VIEWS: 40 PAGES: 60 POSTED ON: 8/16/2011
For Pr ivate Circulation Volume 1 Issue 42 07th D ec ’10 A Prize Catch With the merger of ENAM’s boutique business, Axis now matches up to the might of its rivals in the security broking business and this will catapult the bank into the big league & Beyond Present LEARN THE ART OF COMMODITY INVESTING Nirmal Bang in association with Zee Business invites you to be a part of Beyond , the one-of-its-kind commodity camp, where market mavens like Anjani Sinha, MD & CEO, National Spot Exchange and Kunal Shah, Head – Commodity Research, Nirmal Bang Commodities Pvt Ltd will discuss the opportunities in the commodity markets with Amish Devgan, Commodity Editor and Anchor, Zee Business. Exchange Partner *Registration Compulsory To register, contact: Date: 18th December, 2010 AMIT BAKLIWAL: +91 80030 93723 Time: 6.30 pm MUKESH MOTWANI: +91 80030 93707 Venue: Pride Amber Villas Resort, Mail: email@example.com Tonk Road, Jaipur. SMS: ‘BANG COM’ to 54646 DB Corner – Page 5 A Pleasant Surprise A stronger-than-expected GDP growth number brings a positive breather – Page 6 A Double-edged Sword Experts are of the opinion that the second round of quantitative easing by the US could further weaken the dollar, increase inflation as well as oil and commodity prices in the emerging economies – Page 7 Everybody’s Invited Financial inclusion can integrate the unbanked portion of rural India into the mainstream economy to boost household incomes and have a multiplier effect on the demand of goods and services – Page 9 A Prize Catch With the merger of ENAM’s boutique business, Axis now matches up to the might of its rivals in the security broking business and this will catapult the bank into the big league – Page 12 IPO: Simple Yet Powerful Investing in IPOs is a suitable method for those investors who want to follow a simple strategy of ‘invest and exit’ on the listing date during a bull run on the bourses – Page 15 Cautious Optimism The banking sector always has its evens and odds, and like always, it does not seem to be at peace – Page 18 Health Is Wealth Private healthcare players have realized the tremendous potential this sector offers and are leaving no stone unturned to meet the growing needs of the people while earning profits – Page 20 Volume 1 Issue: 42, 07th Dec ’10 Watt Next… While India works towards generating enough electricity to meet its ever-growing needs, companies involved in the transmission and distribution of power, especially Power Grid, will play an even important role in the Editor-in-Chief & Publisher: Rakesh Bhandari coming years – Page 24 Editor: Tushita Nigam Senior Sub-Editor: Kiran V Uchil Specialty Chemicals: The Next Big Thing Certainty of potentially huge markets coupled with easy availability of skilled manpower, is expected to make India and China a name to reckon with in the specialty chemical industry – Page 27 Art Director: Sachin Kamble Junior Designer: Sagar Padwal Soul Searching In Seoul It was a moment of self introspection for the global leaders that are still coming to terms with the after-effects Marketing & Operations: of the financial meltdown. While they all agreed to iron out their differences, key issues, except few, still remain unanswered – Page 31 Dwiti Bhuta, Savio Pashana MIPs: Rising To The Occasion Research Team: Both conservative and aggressive investors can opt for MIPs if they are seeking stable and higher returns over Kunal Shah, Michael Pillai, other forms of investment – Page 33 Hussain Nagarwala, Vikash Bairoliya, Ashish Khetan Bharti Airtel: Sweet Sound Of Success Expansion of business plans, apart from the introduction of 3G services and number portability, is expected to HEAD OFFICE benefit Bharti Airtel in the coming months – Page 36 38-B/39, Khatau Bldg, 2nd Floor, Alkesh Dinesh Mody Marg, Fort, Mumbai - 400 001 Fortnightly Outlook For Commodities – Page 39 Tel: 022 - 22641234, 30272000 / 2222 CORPORATE OFFICE Fortnightly Outlook For Currencies – Page 40 B-2, 301/302, Marathon Innova, Off Ganpatrao Kadam Marg, Lower Parel (W), Mumbai - 400 013 Important Statistics For The Fortnight Gone By – Page 41 Tel: 022 - 30272300; Web: www.nirmalbang.com N Rangachary: A Man Of Principles We, at Beyond Market welcome your views, Seventy-two-year-old N Rangachary is a man of actions who lets his work speak for himself. And his appointments to various positions in public and private organizations bear testimony to his immense comments, inputs and feedback. contribution to the insurance and financial services sector – Page 50 Do help us to grow better as per your liking. This is our attempt to reach you better while crossing horizons... Knowing Is Half The Battle Won Half knowledge is always dangerous. More so, if you are in for the long run. Answers to the most frequently firstname.lastname@example.org occurring questions will surely help you understand the markets better and also help you play well on the Tel No: 022 - 30278232 bourses – Page 52 Beyond Market 07th Dec ’10 It’s simplified... 3 A ONE-STOP SHOP India’s fourth largest bank in terms of market capitalization acquired the investment banking and broking arms of ENAM Securities Pvt Ltd recently. With the acquisition of ENAM’s boutique business, Axis now matches up to the might of its rivals in the security broking business and this will catapult the bank into the big league. This merger will make the bank strong in corporate finance and invest- ment banking. The main objective behind the deal is to create a complete bouquet of financial products and services for corporate, institutional and individual clients of Axis Bank. Although the deal weighs heavily in favour of Axis Bank, it is not a raw deal for ENAM. Due to the competition among smaller players arising out of the entry of new players, it is getting tougher to survive in the industry. Experts believe that it is a win-win situation for both Axis Bank and ENAM. However, only time will tell how successful the deal has been and how it will impact the financial services sector. Due to the enormous importance of the Axis-ENAM deal, we have featured it as our cover story. Other important articles include the impact of quantitative easing by the US government, financial inclusion in India to take banking facilities to the large unbanked population of the country and the benefits of the better-than-expected GDP number. Sectorally speaking, there are articles on banking, private healthcare , power transmission and distribution and specialty chemical sectors in the country. Further, we have featured telecom major Bharti Airtel in our Beyond Analysis section as the company has a positive long-term outlook due to the wide range of services it offers and its strong customer base. The company also merits a mention because it is one of the few companies that are not involved in the 2G scam. And finally, the Beyond Learning section carries important facts in an interesting question and answer format that is aimed to inform and educate our readers while simplifying complex datA. Tushita Nigam Editor 4 Beyond Market 07th Dec ’10 It’s simplified... The markets look good above the 6,080 level. T he Indian stock markets have seen a bounce be looked at with trading and investment perspectives. back owing to the reduced intensity of global issues. The markets have moved up on the back Traders and investors can look at stocks like Tata Motors of strong economic data like a better-than-expected GDP Ltd (LTP: `1,323.10), Bharat Forge Ltd (LTP: `392.80), figure, credit growth at 23% and good results for the Whirlpool of India Ltd (LTP: `290) and Bilcare Ltd second quarter 2010-11. (LTP: `657) too for trading and investment purposes. Even Foreign Institutional Investors (FIIs) have helped In the coming fortnight, issues in China and Europe could maintain momentum in the markets. Though their partici- be a cause of volatility in the markets. The probable hike pation has been low world over, the FIIs were not major in interest rates by China to keep inflation under check sellers at the time of correction, in the Indian markets. and the sovereign debt crisis in the Euro region that comprises countries like Spain, Ireland, Italy and Greece, The Nifty has support at the 5,910 level. Traders and may force market participants to remain cautiouS. investors are advised to buy at declines at given support levels due to the expected volatility in the markets. Nifty has resistance at the 6,075 level. However, the markets look good above the level of 6,080. If the Nifty crosses this level, then the Nifty futures will have support at the 5,980 level, thereafter. Nifty: 6002.95 The software and pharma sectors look attractive. Among Sensex: 19,987.57 (As on 3rd Dec ’10) software stocks, Infosys Technologies Ltd (LTP: `3,120) Disclaimer and Tata Consultancy Services Ltd (LTP: `1,093.05) It is safe to assume that my clients and I may have an investment interest in look good, while Cipla Ltd (LTP: `370.15), Lupin Ltd the stocks/sectors discussed. Investors are required to take an independent decision before investing. Investment in equity is subject to market risk. Our (LTP: `497) Aurobindo Pharma Ltd (LTP: `1,291) and research should not be considered as an advertisement or advice, professional Orchid Chemical & Pharmaceuticals Ltd (LTP: `292) or otherwise. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and appear attractive in the pharma space. These stocks can the like and take professional advice before investing. Beyond Market 07th Dec ’10 It’s simplified... 5 consumption. This is particularly impressive in the wake of the 9% average monthly WPI inflation recorded during this period. Meanwhile, on a y-o-y basis, the government consump- tion expanded by a strong 9.19%. Most importantly, year-on-year investments increased by a sound 11.08% in the latest quarter. “Investment demand, on the other hand, enters a critical phase amidst renewed uncertainties in the global economy, a squeeze in liquidity in the domestic economy and a rising interest rate scenario,” the Barclays Capital report states. So how does this better-than-expected GDP number change the domestic macro picture of the economy? E ight point nine percent. That is indeed the latest Despite an average growth of 8.9% in the first half of the year-on-year (y-o-y) gross domestic product current fiscal, economists largely expect the GDP to (GDP) growth reported by the Central Statistical grow at about 8.5% for the full financial year ending Organization (CSO) for the quarter ended March ’11. The reason is that the favourable base will September ’10. fade in the coming quarters. But, the good news is that the economists are expecting the Reserve Bank of India The boom was in full swing and we saw the Sensex to maintain a pause on policy rate hikes as the manufac- breaching the 21,000-mark in early November. But then turing sector has shown moderation in growth. global uncertainties and concerns right from Europe to China resurfaced, resulting in the Sensex trading in the At 8.9%, in the quarter ended September ’10, the year- 19,300-19,500 zone. on-year industrial sector growth was marginally higher than the 8.4% growth in the corresponding quarter of the The surprise is a welcome one not just for inching closer previous year. But it was lower than the 11.3% year-on- to almost 9% growth in the second quarter of 2010-11, year growth in the previous quarter ended June ’10. The but because the revised GDP for FY09, after incorporat- uneven pattern of IIP numbers have depicted the sequen- ing changes in the Wholesale Price Index (WPI) and tial slowdown. Market observers partly attribute this to Index of Industrial Production (IIP), has seen a 10 basis the wearing off of the low base of the previous year. point (hundred basis points make a percent) increase in Going ahead, industry growth is likely to slow down the GDP from 8.8% to 8.9% for quarter ended June ’10. further on the back of a higher base, says an economist. In the latest quarter, while the market estimated the GDP The Reserve Bank of India (RBI), which raised both the to be around 8.2%, the services sector largely stayed repo and reverse repo rates by 25 basis points in its strong, while agriculture recorded a turnaround as mid-term policy review earlier this month, taking the expected. Manufacturing on the other hand shed a large repo and reverse repo rates to 6.25% and 5.25%, respec- cyclical uptick and started settling towards a more tively, made it fairly clear that it would prefer to keep sustainable level, points out a Barclays Capital report. rates on hold at least for the next three months. Siddhartha Sanyal and Rahul Bajoria, economists with “We also expect the central bank to stay on hold for the Barclays Capital, in a report say that while the GDP remaining months of the fiscal year,” states the Barclays figure can soften to some extent in the next couple of Capital report. The September IIP number of 4.4% quarters on lower IIP numbers and subdued export (year-on-year) was a significant downside surprise. demand, they believe FY11 GDP growth is set to cross “While the current GDP print had been a surprisingly the 8.5% mark, surpassing the forecasts of the govern- strong one, we do not expect that to meaningfully alter ment and the RBI. the stance of the central bank,” the report adds. Rising income (including rural income) and steady For the markets, global macroeconomic weaknesses and consumer confidence that consumption will continue to their contagion effects and impact on risk appetite will stay strong are likely to remain the primary source of prove to be the main headwind. “Barring inflation growth. The numbers push themselves to make one situation, the Indian economy is good to go,” says Sunan- believe that consumption grew by a strong 9.27% on an dan Chaudhuri, Economist at global investment bank annual basis, led by a 9.28% annual growth in private Execution Noble. Of course, things look good for noW. 6 Beyond Market 07th Dec ’10 It’s simplified... E arly in November, the United States Federal Reserve (Fed) announced its much awaited second round of quantitative easing (QE2) of $600 billion to stimulate the economy and cut its high unemployment rate. The Fed has said that it will buy long-term treasury bonds until the end of June ’11 to increase money supply in the system. This increase in money supply is expected to keep interest rates low and stimulate borrowing and spending activities in the US economy. Quantitative easing is an extreme type of monetary policy used to stimulate an economy when normal methods to control money supply have failed. The US economy has come out of the 2008-09 recession but problems like slow growth, high unemployment and disinflation persist. Economists feel that if this situation continues, it might lead to another recession, which could be longer than the recent one. This explains the Fed’s efforts to stimulate growth by infusing liquidity. The problem is that quantitative easing has not delivered the desired results. Instead of improving the US A Double-Edged Sword Experts are of the opinion economy, the excess liquidity has found its way into that the second round of emerging economies, which have higher interest rates quantitative easing by the that give higher returns. US could further weaken Net private capital flows to emerging Asian economies are expected to reach more than $270 billion in 2010 and the dollar, increase the same in 2011, according to the Institute of Interna- in ation as well as oil and tional Finance. The huge inflows have driven up inflation, oil and commodity prices. International commodity prices in the agencies such as the World Bank and the International emerging economies Monetary Fund (IMF) are worried. In April this year, the IMF warned that Asia is attracting capital inflows that may cause the region to overheat and lead to the forma- tion of asset bubbles. India, like many other emerging economies, is trying to cope with huge capital inflows that it is attracting from the US. Foreign institutional investors have put in over `1 trillion in Indian stock markets in the current year. The hot money has inflated the markets to all-time highs. In the last one year, since March ’09, when the US first injected $1 trillion into its economy through quantitative easing, the Indian benchmark index, the Sensex has risen Beyond Market 07th Dec ’10 It’s simplified... 7 by 104.61% from 9,708.50 points in March ’09 to 19,930 situation. Liquidity left unsterilized will fuel inflation in November this year. and if sterilized, it will put upward pressure on interest rates which will hurt the export sector and encourage In September, after a gap of two years, the Sensex more inflows, Subbarao said. touched the 20,000 mark. The last time the index had reached this level was in December ’07, before the Experts say that the second round of quantitative easing markets crashed in October ’08. The markets have again could further weaken the dollar, increase inflation and oil picked up steam since March ’09, after the Fed and commodity prices. Inflation rates are still high in announced its first round of quantitative easing. emerging economies like India at 12% and 7% in Brazil. The doubling of the Sensex has raised concerns about a A continued low interest regime in the US means that possible capital market bubble that could burst when there is too much money chasing commodities, which is foreign institutional investors pull out of their invest- pushing up commodity prices. India imports many ments. This could happen if investors get concerned over commodities, which means that a further rise in India’s widening current and fiscal account deficit. commodity prices will increase India’s import bill, which will, in turn, widen the current account deficit. The current account deficit widened to 2.9% in 2009-10 from 2.4% of gross domestic product (GDP) in 2008-09. In the recent G20 summit held in Seoul, emerging econo- In the June quarter, the current account deficit widened to mies raised concerns over the spill-over effects of quanti- $13.7 billion, which was around 3.7% of India’s GDP. tative easing. In fact, emerging economies have started using capital control as a tool to restrict the inflow of hot The problem is that India is using capital inflows rather money. Capital control is the use of transaction tax or than Foreign Direct Investments (FDIs) to finance the other limitations to regulate the flows into and out of the current account deficit. “Capital flows are largely financ- nation’s capital account. ing the current account deficit,” the Minister of State for Finance, Namo Narain Meena, told Rajya Sabha in a Countries like Brazil, China, Taiwan, Thailand, South written reply on 16th November this year. Korea and Indonesia are using capital controls to limit inflows. Thailand, for instance, introduced a tax on Goldman Sachs estimates the current account deficit will foreign holdings of government bonds to restrict inflows. widen to 4% of GDP in the current fiscal year, from 2.9% The problem with such controls is that investors often in the previous year and to 4.3% in 2011-12, its highest find ways to evade them and the excess liquidity could level ever. “While we remain constructive on India’s then find its way into other financial instruments. medium-term growth outlook, the deterioration in external balances represents the biggest risk, in our view, The other solution could come from the US itself if it to the Indian growth story and one that investors should starts regulating the outflow of capital. This is in fact a follow closely,” Goldman Sachs said in a note recently. much preferred alternative because this would keep excess liquidity within the US, which could then be used The figure put out by Goldman Sachs is slightly more for investment in the domestic economy. than government estimates. In October, India’s Planning Commission Deputy Chairman Montek Singh Ahluwalia India has so far not considered capital control as an had said that the government expects the current account option to regulate inflows. Recently, the Prime deficit for 2010-11 to be above 3% and that the economy Minister’s Economic Advisory Council Chairman C can manage a deficit of 3-3.5% of GDP. Rangarajan had said the time for curbing capital inflows has not yet come since India has the capacity to absorb According to Goldman Sachs, a reversal of capital $70 billion during the year. inflows, because of risk aversion by investors could lead to “a sharp sell-off in currency, bonds, equities and cause The RBI has said it may intervene in the Forex market if a liquidity crunch resulting in a sharp decline in output.” inflows become volatile. India is worried that capital controls could result in a flight of capital, which is why The other problem caused by capital inflows is rupee the government is in a wait and watch mode. appreciation, which hurts the competitiveness of the export sector. The Indian rupee has appreciated by Will India eventually resort to capital controls? The around 5% this year against the US dollar. In a recent move, if it happens, is likely to have a big bearing on the speech, Reserve Bank of India Governor D Subbarao had markets because if capital control is exercised, the said that intervention in the forex market, to prevent current bull run led by foreign money could come to an currency appreciation, involves costs. It is a Catch-22 end. The investors should, therefore, tread cautiouslY. 8 Beyond Market 07th Dec ’10 It’s simplified... Everybody’s Invited Financial inclusion can integrate the unbanked portion of rural India into the mainstream economy to boost household incomes and have a multiplier effect on the demand of goods and services F inancial inclusion is the availability of banking, A large part of the financially under-served segment credit facilities and a whole gamut of financial resides in rural India, which encompasses almost six lakh services at an affordable cost to people from villages across the country. The integration of rural India low income groups and other vulnerable strata into the economic mainstream will not only boost the of the society in an equitable manner. income of rural households but also have a multiplier effect on the demand for goods and services, while Extending credit and banking services to the previously promoting financial inclusion. unbanked population can improve productivity and self-sufficiency among people. Financial inclusion Financial Inclusion – An Integral Part Of Banking encompasses the ability to reach out to remote areas where traditional banking networks are absent and The broader process of achieving inclusive growth serves deliver the required products and services. the purpose of focusing on the poor and disadvantaged Beyond Market 07th Dec ’10 It’s simplified... 9 population from priority sectors such as the small and on the correspondents’ recommendations. medium enterprises and the farm sector that do not have formal financial institutional support in remote villages Furthermore, the banks may also engage individuals like and towns. Hence, getting them out of the clutches of retired bank and government employees, individual local moneylenders and other informal mediums of Public Call Office (PCO) operators, agents of Small finances is important. Savings Schemes of the government of India/insurance companies and authorized functionaries of well-run Self The exposure of the underprivileged section to high Help Groups, which are linked to banks, among others. interest levying by informal credit sources does not leave As many as 130 such correspondents that were appointed them with any scope for savings. Whatever little surplus till last year opened 90 lakh accounts, according to the they generate cannot be put to secure savings and make available data. their investments productive. However, through financial inclusion, the banks can provide customized credit Recently, the RBI also allowed for-profit companies with products at affordable costs in a banking environment large and widespread retail outlets to act as BCs to that will be suitable to them. deepen and broaden the financial inclusion mandate. A corporate is likely to continue as a BC for a longer period Apart from meeting the social objective, financial than individuals, thus ensuring continuity of services. inclusion also provides a business opportunity to finan- cial institutions to expand business volumes and tap The government is also seeking a larger role for newer avenues, at the bottom of the pyramid that needs to non-banking financial companies (NBFCs). It wants be sustainable. NBFCs to be allowed to function as Business Corespon- dents in urban areas to provide financial services to the Through Geographic Spread urban poor. In its guidelines, issued in September, the central bank had barred banks from appointing NBFCs as The nationalization of major commercial banks in 1969 BCs, citing a possible conflict of interest with deposit- was an important landmark in the history of financial taking entities. inclusion, which led to a significant expansion of bank branches to the under-banked areas. However, despite Through ‘No-frill Accounts’ focused expansion of branches in the rural and semi- urban areas, India has not been able to reach out to poor To achieve the goal of financial inclusion, the govern- farm households to the desired extent. ment should work towards providing an environment where banks are free to undertake necessary innovations Considering the sheer size of the population and the to reach low-income consumers and yet make profits. At geographic spread, neither the existing branch-based the same time, new entrants in the banking sector should infrastructure nor the standard financial products are be strong, well-capitalized to promote a cost-effective optimal to meet the financial needs of the rural populace medium to drive sustainable economic growth. because of limited reach, inadequate technology and higher intermediation costs. It is crucial to ideate schemes that incorporate the excluded weaker sections of the society for further The government aims to increase access to banking accentuating the process of their access to financial services across geographies through information and services that will ensure a better standard of living and a communication-based models and by adding new regular income. players. The government’s stated intention is to ensure that every village with a population of more than 2,000 The drive for financial access received a boost in 2005- individuals, as per 2001 consensus, be brought under the 06 when the RBI called upon Indian banks to design a banking fold by March ’12. ‘no-frills account’ – a no precondition, low ‘minimum balance maintenance’ account with simplified KYC Through Business Correspondents (Know Your Customer) norms - to bring a large section of underprivileged people into the banking net. To further the reach of the banking community innova- tively, banks can also forge alliances and synergies with Thus, a daily wage earner owning a deposit account in a specific microfinance institutions (MFIs) and organiza- bank, who until now had no access to formal banking tions of Self Help Groups (SHGs) among other eligible systems, can well be brought under the umbrella of credit intermediaries as Business Correspondents (BCs) where and savings. While no-frill accounts have grown they undertake the promotional role of identifying the phenomenally, the main issue before banks is to keep client base and then the bank finances the clients directly these accounts operational. 10 Beyond Market 07th Dec ’10 It’s simplified... Through Core Banking Solutions must also include a plethora of banking services such as loans and insurance services, pension, payment and The use of technology in expanding the banking outreach remittance facilities, besides normal banking services. has been an area of focus for the Reserve Bank of India. Banks and financial institutions rely on gathering, Through Mobile Banking processing and analyzing information in order to improve their service and meet customer expectations. The number of telecom subscribers in India stands at a Banks have been quick in realizing this and adopting mind-boggling 650 million individuals. And mobile technology in a big way. seems to have broken the social barrier in terms of outreach. It could thus prove to be an extremely effective A good portion of the banking system is now under the alternative channel through which banking services can Core Banking Solution (CBS). Further, as per an RBI be delivered to those who would otherwise have directive, all Regional Rural Banks (RRBs) have to remained outside the purview of the financial system. migrate to CBS by September ’11. From software technology and delivery point of view, a hosted or According to a McKinsey report of March ’10, in a software-as-a-service model keeps IT operations lean. country where more than 65% of the population has Also, operational and capital expenditure required to set limited or no access to a bank, one out of every two up its own infrastructure stays low. persons own a mobile phone or a TV. A secured mobile banking technology will provide flexibility to the bank’s The visible benefits of IT in day-to-day banking in the agents in terms of mobility and assurance to the bank that country are quite well known. The ‘Anywhere Banking’ online transactions will get. through Core Banking Systems, ‘Anytime Banking’ through ATMs and Net Banking are increasingly becom- This coincides with the growing realization, globally, of ing an integral part of the services that are provided by the need for developing countries to put mobile technol- the banking community. ogy to optimum use to serve the underprivileged and unlock their savings and investment potentials. From the The use of IT reduces the cost of financial transactions, bank’s perspective, a business opportunity worth $8 improves allocation of financial resources and increases billion on an annual basis in the form of direct and competitiveness and efficiency of financial institutions. indirect revenues for financial services rendered when- Centralized technology applications will enable transac- ever someone uses the mobile phone to make a purchase tions through hand-held front-end devices by seamlessly or P2P payment, needs to be tapped. integrating it with the main server of the concerned bank. In a nutshell, inclusive financial sector development will Through Different Channels Of Savings alleviate poverty, provide affordable services and foster economic growth. Moreover, it will inculcate the habit of The RBI soon realized that having a savings account to mobilizing savings and lead to the growth of productive not enough to achieve the primary objective. It, therefore, sectors in the country. broadened its scope of financial inclusion by shifting its focus beyond extending institutional credit. Co-operatives and RRBs need to actively participate as local level institutions through which financial inclusion The under-served must also have access to products that of the masses can be achieved. Financial inclusion can channelize their savings into growth-oriented schemes. address concerns of growth with equity and also ensure Thus, the portfolio of the product offerings by banks the growth of the pooR. an apple a day keeps the doctor away regular investments keep worries away Your financial health is our concern. EQUITIES | DERIVATIVES | COMMODITIES | CURRENCY | MUTUAL FUNDS | IPOs | INSURANCE | PMS | DP At Nirmal Bang, it’s a relationship beyond broking... S M S ‘BANG’ to 5 4 6 4 6 | e - m a i l : f re e @ n i r m a l b a n g.co m | w w w.n i r m a lb a ng. co m Beyond Market 07th Dec ’10 It’s simplified... 11 A Prize Catch With the merger of ENAM’s boutique business, Axis now matches up to the might of its rivals in the security broking business and this will catapult the bank into the big league O n 17th November this year, Axis Bank announced the merger of the investment banking and equities business of domestic financial major ENAM Securities with itself, in an all-stock share-swap deal. Axis Bank will issue 13,782,600 shares (3.3% of enlarged share capital of Axis Bank) in exchange for ENAM’s 2,418,000 shares, resulting in a share ratio of 5.7 shares of Axis Bank for every one share of ENAM. The stipulated ratio values ENAM at `8,379 per share, valuing the total deal at approximately `2,027 crore, at Axis Bank’s current market price of `1,469 per share. 12 Beyond Market 07th Dec ’10 It’s simplified... With this deal, Vallabh Bhansali co-founder and transaction worth as much as `2,300 crore. chairman, ENAM Group and Shikha Sharma, chief executive and managing director of Axis Bank, the third HDFC Bank bought regional lender Centurion Bank of largest private sector bank in the country, created a flutter Punjab in July ’08 for `7,120 crore in India’s biggest in the financial world. banking acquisition. With this acquisition of ENAM’s boutique business Axis now matches up to the might of After having built a formidable domestic investment its rivals in the security broking business and will bank over the past two decades and recently lead catapult the bank into the big league. managed the successful `15,000-crore Coal India IPO, Bhansali chose to hang up his boots in the investment ENAM ranks third among equity-underwriters in India in banking business. mergers and acquisitions. It is ranked ninth among advis- ers, while Axis isn’t in the top 20. ENAM, on the other Shikha Sharma, whose appointment for the top job at hand, gets access to the bank’s large franchise. Axis Bank was looked down upon by her predecessor barely a couple of years ago, silenced her critics and took With minimum overlapping of business, the synergies competition by surprise. will be accretive in the long run. Analysts point out that with ENAM Securities coming under the fold of Axis After having used her time at the bank to strengthen the Bank, it will now give the much needed shot in the arm to balance sheet and raise capital, she spearheaded a strate- the fee-based income of the bank. gic move by lapping up the boutique business of ENAM. ENAM which means prize in some Indian languages, PREMIUM JUSTIFIED occupies a sizeable share in the equity capital market business, a space in which Axis hasn’t been able to make The low component of the fee-based income of the bank much of a dent. has been the reason why Axis Bank has been trading in the 2.8-2.9 times price to book value (P/B )as compared WINNING SYNERGIES to even smaller private banks like Kotak Mahindra Bank that is trading at 4 times P/B. The proposed merger means that ENAM’s broking, investment banking, financial products distribution and With the distribution reach of ENAM and its expertise in advisory business will now be a part of Axis Bank’s the securities broking business, the fee income pie of wholly-owned subsidiary, Axis Securities and Sales Ltd. Axis Bank is expected to increase and see the gap in P/B As many as 400 employees of ENAM will also move on with peers narrowing down. At first glance, the deal to this entity as part of this deal. appears to be expensive. The bank on its part will demerge its I-banking unit and On an annualized basis, the profits work out to a big sum, merge it with this wholly-owned subsidiary. The merged implying that the valuations are a little lower over 20x entity will be headed by Manish Chokhani, the erstwhile FY11E earnings. director of ENAM, while two other founder members, Vallabh Bhansali and Jagdish Master will join the Axis This is at a 25% premium to comparables like other listed Bank board as independent directors. brokerages such as Motilal Oswal. However, analysts point out that this should be seen in the context that such The two entities have also entered into a non-compete deals are usually executed at a large premium (of at least agreement for the sell side business for a period of five 10-20%) on account of the synergies involved. years. Besides, the senior executives of ENAM have a binding to stay on with Axis Bank for at least the next Also, the acquisition size is just 3.3% of the market two years to develop the investment banking business. capitalization of Axis Bank and is unlikely to materially impact the bank valuations either way. Besides, it needs However, the buy side business of ENAM that includes to be kept in mind that since the deal is a share-swap deal asset management and portfolio management services where no cash changes hands and the promoters of remains separate and does not form a part of this deal. ENAM have a restriction of holding on to the stocks of Axis Bank for at least a year. With this deal, Axis comes at par with its other private sector peers such as ICICI Bank and HDFC Bank. Axis’s While analysts seem to be giving a thumbs up to the deal rivals have made acquisitions in recent years to add as of now, there are a few risk factors, as well. Firstly, the clients and outlets. ICICI Bank bought smaller rival success of the deal is contingent upon the retention of the Bank of Rajasthan, in August through a share-swap in a key personnel of ENAM’s sell side team. Beyond Market 07th Dec ’10 It’s simplified... 13 While the senior management of ENAM has agreed to conservative company, primarily a profit and loss stay on for at least two years, any loss of talent will result account company.” in lower-than-anticipated performance. A lot will depend on the Axis Bank business and HR policies that ought to THE INDUSTRY IMPACT ensure that the integration goes on smoothly. The Axis Bank-ENAM deal has also fuelled murmurs of The other and more palpable worry is in the wake of possible consolidation in the industry. The industry declining margins in the broking business. It will be positioning of both banks and brokerages is such that difficult to sustain the robust historical performance of more marriages between them would be essential if they ENAM’s broking and I-Banking business. need to grow at a speed their shareholders would be happy with. I-Banking business is facing severe competition with commission and fees dipping to miniscule levels as was The ENAM deal could lead to a second round of transfor- evident during the recent PSU disinvestment programme mation in the financial services industry in about two and FPOs. However, given Axis Bank’s strong expertise decades. In the first round, Kothari set the trend by in corporate banking, the merger with ENAM will enable selling a partial stake to Merrill Lynch. Uday Kotak the bank to offer a complete bouquet of financial partnered with Goldman Sachs, Nimesh Kampani of JM products and services. Financial with Morgan Stanley and Murarka of Batlivala & Karani with HSBC. SBI Capital Markers flirted with Calling the deal a “fantastic strategic fit”, Sharma Lehman Brothers and later CLSA. explained that after project finance, infrastructure and debt capital markets, which the bank is sure footed in, None of the marriages survived. Successful brokerages ENAM gives the bank the much needed share of equities. may be seen as candidates ripe for takeover by banks as these would have better reach when backed by funds that Gaurav Gupta, managing director and head Macquarie are plenty with banks. Capital Advisors, India, the investment bank which advised Axis Bank in clinching the deal said, “As Indian Currently, while the number of pan-India brokerages banking moves towards the universal banking model, (medium to large players) is over 25, there are many ENAM fills the gap in Axis Bank’s portfolio and offers standalone players. There are quite a few triggers that significant synergies.” could lead to consolidation (mergers and acquisitions) in the industry. Bhansali, on his part, is clear that he is not “cashing out”. Rather he considers Axis Bank a “fabulous investment” Among key reasons is the intensifying competition and and is looking forward to creating greater synergies. A rising costs, which are putting pressure on the margins. fellow investment banker who has been in the business Despite fairly healthy revenue growth, profitability of for more than three decades and has had the chance to see brokerages has been under stress for several quarters. Bhansali up close, points out that unlike the famed ego of Margins have contracted on a quarter-on-quarter (q-o-q) bankers, Bhansali has always been known for his and year-on-year (y-o-y) basis. pragmatic approach. Industry experts feel consolidation is surely on the cards “It was not like he had to swallow his pride to sell off and expect the standalone players to have a tough time what he had built over the years. He has done what was surviving in this low profitability business amidst best to take things forward for both his customers and his intensifying competition as the bigger players aggres- employees,” points out a senior banker who did not wish sively want to expand their reach. to be identified. According to experts, the next deal in this space could ENAM had almost everything needed to transform itself possibly be some foreign player buying out an Indian into a top-rung investment bank. It had an army of brokerage for its distribution skills. Overall, it is being experienced, loyal bankers, a decent client list and had estimated that in the next 5 to 10 years, the industry will just raised `2.7 trillion in six days as part of the shrink to around 10 large players and some region- government’s asset sale programme. specific small brokers. “We had two options - either get a banking licence or be While the consolidation would pan out over the medium a part of the bank,” says Bhansali. The lack of a balance to long-term, the near-term prospects of brokerage firms sheet was what persuaded him. “I look at what regulators are not very bright, suggesting that their stocks would, at say (rather) than my rivals,” says Bhansali. “We are a best, move in line with the broader marketS. 14 Beyond Market 07th Dec ’10 It’s simplified... IPO: SIMPLE YET POWERFUL Investing in IPOs is a suitable method for those investors who want to follow a simple strategy of ‘invest and exit’ on the listing date during a bull run on the bourses T he Indian equity markets witnessed a strong deposits are also attractive. growth momentum up till the past few weeks, in the last one year. While some sectors outper- The rising interest rate environment has provided oppor- formed the benchmark indices, others under- tunities to investors with products like SBI bonds, L&T performed at the same time. The performance varied infrastructure bonds offering attractive yields. And by depending on the size of the companies – large, mid or any measure, these are relatively safer investments. small-cap stocks. Hence, if investors expect to earn superior returns from the equity markets, they need to follow a suitable Although many investors are believed to have made a strategy, which is best suited in a bull market, depending killing during the rally, there may be others whose on their risk appetite. portfolio may not have moved anywhere. Out of the several options available, IPOs (initial public For instance, telecom stocks have largely underper- offerings), including FPOs (follow-on public offerings), formed the market in the last one year. What this means are an option that investors can consider. is that by simply remaining invested in the equity markets may not ensure good returns even during a bull An analysis of all the IPOs (which also include FPOs) run. It becomes more important at a time when the that have come to the market during this year reveals that returns from alternative instruments like bonds and fixed investors had the chance to double their money by churn Beyond Market 07th Dec ’10 It’s simplified... 15 ing money continuously in all the IPOs. Not to forget, Return Distribu on Of IPOs this return could have been far superior by taking some 25 additional amount of risk. Such returns could have 20 outperformed many leading benchmark indices and this No Of Issues 15 is a superior return by any measure. 10 5 For instance, if a person had mimicked the portfolio 0 Less then 0% 0% to 5% 5% to 10% More than 10% exactly as any benchmark index like Nifty50 or Sensex, Lis ng Premium then the return would not have been more than 20%. And Source: NSE as far as diversification is considered, both strategies provide almost a similar level of diversification. Simply put, an investor with a starting amount of `50,000 in the beginning of the year would have ended However, what makes the IPO strategy more attractive is with close to `1.1 lakh, almost double his money. While that it is simple yet very powerful. The retail investors making this calculation, it was considered that investors with very little knowledge about companies’ business would take roughly 20-30 days time period to realize performance, or little time to track markets regularly and their money. are not quite conversant with financial gimmicks, can follow this simple rule and can make decent amount of It means that on an average, there will be a 20-30 days money. Just like any other investment in the equity gap between the issue closing date and the listing date. markets, this strategy does not guarantee similar kind of And there were roughly 4-5 issues in a month. The inves- returns all the time. tor could have divided his initial investment amount of `50,000 in five compartments, each containing `10,000. For instance, if the equity markets start moving down- The first `10,000 could have been invested in the first wards in the coming months, then the returns would also issue, the second `10,000 in the second issue and so on. be lower. However, in such a scenario, investors would also benefit little by investing in equity markets. It means It was also assumed that the allocation for each issue is in those investors who are keen to put their money in the the ratio of 1:2 only. In this way, one can churn the equity markets, may find this strategy more useful. money and invest in almost all the IPOs. One should also remember that this is for illustration purpose only and As many as 53 issues have been analyzed here. Out of exact factors may vary from what is assumed above. these 53 issues, only 8 have given negative returns on listing. This means that there is an 85% chance that an If investors want to maximize their returns further from investor would earn a positive return in a bull market by the IPO strategy, then there is a way out too. But to investing in an IPO. The amount of return, however, can execute this strategy, investors have to track the stock vary by a great deal. price closely and exit at a suitable point of time. A little more than one-third of the total issue has given a Let’s look at what could happen if investors do not exit return of 0 to 5%, whereas another one-third gave more immediately after listing and rather wait for some more than a 10% return on the listing date. time, anticipating stock prices to move up further. Though these numbers in themselves look small, a return In this sample analysis, it was found that barring four of 5-10% every month means a compounded return of issues, in all the other cases, the stock price reached a more than 200% per year, which is way above the level which was higher than the listing price. It means average expected return of 20-25% in the emerging that if investors had waited for some more time, there equity markets. was more than 90% probability that they would have made more money than listing premium. In addition, investors may come across issues where the listing gain could be close to around 40-50% or in some In more than one-third cases, the investors could have cases, even in triple digits. Though the number of such made more than 50% returns. And in almost half the issues may be less, they give a significant push to the cases, the returns could have been more than 20%. overall return. For instance, stocks like Bedmutha Industries, BS Trans- For instance, issues like NMDC (National Mineral comm, Microsec Financial Services, Prakash Steelage, Development Corporation), ARSS Infrastructure Aster Silicates, Mandhana Industries, Talwalkars Better Projects and Career Point Info Systems offered returns of Value Fitness, United Bank of India and NMDC either roughly 45% on listing date. doubled or tripled within days of listing. Since the down 16 Beyond Market 07th Dec ’10 It’s simplified... side in a bull market is limited, the returns could have exponential. Almost half the stocks nosedived by more grown exponentially by exiting at these prices. than 20%. This means that investors need to be careful and patient if they are planning to hold stocks beyond the Maximum Possible Gain listing date. 18 16 Worst Case Scenario 14 12 16 No Of Issues 10 14 8 12 No Of Issues 6 10 4 8 2 6 0 4 0% to 10% 10% to 20% 20% to 30% 50% to 100% More than 100% 2 Maximum Gain 0 More than 0% 0% to -10% -10% to -20% -20% to -50% Less than -50% Source: NSE Maximum Loss While the upside potential looks very lucrative, one also Source: NSE needs to check the downside risk while timing the Investors should note that this analysis is to demonstrate market. The prices of many of these stocks slipped down how IPOs can be a suitable method for those investors and reached the red territory. Nearly 29 out of 53 stocks who want to follow a very simple strategy of ‘invest and gave negative returns at their lowest price level after the exit’ on listing date. In a bull market, this could generate listing date. decent returns. But there are also opportunities where investors can earn higher profits but they need to take Like the positive returns, the negative returns were also additional risk since it entails higher risK. SMS ‘BANG’ to 54646 Contact at: 022-30272323, E-mail: email@example.com BSE SEBI REGN No. INB011072759, INF011072759 & INE011072759, NSE SEBI REGN No. INB230939139, INF230939139 & INE230939139 DP SEBI REGN. No NSDL: IN-DP-NSDL-136-2000, CDS(I)l: IN-DP-CDSL-37-99, AMFI REGN. No. arn-49454 NCDEX REGN. NO. 00362, FMC Code-0075, MCX REGN. No. 16590, FMC Code-MCX/TCM/CORP/0490, MCX SX-INE260939139, PMS-INP000002981 EQUITIES | DERIVATIVES | COMMODITIES* | CURRENCY | MUTUAL FUNDS # | IPOs # | INSURANCE # | PMS | DP Disclaimer: Insurance is a subject matter of solicitation. Mutual Fund investments are subject to market risk. Please read the scheme related document carefully before investing. Please read the Do’s and Don’ts prescribed by Commodity Exchange before trading. The PMS Service is not o ering for commodity segment. *Through Nirmal Bang Commodities Pvt. Ltd. #Distributors Beyond Market 07th Dec ’10 It’s simplified... 17 The banking sector always has its evens and odds, and like always, it does not seem to be at peace W hen interest cycles turn, a banker is happy As for the sectoral deployment of gross bank credit, there and sad, both. A borrower, on the other has been a significant improvement in credit flow to hand, wishes that the rate remains low so industry, services and personal loans during the current that he will have to shell out less for more. financial year, while credit to the agricultural sector has seen a decline. Similarly, a depositor wishes that the rate remains high so that he will get more for less. Thus, life for a banker, According to the Reserve Bank of India (RBI), a look at who is in the business of taking money from one and the disaggregated data, however, suggests that the credit giving to another, with an eye on profit, is not easy. flow to the industry is not yet broad-based as the growth is mainly driven by flow of credit to the infrastructure For the banking sector and the investors therein, there sub-sector, iron and steel, chemicals and chemical have been reasons to cheer and be cautious about. The products, other metal and metal products as well as improving macro economic sentiments reflected in the engineering industries. momentum of credit growth across all bank groups, with private banks showing the highest growth rate at the On the lending side, the aggregate y-y-o bank credit beginning of the third quarter of 2010-11. On the other growth of 21.6% as of 2nd Jul ’10 was mainly on account hand, public sector banks accounted for 74% of of large borrowings for 3G spectrum and broadband incremental credit offtake on a year-on-year (y-o-y) basis wireless access auctions. at the beginning of October ’10. “Credit growth is expected to be about 20% for 2010-11 For the six months ended September ’10, the banking as high capacity utilisation levels will require capital sector recorded robust growth in core income led by an investments and increase in infrastructure credit increase in margins. But despite a sharp increase in the disbursements for projects where sanctions have been net interest income, or NII as it is better called, the profit received,” says a Crisil research report. growth was slightly subdued due to an increase in non performing assets (NPA) provisions and a decline in “Also, given the festive and agricultural harvest seasons treasury income. in the second half of the year, credit growth is expected to remain stable,” the report adds. As per latest data While provisioning has shot up due to concerns of released by the RBI, the aggregate bank credit grew by delinquencies and also because of no further extension of 22%, y-o-y, up to 5th Nov ’10. loan restructuring that was introduced in the aftermath of the global financial crisis, higher interest rates are the On the deposit side, despite an average hike in deposit reason for treasury income showing an across-the-board rates by 50 basis points (hundred basis points make a decline in the banking sector. percent) in the first half of the current fiscal year, the 18 Beyond Market 07th Dec ’10 It’s simplified... deposit growth rate has been around 14-15% till October loans, the central bank has proposed an increase in the this year. standard asset provisioning by commercial banks for all such loans to 2%, which was just 0.4% earlier. The annual deposit growth that stood at 15.3% as on 5th Nov ’10 is much lower than 18.7% growth clocked a year While asset quality has been under pressure for some ago. “This is primarily because investors are preferring to time, which has led to higher provisioning, the newer channelize their savings to other avenues on account of provisioning requirements would just add to the burden negative real interest rates on bank deposits,” says the on the banks’ net interest margin (NIM). Crisil research report. So far, the hikes in lending rates and implementation of Given higher inflation and, hence, negative real interest base rates have cemented the increasing trend in net rates on deposits, depositors have been induced to both, interest margins on the lending side. hold currency and invest in non-financial assets, includ- ing gold and real estate, whose prices have shown signifi- And on the deposit front, the near-stable current account cant increases over the course of the current year. - savings account (CASA) ratios coupled with re-pricing of deposits aided the margin growth of banks. However, As part of its prudential measures, in the latest policy tight liquidity conditions in the current quarter and a review, the Reserve Bank of India tweaked a few norms possible increase in the deposit rates, the banks’ margins pertaining to housing loans, which will make the could shrink by about 15-20 basis points over the next environment more challenging for the sector. So far, two quarters. there were no regulatory ceilings on the loan to value (LTV) ratio in respect of banks’ housing loan exposures. Outside these challenges, add the negative news about the microfinance sector, which has a lot of banks’ In order to prevent excessive leveraging, the RBI has exposure lined up to it. And the recent newsbreak of the decided that the LTV ratio in respect to housing loans Central Bureau of Investigation’s announcement of the should not exceed 80%. The banks, as part of prudential arrest of eight individuals, including executive officials norms, are required to make proactive provisioning for at Bank of India (General Manager) and Punjab National the loans extended by them. Bank (Deputy General Manager) apart from a non-executive, independent director at Central Bank of So far, the risk weight for provisioning on residential India, in a bribery scam. housing loans up to `30 lakh with LTV ratio up to 75% was 50% and 75% for loans above `30 lakh. While not many expect this to spiral into a sizeable balance sheet risk, the credibility risk is definitely higher For loans where the LTV ratio is more than 75%, the risk and is likely to take a toll. weight of all housing loans, irrespective of the amount of loan, is 100%. In the recent policy, the Reserve Bank of A Fair Comparison India increased the risk weight for residential housing loans of `75 lakh and above, irrespective of the LTV ratio, to 125%. 13477.92 And that’s not the end of the proactive measures of the central bank. Ever since the interest rates started inching 19459.85 17558.73 up, a lot of banks were following the practice of sanction- 10108.2 ing housing loans at ‘teaser rates’, wherein the loans carry a comparatively lower rate of interest in the first 18 Jan10 21 Jun10 19 Jul10 16 Aug10 30 Aug10 13 Sep10 27 Sep10 22 Nov10 1 Feb10 1 Mar10 4 Jan10 15 Mar10 29 Mar10 15 Feb10 12 Apr10 26 Apr10 10 May10 24 May10 7 Jun10 5 Jul10 2 Aug10 11 Oct10 25 Oct10 8 Nov10 few years, after which rates are reset at higher rates. BSE Bankex BSE Sensex “This practice raises concern as some borrowers may Source: BSE find it difficult to service the loans once the normal Over the past few months, the banking stocks have been interest rate, which is higher than the rate applicable in outperforming the market. A comparison of the BSE the initial years, becomes effective,” the RBI believes. Bankex Index and the Sensex does validate the same. But, going ahead, things may not be the same because a Also, the Reserve Bank observes that many banks at the lot of possible positives are factored in the stock prices time of initial loan appraisal do not take into account the and the challenges, as and when they unfold, keep testing repaying capacity of the borrower at normal lending the strength of the sector. Things are really on the swing rates. In view of the higher risk associated with such for noW. Beyond Market 07th Dec ’10 It’s simplified... 19 HEALTH IS WEALTH Private healthcare players have realized the tremendous potential this sector offers and are leaving no stone unturned to meet the growing needs of the people while earning profits 20 Beyond Market 07th Dec ’10 It’s simplified... L ittle did people know that the healthcare sector demographics and rising income levels. The private would be the toast of corporate players in an healthcare sector would not only be the biggest contribu- age when fixed deposits, life insurance and tor but also the beneficiary in the process. mutual funds were considered indispensable investment avenues. But that was a couple of years ago, However, despite its profitability, the tertiary sector is until the liberalization of early 1990s when things relatively complex due to high costs for private players. changed for good. The capital requirement for setting up a tertiary hospital bed is `7-10 million in larger cities with real estate and The opening up of the economy saw the entry of private medical equipment accounting for 60-65% of the total players in major sectors, including the healthcare sector. project cost. This leads to long gestation periods, right Although investments in healthcare were few and far from conceptualization to execution. Besides this, it between, the situation is no longer the same today. In takes another 2-3 years to break-even. fact, the private players have realized the tremendous opportunity this sector offers and hence, healthcare is one Analysts believe that tertiary hospitals can potentially of the fastest-growing sectors in India. Add to the fact generate more than 25% operating margins from the fifth that government spending on healthcare has been year of their operations with margins stabilizing at dismally low, to say the least. 30-35% in a matured state. Industry experts believe that players adopt varied business models to scale up their In 2009, the national healthcare spending was around margins from around 30-35% that a normal private sector 5.5% of the gross domestic product (GDP), with hospi- player would continue to record in the absence of the tals forming 50% of this spending. This is in sharp need to grow organically. contrast to the global healthcare spending. Another reason is that the government’s healthcare allocation is BUSINESS MODELS not in tune with the demand. Private healthcare players continue to dominate the sector’s tertiary and secondary Single-Specialty care segments in India. Single-specialty tertiary hospital chains offer ‘best in According to an estimate by Crisil, there is a need for class’ treatment in defined therapy areas. Being special- nearly one million beds in the country. However, there is ists in certain therapies, these hospitals have the best of no single big player that can meet this requirement on a specialists and patient volumes overriding geographical pan-India basis. Apollo Hospitals, the largest healthcare constraints. These hospital chains are effective only for chain in India, has only 8,000 beds under management, select therapy segments like ophthalmology and oncol- including those owned by itself and associates as well as ogy. Some of the hospital chains that have adopted this managed beds. model include HCG (Healthcare Global), which is focused on oncology and Shankar Netralaya and Arvind This mismatch in demand and supply highlights the need Eye Hospital that cater to ophthalmology cases. for private players to ramp up their capacities, especially in the tertiary care segment because this segment needs Secondary/ Primary Care In Tier II/ III Cities sufficient spending in terms of infrastructure, technology and specialization. It has been observed that the hospital industry which is largely unorganized, services only 30% of the country’s Moreover, with the mushrooming of primary care units, population. One prime reason for this is that bed thanks to government spending and economic sense in additions are largely skewed towards metros. It is having primary care units, there is a dearth of tertiary estimated that 80% of healthcare facilities are still hospitals where patients are treated for major and available in metros only. specialized cases. This has presented opportunities for private players to tap Hence, it is important for private hospitals like Apollo, rural areas to meet their requirements relating to second- Fortis Healthcare (Fortis), Manipal Hospitals and Max ary and primary care. Private players like Vaatsalya are Healthcare to improve capacities and widen their reach. working on innovative models to tap the unmet health- care needs of majority of the population by setting up The Indian healthcare sector is currently valued at $62 secondary care hospitals in Tier II/ III cities. These billion and is estimated to be growing at the rate of 13% models offer standardized secondary care with limited per annum. At an estimated population growth of 2% specialities including gynaecologists, obstetricians and annually and a 10% annual increase in healthcare spend, dermatologists. They operate on leased facilities, entail- the sector is expected to grow on the back of changing ing limited capital investments. Beyond Market 07th Dec ’10 It’s simplified... 21 Joint Ventures (new administrator), which has a certain equity stake in the SPV, infuses capital and undertakes management Setting up hospital chains entail huge capital invest- responsibility of marketing, finance, administration, ments, especially in tier-I cities where land prices have operations, etc. In return, the corporate hospital receives shot through the roof. This is the primary reason why a share of profits. bigger hospital chains are looking at making their presence felt in Tier I cities by opting for joint ventures These are three business models that private sector hospi- (JVs) through collaborations with trust hospitals. tal players have adopted to maximise their revenues. Considering huge land costs involved in setting up hospi- Trusts hospitals have land banks at nominal lease rentals. tals, identifying either of these three business models These hospitals have failed to match private sector serves good for private sector players. players considering their lack of professional manage- ment and adequate technology. Of late, some trust hospi- Among the listed companies, Fortis Healthcare and tals have formed JVs with leading corporate hospital Apollo Hospitals are placed well considering their chains like Apollo and Fortis. sizeable assets, significant geographical footprint and strong brand identities. These companies would continue Under a JV agreement, a trust hospital leases out the to dominate the market and command significant newly entire building and medical equipment to the newly- premium given the fact that early entry and established formed SPV or company. The corporate hospital chain names, will work in their favouR. Commodity Trading backed by In-depth Daily Technical And Fundamental Reports Evening Buzzer Research# Quarterly Magazine F&O Reports Of Gold On Commodities And Crude Oil On Comex And Nymex Spread Strategies Intra-day And Long-term Calls Commodity trading helps to boost your investment portfolio when backed by in-depth research. At Nirmal Bang, we assist you in taking the right decisions with the right analysis. EQUITIES* | DERIVATIVES* | COMMODITIES | CURRENCY* | MUTUAL FUNDS ^ | IPOs ^ | INSURANCE ^ | PMS* | DP* Contact: Hiral Parekh - +91 77383 80020/ 022-3027 4557/58/59 | Shalini Desai - +91 77383 80155/ 022-3027 2332 SMS ‘BANG COM’ to 54646 | e-mail: firstname.lastname@example.org w w w. ni r malban g.com For job openings at Nirmal Bang, visit http://www.nirmalbang.com/careers.aspx Disclaimer: Insurance is a subject matter of solicitation. Mutual Fund investments are subject to market risk. Please read the scheme related document carefully before investing. Please read the Do’s and Don’ts prescribed by Commodity Exchange before trading. The PMS Service is not o ering for commodity segment. *Through Nirmal Bang Securities Pvt. Ltd. ^Distributors #Prepared by Research Analyst of Nirmal Bang Commodities Pvt. Ltd. REGD. OFFICE: Sonawala Building, 25 Bank Street, Fort, Mumbai - 400 001. Tel: 022 - 30272222; Fax: 022 - 30272232. CORPORATE OFFICE: B-2, 301/302, Marathon Innova, O Ganpatrao Kadam Marg, Lower Parel (W), Mumbai - 400 013. Tel: 022 - 30272300; Fax: 022 - 30272303 BSE SEBI REGN No. INB011072759, INF011072759 & INE011072759, NSE SEBI REGN No. INB230939139, INF230939139 & INE230939139 DP SEBI REGN. No NSDL: IN-DP-NSDL-136-2000, CDS(I)l: IN-DP-CDSL-37-99, AMFI REGN. No. arn-49454 NCDEX REGN. NO. 00362, FMC Code-0075, MCX REGN. No. 16590, FMC Code-MCX/TCM/CORP/0490, MCX SX-INE260939139, PMS-INP000002981 22 Beyond Market 07th Dec ’10 It’s simplified... Exclusivity has its own privileges Yours specially, NB Private Client Group EQUITIES | DERIVATIVES | COMMODITIES* | CURRENCY | MUTUAL FUNDS# | IPOs# | INSURANCE# | PMS | DP Contact: Raana Kumaar: +91 77383 80161 Ashish Bathija: +91 77383 80162 SMS ‘BANG’ to 54646 | www.nirmalbang.com Disclaimer: Insurance is a subject matter of solicitation. Mutual Fund investments are subject to market risk. Investments in Securities are subject to market risk. Please read the scheme related document carefully before investing. Please read the Do’s and Don’ts prescribed by Commodity Exchange before trading. The PMS Service is not o ering for commodity segment. Through Nirmal Bang Securities Pvt. Ltd *Through Nirmal Bang Commodities Pvt. Ltd. #Distributors REGD. OFFICE: 38-B/39, Khatau Bldg, 2nd Flr, Alkesh Dinesh Mody Marg, Fort, Mumbai - 400 001. E-mail: email@example.com; Tel: 022 - 22641234, 30272000 / 2222; Fax: 022 - 30272006. BSE SEBI REGN No. INB011072759, INF011072759 & INE011072759, NSE SEBI REGN No. INB230939139, INF230939139 & INE230939139 DP SEBI REGN. No NSDL: IN-DP-NSDL-136-2000, CDS(I)l: IN-DP-CDSL-37-99, AMFI REGN. No. arn-49454 NCDEX REGN. NO. 00362, FMC Code-0075, MCX REGN. No. 16590, FMC Code-MCX/TCM/CORP/0490, MCX SX-INE260939139, PMS-INP000002981 While India works towards generating enough electricity to meet its ever-growing needs, companies involved in the transmission and distribution of power, especially Power Grid, will play an even important role Watt in the coming years Next… Next… 24 Beyond Market 07th Dec ’10 It’s simplified... I ndia’s demand for electricity is growing with each leasing out its existing tower infrastructure to telecom- passing day and there is a huge power shortage. To munication companies. It currently has about 20,730-km deal with the electricity demand-supply imbalance in of telecom network, which is leased to some of the the country, India wants to build about 62,000 MW leading telecom companies like Bharti Airtel, BSNL and of additional power generation capacity by 2012 and Tata Communication. another 1,00,000 MW by 2017. This will require massive investments of nearly `8,00,000 crore in power genera- Besides, it is leveraging its knowledge and expertise in tion capacities. the power and transmission sector to provide consultancy services for similar projects in transmission. The But power generation alone will not solve the problem. company is currently involved in 12 international consul- In fact, the real challenge for the power sector in the tancy projects in countries like Afghanistan, Bangladesh, country lies in how effectively and efficiently the Nigeria, Bhutan, UAE, Sri Lanka and Nepal. transmission and distribution (T&D) sector is managed. Moreover, the government will have to urgently attend to Though these segments are not contributing much the ageing infrastructure and issues pertaining to technol- currently, they are indeed fast growing segments and ogy to ensure uninterrupted supply of electricity to the should help the company with better margins and returns consumers, comprising households and industries, thus on investments. offering tremendous opportunities to companies in the transmission and distribution space. Although utility companies are known for their consis- tency, those like Power Grid not only offer consistency, The transmission of electricity typically defined as the but also growth, as incremental investments in the bulk transfer of power over a long distance at high company are huge. Looking at the projects in the voltage, is generally 132 KV and above. And the govern- pipeline, the company’s earnings and revenue could ment expects the inter-regional transmission capacity to easily grow at about 20-25% over the next five years, grow to 27,950 MW by this year. However, this, accord- which is considerable for an enormous company like ing to the Central Electricity Authority (CEA), will have Power Grid. to be increased further to 57,000 MW by 2015 and 75,000 MW by the end of the Twelfth Five Year Plan. It, The company had earlier raised funds through an IPO therefore, calls for huge investments in this sector. and is now doing so through FPOs. It has plans to invest `1,00,000 crore over the next six to seven years, which is All this points to the tremendous potential the power significant compared to historical investments. transmission and distribution sector holds and companies in this space will be the key beneficiaries. And Power The company also plans to explore and double its Grid Corporation of India Ltd (PGCIL), considered to be transmission network from the current 80,000 km to the third largest transmission company in the world with about 1,60,000 km. This is possible given the huge power a market share of over 50% in the domestic market, capacity coming in the future. would be the obvious gainer. The company has capex plans of `55,000 crore in the Power Grid currently owns and operates 79,556 circuit current Five-Year Plan, ending 2012. During this period, km of transmission network and 132 sub-stations. These the company will expand its inter-regional grid capacity transmission lines and substations are used by the power to 37,000 MW compared to 14,000 MW it had in the generation and distribution companies to distribute Tenth Five-Year plan. This investment is still small power to different regions and in turn, generate fixed and compared to its plans of investing another `1,00,000 consistent revenues in the form of lease or rents. This is crore over the next few years. also the reason why the company’s revenues are stable, thus ensuring the company a decent return on equity Companies in the private and public sector, along with invested in these projects. Power Grid, will invest huge amounts of money in build- ing transmission lines in the country. Inter-regional Not only this, the company is leveraging its assets and transmission networks are required in India because knowledge in the sector to improve its margins and power generation sources are unevenly distributed and returns, which could also give handsome returns in the power needs to be carried over large distances from areas long run. where power is generated to areas where load centres and demand exist. For instance, the company is using its existing tower infrastructure spread across the country to tap opportuni- Its ripple effect will also be seen on firms that actually do ties in the telecommunication segment. It has started the ground work and build transmission lines for compa Beyond Market 07th Dec ’10 It’s simplified... 25 nies like Power Grid. Leading players like KEC Interna- capacity transmission corridors, which will be useful in tional, Kalpataru Power & Transmission and Jyoti Struc- evacuating high voltage power. tures, who have the expertise, needed to do the engineer- ing and procurement work, will be the key gainers. Larger players like Crompton Greaves, ABB and Areva T&D, known for their superior capabilities and diversi- There is also a growing need for high-capacity transmis- fied portfolio of technology and products will stand to sion lines currently, which can carry high voltage power gain in this space. These companies supply transmission generated by the independent power producers and equipment, distribution equipment like transformers, power generated from the ultra mega power projects, switch gears, capacitors and power substations too. ranging between 1,000 MW and 4,000 MW. In fact, the distribution segment is expected to grow Considering these needs and to build a nationwide faster, given the huge replacement demand along with network, Power Grid is expected to invest in nine high-- the demand for new projects and better technologieS. Our team of dedicated and experienced commodity research analysts have been giving calls on prominent business channels, print media and newswire services, which have consistently hit bullseye. Time and again, we have delivered results that are visible and can be measured. Get the Nirmal Bang advantage, if accuracy is what you seek. Contact: Hiral Parekh - +91 77383 80020/ 022-3027 4557/58/59 Shalini Desai - +91 77383 80155/ 022-3027 2332 SMS ‘BANG COM’ to 54646; e-mail: firstname.lastname@example.org 26 Beyond Market 07th Dec ’10 It’s simplified... Specialty Chemicals: The Next Big Thing Certainty of potentially huge markets coupled with easy availability of skilled manpower, is expected to make India and China a name to reckon with in the specialty chemical industry T he Indian pharma sector has an estimated GDP. It has the potential to grow to around US $100 market value of about US $8 billion and is billion by 2010 in India, an annual growth rate of 15.5%, growing at an average rate of 7.2%. It is according to industry analysts’ survey. expected to grow to US $12 billion by 2010. Sales of the Indian pharma industry would be worth US The chemical industry includes a wide variety of $43 billion within the next decade. products - from commodity chemicals to research-driven specialized products. The characteristics of these The chemical industry is an integral component of the products differ across the industry supply chain, from economy and contributes around 6.7% of the Indian sourcing bases to their target markets. Beyond Market 07th Dec ’10 It’s simplified... 27 End Use Market Growth (CAGR-FY07/FY12) Evolving Customer Needs Tex le Construc on Glass Auto Paints Paper Pharma 0% 5% 10% 15% 20% 25% Source: KPMG Reports, Cygnus Report According to the Global Industry Classification Standard ity are improved and supplemented by domestic and (GICS), specialty chemical companies are those that foreign investments. Several foreign companies have primarily involved in the manufacture of high value- made significant commitments and investments in India added chemicals useful in the manufacture of products, and China and plan to continue investing over the long including, but not limited to, fine chemicals, additives, term. India and China are the key players in the specialty advanced polymers, adhesives, sealant and specialty chemical markets. paints, pigments and coatings. A major part of investments in specialty markets will be The user industries for specialty chemicals comprise of done in these two countries not only because of easy textile, construction, paint, pharma and auto, among availability of skilled and cheap labour, but also because others. The growth of each category within the specialty of the certainty of potentially huge markets. chemical domain depends on the type of industry it serves and the growth rate of the industry. To give better thrust to both, the Indian and the Chinese pharma industry, the Indian Drug Manufacturers’ As per the Cygnus report, personal care, API and Association (IDMA) and China Pharmaceutical Industry automobile chemicals are growing faster than textiles, Association (CPIA) have jointly agreed to sign a memo- leather and paper, as the growth of specialty chemicals is randum of understanding (MoU) by early next year directly related to the growth of the end user industry. during API China 2010. Presently, an ample number of SMEs along with some The three-year MoU will ensure provision of information big names are engaged in the manufacture of specialty data and guidance to each other’s members and also chemicals. The domestic specialty chemical market is facilitate imports, distribution, marketing and adminis- captured by APCL, Amines & Plasticizers, Ciba tration of drugs and medicines, including information Specialty Chemicals, United Phosphorous, Pidilite, RIL, about the statutory regulations and requirements in their Syngenta. Similarly, Lubrizol, BASF, Dow Chemicals, respective countries. Bayer, Sumitomo, Degusa, Clariant are some of the international players involved in this segment. The global financial crisis had a negative impact on the global and Chinese specialty chemical markets. The Big Indian pharma companies like Ranbaxy, Shasun, Chinese market had a comparatively higher growth rate Cipla, Dr Reddy’s, Cheminor, Lupin, Ipca Laboratories, due to the huge potential offered by domestic demand. Sun Pharma, Cadila, Wockhardt, Aurobindo and Kopran, According to the Chinese Chemical Industry Yearbook, among others, are also involved in the manufacture of sales revenue for the specialty chemical market was US specialty chemicals. $124.5 billion in 2008, which amounted to 12.9% of the total chemical market. India and China continue to be the key suppliers of finished dosages to the global pharma market. The huge Till the year 2012, the Chinese specialty chemical market domestic middle-class markets and the huge supply of is likely to grow at a compound annual growth rate labour are the principal drivers of economies like India (CAGR) of 12.9%, which is higher than 10.7%, the and China. The countries’ industry structure and capabil- average growth rate of the Chinese chemical market. 28 Beyond Market 07th Dec ’10 It’s simplified... Different Segments Segment Characteristics Constituent industries With this high growth, China is likely to acquire more The FICCI-E&Y study says that high-value drugs from market share in the world specialty chemical market in MNCs could produce up to US $8 billion in sales by the coming times. 2015. The population in India’s highest income class is expected to grow to 25 million in 2015 from 10 million The country contributed about 12% to the world today. Hence, more people will be able to afford high- specialty chemical market in 2006. This share is expected value patented drugs. “MNCs are increasingly restructur- to reach 20.1% in 2012. China is on its way to becoming ing their operations with global parent companies a major hub of specialty chemical manufacturers world- increasing their equity stakes in their Indian affiliates,” wide. The Chinese chemical industry parks have their the report says. respective advantages in attracting foreign investments. At the provincial or national level, there are about 350 Global specialty companies are increasingly establishing chemical industry parks in China. base in high-growth Asian economies to participate in their growth and to meet the exact needs of the local Globally, pharma companies are shifting their outsourc- customers while leveraging their low-cost advantage. ing activities to Asian markets and India is emerging as Much of this investment till now has been in China due one of the most attractive destinations. India is a to the large talent pool, manpower and cost efficiency. fast-growing custom manufacturing outsourcing destina- tion with a growth rate of 43%, three times the global India, now, is establishing itself as a major hub for manu- market rate. facturing and R&D of specialty chemicals. The interest of MNCs in India is only increasing and the advantages India ranks the highest in terms of cost-efficiency attrac- that China had to offer are slowly fading in light of the tiveness among six destinations including China, Eastern various add-ons that India provides as a chemical hub. Europe, Puerto Rico, Singapore and Ireland. India’s cost These add-ons include a more standardized regulatory efficiency is driven by its low manufacturing cost, which system and a validated IP regime amongst other factors is only 35% to 40% of the cost of manufacturing in the like cost and skilled manpower. United States, supported by its low installation and manpower cost. India provides a robust legal and regulatory framework for research-based development in the specialty chemi- In drug discovery and development services, India is cals segment. India became a signatory to TRIPS in the emerging as a hot spot, growing at around 65%. India year 1995 and several companies are getting their offers significant cost arbitrage in end-to-end R&D with products patented in India. All these factors have contrib- potential savings of 61% as compared to the United uted to India evolving into an attractive investment States. India enjoys significant cost arbitrage in the destination in comparison with China where IP protec- conduct of clinical trials, which includes infrastructure, tion and manufacturing guidelines are still haphazard and patient recruitment, manpower, data management and need improvement. processing costs. Globally, R&D is the fundamental driver of success for The cost of these activities in India is typically 40% to the pharmaceutical industry. Companies depend on 60% lower than in developed countries and around 10% developing premium therapies to open up entirely new to 20% lower than in other emerging economies. Thus, markets and sustain growth. Globally, R&D spend has MNCs have yet another reason to eye India. been on the rise in the last few years and currently the Beyond Market 07th Dec ’10 It’s simplified... 29 average stands at 18.5% of net sales. This is partly led by for players wishing to enter new markets. an increase in drug development costs. The average cost of introducing a new drug to the market has risen from However, knowledge chemicals are definitely growing at US $550 million to US $820 million with most of the a rate faster than specialty chemicals and basic chemi- cost increases being in the testing phase. cals. Knowledge chemicals’ growth has risen to around 12%, specialty around 7.5% and basic chemicals around There is also an increasing trend of migrating R&D 1.8%, nationally. centres to India to access low-cost skilled manpower and cut down overall product development costs. R&D is Specialty and knowledge chemical companies use R&D increasingly assuming importance for the entire industry for new product development. Companies in this but its focus varies across industry segments. Basic segment have adopted R&D, both as a means to achieve chemicals use R&D for making manufacturing process product leadership as well as to orchestrate process improvements to reduce costs and application develop- innovations and realize savings in manufacturing costs. ment to boost demand. R&D levels in leading companies within this segment are Vitamins, antibiotics, antibacterials, cardiovascular and between 5-15% of sales. Application development other essential drugs account for nearly 37% of the total strategy is also adopted effectively by knowledge chemi- specialty market. Other therapeutic areas that are show- cal companies. This includes techniques like evergreen- ing significant potential are medications used to treat ing, which involves finding new applications and lifestyle-related disorders like anti-diabetic, anti-obesity delivery systems for existing drugs as a means for drugs, anti-cancer medications and vitamin supplements. extending patent protection and hence revenue genera- tion. The Indian patent regime has encouraged research The specialty chemical industry relies extensively on in the area of processes and reverse engineering. R&D for new products. Most of the R&D is capital- intensive and the scale of operations is important to Going forward, India will have to focus on new chemical provide the financial strength and access to global entities (NCEs) and new drug delivery systems (NDDS). markets. Patents and the presence of appropriate regula- The R&D spend in Indian companies is, therefore, tions to protect intellectual capital is a key consideration expected to see a risE. Your financial success is our concern. At Nirmal Bang, it’s a relationship beyond broking... 30 Beyond Market 07th Dec ’10 It’s simplified... Soul Searching In Seoul It was a moment of self introspection for the global leaders that are still coming to terms with the after-effects of the financial meltdown. While they all agreed to iron out their differences, key issues, except few, still remain unanswered W orld leaders met at the G20 Summit in Germany, Japan and Canada), 4 Asian countries (India, Seoul last month at a crucial time when China, South Korea and Indonesia), 3 Latin American the world economy is fraught with countries (Brazil, Argentina and Mexico), 4 European multiple problems requiring nations to countries (Russia, Australia, Turkey and the European come out with a coordinated response to grapple with the Union), South Africa and Saudi Arabia. financial crisis which started in the United States. The countries that attended the G20 summit included G7 This is the second G20 summit with the first one being (United States of America, France, United Kingdom, held in Toronto in June this year. Beyond Market 07th Dec ’10 It’s simplified... 31 Before the commencement of this summit, tension was taking centre stage and there was no focus on long-term building among nations because of the fear of currency issues such as development. wars and re-emergence of a protectionist policy. These issues were expected to be touched upon and optimists Under the label of the ‘Seoul Development Consensus believed that a consensus would be arrived at. While for Shared Growth,’ the G20 endorsed a strategy based consensus was achieved on some important parameters, on resilient growth. The summit defined new principles issues such as trade imbalances and currency movements and an action plan. The G20 proposed a new focus on continue to remain an area of contention. development by the World Bank and a new high-level panel to recommend ways to speed things up. The key factors that were responsible for the difference in opinion were the QE2 effort by the US Federal Some of the disappointments include lack of consensus Reserve that came out in the run up to the summit and the on the following: lack of a pressing need by most nations who seem to have recovered from the crisis. So, not everyone was in as Global Imbalances: Nations were unable to agree on much hurry as the US. numerical targets for current account deficits and surplus, but each of the G20 leaders instructed their While most would not be appeased by the outcome of finance ministers to come up with an indicative guideline this summit, one cannot deny that there were a few to measure large current account imbalances in consulta- positive takeaways. These include: tion with the IMF. Strengthening Of The Financial System: In order to The details are to be discussed in the first half of next increase the quantity and enhance the quality of bank year. India too spoke against putting a cap on the current capital, the G20 leaders signed the Basel III agreement. account balance proposed by the US at 4% of the GDP The Financial Stability Board’s proposals to tighten saying that on account of structural differences across supervision of the over-the-counter derivatives market, countries it is not easy to arrive at a threshold. regulate banks that were judged as too big to fail and reduce reliance on credit rating agencies, were endorsed. Decontrolling Currency Movements: There was no formal agreement on currency imbalances at the summit. Recognition Of A Shift In Economic Power: G20 leaders repeated a commitment to move towards Reforms were introduced in the IMF to reflect the shift in competi market-determined exchange rates and to shun competi- the balance of economic power. Under the deal, more tive devaluations. than 6% of voting shares at IMF will shift to developing countries like China, which will become the third-biggest G20 also stressed on the fact that emerging economies, member of the 187-strong Washington-based lender. having overvalued exchange rates, face a burden of adjustment, which requires carefully designed macro- Also, the composition of the Board will be changed to prudential measures. As is the case with previous G20 reduce the European representation. This reform was summits, leaders did not single out China for keeping its overdue and is an important step in the direction of currency undervalued. giving developing nations a greater influence in the organization. Developing countries will now grant IMF This summit can be easily termed a ‘failure’ as a consen- the role of managing the global macro economy. sus on some important issues was not achieved. But a two-day summit cannot be expected to overcome differ- India would be putting in an additional `14,000-15,000 ences in opinion over grave issues as each nation has a crore to subscribe to an additional IMF quota. Prime unique economic background that can sometimes prove Minister Dr Manmohan Singh welcomed the decision to to be a hindrance. comprehensively review the quota formula by 2013 to reflect the growing economic weight of the emerging Let us take the positives in our stride, especially an market countries. He said that this should be fully important aspect like the one that gives developing reflected in the next quota review. nations greater influence. This is an indication that the global order is changing and there will be greater democ- Trade: G20 leaders pledged not to pursue protection- protection racy in global policy making. ist policies and to work towards concluding the long stalled Doha round of trade liberalization. At least nations are willing to come together, voice their opinions and talk it out. Maybe over a period of time, Development: South Korea and India stressed on this things will change, differences in opinion will be erased issue at the summit as the global economic crisis was and there will be greater international co-operatioN. 32 Beyond Market 07th Dec ’10 It’s simplified... MIPs Rising To The Occasion I f you are worried that your hard-earned money Both conservative might get washed away in the stock markets, then and aggressive Monthly Income Plans (MIPs) are for you. A mix of investors can opt for equity and debt, MIPs give investors more or less MIPs if they are consistent returns and are also less risky, as compared to the equity markets. seeking stable and higher returns over One of the many aims of investors is to have a regular other forms of rate of return on a portion of their investments. MIPs investment fulfill this need as there is an element of safety associated with them and they also provide a regular cash flow to meet various expenses. With the current level of market volatility, MIPs can be a good option, considering their exposure to debt instru- ments. These help investors to maintain a low-risk portfolio and generate regular and stable returns. Stabil- ity, rather than quick and high returns, should be the priority for a typical MIP investor. If a regular investor is apprehensive about investing in turbulent times like we are seeing currently, he may consider post office savings as against other available options, since it offers him safety as well as moderate returns ranging anywhere between 7% and 8.5%, along with some bonus at the time of maturity. Thus, an investor seeking a steady return on his invest- ments without any disturbance will, therefore, opt for the post office plan over others. For risk-averse individuals, fixed deposits (FDs) might appear as a good investment option, but they must bear in mind the fact that FDs are taxable as ‘income from other Beyond Market 07th Dec ’10 It’s simplified... 33 sources’, depending upon the tax bracket they fall into. equity, based on the various schemes available in the Further, if the interest income is more than `5,000 in a market, this concern is taken care of. given financial year, then TDS is applicable. On the other hand, MIPs are more tax-efficient than fixed deposits A bigger portion of the portfolio is invested in debt (FDs), as dividends declared under these type of mutual instruments and this is the part that provides stability to funds are tax-free. the fund. The equity part is expected to provide the kicker, in terms of returns, when the equity markets are But if an investor also wants to take advantage of the robust, but this is unreliable. upswing in the stock markets, he may consider monthly income plans that are offered by various mutual fund Based on the risk appetite of the investors, the proportion houses as these provide decent returns, although they of equity in the funds may qualify them as conservative may not be consistent, owing to the volatility in the or aggressive. equity markets. While conservative funds restrict their equity holdings to And even if an investor is conservative with his invest- 5-10%, this proportion is anywhere between 20-25% in ments, he can still earn marginally better returns through the case of aggressive funds. This change in holdings MIPs, than a debt-only portfolio, as MIPs typically invest makes a significant impact on investment risk and the bulk of their asset under management (AUM) in debt, returns. When the markets are bullish, the funds will while maintaining a small exposure to equity. perform better-than-expected in case of the funds that have higher equity exposure. MIPs mainly come in two options, that is, growth and dividend. Investors have the option to choose the one that Hence, Monthly Income Plans like various other mutual suits their needs. While dividends are by and large issued fund products do not provide the security of regular either monthly, quarterly, half-yearly or annually, the dividends as they are governed by the volatility of the growth option reinvests the entire return back into the markets. In such instances, there is a quick fix route investor’s fund. called Systematic Withdrawal Plan or SWP that can be opted for by the investor. Though many mutual fund houses declare monthly dividends, they have no obligation to pay them. MIPs If an investor is looking for regular income, he can further differ from income funds, in the sense that the choose the Systematic Withdrawal Plan rather than the latter are launched in the markets with the objective of Dividend Payout Option. But the investor must exercise posting regular returns. this option only after one year of the investment. The ‘growth’ option of an MIP fits neatly into the Monthly income plans are considered good for conser- risk-return profile between a pure income fund and a vative investors, people nearing retirement and even balanced fund and is favoured by investors like HNIs and retirees seeking better returns over traditional options institutions as these investors typically do not require a like post office savings schemes and bank fixed deposits. regular monthly dividend inflow. These people want their investment product to provide them with a steady flow of income at a higher real rate of In the past one year, the total industry AUM was close to interest to meet their regular expenses while offering `4,000 crore, which is now approximately `24,500 crore. capital appreciation. The last few months have seen corpuses of MIP schemes rising a great deal. During this period, equity funds AUM While all this sounds quite promising, investors should, have gone down. however, bear in mind that there is an exit load of 1% on most MIPs, if they withdraw before one year and in some Unlike other funds, the returns on MIPs are market- cases even one-and-a-half years. There is no guarantee driven. In the past one year alone, several MIPs have about the payout of dividend too. Large fluctuations in given 10% to 14% returns. This has led to an influx of the equity markets can further make the entire net asset investors in MIPs, who have taken the advantage of value of the fund quite volatile. reinvesting the dividend returns from MIPs in pure equity funds and reaping excellent returns over FDs, Given its wide-ranging appeal to conservative and while enjoying tax efficiency. aggressive investors, MIPs have the potential to be very much there to cater to these segments. Further, MIPs not Investors may also want to know whether there is any only offer stable returns but also provide an additional risk associated with the earnings from the fund. But since incentive of higher returns, provided the equity portion in MIPs invest a major part of the corpus in debt vis-à-vis the MIP fund does welL. 34 Beyond Market 07th Dec ’10 It’s simplified... Bharti Airtel: Sweet Sound Of Success B harti Airtel is one of world’s leading providers of telecommunication services with presence in all the 22 licensed jurisdictions (also known as telecom circles) in India and operations in Sri Expansion of business plans, Lanka, Bangladesh and Africa. apart from the introduction The company has more than 194.8 million customers as of 30th Sept ’10, making it one of the largest wireless of 3G services and number service providers in India. The company offers an integrated suite of telecom solutions to its enterprise customers, in addition to providing long distance connec- portability, is expected to tivity, both nationally and internationally. bene t Bharti Airtel in the The company also offers Digital TV and IPTV Services. All these services are rendered under a unified brand coming months ‘Airtel’. The company also deploys, owns and manages passive infrastructure pertaining to telecom operations under its subsidiary, Bharti Infratel Ltd. Bharti Infratel owns 42% of Indus Towers Ltd. Bharti Infratel and Indus Towers are among the top providers of passive infrastructure services in India. 36 Beyond Market 07th Dec ’10 It’s simplified... Business Units million customers continues to add 1 in every 4 new customers joining the DTH platform. The company also offers Airtel Digital TV recorder and High Definition Mobile Ser (Zain) (HD) set top boxes delivering superior experience to is Africa Africa Others customers in this segment. Business Units Passive Infra Mobile Services India & South Asia Bharti Infratel provides passive infrastructure services on Telemedia Services a non-discriminatory basis to all telecom operators in India. Bharti Infratel deploys, owns and manages passive Enterprise Services infrastructure in 11 circles of India. Digital TV Services Infratel also holds 42% share in Indus Towers (a joint venture between Bharti Infratel, Vodafone and Idea Passive Infra Services Cellular). Indus operates in 15 circles (4 circles common with Infratel and 11 circles on exclusive basis). Source: Company Data, Nirmal Bang Research BUSINESS UNITS IN INDIA & SOUTH ASIA Bharti Infratel has 31,831 towers in 11 circles, excluding the 35,254 towers in 11 circles for which the right of use Mobile Services has been assigned to Indus with effect from 1st Jan ’09. Indus Towers has a portfolio of 1,06,438 towers, includ- Bharti Airtel offers mobile services using GSM technol- ing the towers under right of use. ogy in India, Sri Lanka and Bangladesh. It serves over 147 million customers across these geographies. Bharti BUSINESS UNITS IN AFRICA Airtel has the largest customer base in India in the wireless segment. The company had 143.3 million Mobile Services mobile customers in India, with a customer market share (CMS) of 20.8%, as on 30th Sept ’10. Bharti Airtel acquired the Africa operations of Kuwait- based telecom major Zain Group on 8th Jun ’10, exclud- Telemedia Services ing the Sudanese and Moroccan operations for a total enterprise value of US $10.7 billion. Bharti Airtel also Bharti provides broadband (DSL), data and telephone acquired 100% stake in Telecom Seychelles Ltd on 27th services (fixed line) in 88 cities with a growing focus on Aug ’10. various data solutions for the Small & Medium Business (SMB) segment. Of its 3.2 million customers, 42.8% Others subscribe to broadband/internet services, as on 30th Sept ’10. Bharti’s product offerings in this segment include It comprises of investment-holding companies for Africa fixed-line telephones providing local, national and mobile operations. international long distance voice connectivity and broad- band internet access through DSL. Mobile Services (including Africa) contributes around 75% of the company’s total revenues (revenues before Enterprise Services inter-segment eliminations) Segment-Wise Revenues (Q2 FY11) Bharti delivers end-to-end telecom solutions to India’s 1% large corporates by serving as the single point of contact 12% for all telecom needs by providing a full suite of commu- nication services across data, voice, network integration 6% and managed services. It owns a state-of-the-art national 5% and international long distance network infrastructure, enabling it to provide connectivity services, both within 75% India and connecting India to the world. Mobile Services Telemedia Services Digital TV Enterprises Services - Carriers Passive Infrastructure Services Others Airtel Digital TV Services, with a base of over 3.8 Source: Company Data, Nirmal Bang Research Beyond Market 07th Dec ’10 It’s simplified... 37 INVESTMENT POSITIVES According to the company management, “3G services has the potential to transform the lives of millions of Expansion In Africa A Big Boost Indians by taking a variety of life-enhancing services on high-speed broadband to the remotest corners and bridge The Zain acquisition is in line with Bharti’s strategy of the digital divide. In addition, 3G services will have a expanding in the emerging markets across the globe. strong multiplier effect on economic growth and also Africa’s population stands at one billion today and is enhance efficiencies.” This will aid the company top-line projected to grow at an annual average rate of 2.3%, with growth and improve its profitability in the long run. a GDP growth rate of 3.1%. Stability In ARPM The population in 16 countries where it operates is around 459 million, with a mobile customer base of 185 The pricing has remained stable in Q2 FY11 after the million, representing a penetration of 40%. This offers tariff war of 2009 and early 2010. 2QFY11 was the first tremendous growth opportunity to the company. The quarter of flat q-o-q ARPM for most wireless operators company has started the restructuring process of its in 6-7 quarters. Going forward, we expect ARPM to African business. We believe Bharti can implement its remain stable as the operators are struggling to maintain low-cost model in Africa, which will provide a big boost margins after taking massive loans for 3G spectrum. to the company’s margins. The number portability will start soon, which may 3G Launch To Aid Top-Line Growth increase competition. However, in the long term, we may also see some consolidation in the industry, which would Bharti plans to launch 3G services in four cities be beneficial in maintaining or increasing ARPM, (including Delhi and Mumbai) by December ’10 - thereby positively impacting margins. January ’11 and scale up to 50 cities by March ’11. Perfomance Indicators Airtel successfully bid for 3G spectrum in 13 telecom circles across India and is rolling out state-of-the-art 600 0.80 500 networks in these geographies. 0.60 400 300 0.40 These 13 telecom circles also constitute 68% of Airtel’s 200 0.20 revenue market share. This includes key metros like 100 Delhi, Mumbai, Bengaluru, Chennai and Hyderabad, that 0 0.00 account for 21% of all data traffic in the country and are Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 ARPU MOU ARPM expected to have the strongest uptake of 3G services. Source: Company Data, Nirmal Bang Research VALUATIONS Annual Financials Year Net Sales Growth EBITDA Margin PAT EPS PE EV/ ROE ` in Cr % ` in Cr % ` in Cr ` EBIDTA % FY07A 18420 57.9% 7264 39.4% 4110 10.71 33.6 26.7 30.3% FY08A 27012 46.6% 11151 41.3% 6495 17.10 21.1 17.4 29.9% FY09A 37352 38.3% 14973 40.1% 8044 20.70 17.4 12.9 26.5% FY10A 41829 12.0% 16572 39.6% 9362 24.13 14.9 11.7 22.6% Source: Company Data, Nirmal Bang Research These initiatives are likely to improve the company’s top-line and margins going forward, enabling Bharti Airtel to increase its subscriber base by offering competitive tariffs. Bharti Airtel is one of the very few companies which is out of the 2G scam. This is a positive factor for the company. Moreover, the start of 3G will further augment the company’s top-line going forward. Therefore, our long-term outlook is positive for Bharti AirteL. 38 Beyond Market 07th Dec ’10 It’s simplified... Fortnightly Outlook For Commodities C ommodities witnessed a much-needed correc- way for its peers. Copper moved up after testing `378/kg tion in the previous fortnight. While base – `399/kg, the biggest gain in four weeks, on the back of metals took a severe beating, crude oil saw a factory output expansion in China and the strike in Colla- correction in prices. Precious metals remained huasi, the fourth biggest copper mine in the world, which firm. So did agricultural commodities. However, natural has raised supply concerns. Add to this, the shortage of gas was the best performer in the energy basket, moving 3,50,000 tonnes that the global copper market is facing. up by 10% during this period. All these factors have supported copper prices. Despite the European crisis, the downside in base metals was The correction in metals and oil began on 19th Nov ’10. capped except zinc and lead, which have high invento- The People’s Bank of China raised banks’ required ries. Currently, QE2 seems to be playing its part in rising reserve ratios to 18.5% this year. Europe’s debt crisis base metal prices. was also one of the reasons for metals and oil prices correcting in the last fortnight. The cost of insuring We may see a further upside in base metals, especially Portuguese, Spanish and Italian bonds rose to record copper, nickel and aluminium, which are fundamentally highs, as investors bet that the EU’s 750 billion euro stronger than other metals. financial lifeline may not be enough to ward off defaults, undermining confidence in the euro-denominated debt. Energies Crude oil prices were seen dropping from $88/barrel to Ireland’s decision on 28th November to accept an 85 $81/barrel in the previous fortnight. But we have seen a billion-euro bailout ($111 billion) failed to end the gradual recovery since then. According to the annual spread of the European debt crisis, fuelling investor winter outlook of the National Oceanic and Atmospheric concerns about the willingness and ability of Europe’s Administration (NOAA), the Pacific Northwest region stronger nations to foot the price of future rescues. should brace itself for a colder and wetter-than-average winter, while the South and Southeast region can expect Despite the bailout package, euro had hit an 11-week a warmer and drier than average weather through Febru- low. On the other hand, there have been encouraging ary ’11. Severe winter will result in good demand for economic reports from the US such as better-than- heating oil and natural gas. We expect inventories of expected GDP, drop in jobless claims, increased produc- natural gas to deplete in the next two month, pushing tivity and better-than-expected manufacturing activity. natural gas prices further by 10%-15%. Crude oil, on the This did provide support to the falling commodity prices, other hand, may offer stiff resistance at $90/barrel but though. The Purchasing Managers Index (PMI) of people are advised to buy at dips. China’s manufacturing sector, rose to 55.2% in Novem- ber, up 0.5 percentage points from October, was seen Agri Commodities lending support to commodities. Agri commodities remained buoyant in the previous fortnight. A good upside was visible in edible oil. There Precious Metals was an upside of more than 10% in the guar complex. Escalating geopolitical tensions over the exchange of However, spices remained range-bound during this artillery fire between North and South Korea and grow- period. We expect the bull run in the spices complex to ing concern that the debt crisis in Ireland could spread to intensify in the coming fortnight. Pepper prices may other parts of the Euro zone, were the main reasons for move up by more than 10% in the next fortnight as stocks the rally in precious metals in the previous fortnight. We are already low, both globally and domestically. Besides, believe the major focus would be on whether Europe’s unseasonal rains may delay the harvesting of pepper by economic system would be able to survive the debt crisis, more than 20 to 25 days. Black pepper may trade at whether the European Central Bank (ECB) would `24,000/quintal in the next fortnight. expand its purchases of government debt, which could calm fears of debt crisis. We believe people must remain Jeera may test the level of `15,200/kg as only 50% invested in precious metals amidst so much uncertainty. sowing has been carried out so far and carry forward Gold may test the levels of $1,425/ounce - $1,430/ounce stocks are at a five-year low. In the oilseeds complex, we in the coming fortnight are bullish on soyoil and soybean as the dry weather in Argentina and Brazil will support the ongoing momen- Base Metals tum in this complex. Soyoil may test `610/10 kg and Following the correction in base metals, copper led the soybean may test `2,400/quintal in the next fortnighT. Beyond Market 07th Dec ’10 It’s simplified... 39 Fortnightly Outlook For Currencies T he reigning European debt concerns lent the focus now shifts to ECB rate decision in the coming broader theme to the Forex markets in the fortnight. We may witness a further weakness in the euro fortnight gone by. Most high-yield currencies if the markets remain unconvinced with the ECB’s witnessed sell-offs on the backdrop of deterio- efforts to rein the prevailing debt crisis in. We expect the rating debt situation in Europe, giving a boost to the US euro to test 1.27-1.28 against the dollar on the downside. dollar as it appeals as a safe-haven asset. Sterling was not an exception to the sell-off and fell in However, better-than-expected manufacturing PMI from line with other major currencies. The UK exposure to the China gave some respite to the emerging markets as well crisis in Ireland sank the sterling. as other major currencies like the euro, the sterling and the Australian dollar towards the end of the fortnight. Meanwhile, British fundamentals have remained quite firm, which fuelled sterling support as the outlook for The Chinese Manufacturing Purchasing Managers Index yields improved. The manufacturing PMI came in at a (PMI) was reported to be 55.2 in November, up from the 16-year high. This development diminishes the expecta- 54.7 reading in October and better than the 54.8 consen- tions of any expansion in Asset Purchase Program by the sus estimate. This was the best reading since April and Bank of England. up notably from the levels of July, when the PMI fell to a recent low of 51.2. Therefore, the downside potential seems to be very limited in the sterling and we could see the pound regain- The US dollar was highly bid on two accounts in the ing its footing if broader concerns wane, allowing for a fortnight gone by. First, investors turned to this currency retracement. We see 1.55 as a strong support for the on the back of overall risk aversion seen in the financial pound against the US dollar and also see this level as a markets. Second, strong economic numbers from the US decent buying opportunity. made the dollar even more attractive for the investors. Asian currencies also fell prey to the developments in Surprisingly, employment numbers, manufacturing and Europe. Moreover, North Korean encounter with South confidence numbers came out better than the estimates. Korea added to the sober mood in Asia, triggering a The recent data by Commodity Futures Trading further decline in the Asian currencies. The South Commission shows that investors have trimmed dollar Korean won declined to the tune of 4% on the outbreak short positions to 9 odd billion dollars, from the previous of this news before recovering some ground towards the 15 odd billion dollars. end of the fortnight. The dollar index, a broad performance of the US dollar The Australian dollar too fell after the government against major currencies, briefly touched the mark of reported that the economy expanded at a slower-than- 81.50. However, it pared some gains against the expected pace in the third quarter. GDP in the period rose backdrop of robust Chinese PMI, which triggered some 0.2% quarter-over-quarter, below 0.4% that was profit-taking in the US dollar. Going forward, a hike in expected and significantly slower than the 1.1% growth policy rates and persistent debt worries seem likely and in the previous quarter. the dollar index may continue its run up to the 82 mark. The rupee came under extensive selling pressure, The euro was the worst hit among major currencies, tracking the overall strength in the dollar overseas and victimized by the prevailing debt concerns in the euro the fall in domestic share markets. Moreover, the market zone. It fell broadly in line with rising debt yields of the positioning was essentially long in the USDINR pair, peripheral countries in the euro zone. The euro which pushed this pair to a high of 46.10 in spot. nosedived to 1.29 against the US dollar. However, the pair regained some footing as strong Chinese PMI and However, fundamentals came into play with robust GDP comments from European Central Bank President, and trade numbers for second quarter, which lent tremen- sparked some short covering in the euro. dous support to the rupee. Investors also took comfort on the broad weakness in the US dollar and thereby Jean-Claude Trichet, president of the European Central supported the rupee further. We expect the rupee to trade Bank, stated that the markets were underestimating in the range of 45.10-46.00 in the coming fortnight with policy maker’s determination to end the debt crisis. The a bias on the upsidE. 40 Beyond Market 07th Dec ’10 It’s simplified... Quarterly Results of Nifty 50 Companies (For quarter ended September ’10) Co. Name Year Equity Net Sale Open T.Inc. T.Exp. PBIDT Int. Dep. Tax D.Tax Rep. Ex. Item Adj. EPS Interest PAT PAT ACC 200909 187.9 2077.38 52.30 2129.68 1423.23 706.45 13.55 87.65 189.83 0.0 415.51 0.00 415.51 22.1 ACC 200912 187.9 2049.95 82.19 2132.14 1613.29 518.85 18.05 114.47 108.24 0.0 278.08 0.00 278.08 14.8 ACC 201003 187.9 2240.38 61.92 2302.30 1621.02 681.28 13.63 103.08 171.67 0.0 392.88 0.00 392.88 20.9 ACC 201006 187.9 2166.89 61.00 2227.89 1615.86 612.03 14.16 104.68 143.72 0.0 349.47 0.00 349.47 18.6 ACC 201009 187.9 1759.18 81.82 1841.00 1594.33 246.67 16.42 100.24 43.74 0.0 86.31 0.00 86.31 4.6 Ambuja Cem. 200909 304.6 1610.95 89.44 1700.39 1180.94 519.45 5.21 71.92 123.84 0.0 318.48 0.00 318.48 2.1 Ambuja Cem. 200912 304.7 1772.88 55.63 1828.51 1338.52 489.99 6.78 85.99 156.03 0.0 241.19 0.00 241.19 1.6 Ambuja Cem. 201003 304.7 1990.16 127.21 2117.37 1420.06 697.31 10.78 76.72 147.62 0.0 462.19 15.22 446.97 3.0 Ambuja Cem. 201006 304.9 2047.56 66.74 2114.30 1444.38 669.92 8.10 100.07 170.54 0.0 391.21 0.00 391.21 2.6 Ambuja Cem. 201009 305.1 1564.02 49.54 1613.56 1280.86 332.70 8.94 101.80 69.87 0.0 152.09 0.00 152.09 1.0 Axis Bank 200909 402.0 2860.36 1065.58 3925.94 1408.40 2517.54 1710.68 0.00 275.22 0.0 531.64 0.00 531.64 13.2 Axis Bank 200912 403.6 2883.65 988.09 3871.74 1335.71 2536.03 1534.54 0.00 345.51 0.0 655.98 0.00 655.98 16.3 Axis Bank 201003 405.2 2988.45 933.54 3921.99 1211.67 2710.32 1528.38 0.00 417.07 0.0 764.87 0.00 764.87 18.9 Axis Bank 201006 407.4 3325.59 1000.78 4326.37 1397.50 2928.87 1811.82 0.00 375.17 0.0 741.88 0.00 741.88 18.3 Axis Bank 201009 408.8 3624.25 1033.24 4657.49 1540.75 3116.74 2009.15 0.00 372.45 0.0 735.14 0.00 735.14 18.0 BHEL 200909 489.5 6625.21 297.81 6923.02 5495.68 1427.34 4.52 93.41 471.53 0.0 857.88 0.00 857.88 17.5 BHEL 200912 489.5 7100.34 322.17 7422.51 5667.53 1754.98 6.90 103.81 571.68 0.0 1072.59 0.00 1072.59 21.9 BHEL 201003 489.5 13559.10 593.53 14152.63 11071.84 3080.79 17.80 164.69 988.72 0.0 1909.58 0.00 1909.58 39.0 BHEL 201006 489.5 6479.69 284.80 6764.49 5636.02 1128.47 3.83 126.89 330.10 0.0 667.65 0.00 667.65 13.6 BHEL 201009 489.5 8328.41 324.23 8652.64 6858.26 1794.38 5.93 134.10 512.07 0.0 1142.28 0.00 1142.28 23.3 BPCL 200909 361.5 27071.03 442.37 27513.40 27187.31 326.09 267.25 308.83 -91.22 0.0 -158.77 0.00 -158.77 0.0 BPCL 200912 361.5 32161.24 487.25 32648.49 31538.49 1110.00 251.28 381.63 98.00 0.0 379.09 0.00 379.09 10.5 BPCL 201003 361.5 37550.90 607.80 38158.70 36423.72 1734.98 205.87 320.78 505.15 0.0 703.18 0.00 703.18 19.5 BPCL 201006 361.5 34211.89 341.51 34553.40 35638.41 -1085.01 232.35 400.74 0.00 0.0 -1718.10 0.00 -1718.10 0.0 BPCL 201009 361.5 35416.19 552.17 35968.36 32948.27 3020.09 277.98 401.89 198.00 0.0 2142.22 0.00 2142.22 59.3 Bajaj Auto 200909 144.7 2793.22 116.02 2909.24 2296.83 612.41 0.00 33.58 176.00 0.0 402.83 -31.89 434.72 30.0 Bajaj Auto 200912 144.7 3165.84 164.84 3330.68 2617.84 712.84 0.02 35.68 202.00 0.0 475.14 -32.15 507.29 35.1 Bajaj Auto 201003 144.7 3290.45 151.50 3441.95 2669.08 772.87 -0.01 34.11 207.50 2.6 528.65 -32.80 561.45 38.8 Bajaj Auto 201006 144.7 3737.29 234.44 3971.73 3113.13 858.60 0.63 31.82 236.00 0.0 590.15 0.00 590.15 40.8 Bajaj Auto 201009 289.4 4180.91 244.62 4425.53 3444.65 980.88 0.65 29.95 268.20 0.0 682.08 0.00 682.08 23.6 Bharti Airtel 200909 1898.4 10378.50 19.00 10397.50 6078.70 4318.80 208.40 1524.40 509.20 -233.9 2263.00 0.00 2263.00 6.0 Bharti Airtel 200912 1898.5 10304.95 22.62 10327.57 6261.23 4066.34 -131.88 1591.45 267.66 59.5 2236.90 0.00 2236.90 5.9 Bharti Airtel 201003 1898.8 10739.41 43.21 10782.62 6766.67 4015.95 -174.67 1671.10 273.14 164.7 2024.11 0.00 2024.11 5.3 Bharti Airtel 201006 1898.8 12230.80 54.80 12285.60 7847.20 4438.40 419.80 1946.70 540.90 -165.9 1681.60 -72.56 1754.16 4.4 Bharti Airtel 201009 1898.8 15215.00 16.90 15231.90 10094.30 5137.60 331.90 2579.00 702.50 -134.7 1661.20 0.00 1661.20 4.4 Cairn India 200909 1896.7 229.78 269.33 499.11 108.21 390.90 0.88 39.05 28.26 -129.3 469.51 150.53 318.98 1.7 Cairn India 200912 1896.7 495.46 99.85 595.31 192.22 403.09 26.00 29.97 21.45 34.7 290.96 0.00 290.96 1.5 Cairn India 201003 1897.0 692.83 87.91 780.74 446.90 333.84 1.88 38.16 20.84 27.8 245.19 0.00 245.19 1.3 Cairn India 201006 1897.4 840.60 28.07 868.67 266.83 601.84 49.26 165.95 29.62 75.6 281.41 0.00 281.41 1.5 Cairn India 201009 1897.5 2686.42 28.20 2714.62 578.03 2136.59 128.09 275.61 279.86 -132.1 1585.08 0.00 1585.08 8.4 Cipla 200909 160.6 1371.18 84.52 1455.70 1062.04 393.66 8.36 47.81 61.75 0.0 275.74 0.00 275.74 3.6 Cipla 200912 160.6 1344.16 112.18 1456.34 1058.62 397.72 4.37 45.67 52.65 6.0 289.03 0.00 289.03 3.6 Cipla 201003 160.6 1317.49 197.28 1514.77 1116.70 398.07 0.46 49.48 67.60 5.0 275.53 95.00 180.53 2.2 Cipla 201006 160.6 1427.38 69.13 1496.51 1129.16 367.35 0.11 54.82 51.25 3.8 257.42 0.00 257.42 3.2 Cipla 201009 160.6 1579.88 52.11 1631.99 1248.79 383.20 0.28 63.91 56.00 0.0 263.01 0.00 263.01 3.3 DLF 200909 339.4 1750.94 59.83 1810.77 841.81 968.96 248.61 76.55 236.37 -44.6 439.74 0.00 439.74 2.6 DLF 200912 339.5 2025.77 130.93 2156.70 1186.47 970.23 256.83 79.96 168.40 0.0 467.89 0.00 467.89 2.8 DLF 201003 339.5 1994.37 156.45 2150.82 1081.63 1069.19 314.70 94.71 236.19 0.0 426.38 0.00 426.38 2.5 DLF 201006 339.5 2028.53 140.72 2169.25 1048.95 1120.30 388.44 149.83 167.86 0.0 411.03 0.00 411.03 2.4 DLF 201009 339.5 2369.02 157.58 2526.60 1440.16 1086.44 433.76 153.97 73.41 0.0 418.38 0.00 418.38 2.5 Dr Reddy's Labs 200909 84.4 1836.81 14.01 1850.82 1496.19 354.63 -20.85 98.70 59.51 0.0 217.27 0.00 217.27 12.9 Dr Reddy's Labs 200912 84.4 1743.13 23.87 1767.00 1833.21 -66.21 8.23 111.78 46.85 0.0 -233.07 -411.43 178.36 10.6 Dr Reddy's Labs 201003 84.4 1622.56 16.53 1639.09 1351.72 287.37 3.90 98.83 78.84 0.0 105.80 0.00 105.80 6.3 Dr Reddy's Labs 201006 84.6 1683.13 19.11 1702.24 1341.62 360.62 17.74 97.60 35.73 0.0 209.55 0.00 209.55 12.4 Dr Reddy's Labs 201009 84.6 1870.37 22.20 1892.57 1464.82 427.75 3.49 104.79 32.65 0.0 286.82 0.00 286.82 17.0 GAIL (India) 200909 1268.5 6223.30 168.92 6392.22 5206.00 1186.22 17.85 141.62 309.40 4.1 713.23 0.00 713.23 5.6 GAIL (India) 200912 1268.5 6187.84 143.77 6331.61 4918.22 1413.39 14.22 140.91 371.11 27.2 859.95 0.00 859.95 6.8 GAIL (India) 201003 1268.5 6522.12 148.57 6670.69 5205.35 1465.34 20.01 138.88 354.67 41.0 910.82 0.00 910.82 7.2 GAIL (India) 201006 1268.5 7095.95 67.55 7163.50 5661.16 1502.34 20.54 159.96 410.98 24.0 886.88 0.00 886.88 7.0 GAIL (India) 201009 1268.5 8104.09 174.01 8278.10 6671.20 1606.90 11.74 162.59 321.53 187.5 923.55 0.00 923.55 7.3 HDFC 200909 284.9 2844.83 5.40 2850.23 96.32 2753.91 1836.51 4.46 249.00 0.0 663.94 0.00 663.94 23.3 HDFC 200912 285.9 2756.95 5.26 2762.21 96.24 2665.97 1704.23 4.49 286.00 0.0 671.25 0.00 671.25 23.5 HDFC 201003 287.1 2892.30 7.02 2899.32 68.62 2830.70 1559.54 5.28 339.50 0.0 926.38 0.00 926.38 32.2 HDFC 201006 291.0 2797.13 4.82 2801.95 111.76 2690.19 1719.59 4.01 272.00 0.0 694.59 0.00 694.59 24.0 HDFC 201009 292.0 2965.50 4.72 2970.22 114.72 2855.50 1717.55 4.41 326.00 0.0 807.54 0.00 807.54 5.5 Note: Quarterly Results (Consolidated in Bold) Beyond Market 07th Dec ’10 It’s simplified... 41 Quarterly Results of Nifty 50 Companies (For quarter ended September ’10) Co. Name Year Equity Net Sale Open T.Inc. T.Exp. PBIDT Int. Dep. Tax D.Tax Rep. Ex. Item Adj. EPS Interest PAT PAT HCL Technologies 200909 134.3 1247.32 47.87 1295.19 866.41 428.78 15.23 68.45 44.35 0.0 300.75 0.00 300.75 4.5 HCL Technologies 200912 134.7 1213.71 45.51 1259.22 886.46 372.76 36.07 67.40 13.85 0.0 255.44 0.00 255.44 3.8 HCL Technologies 201003 135.2 1287.11 34.06 1321.17 943.10 378.07 24.61 64.73 26.16 0.0 262.57 0.00 262.57 3.9 HCL Technologies 201006 135.8 1330.61 35.61 1366.22 1017.64 348.58 25.45 73.43 11.88 0.0 237.82 0.00 237.82 3.5 HCL Technologies 201009 136.0 1498.32 42.02 1540.34 1220.00 320.34 26.29 73.43 25.74 0.0 194.88 0.00 194.88 2.9 HDFC Bank 200909 427.4 3991.89 1053.54 5045.43 2010.44 3034.99 2036.13 0.00 311.40 0.0 687.46 0.00 687.46 16.1 HDFC Bank 200912 455.2 4034.81 853.01 4887.82 1900.94 2986.88 1810.90 0.00 357.48 0.0 818.50 0.00 818.50 18.7 HDFC Bank 201003 457.7 4053.11 903.55 4956.66 2000.45 2956.21 1701.75 0.00 417.84 0.0 836.62 0.00 836.62 18.3 HDFC Bank 201006 459.7 4420.15 939.88 5360.03 2147.33 3212.70 2019.01 0.00 381.98 0.0 811.71 0.00 811.71 17.7 HDFC Bank 201009 462.6 4810.00 960.70 5770.70 2134.36 3636.34 2283.72 0.00 440.48 0.0 912.14 0.00 912.14 19.8 Hero Honda Motor 200909 39.9 4040.10 98.21 4138.31 3325.43 812.88 -6.10 50.34 171.50 0.0 597.14 0.00 597.14 29.9 Hero Honda Motor 200912 39.9 3814.42 67.56 3881.98 3166.11 715.87 -4.59 46.89 137.80 0.0 535.77 0.00 535.77 26.8 Hero Honda Motor 201003 39.9 4092.61 99.20 4191.81 3410.58 781.23 -4.47 48.66 138.23 0.0 598.81 0.00 598.81 30.0 Hero Honda Motor 201006 39.9 4264.61 85.42 4350.03 3694.07 655.96 -2.66 48.28 118.65 0.0 491.69 0.00 491.69 24.6 Hero Honda Motor 201009 39.9 4511.29 119.01 4630.30 3944.01 686.29 -2.07 60.75 122.01 0.0 505.60 0.00 505.60 25.3 Hind. Unilever 200909 218.1 4228.11 119.24 4347.35 3783.29 564.06 1.48 46.24 87.81 0.0 428.53 -112.19 540.72 2.5 Hind. Unilever 200912 218.1 4504.26 159.57 4663.83 3792.97 870.86 0.19 45.01 176.55 0.0 649.11 34.97 614.14 2.8 Hind. Unilever 201003 218.2 4315.75 294.93 4610.68 3791.29 819.39 0.14 50.29 187.76 0.0 581.20 160.49 420.71 1.9 Hind. Unilever 201006 218.2 4793.89 147.35 4941.24 4199.67 741.57 0.08 53.50 154.78 0.0 533.21 14.34 518.87 2.4 Hind. Unilever 201009 218.2 4680.87 206.48 4887.35 4123.20 764.15 0.07 55.37 142.59 0.0 566.12 32.30 533.82 2.6 Hindalco Inds. 200909 170.1 4890.41 81.84 4972.25 4305.80 666.45 66.29 165.86 90.25 0.0 344.05 0.00 344.05 2.0 Hindalco Inds. 200912 191.4 5286.10 78.76 5364.86 4567.69 797.17 72.94 167.61 129.52 0.0 427.10 0.00 427.10 2.4 Hindalco Inds. 201003 191.4 5358.46 123.60 5482.06 4569.03 913.03 70.54 168.41 10.16 0.0 663.92 0.00 663.92 3.5 Hindalco Inds. 201006 191.4 5145.51 101.66 5247.17 4345.79 901.38 59.33 169.09 138.56 0.0 534.40 0.00 534.40 2.8 Hindalco Inds. 201009 191.4 5802.76 139.28 5942.04 5161.59 780.45 52.63 171.77 122.24 0.0 433.81 0.00 433.81 2.3 IDFC 200909 1295.5 1019.84 15.53 1035.37 124.06 911.31 512.07 9.85 97.55 0.0 291.84 0.00 291.84 2.3 IDFC 200912 1296.6 997.43 0.71 998.14 140.87 857.27 478.47 10.69 97.88 0.0 269.90 0.00 269.90 2.1 IDFC 201003 1300.6 1023.84 10.49 1034.33 285.96 748.37 436.18 10.50 73.81 0.0 228.11 0.00 228.11 1.8 IDFC 201006 1301.6 1091.39 6.12 1097.51 158.02 939.49 485.21 9.70 109.79 0.0 335.11 0.00 335.11 2.6 IDFC 201009 1460.0 1216.75 2.99 1219.74 165.02 1054.72 568.79 10.35 137.48 0.0 338.40 0.00 338.40 2.3 ICICI Bank 200909 1113.6 6656.94 1823.79 8480.73 2495.83 5984.90 4620.87 0.00 402.29 -78.4 1040.13 0.00 1040.13 9.3 ICICI Bank 200912 1114.2 6089.57 1673.14 7762.71 2364.55 5398.16 4031.48 0.00 463.13 -197.5 1101.06 0.00 1101.06 9.9 ICICI Bank 201003 1114.9 5826.98 1890.84 7717.82 2516.64 5201.18 3792.04 0.00 342.31 61.3 1005.57 0.00 1005.57 9.0 ICICI Bank 201006 1115.5 5812.54 1680.51 7493.05 2281.31 5211.74 3821.49 0.00 515.10 -150.8 1025.98 0.00 1025.98 9.2 ICICI Bank 201009 1150.8 6309.10 1577.93 7887.03 2211.51 5675.52 4104.72 0.00 495.10 -160.6 1236.27 0.00 1236.27 10.7 Infosys Tech. 200909 286.0 5585.00 239.00 5824.00 3892.00 1932.00 0.00 0.00 397.00 0.0 1535.00 0.00 1535.00 26.9 Infosys Tech. 200912 286.0 5741.00 231.00 5972.00 3704.00 2268.00 0.00 231.00 455.00 0.0 1582.00 0.00 1582.00 27.8 Infosys Tech. 201003 286.0 5944.00 256.00 6200.00 3922.00 2278.00 0.00 220.00 357.00 84.0 1617.00 48.00 1569.00 27.4 Infosys Tech. 201006 286.0 6198.00 239.00 6437.00 4443.00 1994.00 0.00 0.00 506.00 0.0 1488.00 0.00 1488.00 26.1 Infosys Tech. 201009 286.0 6947.00 267.00 7214.00 4849.00 2365.00 0.00 0.00 628.00 0.0 1737.00 0.00 1737.00 30.4 ITC 200909 378.0 4352.26 121.13 4473.39 2814.83 1658.56 18.14 148.39 482.12 0.0 1009.91 0.00 1009.91 2.7 ITC 200912 379.5 4531.85 207.42 4739.27 2872.51 1866.76 10.87 154.87 556.85 0.0 1144.17 0.00 1144.17 3.0 ITC 201003 381.8 5053.79 137.02 5190.81 3513.65 1677.16 18.51 153.86 476.57 0.0 1028.22 0.00 1028.22 2.7 ITC 201006 381.8 4816.63 129.19 4945.82 3210.25 1735.57 5.80 159.68 499.78 0.0 1070.31 0.00 1070.31 2.8 ITC 201009 767.7 5061.20 210.47 5271.67 3272.29 1999.38 5.36 163.99 583.29 0.0 1246.74 0.00 1246.74 1.6 Jindal Steel 200909 93.1 2455.58 20.26 2475.84 1139.64 1336.20 102.62 247.42 177.80 0.0 808.36 0.00 808.36 8.7 Jindal Steel 200912 93.1 2675.29 32.15 2707.44 1236.03 1471.41 107.46 253.92 235.68 0.0 874.35 0.00 874.35 9.4 Jindal Steel 201003 93.1 3175.59 30.30 3205.89 1716.93 1488.96 52.30 254.57 218.71 0.0 963.38 0.00 963.38 10.4 Jindal Steel 201006 93.4 2998.24 11.68 3009.92 1436.19 1573.73 86.14 250.91 279.71 0.0 956.97 0.00 956.97 10.1 Jindal Steel 201009 93.4 3077.95 7.88 3085.83 1580.41 1505.42 78.18 273.05 259.95 0.0 894.24 0.00 894.24 9.5 JP Associates 200909 280.4 1843.78 1010.49 2854.27 1368.71 1485.56 258.75 110.04 219.84 28.7 870.19 731.96 138.23 4.1 JP Associates 200912 424.4 2852.37 116.29 2968.66 2290.53 678.13 276.23 110.94 81.28 106.7 103.02 0.00 103.02 0.5 JP Associates 201003 424.9 3345.20 12.29 3357.49 2492.24 865.25 298.92 133.37 76.66 112.3 243.97 0.00 243.97 1.1 JP Associates 201006 424.9 3174.19 556.75 3730.94 2532.77 1198.17 327.94 150.34 142.82 61.1 515.98 367.32 148.66 0.7 JP Associates 201009 425.3 2993.26 84.69 3077.95 2312.19 765.76 323.35 152.78 56.93 117.2 115.52 1.09 114.43 0.5 Kotak Mah. Bank 200909 346.8 1105.97 1210.93 2316.90 1424.15 892.75 426.42 38.22 127.21 0.0 299.77 0.00 299.77 8.7 Kotak Mah. Bank 200912 347.7 1184.70 1225.87 2410.57 1444.92 965.65 444.92 36.34 147.97 0.0 331.40 0.00 331.40 9.6 Kotak Mah. Bank 201003 348.1 1247.75 1701.78 2949.53 1827.09 1122.44 463.85 35.16 193.33 0.0 418.55 0.00 418.55 12.0 Kotak Mah. Bank 201006 348.6 1315.66 1017.07 2332.73 1295.80 1036.93 523.28 36.70 151.06 0.0 327.69 0.00 327.69 9.4 Kotak Mah. Bank 201009 366.7 1449.27 1496.23 2945.50 1776.05 1169.45 606.04 37.83 157.98 0.0 364.11 0.00 364.11 9.9 Larsen & Toubro 200909 117.5 7866.18 334.42 8200.60 7123.14 1077.46 126.25 100.13 272.62 -1.9 580.40 18.61 561.79 9.9 Larsen & Toubro 200912 120.1 8071.37 346.93 8418.30 7115.29 1303.01 133.92 104.52 302.16 3.6 758.82 62.55 696.27 11.6 Larsen & Toubro 201003 120.4 13374.89 640.74 14015.63 11534.34 2481.29 135.56 116.22 804.56 -13.2 1438.10 100.58 1337.52 22.2 Larsen & Toubro 201006 120.6 7835.10 276.97 8112.07 6878.26 1233.81 142.34 114.15 311.05 0.1 666.17 0.00 666.17 11.1 Larsen & Toubro 201009 121.0 9260.77 523.02 9783.79 8325.08 1458.71 193.15 121.21 370.47 8.9 764.98 70.84 694.14 11.5 Note: Quarterly Results (Consolidated in Bold) 42 Beyond Market 07th Dec ’10 It’s simplified... Quarterly Results of Nifty 50 Companies (For quarter ended September ’10) Co. Name Year Equity Net Sale Open T.Inc. T.Exp. PBIDT Int. Dep. Tax D.Tax Rep. Ex. Item Adj. EPS Interest PAT PAT M&M 200909 273.4 4465.00 316.83 4781.83 3726.59 1055.24 12.76 89.19 250.35 0.0 702.94 66.92 636.02 23.3 M&M 200912 273.6 4478.70 72.10 4550.80 3827.61 723.19 37.53 98.36 173.60 0.0 413.70 0.00 413.70 15.1 M&M 201003 283.0 5278.86 43.89 5322.75 4459.05 863.70 0.90 94.74 197.80 0.0 570.26 0.00 570.26 10.1 M&M 201006 283.1 5124.17 56.41 5180.58 4384.52 796.06 -22.70 97.62 158.75 0.0 562.39 0.00 562.39 9.9 M&M 201009 285.2 5311.26 322.87 5634.13 4539.39 1094.74 -9.05 97.00 248.30 0.0 758.49 0.00 758.49 13.4 Maruti Suzuki 200909 144.5 7080.67 233.18 7313.85 6287.70 1026.15 5.97 203.11 247.07 0.0 570.00 0.00 570.00 19.7 Maruti Suzuki 200912 144.5 7372.65 221.45 7594.10 6368.94 1225.16 8.37 202.78 326.48 0.0 687.53 0.00 687.53 23.8 Maruti Suzuki 201003 144.5 8280.82 222.70 8503.52 7313.48 1190.04 12.85 223.04 297.60 0.0 656.55 0.00 656.55 22.7 Maruti Suzuki 201006 144.5 8090.39 241.34 8331.73 7439.02 892.71 7.98 241.70 177.67 0.0 465.36 0.00 465.36 16.1 Maruti Suzuki 201009 144.5 8977.37 303.87 9281.24 8186.95 1094.29 9.72 238.19 248.14 0.0 598.24 0.00 598.24 20.7 NTPC 200909 8245.5 10782.79 739.82 11522.61 7567.88 3954.73 540.69 643.75 574.94 42.4 2151.95 0.00 2151.95 2.6 NTPC 200912 8245.5 11183.73 779.13 11962.86 7818.48 4144.38 341.78 661.36 886.22 -111.7 2364.98 0.00 2364.98 2.9 NTPC 201003 8245.5 12353.39 627.65 12981.04 9687.65 3293.39 481.79 732.16 -97.62 159.4 2017.65 0.00 2017.65 2.5 NTPC 201006 8245.5 12944.49 584.93 13529.42 9957.76 3571.66 535.75 682.72 421.17 90.1 1841.89 0.00 1841.89 2.2 NTPC 201009 8245.5 12989.29 2378.07 15367.36 11241.89 4125.47 590.20 506.28 643.33 278.3 2107.38 0.00 2107.38 2.6 ONGC 200909 2138.9 15080.59 1250.29 16330.88 6357.09 9973.79 3.54 2356.06 2019.97 504.6 5089.64 0.00 5089.64 23.8 ONGC 200912 2138.9 15314.49 161.52 15476.01 6171.46 9304.55 2.93 4675.79 1780.50 -208.3 3053.58 0.00 3053.58 14.3 ONGC 201003 2138.9 14713.26 1758.21 16471.47 6584.31 9887.16 56.08 4448.03 1009.34 597.3 3776.41 0.00 3776.41 17.7 ONGC 201006 2138.9 13665.60 564.62 14230.22 5629.80 8600.42 2.76 3114.27 1825.60 -3.4 3661.14 0.00 3661.14 17.1 ONGC 201009 2138.9 18193.59 1142.87 19336.46 7108.47 12227.99 0.91 4400.07 2231.96 206.3 5388.77 0.00 5388.77 25.2 Power Grid Corpn 200909 4208.8 1701.30 99.60 1800.90 277.08 1523.82 393.47 581.85 87.09 2.9 459.97 -0.68 460.65 1.1 Power Grid Corpn 200912 4208.8 1525.41 224.99 1750.40 278.71 1471.69 411.76 535.97 33.74 2.4 487.84 0.36 487.48 1.2 Power Grid Corpn 201003 4208.8 2230.46 -123.87 2106.59 506.23 1600.36 331.87 394.86 181.86 145.3 546.52 0.00 546.52 1.3 Power Grid Corpn 201006 4208.8 1999.12 151.77 2150.89 318.03 1832.86 404.91 502.39 170.06 52.3 703.18 0.91 702.27 1.7 Power Grid Corpn 201009 4208.8 2126.63 96.34 2222.97 344.37 1878.60 401.66 545.60 188.38 91.6 651.40 -2.45 653.85 1.6 Punjab Natl.Bank 200909 315.3 5304.52 771.34 6075.86 1373.24 4702.62 3312.29 0.00 463.37 0.0 926.96 0.00 926.96 29.4 Punjab Natl.Bank 200912 315.3 5505.54 731.01 6236.55 1523.81 4712.74 3176.44 0.00 524.99 0.0 1011.31 0.00 1011.31 32.1 Punjab Natl.Bank 201003 315.3 5607.63 934.60 6542.23 1721.95 4820.28 3109.68 0.00 575.57 0.0 1135.03 54.04 1080.99 34.3 Punjab Natl.Bank 201006 315.3 5991.86 871.52 6863.38 1926.05 4937.33 3373.29 0.00 495.75 0.0 1068.29 0.00 1068.29 33.9 Punjab Natl.Bank 201009 315.3 6455.43 718.25 7173.68 2110.88 5062.80 3478.74 0.00 509.52 0.0 1074.54 0.00 1074.54 34.1 Ranbaxy Labs. 200909 210.2 1189.60 185.37 1374.97 1073.70 301.27 7.35 31.67 76.17 0.0 186.08 6.22 179.86 4.4 Ranbaxy Labs. 200912 210.2 1522.88 186.00 1708.88 783.84 925.04 -75.84 55.98 456.67 0.0 488.23 0.00 488.23 11.6 Ranbaxy Labs. 201003 210.3 1648.51 767.99 2416.50 1056.36 1360.14 22.41 73.59 392.34 0.0 871.80 0.00 871.80 20.7 Ranbaxy Labs. 201006 210.3 1069.58 382.67 1452.25 1283.21 169.04 123.60 44.33 1.19 0.0 -0.08 -14.74 14.66 0.0 Ranbaxy Labs. 201009 210.4 1130.99 378.06 1509.05 1209.93 299.12 9.57 45.47 22.31 0.0 221.77 89.48 132.29 3.1 Rel. Comm. 200909 1032.0 5352.36 350.20 5702.56 3677.77 2024.79 663.57 714.37 -173.93 0.0 740.30 -2.85 743.15 3.6 Rel. Comm. 200912 1032.0 5128.97 180.80 5309.77 3519.94 1789.83 -407.55 833.06 200.26 0.0 1108.01 -18.81 1126.82 5.4 Rel. Comm. 201003 1032.0 4698.24 276.54 4974.78 3441.54 1533.24 -813.40 1084.66 192.33 0.0 1170.11 0.00 1170.11 5.7 Rel. Comm. 201006 1032.0 5014.96 94.58 5109.54 3477.16 1632.38 439.67 964.77 -71.86 0.0 250.89 0.00 250.89 1.2 Rel. Comm. 201009 1032.0 4972.59 145.71 5118.30 3459.67 1658.63 279.70 955.28 -66.09 0.0 445.92 0.00 445.92 2.2 Reliance Capital 200909 246.2 1395.31 71.08 1466.39 863.85 602.54 360.77 15.38 81.60 -13.5 155.83 -0.03 155.86 6.3 Reliance Capital 200912 246.2 1352.93 135.90 1488.83 1021.64 467.19 345.72 17.51 49.59 -11.7 63.18 0.00 63.18 2.6 Reliance Capital 201003 246.2 1694.28 24.71 1718.99 1343.41 375.58 258.73 20.46 24.74 4.8 64.49 0.00 64.49 2.6 Reliance Capital 201006 246.2 1035.18 232.02 1267.20 861.92 405.28 294.41 12.84 32.85 -12.8 76.97 0.00 76.97 3.1 Reliance Capital 201009 246.2 1280.61 34.45 1315.06 824.93 490.13 339.69 11.85 36.86 -14.3 111.97 0.11 111.86 4.6 Reliance Inds. 200909 1643.0 46848.00 628.00 47476.00 39631.00 7845.00 462.00 2432.00 800.00 299.0 3852.00 0.00 3852.00 23.4 Reliance Inds. 200912 3270.0 56856.00 508.00 57364.00 49012.00 8352.00 550.00 2795.00 699.00 300.0 4008.00 0.00 4008.00 12.3 Reliance Inds. 201003 3270.0 57570.00 615.00 58185.00 48434.00 9751.00 525.00 3392.00 821.00 303.0 4710.00 0.00 4710.00 14.4 Reliance Inds. 201006 3271.0 58228.00 722.00 58950.00 48886.00 10064.00 541.00 3485.00 987.00 200.0 4851.00 0.00 4851.00 14.8 Reliance Inds. 201009 3272.0 57479.00 672.00 58151.00 48083.00 10068.00 542.00 3377.00 1026.00 200.0 4923.00 0.00 4923.00 15.1 Reliance Infra. 200909 225.3 2571.88 240.94 2812.82 2336.64 476.18 73.96 73.96 25.48 -2.6 306.90 0.00 306.90 13.6 Reliance Infra. 200912 225.3 2235.14 267.93 2503.07 2052.12 450.95 56.53 83.02 48.77 -14.5 277.13 0.00 277.13 12.3 Reliance Infra. 201003 244.9 2553.12 257.57 2810.69 2372.51 438.18 58.06 90.67 38.36 0.0 251.09 0.00 251.09 10.3 Reliance Infra. 201006 244.9 2135.38 273.09 2408.47 1974.60 433.87 61.31 76.86 49.45 0.0 246.25 0.00 246.25 10.1 Reliance Infra. 201009 244.9 2364.33 23.98 2388.31 2022.87 365.44 60.04 82.53 52.38 0.0 170.49 0.00 170.49 7.0 Reliance Power 200909 2396.8 0.00 246.15 246.15 15.77 230.38 0.00 0.09 35.76 0.0 194.53 0.00 194.53 0.8 Reliance Power 200912 2396.8 0.00 179.16 179.16 26.74 152.42 0.00 0.16 18.61 0.0 133.65 0.00 133.65 0.6 Reliance Power 201003 2396.8 0.00 82.56 82.56 53.77 28.79 7.02 5.34 -75.97 0.0 92.40 0.00 92.40 0.0 Reliance Power 201006 2396.8 139.34 287.41 426.75 130.13 296.62 28.96 23.75 48.50 0.0 195.41 0.00 195.41 0.8 Reliance Power 201009 2396.8 168.69 343.71 512.40 140.50 371.90 49.90 37.49 49.71 0.0 234.80 0.00 234.80 1.0 SAIL 200909 4130.4 9943.92 627.67 10571.59 7647.01 2924.58 73.50 332.22 853.28 2.1 1663.49 0.00 1663.49 4.0 SAIL 200912 4130.4 9697.14 588.33 10285.47 7300.24 2985.23 110.11 339.04 866.04 -5.5 1675.55 0.00 1675.55 4.1 SAIL 201003 4130.4 11955.20 717.49 12672.69 9132.70 3539.99 134.71 338.44 808.68 173.3 2084.90 0.00 2084.90 5.1 SAIL 201006 4130.4 9029.37 490.15 9519.52 7290.46 2229.06 129.64 350.51 578.05 -5.8 1176.65 0.00 1176.65 2.9 SAIL 201009 4130.4 10602.88 578.67 11181.55 9111.39 2070.16 109.04 368.82 487.28 15.0 1090.01 0.00 1090.01 2.6 Note: Quarterly Results (Consolidated in Bold) Beyond Market 07th Dec ’10 It’s simplified... 43 Quarterly Results of Nifty 50 Companies (For quarter ended September ’10) Co. Name Year Equity Net Sale Open T.Inc. T.Exp. PBIDT Int. Dep. Tax D.Tax Rep. Ex. Item Adj. EPS Interest PAT PAT Sesa Goa 200909 82.1 534.11 93.89 628.00 386.01 241.99 1.98 20.23 48.65 1.9 166.46 0.00 166.46 2.1 Sesa Goa 200912 82.1 1866.79 154.84 2021.63 853.13 1168.50 25.06 22.45 284.86 5.7 827.51 0.00 827.51 10.2 Sesa Goa 201003 83.1 2403.54 144.42 2547.96 915.89 1632.07 22.65 16.64 385.87 -8.2 1212.87 0.00 1212.87 14.6 Sesa Goa 201006 86.0 2394.04 179.98 2574.02 953.45 1620.57 13.74 19.14 283.19 0.0 1301.79 0.00 1301.79 15.2 Sesa Goa 201009 86.0 906.82 111.96 1018.78 578.55 440.23 14.01 19.42 18.90 0.0 384.94 0.00 384.94 4.5 Siemens 200909 67.4 2482.05 31.29 2513.34 2271.01 242.33 -8.67 21.33 94.06 -15.9 151.54 0.00 151.54 4.5 Siemens 200912 67.4 1834.01 32.59 1866.60 1503.39 363.21 -15.72 21.15 123.82 -2.5 236.41 0.00 236.41 7.0 Siemens 201003 67.4 2212.42 13.66 2226.08 1939.98 286.10 -11.72 23.74 95.35 -2.4 181.09 0.00 181.09 5.4 Siemens 201006 67.4 2234.94 11.46 2246.40 2004.42 241.98 -18.06 24.95 88.12 -9.2 156.12 0.00 156.12 4.6 Siemens 201009 67.4 3000.80 24.48 3025.28 2628.06 397.22 -21.44 30.07 143.24 -6.1 251.47 0.00 251.47 7.5 St Bk of India 200909 634.9 25017.91 8083.74 33101.65 11092.83 22008.82 17146.18 0.00 1729.48 0.0 3050.99 0.00 3050.99 48.1 St Bk of India 200912 634.9 24948.45 7283.00 32231.45 11026.67 21204.78 16166.75 0.00 1683.09 0.0 3304.59 0.00 3304.59 52.1 St Bk of India 201003 634.9 25473.26 9912.77 35386.03 15304.37 20081.66 15800.43 0.00 1608.14 0.0 2619.72 0.00 2619.72 41.3 St Bk of India 201006 634.9 26312.95 6495.11 32808.06 11198.88 21609.18 15961.93 0.00 2180.16 0.0 3365.26 0.00 3365.26 53.0 St Bk of India 201009 635.0 27919.03 10006.41 37925.44 17328.29 20597.15 16458.74 0.00 1701.29 0.0 2363.95 -277.26 2641.21 41.6 Sterlite Inds. 200909 168.1 6103.91 451.75 6555.66 4712.88 1842.78 83.48 173.39 259.33 0.0 958.85 -19.59 978.44 11.8 Sterlite Inds. 200912 168.1 6676.96 441.31 7118.27 5345.20 1773.07 92.89 178.21 290.34 0.0 731.33 -220.65 951.98 11.3 Sterlite Inds. 201003 168.1 7110.80 665.62 7776.42 5043.42 2733.00 120.61 224.55 452.82 0.0 1380.90 0.00 1380.90 16.4 Sterlite Inds. 201006 336.1 5924.50 737.24 6661.74 4551.38 2110.36 140.85 217.04 368.46 0.0 1008.43 0.00 1008.43 3.0 Sterlite Inds. 201009 336.1 6028.98 633.22 6662.20 4601.30 2060.90 -0.32 212.34 455.52 0.0 1008.03 -15.95 1023.98 3.0 Sun Pharma.Inds. 200909 103.6 1185.17 66.37 1251.54 737.87 513.67 -32.47 37.90 39.96 0.0 453.81 0.00 453.81 21.9 Sun Pharma.Inds. 200912 103.6 1020.86 9.14 1030.00 652.45 377.55 -23.31 35.89 26.05 0.0 338.95 0.00 338.95 16.4 Sun Pharma.Inds. 201003 103.6 1109.15 -11.14 1098.01 690.64 407.37 -24.87 41.94 -1.26 0.0 394.48 0.00 394.48 19.0 Sun Pharma.Inds. 201006 103.6 1399.70 -8.76 1390.94 783.73 607.21 -20.32 40.20 9.70 0.0 564.32 0.00 564.32 27.2 Sun Pharma.Inds. 201009 103.6 1370.07 55.59 1425.66 903.03 522.63 -36.78 35.18 17.21 0.0 503.65 0.00 503.65 24.3 Suzlon Energy 200909 311.3 4793.34 62.57 4855.91 4734.68 121.23 292.60 188.04 1.81 0.0 -355.52 -20.16 -335.36 0.0 Suzlon Energy 200912 311.4 5590.03 291.80 5881.83 5341.98 539.85 289.51 167.29 56.38 0.0 14.10 187.37 -173.27 0.1 Suzlon Energy 201003 311.4 6083.61 109.77 6193.38 5629.37 564.01 300.15 145.06 295.31 0.0 -188.47 -9.88 -178.59 0.0 Suzlon Energy 201006 311.4 2398.65 29.32 2427.97 2994.60 -566.63 261.10 126.50 -23.71 0.0 -912.22 -37.28 -874.94 0.0 Suzlon Energy 201009 349.1 3771.56 67.45 3839.01 3680.52 158.49 267.09 137.28 132.33 0.0 -369.23 0.00 -369.23 0.0 Tata Motors 200909 514.1 20877.67 637.19 21514.86 19800.93 1713.93 559.03 847.94 289.42 0.0 21.78 8.78 13.00 0.4 Tata Motors 200912 544.0 25979.61 88.71 26068.32 23306.71 2761.61 545.75 1307.20 242.87 0.0 650.26 -169.64 819.90 15.1 Tata Motors 201003 570.6 28734.80 1386.80 30121.60 26021.31 4100.29 551.41 887.76 409.20 0.0 2227.80 0.00 2227.80 39.0 Tata Motors 201006 570.6 26876.08 229.62 27105.70 23241.54 3864.16 561.60 1011.54 296.02 0.0 1988.73 -23.55 2012.28 35.3 Tata Motors 201009 570.6 28572.71 381.15 28953.86 24780.36 4173.50 531.27 1094.86 313.10 0.0 2222.99 112.81 2110.18 37.0 Tata Power Co. 200909 237.1 4735.46 115.27 4850.73 3803.67 1047.06 187.73 224.42 238.68 0.0 368.73 0.00 368.73 15.8 Tata Power Co. 200912 237.2 4313.04 66.86 4379.90 3793.65 586.25 185.30 220.79 26.48 0.0 98.57 0.00 98.57 4.2 Tata Power Co. 201003 237.3 5278.85 519.78 5798.63 4235.72 1562.91 185.30 231.40 78.93 0.0 946.78 0.00 946.78 39.9 Tata Power Co. 201006 237.3 5151.62 -51.84 5099.78 4045.97 1053.81 171.84 235.00 289.01 0.0 317.67 0.00 317.67 13.1 Tata Power Co. 201009 237.3 4797.84 337.03 5134.87 3672.17 1462.70 208.08 247.01 264.81 0.0 675.54 0.00 675.54 28.3 Tata Steel 200909 886.7 25276.14 166.80 25442.94 25934.56 -491.62 717.18 1153.52 327.52 0.0 -2707.25 -784.97 -1922.28 0.0 Tata Steel 200912 886.7 26068.55 598.52 26667.07 23447.16 3219.91 763.04 1154.68 814.78 0.0 472.65 -73.26 545.91 6.2 Tata Steel 201003 886.7 27225.40 865.57 28090.97 23111.53 4979.44 659.95 1094.55 786.60 0.0 2434.06 0.00 2434.06 27.4 Tata Steel 201006 886.7 27010.06 285.77 27295.83 22822.09 4473.74 597.59 1043.94 1000.46 0.0 1825.26 -38.73 1863.99 21.0 Tata Steel 201009 901.7 28090.91 1369.86 29460.77 25005.44 4455.33 663.71 1078.10 744.97 0.0 1978.81 -22.91 2001.72 22.2 TCS 200909 195.7 7435.23 -8.63 7426.60 5317.25 2109.35 3.53 165.96 277.27 0.0 1642.21 0.00 1642.21 8.4 TCS 200912 195.7 7648.53 65.51 7714.04 5375.79 2338.25 3.66 167.91 322.52 0.0 1823.90 0.00 1823.90 9.3 TCS 201003 195.7 7738.17 189.64 7927.81 5399.89 2527.92 5.20 169.02 319.87 0.0 2000.59 0.00 2000.59 10.2 TCS 201006 195.7 8217.28 95.46 8312.74 5808.08 2504.66 2.68 161.53 402.80 0.0 1906.07 0.00 1906.07 9.7 TCS 201009 195.7 9286.39 70.75 9357.14 6510.22 2846.92 15.28 172.46 460.14 0.0 2169.21 0.00 2169.21 11.1 Wipro 200909 293.3 6917.70 128.40 7046.10 5390.10 1656.00 49.20 208.60 221.70 0.0 1170.70 0.00 1170.70 8.0 Wipro 200912 293.3 6963.40 109.40 7072.80 5409.00 1663.80 21.90 192.30 229.10 0.0 1217.40 0.00 1217.40 8.4 Wipro 201003 293.6 6982.90 144.60 7127.50 5457.80 1669.70 -34.20 188.70 301.50 0.0 1209.10 0.00 1209.10 8.3 Wipro 201006 489.9 7236.40 150.80 7387.20 5598.70 1788.50 40.30 188.40 234.50 0.0 1318.60 0.00 1318.60 5.4 Wipro 201009 490.4 7730.50 161.40 7891.90 6130.40 1761.50 46.70 196.80 218.30 0.0 1284.90 0.00 1284.90 5.3 Note: Quarterly Results (Consolidated in Bold) 44 Beyond Market 07th Dec ’10 It’s simplified... CHANGE IN PRICE AND OPEN INTEREST CHANGE IN PRICE AND OPEN INTEREST OF THE NIFTY 50 COMPANIES 15th Nov'10 30th Nov'10 Company Name Price Open Price Open Change Change Change Change (Rs) Interest (Rs) Interest in Price in Open in Price in Open (Rs) Interest (%) Interest (%) Nifty Futures 6140.25 28101350 5886.90 26644100 -253.35 -1457250 -4.13 --5.19 Bank Nifty 12789.95 1610500 12008.95 1397625 -781.00 -212875 -6.11 -13.22 ACC Ltd 1070.05 2289750 986.45 1698750 -83.60 -591000 -7.81 -25.81 Ambuja Cements Ltd 155.80 23308000 140.65 12028000 -15.15 -11280000 -9.72 -48.40 Axis Bank Ltd 1527.70 2210250 1376.75 2011000 -150.95 -199250 -9.88 -9.01 Bajaj Auto Ltd 1595.10 1332000 1579.25 1138250 -15.85 -193750 -0.99 -14.55 Bharti Airtel Ltd 311.40 22865000 360.35 11333000 48.95 -11532000 15.72 -50.44 Bharat Heavy Electricals Ltd 2404.30 2776375 2208.80 2288625 -195.50 -487750 -8.13 -17.57 Bharat Petroleum Corporation Ltd 741.30 3892500 679.05 2780500 -62.25 -1112000 -8.40 -28.57 Cairn India Ltd 331.00 16966000 315.70 14229000 -15.30 -2737000 -4.62 -16.13 Cipla Ltd 345.45 8403000 345.00 5378000 -0.45 -3025000 -0.13 -36.00 DLF Ltd 324.40 18445000 307.05 13460000 -17.35 -4985000 -5.35 -27.03 Dr Reddy's Laboratories Ltd 1764.45 640750 1794.90 600500 30.45 -40250 1.73 -6.28 GAIL (India) Ltd 494.90 2357500 487.05 1498500 -7.85 -859000 -1.59 -36.44 HCL Technologies Ltd 406.15 1806500 406.30 1275000 0.15 -531500 0.04 -29.42 HDFC Ltd 714.35 5350625 689.65 4650875 -24.70 -699750 -3.46 -13.08 HDFC Bank Ltd 2386.80 1496250 2299.15 1511125 -87.65 14875 -3.67 0.99 Hero Honda Motors Ltd 1827.50 3024875 1987.70 2012250 160.20 -1012625 8.77 -33.48 Hindalco Industries Ltd 224.30 16462000 207.05 12276000 -17.25 -4186000 -7.69 -25.43 Hindustan Unilever Ltd 304.45 11571000 299.35 11540000 -5.10 -31000 -1.68 -0.27 ICICI Bank Ltd 1227.65 9572250 1152.10 9671500 -75.55 99250 -6.15 1.04 IDFC Ltd 196.60 30672000 187.30 18776000 -9.30 -11896000 -4.73 -38.78 Infosys Technologies Ltd 3032.55 2813875 3060.05 2221500 27.50 -592375 0.91 -21.05 I T C Ltd 175.60 19014000 172.35 15258000 -3.25 -3756000 -1.85 -19.75 Jindal Steel & Power Ltd 680.80 4850500 641.15 4527500 -39.65 -323000 -5.82 -6.66 Jaiprakash Associates Ltd 128.65 47124000 110.50 32534000 -18.15 -14590000 -14.11 -30.96 Kotak Mahindra Bank Ltd 484.55 2856000 477.75 1953000 -6.80 -903000 -1.40 -31.62 Larsen & Toubro Ltd 2088.00 2060500 1958.25 2488250 -129.75 427750 -6.21 20.76 Mahindra & Mahindra Ltd 805.20 7139000 769.50 4280500 -35.70 -2858500 -4.43 -40.04 Maruti Suzuki India Ltd 1442.85 2463250 1424.00 1707250 -18.85 -756000 -1.31 -30.69 NTPC Ltd 190.95 24514000 184.85 20769000 -6.10 -3745000 -3.19 -15.28 Oil & Natural Gas Corporation Ltd 1321.80 2917750 1241.45 2340250 -80.35 -577500 -6.08 -19.79 Punjab National Bank 1339.30 1319500 1208.90 1431000 -130.40 111500 -9.74 8.45 Power Grid Corporation of India Ltd 98.65 87986000 95.70 54828000 -2.95 -33158000 -2.99 -37.69 Ranbaxy Laboratories Ltd 569.20 5540000 572.60 3192000 3.40 -2348000 0.60 -42.38 Reliance Communications Ltd 169.15 35504000 132.85 33232000 -36.30 -2272000 -21.46 -6.40 Reliance Capital Ltd 762.50 10815500 655.40 7790500 -107.10 -3025000 -14.05 -27.97 Reliance Industries Ltd 1060.80 21804000 993.95 19828250 -66.85 -1975750 -6.30 -9.06 Reliance Infrastructure Ltd 1031.80 7857500 851.20 7603500 -180.60 -254000 -17.50 -3.23 Reliance Power Ltd 182.30 33418000 160.80 25044000 -21.50 -8374000 -11.79 -25.06 Steel Authority of India Ltd 195.40 8795000 177.45 6075000 -17.95 -2720000 -9.19 -30.93 State Bank of India 3164.15 4572250 2986.50 3858000 -177.65 -714250 -5.61 -15.62 Sesa Goa Ltd 341.75 13252500 308.25 11434500 -33.50 -1818000 -9.80 -13.72 Siemens Ltd 823.60 1529000 773.15 1148500 -50.45 -380500 -6.13 -24.89 Sterlite Industries (India) Ltd 183.35 14668000 162.75 12563000 -20.60 -2105000 -11.24 -14.35 Sun Pharmaceutical Industries Ltd* 464.08 2028125 449.50 1686875 -14.58 -341250 -3.14 -16.83 Suzlon Energy Ltd 53.95 100688000 47.80 79952000 -6.15 -20736000 -11.40 -20.59 Tata Motors Ltd 1260.95 11091750 1238.00 8557250 -22.95 -2534500 -1.82 -22.85 Tata Power Co Ltd 1393.40 562000 1300.40 631750 -93.00 69750 -6.67 12.41 Tata Steel Ltd 620.05 20908500 585.75 16954500 -34.30 -3954000 -5.53 -18.91 Tata Consultancy Services Ltd 1071.15 3656750 1078.35 3312750 7.20 -344000 0.67 -9.41 Wipro Ltd 434.20 4090530 422.00 3478943 -12.20 -611587 -2.81 -14.95 * - price and OI data with respect to 15-Nov-10 has been adjusted for 1:5 stock split Source: NB Research Beyond Market 07th Dec ’10 It’s simplified... 45 BULK DEALS Bulk deals take place from normal trading windows that brokers provide and can be done any time during trading hours. In a bulk deal, the total traded quantity exceeds 0.5% of the number of equity shares of a company. MAJOR BULK DEALS WHERE OVER 1% OF EQUITY WAS TRADED FROM 15th Nov ’10 TO 30th Nov ’10 Price (Rs) Ex Date Company Client Trade Quantity % of Eq Traded Close BSE 15 Nov'10 Computer Point Ltd Camellia Suppliers Pvt Ltd Buy 575,318 1.92 7.98 7.88 BSE 15 Nov'10 Computer Point Ltd Jai Software & Systems Pvt Ltd Sell 500,000 1.67 8.00 7.88 BSE 16 Nov'10 IAG Company Ltd IAG Co Ltd Disinvestment SELL 235,000 3.65 16.92 17.70 BSE 16 Nov'10 Marathwada Refractories Ltd Saha Infrastructure Pvt Ltd BUY 19,400 2.77 268.81 270.20 BSE 16 Nov'10 IAG Company Ltd Goldmine Barter Pvt Ltd BUY 99,500 1.55 16.95 17.70 BSE 16 Nov'10 Sanjivani Paranteral Ltd Sainath Herbal Care Marketing Pvt Ltd BUY 76,117 1.29 57.07 57.05 BSE 16 Nov'10 Neha International Ltd Elia Construction Pvt Ltd BUY 167,011 1.02 246.34 236.50 BSE 18 Nov'10 IAG Company Ltd IAG Co Ltd Disinvestment SELL 286,698 4.45 14.54 0.00 BSE 18 Nov'10 Marathwada Refractories Ltd Saha Infrastructure Pvt Ltd BUY 20,000 2.86 280.94 0.00 BSE 18 Nov'10 Well Pack Papers & Containers Ltd Aman Tieup Pvt Ltd BUY 1,437,763 1.76 42.80 0.00 BSE 18 Nov'10 Well Pack Papers & Containers Ltd Pumarth Infrastructure Pvt Ltd SELL 1,409,000 1.72 42.80 0.00 BSE 19 Nov'10 Amtek India Ltd Warburg Pincus Intnl Llc Sell 5,500,000 3.97 64.96 0.00 BSE 19 Nov'10 Marathwada Refractories Ltd Saha Infrastructure Pvt Ltd Buy 13,000 1.86 294.86 0.00 BSE 19 Nov'10 Compuage Infocom Ltd Mandhana Industries Ltd Buy 91,746 1.77 233.83 0.00 BSE 19 Nov'10 Silverline Animation Tech Ltd Mukund Motor Parts Pvt Ltd Buy 1,000,000 1.61 20.95 0.00 BSE 19 Nov'10 Amtek India Ltd North Eastern Publishing And Advt Co Ltd Buy 2,000,000 1.45 65.79 0.00 BSE 19 Nov'10 BS Transcomm Ltd Mukund Motor Parts Pvt Ltd Buy 250,000 1.14 207.37 0.00 BSE 19 Nov'10 Silverline Animation Tech Ltd Live Star Marketing Pvt Ltd Buy 643,298 1.04 20.95 0.00 BSE 19 Nov'10 Priyadarshini Tarini Enterprises Pvt Ltd Sell 112,718 1.02 122.51 0.00 BSE 22 Nov'10 Indcap Financial Ltd Shark Communications Pvt Ltd Sell 100,000 1.66 9.36 9.35 BSE 22 Nov'10 Apl Apollo Tubes Ltd Fidelity Institutional Funds Buy 248,708 1.23 148.00 151.65 BSE 22 Nov'10 Amtek India Ltd Warhol Ltd Sell 1,500,000 1.08 64.48 64.45 BSE 23 Nov'10 Sangam (I) Ltd India Advantage Fund I Sell 6,207,229 15.75 50.00 0.00 BSE 23 Nov'10 Sangam (I) Ltd Pacific Corporate Services Ltd Buy 4,572,000 11.60 50.00 0.00 BSE 23 Nov'10 Sangam (I) Ltd Swiss Finance Corporation (Mauritius) Ltd Sell 2,865,590 7.27 50.00 0.00 BSE 23 Nov'10 Sangam (I) Ltd Withal Commercial Pvt Ltd Buy 1,799,990 4.57 50.00 0.00 BSE 23 Nov'10 Monsanto India Ltd Monsanto Holdings Pvt Ltd Buy 383,810 4.45 1830.00 0.00 BSE 23 Nov'10 Monsanto India Ltd Bretco Holdings (Mauritius) Ltd Sell 383,810 4.45 1830.00 0.00 BSE 23 Nov'10 Indcap Financial Ltd Shark Communications Pvt Ltd Sell 169,954 2.82 8.45 0.00 BSE 23 Nov'10 Amtek India Ltd Copthall Mauritius Investment Ltd Sell 2,666,549 1.93 64.43 0.00 BSE 23 Nov'10 Amtek India Ltd Neelanchal Mercantile Pvt Ltd Buy 2,280,000 1.65 64.37 0.00 BSE 23 Nov'10 Dhanus Technologies Ltd UCO Bank Sell 190,421 1.06 16.71 0.00 BSE 23 Nov'10 Sky Industries Ltd Vijit Asset Management Pvt Ltd Sell 40,000 1.01 120.16 0.00 BSE 24 Nov'10 Seax Global Ventures Ltd CDC Medinvest Sell 395,500 4.47 34.95 34.95 BSE 24 Nov'10 Shetron Ltd Copthall Mauritius Investment Ltd Sell 244,775 2.72 43.24 43.25 BSE 24 Nov'10 Le Waterina Resorts & Hotels Ltd Pawantar Agro Agencies Pvt Ltd Sell 168,500 2.53 134.00 134.00 BSE 24 Nov'10 Le Waterina Resorts & Hotels Ltd Miatru Agro Marketing Pvt Ltd Sell 150,000 2.25 134.00 134.00 BSE 24 Nov'10 Micro Technologies (India) Ltd Withal Commercial Pvt Ltd Buy 179,000 1.29 182.07 181.65 BSE 24 Nov'10 Dhanus Technologies Ltd Uco Bank Sell 220,000 1.23 15.46 14.70 BSE 25 Nov'10 Sea Tv Network Ltd Narvada Exim Pvt Ltd Buy 245,000 2.04 82.00 78.80 BSE 25 Nov'10 Shetron Ltd Copthall Mauritius Investment Ltd Sell 119,840 1.33 43.03 41.95 BSE 25 Nov'10 Taneja Aerospace & Aviation Ltd Taib Bank E C Buy 250,000 1.00 45.98 45.95 BSE 26 Nov'10 Well Pack Papers & Containers Ltd Cresta Fund Ltd Buy 2,600,000 3.18 35.15 35.15 BSE 26 Nov'10 Shetron Ltd Copthall Mauritius Investment Ltd Sell 186,055 2.07 41.71 42.75 BSE 29 Nov'10 Sark Systems India Ltd Shree Vihar Housing & Developers Pvt Ltd Buy 185,000 1.98 10.02 10.44 BSE 29 Nov'10 Shetron Ltd Copthall Mauritius Investment Ltd Sell 157,133 1.75 41.10 39.70 BSE 29 Nov'10 Systematix Corporate Services Ltd India Discovery Fund Ltd Buy 135,000 1.06 215.00 214.10 BSE 29 Nov'10 Amtek India Ltd North Eastern Publishing And Advt Co Ltd Buy 1,450,000 1.05 61.69 61.70 BSE 30 Nov'10 Kay Power And Paper Ltd Bhaijee Portfolio Ltd Sell 179,100 1.68 24.61 24.70 BSE 30 Nov'10 BAMPSL Securities Ltd Bhaijee Portfolio Ltd Buy 1,278,850 1.24 2.41 2.44 BSE 30 Nov'10 Visagar Polytex Ltd Global Film & Bord Casting Ltd Sell 80,851 1.01 74.51 75.90 Source: NSE and BSE 46 Beyond Market 07th Dec ’10 It’s simplified... TECHNICAL OUTLOOK FOR THE FORTNIGHT KEY HIGHLIGHTS three month’s average. The marketwide rollover stood The Indian benchmark indices tanked sharply in at 76%, significantly lower than the past three months’ November due to various negative developments average of 85%. Overall, the data suggests a high level globally, like the exchange of fire between North of uncertainty prevailing in the markets. Korea and South Korea and fears that the sovereign debt crisis in Europe might engulf other nations too. The markets will continue to track FII flows as well as developments in the European and Chinese markets In India, the busting of the loan bribery scandal by the closely as nervousness continues to persist. But the CBI recently, aggravated the situation further. The data on housing, unemployment and retail sales from unearthing of the scam led to huge sell-offs in the the US seems to be improving. The S&P 500 chart is realty and banking sectors. The realty index was down giving strong indications of the likelihood of a big 13% week-on-week, while the banking index dropped rally, if the index holds above the 1,200 level in the 3% week-on-week. near term. The S&P 500 has a strong support at the 1,170 level. Unless this level is broken, we don’t see The Indian markets have corrected almost 10.20% any negative signs coming from the US markets. On since the Nifty’s recent peak of 6,338 in the first week the higher side, the S&P 500 could rally up to the of November due to region-wide concerns and India- levels of 1,250 - 1,275 in the coming days. specific issues. For the November series, the Nifty ended 188 points lower at 5,799. As far as Options data is concerned, the 5,900 Put and 5,800 Put have the highest open interest (OI) while the Foreign Institutional Investors (FIIs) were net buyers out-of-the-money (OTM) 5,400 and 5,300 Put saw to the tune of `5,518 crore, while Domestic Institu- additions on 29th Nov ’10. On the call side, 6,200 and tional Investors (DIIs) were buyers of `2,492 crore in 6,300 have the highest OI base. the cash segment for the month of November. This shows that the market corrected almost 10.2% from The Put Call ratio (PCR) for the Nifty stands at 1.22, the recent top without any sell-offs from big institu- indicating a steady and positive trend in the coming tional players, largely due to excess leveraged days. The Nifty premium is seen lowering from `30 to positions from HNIs or from corporate funding, `12, showing slight uncertainty at current levels. The leading to massive sell-offs in individual stocks. Nifty is holding above the major important 89-day EMA of 5,845 and a fresh round of selling is possible Technically, a correction was due in the Indian only if the Nifty drifts below the 5,800 level. A major markets after a spectacular rally of almost 18.5% from upmove is possible only if the Nifty holds above the the lows of 5,348 to the highs of 6,338. The markets 6,080 level in the near term. have witnessed a price correction. In the December series, we believe that the 89-day exponential moving India’s long-term outlook remains promising as the average (EMA) of 5,845 and the 100-day simple Nifty is still trading above its long-term 200-DMA of moving average (SMA) of 5,788 could act as a strong 5,475. From a near-term trading perspective, the support. The next round of sell-offs would take place 89-day EMA of 5,845 will act as an important support only if the Nifty trades below the 5,788 level. level. From a very short-term trading perspective, the 5-DMA of 5,935 is likely to act as an immediate STRATEGY support level and if this gets violated, then 5,845 – Going forward from the current levels of the Nifty 5,780 will be the key levels that people should watch futures at 6,010, we see that the Indian markets are out for in the near term. technically well shaped from a long-term perspective. However, we believe that the markets could correct a On the higher side, the 6,080 - 6,145 - 6,185 levels bit if the Nifty slips below the important level of 5,788 should be breached and sustained with positive market on global jitters, from a very short to medium-term breadth to maintain stability and regain investor confi- perspective. dence. The Bank Nifty is likely to trade in the range of 11,800 - 12,600 and a major move will be seen only if The Nifty rollover stood at 91%, higher than the past the index breaks any of the given points. The overall Beyond Market 07th Dec ’10 It’s simplified... 47 outlook remains positive for the Indian markets in the Bharat Forge Ltd, Canara Bank, Bharat Petroleum coming fortnight, provided the Sensex holds the 19,330 Corporation Ltd, Exide Industries Ltd, IDBI Bank Ltd, level, while the Nifty holds the 5,800 level. Praj Industries Ltd, Raymond Ltd, Rural Electrification Corporation Ltd, Spicejet Ltd, Whirlpool of India Ltd STOCK IDEA and Yes Bank Ltd can be bought from trading and If there is a correction in the indices, then stocks like investment perspectiveS. NIFTY FUTURE DAILY CHART: The 5,910 level may act as an intermediate support in the near term. If this point gets violated, then the next support can be seen at the 100-DMA 5,790, which should be treated as an impor- tant support for the bullish trend to continue. On the higher side, 6,075 will be the level to watch out for. If this level sustains, a fresh rally may begin. MUTUAL FUND, FII ACTIVITY AND NIFTY This graph and data represent the Mutual Fund and FII activity Date MF Net* FII Net * Nifty that took place in the last fortnight, whether the Fund Houses 15 Nov'10 -77.10 -683.20 6121.60 were buyers or sellers. 16 Nov'10 -108.00 526.40 5988.70 18 Nov'10 196.10 -16.80 5998.80 MF Net , FII Net & Nifty 19 Nov'10 -52.70 -218.80 5890.30 22 Nov'10 297.10 1443.50 6010.00 2000.00 6200.00 1500.00 23 Nov'10 346.00 525.90 5934.75 6100.00 1000.00 24 Nov'10 -453.60 -1396.20 5865.75 6000.00 500.00 25 Nov'10 -407.80 1775.50 5799.75 5900.00 0.00 26 Nov'10 234.70 -532.20 5751.95 5800.00 -500.00 19 Nov'10 29 Nov'10 -48.90 -671.90 5830.00 -1000.00 15 Nov'10 29 Nov'10 5700.00 30 Nov'10 -305.00 272.10 5862.70 -1500.00 5600.00 24 Nov'10 01 Dec'10 228.70 1190.70 5960.90 -2000.00 5500.00 Source: NB Research *Net activity in Equity MF FII NIFTY (RHS) 48 Beyond Market 07th Dec ’10 It’s simplified... MOVERS AND LAGGARDS IN MUTUAL FUND SCHEMES Absolute % NAV Scheme Name (Point to Point) (1st Dec '10) 2 Weeks Equity Schemes Movers JM Telecom Sector Fund - Growth 8.2655 4.2032 ICICI Prudential Technology Fund - Growth 18.6200 2.0833 Franklin Infotech Fund - Growth 65.1664 1.5904 Birla Sun Life Enhanced Arbitrage Fund - Growth 10.6308 0.8931 Sundaram Growth Fund - Growth 103.2985 0.8678 Laggards JM Hi Fi Fund - Growth 5.8015 -5.9038 DSP BlackRock Natural Resources & New Energy Fund - Ret - Gth 14.5300 * -5.4713 JM Mid Cap Fund - Growth 27.2504 -5.1457 HSBC Midcap Equity Fund - Growth 24.9117 -5.0838 Reliance Infrastructure Fund - Ret - Growth 10.9506 -4.9774 Debt Schemes Movers Canara Robeco InDiGo Fund - Growth 10.3777 0.6664 Birla Sun Life Medium Term Plan - Ret - Growth 11.0010 0.4272 ICICI Prudential SMART Fund - Series D - 24 Months - Ret - Growth 13.7002** 0.3722 Religare Active Income Fund - Reg - Growth 11.3099 0.2980 ICICI Prudential Banking & PSU Debt Fund - Prem Plus - Growth 10.5369 0.2893 Laggard ICICI Prudential SMART Fund - Series G - 36 Months - Ret - Growth 20.0080 -2.8771 ICICI Prudential SMART Fund - Series H - 36 Months - Ret - Growth 15.3474 -1.0739 ICICI Prudential SMART Fund - Series F - 36 Months - Ret - Growth 16.1077 -0.5618 Sundaram Bond Saver - Growth 28.0393 -0.4279 DWS Premier Bond Fund - Regular Plan - Growth 16.1772 -0.1167 Balance Schemes Movers Baroda Pioneer Balance Fund - Growth 29.8200 0.7092 ING Balanced Fund - Growth 26.7700 0.0374 FT India Balanced Fund - Growth 50.1081 0.0224 ICICI Prudential Balanced - Growth 47.1500 -0.1482 SBI Magnum Balanced Fund - Growth 53.5600 -0.2235 Laggards JM Balanced - Growth 23.8545 -2.5512 DSP BlackRock Balanced Fund - Growth 68.2270 -1.9572 Escorts Balanced Fund - Growth 65.1153 -1.6813 LIC Balanced - Plan C (Growth) 58.7792 -1.4470 Kotak Balance 23.8340 -1.3983 *(30-Nov-10),* *(25-Nov-10) Source: NB Research Disclaimer The information provided here has been obtained from various sources and is considered to be authentic and reliable. However, Nirmal Bang Securities Private Limited is not responsible for any error or inaccuracy in the same. Beyond Market 07th Dec ’10 It’s simplified... 49 N Rangachary: A Man Of Principles N ambi Iyengar Rangachary was appointed the chairman of the Central Depository Services Ltd (CDSL), promoted by the Bombay Stock Exchange (BSE), on 16th Aug ’10. He is also Seventy-two-year-old N the former chairman of the Insurance Regulatory and Development Authority of India (IRDA). Rangachary, Rangachary is a man of 72, started out as an Indian Revenue Services officer and actions who lets his work has a career spanning 40 years in insurance and financial speak for himself. And his services collectively. appointments to various Rangachary is a fellow member of professional bodies positions in public and such as the Institute of Chartered Accountants of India private organizations bear (ICAI), the Institute of Cost and Works Accountants of India (ICWA) as well as the Institute of Company Secre- testimony to his immense taries of India (ICSA). He is also an honorary member of contribution to the the Indian Institute of Actuary. He holds a National insurance and financial Diploma in Commerce from All India Institute of Technical Education, New Delhi. services sector In 1960, he joined the Indian Revenue Services and went on to become the chairman of the Central Board of Direct Taxes in the year 1995. He retired from this post in July ’96 and was appointed as the chairman of the Insurance Regulatory and Development Authority (IRDA) in 1997. IRDA became an autonomous body in April ’00 and Rangachary was the first chairman to head the insurance watchdog. He stepped down from this post in June ’03. He has also been the advisor to the finance department of the government of Andhra Pradesh from 2003 to 2008. 50 Beyond Market 07th Dec ’10 It’s simplified... He was awarded the ‘International Insurance Man of the just goes to prove that he had created a level playing field Year’ in 1999 by US-based International Insurance for all players with no bias. Council, a council of leading insurers working to liberal- ize the closed insurance markets around the world. He is Between 1996 and 2003, Rangachary supervised the the first insurance regulator to receive this award for entry of the private sector players and was also involved excellence. On 18 occasions before this, the council has in developing the entire industry structure to facilitate the awarded only the chief executives of the insurance entry of several new insurance businesses in India. companies for their professional accomplishments. He also introduced new accounting norms for Indian Rangachary has held posts of additional secretary in the insurance companies since he was of the view that the department of space; controller of insurance, government nationalized insurers were indulging in wrong practices. of India; chairman of the Tariff Advisory Committee and He managed to bring different insurance bodies such as advisor to the government of Andhra Pradesh on finance, the office of the insurance controller and the tariff risk management and insurance. He was also the finan- advisory committee, which fixes premiums for general cial advisor for United India Insurance Company Ltd, insurers, under his purview. Chennai. He has served as an advisor to various central and state government initiatives and is still frequently When the General Insurance Company called for an requested to assist in such projects. upward revision of motor insurance premium, Rangachary strongly opposed this move. He also reduced He is also the director of companies like RT Exports Ltd, fire insurance rates by around 30%. He has drafted Gokuldas Exports, Take Solutions Ltd, Shriram Proper- regulations for the appointment of actuaries, insurance ties Ltd, Cecilia Healthcare Services Pvt Ltd, Tiger brokers, agents and surveyors too. Rangachary was Warehouse Cold Chain Pvt Ltd, Equitas Micro Finance called the most ‘customer-friendly’ regulator. (India) Pvt Ltd, MTAR Technologies Pvt Ltd and Root Multiclean Ltd. He is an independent director of AIG CHAIRMAN, CDSL Trustee Company (India) Pvt Ltd and a non-executive CDSL is promoted by the Bombay Stock Exchange and director at Max New York Life Insurance Company Ltd. has over 72 lakh active accounts and 529 agents or He is the chairman and non-executive independent depository participants (DPs) offering depository director at Orient Green Power Company Ltd. services to investors. Rangachary, Chairman at CDSL, was offered this plum post because CDSL expects him to Rangachary started his career as a junior officer in the I-T bring in business from the taxation and insurance department and was eventually elevated to the post of segments due to his illustrious career. chairman, Central Board of Direct Taxes. Subsequently, he took over as the chairman of what was initially IRA On being appointed at CDSL in August this year, (Insurance Regulatory Authority) in 1996. In 2001, he Rangachary said: “We will endeavour to enter into new got a two-year extension as the head of IRDA. segments to expand the business of CDSL and grow with distinction.” Rangachary’s main concern at CDSL is to Rangachary did his mandatory practical training from D direct the depository’s venture into businesses that have Rangaswamy & Co, a firm of chartered accountants. He up till now been the monopoly of the bigger rival, went on to successfully pass the chartered accountancy National Securities Depository Ltd (NSDL). course. He then decided to join the I-T department, even though he had an attractive offer from the Hindu Group CDSL has always wanted to enter the pension and of publications. In the following years, he completed the taxation space. Rangachary, with his background as cost accounting and company secretary course as well. taxman plus his contacts with top insurance firms, could be the answer to this depository’s plans. CHAIRMAN, IRDA Rangachary is considered as a very down-to-earth ON THE PERSONAL FRONT regulator in the financial services space in the country. N Rangachary has a different style of dressing in a He has been credited with privatizing the insurance spotless white shirt and white trousers along with a red industry in India. On the privatization of the insurance tilak across his forehead. Rangachary is also the sector, experts believed that the Life Insurance Corpora- chairman of Healing Fields, a not-for-profit organization tion of India (LIC) would lose up to 10% market share that works as a micro-health insurer for the needy. He is over a span of five years. But LIC lost between 8% to a man of principles and is brutally honest, if need be. 10% in the first two years itself. Rangachary had said that Rangachary practices humility and has an inclination new entrants were learning the trade fast and competing towards idealism. He is also quite familiar with the ‘shas- with the established players on the insurance front. This tras’ and Hindu scriptureS. Beyond Market 07th Dec ’10 It’s simplified... 51 Knowing Is Half The Battle Won V Half knowledge is always ery often we come across people who have entered the stock markets without any formal dangerous. More so, if you knowledge. The only thing they know is how are in for the long run. to buy and sell stocks. While this may be useful for short-term players, those with a long-term Answers to the most perspective need to have thorough information about the frequently occurring stock markets. questions will surely aid you The questions and answers mentioned in the article are in understanding the markets not intended to assess your Intelligence Quotient (IQ) regarding the stock markets, instead it is meant to help better and also help you play you grasp a few of the generalized concepts of the stock well on the bourses markets. Go ahead and test your skills; who knows you might feel the need to brush up your theoretical know- how a little bit. For your convenience, we have listed a few questions with four options and also the right answer with a suitable explanation. 52 Beyond Market 07th Dec ’10 It’s simplified... Q. What is the difference between a Depository and a Explanation: Often when dividend is declared it is done Depository Participant (DP)? so in percentage terms, which could be very misleading at the first glance. The main thing to focus on is the face A. Depository is a bank for securities whereas Deposi- value because whenever the dividend is in the percentage tory Participant is an agent of the Depository form, it is a percentage of the face value and not of the B. Depository participant is a bank for securities while market price of the shares. So for a face value of `5, a Depository is an agent of the Depository participant 30% dividend works out to `1.5 per share. C. Depository is a bank for securities whereas Deposi- tory Participant is a bank for bonds Q. A company issues 1:1 bonus shares, after D. Both are one and the same which_________ Correct Answer is A A. The number of shares with an investor remains the Explanation: A depository is a bank for securities where same, but the market price of the share changes dematerialized physical securities are held in custody and B. The number of shares with an investor increases, but from where they can be traded. Whereas, a depository the market price remains the same participant is an agent of the Depository through which C. The number of shares with an investor decreases but the depository provides its services to the investors. the market price remains the same D. The number of shares with an investor increases, but Q. What is the price band on securities on which deriva- the market price decreases proportionately tive products are available? Correct Answer is D A. 5% Explanation: Bonus shares are free shares allotted to B. 10% existing shareholders by converting the free reserves into C. 20% share capital and issuing it as bonus shares in proportion D. No price band to the bonus ratio announced. Post bonus, the number of outstanding shares of the company increases and so the Correct Answer is D earnings per share decreases and theoretically, the share Explanation: Price bands, also known as circuit filters price also falls by the same factor. or circuit breakers, set the upper and lower limit within which a stock can fluctuate on any given trading day. For Hence, if an investor is holding 1,000 shares at `50, post example, stock ABC closed at `100 on a particular day. bonus, he would hold 2,000 shares at `25. There is no The stock has a price band of 5%, which means the next change in the overall wealth of the investor and hence day the stock can go up to a maximum of `105, and a bonus shares should not be considered as a reward or an minimum of `95. Price bands help to reduce extreme incentive to shareholders. Bonus shares are issued fluctuations in the price movement and check unwanted primarily to increase the number of shares, thus increas- price manipulation. ing both liquidity and the traded volume in the stock. However, there is no price band applicable on a stock on Q. If a buyer A places a buy order for 100 shares of ABC which a derivative product (F&O) is available. These are at a price of `25 and simultaneously another buyer B also fairly widely held shares and enjoy high institutional places a buy order for 100 shares of ABC at `25.50. interest and if they are constrained by price bands, then Whose order will get executed first assuming that there is settlement would become very complicated. Such stocks a seller for 100 shares of the same company? can have unlimited movement on either side, which makes them riskier than other stocks. A. Buyer B B. Buyer A Q. If a company declares a dividend of say 30% on its C. Buyer A and B share with a current market price of `80 and a face value D. None of the above. of `5, then how much is the dividend that you will receive per share? Correct Answer is A Explanation: All orders are arranged in a price-time A. `3 priority basis in the system. Hence, if there is a seller for B. `24 100 shares, the order will first be matched with the buy C. `12 order of Buyer B since he has offered a better price. This D. `1.5 is price priority. In case, both buyers were to quote the same buy price of `25, in that case the buyer who had Correct Answer is D placed the order earlier would get priority. Beyond Market 07th Dec ’10 It’s simplified... 53 Q. If you have bought some shares but the counterparty Correct Answer is A fails to deliver the shares on the pay-in date, then______ Explanation: The answer lies not in the dividend given for the stock but in a concept known as the dividend A. You get the shares as and when the counterparty yield, which is a financial ratio that shows how much a delivers the shares company pays out in dividends each year, relative to its B. You have to accept it as an inherent risk of the stock share price. In other words, it is the return you are getting market and bear the loss for each rupee invested. C. You may get the shares via auction D. The matter goes to court Dividend Yield = Dividend per share x 100 Market price Correct Answer is C So, for Stock A Dividend yield = 2/20 x 100 = 10 Explanation: An auction is an exchange mechanism for for Stock B Dividend yield = 2/40 x 100 = 5 getting shares for the buying broker in case of default by the selling broker. If there is non-delivery of securities on So you see, stock A has a higher dividend yield of 10% the pay-in day, the securities are put up for auction by the as compared to 5% of stock B thereby making stock A a exchange. The exchange purchases the required quantity much better stock to have in your portfolio. in the auction markets and gives them to the buying trading member. Q. If you bought a stock on one exchange and sold it off simultaneously on another exchange for a small profit, In this manner you would not be affected for the default what strategy did you just employ? of the opposite party. If, however, you do not get the shares via auction, the trade will be closed out either at a A. Hedging price that is 20% higher than the last closing price or B. Arbitrage highest price recorded in the scrip from the settlement in C. Averaging which the transaction took place up to a day prior to the D. Churning day of the auction and you will get back your money. Correct Answer is B Q. Which group of shares are the riskiest? Explanation: Arbitrage means buying in one market and selling it in another, profiting from a temporary price A. B1 difference between the two markets. If a stock has a B. A seller at `25.10 on one exchange and a buyer at `25.30 C. B2 on another exchange at the same time, an arbitrage trader D. Z would buy the stock at `25.10 on the first exchange and simultaneously sell it at `25.30 on another exchange, Correct Answer is D thus pocketing a profit of `0.20 per share. Normally, an Explanation: A, B1, and B2 are highly liquid stocks arbitrage trade involves huge volumes and, hence, even a with good performance and good track record. However, profit of 10 or 20 paise leads to great profits due to the the Z group, which was introduced in the year 1999, larger number of shares involved. Arbitrage is consid- includes those companies that have failed to comply with ered as a risk-less profit. the listing rules and regulations of the stock exchanges or have not addressed investor complaints or have not Q. What is the investment limit for the retail category of published annual reports or all of the above. In a way, the investors in an IPO? Z group shares are blacklisted shares, which may be suspended from trading at any given point of time due to A. `50,000 the above-stated reasons and hence, are considered very B. `1 lakh risky for trading and investment purposes. C. `2 lakh D. No limit Q. Stock A, trading at a market price of `20 gives a dividend of `2. Stock B, trading at a market price of `40 Correct Answer is C also gives a dividend of `2. Which stock is a better option Explanation: If you are not an active market participant to have in your portfolio? or follower but just an occasional by-passer, your obvious answer would be `1 lakh, which would have A. Stock A been right a few months back. But, if you are a regular B. Stock B market player, you would be well aware that a few C. Stock A and B months ago the investment limit for retail investors in an D. Neither A nor B IPO or FPO was increased to `2 lakh from `1 lakh. 54 Beyond Market 07th Dec ’10 It’s simplified... Q. If you fall under the aggressive risk-taking class of Explanation: Just as Dematerialization is the process of investors, which stock would you want to include in your converting securities held in the physical form to existing portfolio? electronic form, similarly, Rematerialization is the process of converting securities held in electronic form in A. Low Beta a demat account back to physical form. As primitive as it B. Neutral Beta may sound, some people do opt to receive their share C. High Beta certificates back in physical form. Rematerialization is D. Negative Beta the exact opposite of Dematerialization. Correct Answer is C Q. A company announces a stock split in the ratio of 1:10 Explanation: High beta stocks are high-risk, high-return and a bonus of 1:1. It fixes the ex-date as 25th Oct ’10. stocks. Beta is a ratio, which measures the volatility (the To be eligible for both corporate benefits, by when rate at which the price of an entity moves up or down) of should you buy the shares? a stock or portfolio in relation to the markets on the whole. For example, if the beta of a stock, say ABC is 1. A. Before 25th October It simply means that the stock will move in line or in B. After 25th October tandem with the market movement. C. On 25th October D. Any time If the beta is less than 1, then the stock will be less volatile than the market and if the beta is greater than 1, Correct Answer is A then the stock will be more volatile compared to the Explanation: Ex-date is the first day from which a stock markets on the whole. Therefore, an aggressive investor trades without corporate benefits. The buyer of a stock on will look for a high beta stock (beta greater than 1) since or after the ex-date will not be eligible for corporate such stocks will give greater returns than the overall benefits. Before the ex-date, the share trades as cum- market during a rise. But don’t forget that the risk also bonus or cum-split or cum-dividend. This means that it increases since the stock tends to fall much more during ‘includes’ the said benefit. a fall in the markets. But, on and after the ex-date, the stock trades as ex-bonus Q. Dividends received in respect of equity shares of an or ex-split or ex-dividend. This means that it is “exclud- Indian company are ______ ing” the said benefits. Hence, in the above case, the stocks need to be bought before 25th October to be A. Taxable in the hands of individual shareholders eligible for corporate benefit. B. Not taxable in the hands of individual shareholders C. Taxable both to the company and individual share- Q. Securities and funds’ pay-in and pay-out are carried holders out on the ______day. D. None of the above A. T+3 Correct Answer is B B. T+2 Explanation: Dividends are nothing but distribution of C. T+1 profits of a company. In India, dividends of equity shares D. Within 24 hours of the sale are not taxable in the hands of individual shareholders because the company issuing the dividends has already Correct Answer is B paid tax on that profit and so taxing it again in the hands Explanation: Pay-in is the day when brokers make of shareholders would amount to double taxation of the payment or delivery of securities to the exchange and same income. pay-out is the day when exchange makes payment or delivery of securities to the brokers. Q. The process of conversion of securities held in electronic form in a demat account back to physical form In rolling settlement, trades executed during the day are is called as ________ settled on a T+2 basis, where ‘T’ stands for the Trade Day. For instance trades executed on Monday will be A. Revertible settled on Wednesday (that is 2 working days from the B. Reverse Dematerialization trade date). C. Regression D. Rematerialization We hope that these questions and answers will help you to better understand the basic concepts of trading and Correct Answer is D investing in the stock marketS. Beyond Market 07th Dec ’10 It’s simplified... 55 & Beyond Present LEARN THE ART OF COMMODITY INVESTING Exchange Partner Date: 25th November, 2010 Venue: Siri Fort Auditorium, New Delhi. 56 Beyond Market 07th Dec ’10 It’s simplified... Experts continue to remain WINNING HEARTS optimistic about the rally IN THE INDIAN in commodities and urge market participants to make CAPITAL the most of the potential the markets have to offer T he second in the series of commodity camps called Beyond Mandi, organized by Nirmal Bang, one of the leading broking houses in India, in association with Zee Business, was indeed worth the wait. This was clearly evident from the huge turnout at the Siri Fort auditorium in Delhi on 25th November. The crowd, comprising a healthy mix of traders and investors from the commodity markets, was eagerly waiting to hear industry experts speak on the immense potential of the commodity markets and ways to take advantage of the opportunities offered by this avenue. Experts like Anjani Sinha, MD & CEO of NSEL; Kunal Shah, Head of Commodity Research at Nirmal Bang; SK Jindal, Chairman Jindal Group of Companies and Investment and Capital Markets Chairman at the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Rahul Gupta, Director, PP Jewellers won the audience over by the end of the commodity camp, with their intellectual discussion. Amish Devgan, Amish Devgan, Commodity Editor and Anchor at Zee Business, and also the compere for the event Commodity Editor and could not agree less. He introduced the panelists to the audience and said that the speakers would Anchor at Zee Business shed light on the different aspects of the commodity markets. Anjani Sinha, the first speaker to address the gathering, dwelt on the importance of spot exchanges. NSEL, he said, is currently creating an avenue for investors where they have the option of products like e-gold, e-silver, etc. These products will help create a new platform for investors, eventually making the process of investing in commodities hassle-free and less complicated. Besides, these products can be converted into the physical form. He said NSEL plans to launch 20 more products in the next one year. This will lead to the emergence of cash markets in commodities. Anjani Sinha MD & CEO at NSEL The next speaker, Kunal Shah, on the other hand, spoke about the value of commodities as an asset class and the opportunities in the commodity markets. He also informed the audience about how commodities have performed in the past 10 years. And finally, he gave an outlook on some of the key commodities. Shah said he believes that the commodity markets are likely to grow three to four times in the near future. Moreover, the changes in regulations will work in favour of the commodity markets, especially spot markets. Talking about the returns on commodities over the past 10 years, Shah says barring a year Kunal Shah or two, a bull run was visible. He feels that the bull run may continue and people should Head of Commodity take advantage of the same. He sees the value of commodities rising. Research at Nirmal Bang Beyond Market 07th Dec ’10 It’s simplified... 57 In the coming times, issues like the probable rate hikes by China, measures to control food inflation and persistent problems in the Euro zone, could impact the commodity markets, he says. The rate hikes could impact base metals and crude oil negatively. Further, in the base metals complex, copper could touch the level of `385/kg - `388/kg, wherein individuals can take a short position with stop loss at `395 and it could again touch the levels of `368/kg - `370/kg. Zinc, on the other hand, is likely to see a bounce back. In such a situation, market participants can take short positions around `94/kg - `95/kg. However, he sees a continued bull run in gold and silver. The yellow metal may touch $1,450/ounce on the Commex and silver around $28.50/troy ounce - $29/troy ounce. Silver could rise further if a 1%-2% correction is seen, then long-positions can be taken. As regards agri commodities, he remains bullish and states that it will be the most preferred complex among commodities. He is equally bullish on guar seed and guar gum. People can take long positions in guar seed `2,450/quintal - `2,500/quintal for January contracts. Levels of `2,700/quintal - `2,750/quintal can be seen in one to one-and-half months. Similarly, the outlook is bullish on soy oil and soy bean too. People can buy soy oil January contracts at `570/10 kg - `580/10 kg and in one month, it could be around the `600/10 kg - `605/10 kg levels. They can also take long positions in jeera at `14,300/quintal - `14,500/quintal with a stop loss of `13,700/quintal. It could touch the `16,000/quintal level. Shah is upbeat on black pepper too and expects a rally of `1,500/quintal to `2,000/quintal, touching the `24,000/quintal level in a month. As regards natural gas, Shah is bullish on this complex and expects it to touch `230/mmBtu - `235/mmBtu and it may outperform all other commodities. SK Jindal, who took the discussion forward, said the commodity markets have the poten- tial to make money and grow in times of global uncertainty. Maximum quantities of gold and silver are found in Indian households. He said that India stands fifth in terms of energy consumption and similarly mentioned the standings of other commodities too. He urged people not to take overpositions in gold as prices increase on rising global fears. Risk management is very important. He says that new products introduced by NSEL like e-gold and e-silver are gaining acceptance among people and these products have the potential to grow further. Such products bring efficiency and completeness to the markets. He sees tremendous potential in the agricultural complex too. According to him, continu- ous reforms will help the sector to achieve growth targets and fast results. New develop- ments will be seen in time, he concludes. SK Jindal Chairman at Jindal Group of Companies Investment & Capital Markets Chairman at ASSOCHAM Hailing from a family of jewellers, Rahul Gupta shared his experience in the industry over the years. He sees gold as an asset class and says how its value has grown over the years. “A lot of things have happened in the yellow metal in the past and we are seeing a repetition of sorts,” said Gupta. He expects prices of gold to double in the coming times. He believes India can control the prices of gold to a large extent owing to the amount of gold that Indian consumers possess. China too is seen buying gold like never before. This was followed by a discussion among the panelists and a round of questions and answers. The camp was a huge success going by the number of people who attended the meet. This encourages us to hold more such camps in the near future and thus educate investors by inviting industry experts to give sharp insights and wider perspec- Rahul Gupta tives, eventually enabling them to take informed decisions. Director at PP Jewellers The next camp will be held on 18th December at Pride Hotel in JaipuR. 58 Beyond Market 07th Dec ’10 It’s simplified... Missed a copy? Log on to www.nirmalbang.com To subscribe: e-mail us at email@example.com It’s simpli ed... NBE T Nirmal Bang E-broking Access Terminal THE SMARTER CHOICE Times have changed. So has Nirmal Bang’s online trading portal, NB TRADE. We are now NBEAT, an exciting way to trade online. DISCLAIMER In the preparation of the content of this magazine, Nirmal Bang Securities Private Limited has used information that is publicly available, including information developed in-house. Such information has not been independently verified and we make no representation or warranty as to its accuracy, completeness or correctness. Any opinions or estimates herein reflect the judgement of Nirmal Bang Securities Private Limited at the date of this publication/ communication and are subject to change at any point without notice. This is not a solicitation or any offer to buy or sell. This publication/ communication is for information purposes only and is not intended to provide professional, investment or any other type of advice or recommendation and does not take into account the particular investment objectives, financial situation or needs of individual recipients. For data reference to any third party in this material no such party will assume any liability for the same. Further, all opinion included in this magazine are as of date and are subject to change without any notice. All recipients of this magazine should seek appropriate professional advice and carefully read the offer document and before dealing and/ or transacting in any of the products referred to in this material make their own investigation. Nirmal Bang Securities Private Limited, its directors, officers, employees and other personnel shall not be liable for any loss (financial or otherwise), damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary and consequential, as also any loss of profit in any way arising from the use of this material in any manner whatsoever. The recipient alone shall be fully responsible/ are liable for any decision taken on the basis of this material. This magazine is prepared for private circulation only. Nirmal Bang Securities Private Limited, its affiliates and their employees may from time to time hold positions in securities referred to herein. Nirmal Bang Securities Private Limited or its affiliates may from time to time solicit from or perform investment banking or other services for any company mentioned in this document.
Pages to are hidden for
"A PRIZE CATCH"Please download to view full document