and that could be fuel to see the market going around to even 4700-4800 levels."
Sell is Technical Analyst Ashwani Gujral call. "The markets may go down slowly or may go down in a fast manner. But 5,150-5,200 is sort of becoming a ceiling because bull markets are based on confidence and conviction. They are not based on headline risk and people feeling uneasy about what could happen overnight. Today, the Nifty has held 5,000 but we will have to see for how long."
But Apurva Shah of Prabhudas Lilladher expects the markets to trade rangebound in June. "The markets are likely to move somewhere around these levels itself. I do not see any major gains from the market in the coming weeks. I do not see any major buying emerging over the next 30-45 days."
Global cues may hurt markets going forward, said Vibhav Kapoor of IL&FS. "We saw a very good bounceback from 4800, which is the bottom end of the range, last week and have had a good recovery after that. As of now that range of 4850-5400 stands. At the same time, the global situation is getting a little bit more nervous than it was earlier. So if there is a global meltdown, then there's always the risk of this range breaking on the downside. I would say the chances of that have increased a little bit over the past few weeks. But till that range breaks or does not break, you are still in that 4,800-5,400 band."
Will 2010 be a year of consolidation for markets?
Will weak global cues break the back of Indian markets or will the indices show resilience? Jyotivardhan Jaipuria of DSP Merrill Lynch sees the markets consolidating in 2010. "We had a great rally last year and this year we are going to really do nothing much on the index, probably just move around in a narrow range, which is good for the market in the longer-term. We will be in one of the narrowest ranges we have had for the market in a long time. The move this year has been just 2,000 points or something."
Nilesh Shah, Deputy MD, ICICI Prudential AMC, sees overseas inflows continuing over the next couple of months. "We have a fairly large variety of offshore investors. During this entire downfall, the strength and the stability which exchange traded funds (ETFs) have provided has actually surprised me. Some of the long-only investors are actually looking at corrections to buy. At every dip, they are seen accumulating stocks. So except for momentum or hedge funds, which badly have to redeem because of redemption or market calls, we will actually end up seeing quality investment coming in the next couple of months."
Will Nifty revisit 4,800?
Nischal Maheshwari, Head of Research, Edelweiss, is not sure if the Nifty will re-test 4,800 levels in June or July. But he is confident that the markets will remain volatile for the next 3-6 months. "This is a kind of situation we had seen in the US, a similar kind of situation is there is Europe today. If a Hungary kind of a situation happens, it will create panic among the market and that could be fuel to see the market going around to even 4700-4800 levels."
Sell is Technical Analyst Ashwani Gujral call. "The markets may go down slowly or may go down in a fast manner. But 5,150-5,200 is sort of becoming a ceiling because bull markets are based on confidence and conviction. They are not based on headline risk and people feeling uneasy about what could happen overnight. Today, the Nifty has held 5,000 but we will have to see for how long."
But Apurva Shah of Prabhudas Lilladher expects the markets to trade rangebound in June. "The markets are likely to move somewhere around these levels itself. I do not see any major gains from the market in the coming weeks. I do not see any major buying emerging over the next 30-45 days."
Global cues may hurt markets going forward, said Vibhav Kapoor of IL&FS. "We saw a very good bounceback from 4800, which is the bottom end of the range, last week and have had a good recovery after that. As of now that range of 4850-5400 stands. At the same time, the global situation is getting a little bit more nervous than it was earlier. So if there is a global meltdown, then there's always the risk of this range breaking on the downside. I would say the chances of that have increased a little bit over the past few weeks. But till that range breaks or does not break, you are still in that 4,800-5,400 band."
Will 2010 be a year of consolidation for markets?
Will weak global cues break the back of Indian markets or will the indices show resilience? Jyotivardhan Jaipuria of DSP Merrill Lynch sees the markets consolidating in 2010. "We had a great rally last year and this year we are going to really do nothing much on the index, probably just move around in a narrow range, which is good for the market in the longer-term. We will be in one of the narrowest ranges we have had for the market in a long time. The move this year has been just 2,000 points or something."
Nilesh Shah, Deputy MD, ICICI Prudential AMC, sees overseas inflows continuing over the next couple of months. "We have a fairly large variety of offshore investors. During this entire downfall, the strength and the stability which exchange traded funds (ETFs) have provided has actually surprised me. Some of the long-only investors are actually looking at corrections to buy. At every dip, they are seen accumulating stocks. So except for momentum or hedge funds, which badly have to redeem because of redemption or market calls, we will actually end up seeing quality investment coming in the next couple of months."
The most expensive pharma deal ever-www.moneycontrol.com
It took four hours for Ajay Piramal to negotiate a whopping USD 3.7 billion valuation for his generics business with Abbott. Just how did he pull it off?
The secret rendezvous was set at a hotel in Dubai early this year. Ajay Piramal, the chairman of Piramal Healthcare, India’s fifth largest pharmaceutical company, and his daughter Nandini had a two-hour meeting lined up at this carefully chosen neutral location. They met up with Miles White, chairman of USD 30 billion Abbott Laboratories, the world’s seventh largest drug maker. A couple of weeks later, the Piramals met another senior Abbott executive Olivier Bohuon, executive vice president pharmaceuticalbusiness for a couple of hours. During his meeting with White, Piramal handed over a succinct three page note detailing his basis for the valuation. White would have to revert within a week, if the deal was to be consummated. Eventually, White did get back, and offered nearly as much as Piramal had asked for.
Today, most pharma industry watchers would die to get hold of a copy of that note. After all, it formed the basis for the Rs 17,500 crore deal that Piramal clinched for abusiness that he had started 22 years ago with a capital of just Rs 16.5 crore. This isn’t quite the biggest deal in the Indian pharmaceutical industry. In 2008, Japanese firm Dai Ichi paid USD 4.6 billion for a 50% stake in Delhi-based Ranbaxy Laboratories, India’s largestpharmaceutical company . Yet the valuations would make it one of the most expensive, especially for a firm like Piramal which sells inexpensive, off patent drugs (also called generics). Abbott will eventually pay Piramal nine times the current sales, 60 % more than what the Delhi-based Singh brothers — Malvinder and Shivinder — got for selling their stake in Ranbaxy.
Piramal did not rely on any advisors or investment bankers. He says that he arrived at the deal valuation after a few discussions with his daughter Nandini, who is now an executive director in the company. “It took about four hours of my time to negotiate the deal,” says Piramal. Only two executives from Piramal’s side assisted Abbott’s team in conducting their due diligence over a couple of weeks.
Despite the huge premium it is paying, there are, of course, quite a few advantages for Abbott. It will get total control of Piramal’s domestic drug sales business, plus a factory in Baddi, Himachal Pradesh, that manufactures these products. Unlike Ranbaxy, Abbott won’t need to go through any stock market related regulatory issues since it is just buying a business division and not a listed company. And the icing on the cake: Abbott will become India’s No.1 domestic company beating rivals like GlaxoSmithkline and Cipla. There’s little doubt that the deal will now force global pharma companies like Sanofi-Aventis, Glaxosmithkline and Pfizer, who are looking to expand their Indian foot print, to pay a lot more for local assets.
Even a year ago, Piramal says he had no intention to sell off the business. Pressure from the multinationals was gradually mounting. He had met up CEOs of global drug majors, including Abbott’s White, who had shown interest in striking a deal with Piramal earlier too. It was only late last year that Piramal started having a second thoughts about running his domestic pharmaceutical business.
Last year was also when MNC pharma firms like Pfizer inked the most number of deals with Indian firms for partnerships in manufacturing and research. Says an executive who works closely with Piramal, who did not wish to be named: “Piramal felt that just like it made sound sense to get into the business when MNCs were winding down their presence in India in the 1980s, it will be a good idea to quit the business when they are coming back.”
To recap, when Piramal inherited the family textile business in the eighties, labour trouble and increasing costs had already scuppered any chances of growth. As Piramal searched for new business opportunities, he zeroed in on pharma, convinced that there would be a shortage in primary healthcare services in India. Incidentally, Piramal’s wife, Swati, is a medical practitioner who sits on the board of Piramal Healthcare.
Since there was no patent protection in India, which allowed local companies to copy and sell their drugs cheaply in the country, MNCs increasingly found the going tough. In the late 1980s, instead of creating a business from scratch, Piramal starting buying multinational companies that were exiting the country at that time. His peers didn’t see it quite the same way: They felt MNC talent was far too expensive. Piramal landed some plum deals, capitalising on the desperation of the MNCs to exit the country. In the initial deals, Piramal made sure that he kept his promise that he would retain the people he inherited through thhe acquisition. So as word got around, more MNCs decided to sell their businesses and brands to him.
Piramal also stayed away from copying and selling the drugs sold by multinationals. He also consciously kept away from selling generic drugs in regulated markets, as it meant litigating with MNCs against their patents. Says a former CEO of a Piramal group company: “Piramal always laid a great emphasis on amicability. He kept away from confrontations.”
This time around, when Abbott again proposed a deal, Piramal picked up the gauntlet. Says Piramal: “I thought I would see where the discussion led us to.” If things didn’t go to plan, he would merely pull out of the discussions.
From his vantage point observatory, Piramal could sense the growing buzz about emerging economies. Every major MNC was looking to increase their presence in these markets. Companies like AstraZeneca and Roche have been investing in China in the last five years but none of them had made big moves for India yet. There was a lot riding on the potential of emerging markets, perhaps with reason too. Drug demand was expected to rise on an average 15 percent a year in emerging markets through 2014
He had a clear logic in justifying a higher valuation than Ranbaxy. Says Piramal: “Since we had a pure domestic play on offer, we knew that our valuations should be substantially more than Ranbaxy.” This wasn’t entirely unfounded. The domestic branded generic business is by far the most profitable segment for Indian firms and it is natural that will command a higher valuation, says Manoj Garg, pharma analyst at broking firm Emkay Global Financial Services. Piramal and his daughter Nandini, 28, also did a few simple extrapolations of where theirdomestic business would be headed in the next three to five years. Nandini, an Oxford and Stanford business graduate, was inducted into Piramal Healthcare’s board as executive director in April 2009.
Piramal’s business was already growing at close to 25% in the past couple of years and it had steadily climbed to the No. 5 spot in the Indian market. Piramal erred on the side of caution and pegged the growth at 20%. But he factored in a substantial premium for the scale of thedomestic operations. “There are few businesses of our size available in the domestic market and that too organised in clear business division like MNCs,” says Piramal. So far, Cipla, Sun Pharmaceuticals and Zydus Cadila, who were in the same league as Piramal, had publicly declared that they weren’t interested in selling their business. “At least during my lifetime I won’t sell Cipla as I wouldn’t know how to use up all that money,” says Dr Y.K. Hamied, chairman and managing director of Cipla.
Piramal also knew that Abbott quickly needed a presence in India. Says analyst Nimish Mehta of Mehta Partners: “The trick was perhaps in choosing a buyer who was desperate to have a bigger say in thedomestic Indian market.” Way back in 2001, Abbott had built its strategy around established products. In 2007, it formed a new international unit to focus on the BRIC markets, where competitors like Pfizer and AstraZeneca were striking deals with local players.
Piramal hopes to use the money for three broad purposes. He will invest more money in his existing healthcare businesses as he feels that they have great potential for growth. He has also identified two new business areas, which he will announce in due course. He also plans to reward his shareholders with a special one-time dividend. “I have a few ideas for new business initiatives, but I don’t want to do any kite flying now,” says
The secret rendezvous was set at a hotel in Dubai early this year. Ajay Piramal, the chairman of Piramal Healthcare, India’s fifth largest pharmaceutical company, and his daughter Nandini had a two-hour meeting lined up at this carefully chosen neutral location. They met up with Miles White, chairman of USD 30 billion Abbott Laboratories, the world’s seventh largest drug maker. A couple of weeks later, the Piramals met another senior Abbott executive Olivier Bohuon, executive vice president pharmaceuticalbusiness for a couple of hours. During his meeting with White, Piramal handed over a succinct three page note detailing his basis for the valuation. White would have to revert within a week, if the deal was to be consummated. Eventually, White did get back, and offered nearly as much as Piramal had asked for.
Today, most pharma industry watchers would die to get hold of a copy of that note. After all, it formed the basis for the Rs 17,500 crore deal that Piramal clinched for abusiness that he had started 22 years ago with a capital of just Rs 16.5 crore. This isn’t quite the biggest deal in the Indian pharmaceutical industry. In 2008, Japanese firm Dai Ichi paid USD 4.6 billion for a 50% stake in Delhi-based Ranbaxy Laboratories, India’s largestpharmaceutical company . Yet the valuations would make it one of the most expensive, especially for a firm like Piramal which sells inexpensive, off patent drugs (also called generics). Abbott will eventually pay Piramal nine times the current sales, 60 % more than what the Delhi-based Singh brothers — Malvinder and Shivinder — got for selling their stake in Ranbaxy.
Piramal did not rely on any advisors or investment bankers. He says that he arrived at the deal valuation after a few discussions with his daughter Nandini, who is now an executive director in the company. “It took about four hours of my time to negotiate the deal,” says Piramal. Only two executives from Piramal’s side assisted Abbott’s team in conducting their due diligence over a couple of weeks.
Despite the huge premium it is paying, there are, of course, quite a few advantages for Abbott. It will get total control of Piramal’s domestic drug sales business, plus a factory in Baddi, Himachal Pradesh, that manufactures these products. Unlike Ranbaxy, Abbott won’t need to go through any stock market related regulatory issues since it is just buying a business division and not a listed company. And the icing on the cake: Abbott will become India’s No.1 domestic company beating rivals like GlaxoSmithkline and Cipla. There’s little doubt that the deal will now force global pharma companies like Sanofi-Aventis, Glaxosmithkline and Pfizer, who are looking to expand their Indian foot print, to pay a lot more for local assets.
Even a year ago, Piramal says he had no intention to sell off the business. Pressure from the multinationals was gradually mounting. He had met up CEOs of global drug majors, including Abbott’s White, who had shown interest in striking a deal with Piramal earlier too. It was only late last year that Piramal started having a second thoughts about running his domestic pharmaceutical business.
Last year was also when MNC pharma firms like Pfizer inked the most number of deals with Indian firms for partnerships in manufacturing and research. Says an executive who works closely with Piramal, who did not wish to be named: “Piramal felt that just like it made sound sense to get into the business when MNCs were winding down their presence in India in the 1980s, it will be a good idea to quit the business when they are coming back.”
To recap, when Piramal inherited the family textile business in the eighties, labour trouble and increasing costs had already scuppered any chances of growth. As Piramal searched for new business opportunities, he zeroed in on pharma, convinced that there would be a shortage in primary healthcare services in India. Incidentally, Piramal’s wife, Swati, is a medical practitioner who sits on the board of Piramal Healthcare.
Since there was no patent protection in India, which allowed local companies to copy and sell their drugs cheaply in the country, MNCs increasingly found the going tough. In the late 1980s, instead of creating a business from scratch, Piramal starting buying multinational companies that were exiting the country at that time. His peers didn’t see it quite the same way: They felt MNC talent was far too expensive. Piramal landed some plum deals, capitalising on the desperation of the MNCs to exit the country. In the initial deals, Piramal made sure that he kept his promise that he would retain the people he inherited through thhe acquisition. So as word got around, more MNCs decided to sell their businesses and brands to him.
Piramal also stayed away from copying and selling the drugs sold by multinationals. He also consciously kept away from selling generic drugs in regulated markets, as it meant litigating with MNCs against their patents. Says a former CEO of a Piramal group company: “Piramal always laid a great emphasis on amicability. He kept away from confrontations.”
This time around, when Abbott again proposed a deal, Piramal picked up the gauntlet. Says Piramal: “I thought I would see where the discussion led us to.” If things didn’t go to plan, he would merely pull out of the discussions.
From his vantage point observatory, Piramal could sense the growing buzz about emerging economies. Every major MNC was looking to increase their presence in these markets. Companies like AstraZeneca and Roche have been investing in China in the last five years but none of them had made big moves for India yet. There was a lot riding on the potential of emerging markets, perhaps with reason too. Drug demand was expected to rise on an average 15 percent a year in emerging markets through 2014
He had a clear logic in justifying a higher valuation than Ranbaxy. Says Piramal: “Since we had a pure domestic play on offer, we knew that our valuations should be substantially more than Ranbaxy.” This wasn’t entirely unfounded. The domestic branded generic business is by far the most profitable segment for Indian firms and it is natural that will command a higher valuation, says Manoj Garg, pharma analyst at broking firm Emkay Global Financial Services. Piramal and his daughter Nandini, 28, also did a few simple extrapolations of where theirdomestic business would be headed in the next three to five years. Nandini, an Oxford and Stanford business graduate, was inducted into Piramal Healthcare’s board as executive director in April 2009.
Piramal’s business was already growing at close to 25% in the past couple of years and it had steadily climbed to the No. 5 spot in the Indian market. Piramal erred on the side of caution and pegged the growth at 20%. But he factored in a substantial premium for the scale of thedomestic operations. “There are few businesses of our size available in the domestic market and that too organised in clear business division like MNCs,” says Piramal. So far, Cipla, Sun Pharmaceuticals and Zydus Cadila, who were in the same league as Piramal, had publicly declared that they weren’t interested in selling their business. “At least during my lifetime I won’t sell Cipla as I wouldn’t know how to use up all that money,” says Dr Y.K. Hamied, chairman and managing director of Cipla.
Piramal also knew that Abbott quickly needed a presence in India. Says analyst Nimish Mehta of Mehta Partners: “The trick was perhaps in choosing a buyer who was desperate to have a bigger say in thedomestic Indian market.” Way back in 2001, Abbott had built its strategy around established products. In 2007, it formed a new international unit to focus on the BRIC markets, where competitors like Pfizer and AstraZeneca were striking deals with local players.
Piramal hopes to use the money for three broad purposes. He will invest more money in his existing healthcare businesses as he feels that they have great potential for growth. He has also identified two new business areas, which he will announce in due course. He also plans to reward his shareholders with a special one-time dividend. “I have a few ideas for new business initiatives, but I don’t want to do any kite flying now,” says
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