Google -- Always the innovator!!

Now who isn't aware of Google Maps -- I would hazard a guess and say that over 90% of the cyber population is aware of this innovative service from this innovative service provider.. .. But how many of you are aware of the Google Maps Street View?? The Street view service, to put it mildly, is simply mind-blowing!!

According to the official Google website, by clicking on the "Street view" button in Google maps, users can navigate street-;eve;, panoramic imagery. With Street View, users can virtually walk the streets of a city, check out a restaurant before arriving and even zoom in on bus stops and street signs to make travel plans!

The bets part is that the site captures a 360 degree image and explores neighbourhood at sreet level. Literally!! Google has not only licensed shots from Immersive Media, a commpany specialising in 360 degree videos, but also sent out its vehicle-cameras capturing images of the roads.

Our small world just shrank further -- It's now even more smaller and easier to navigate.

Right Issues -- The saviours in a bear market

Companies like SBI, Exide Industries and Gujarat NRE Coke recently announced rights issues. While their share prices have reduced considerably in the recent meltdown, they’re still trading above the rights price.

The equity market has seen a sharp correction in the past week. Just a couple of weeks ago, companies like SBI, Gujarat NRE Coke announced issuance of rights shares. SBI, for instance, announced a 1:5 rights issue at a price of Rs 1,590 per share.

While the share prices have seen correction (it was at the Rs 2,400-level some days back) to Rs 2,159, the rights price is still at a 25% discount to the latest market price. After adjusting for equity dilution, it’s still available at an 11% discount. The discount factor has reduced, but long-term investors could still consider rights issues like that of SBI, Exide Industries, Gujarat NRE Coke, Dhanalakshmi Bank, Centurion Extrusion if they are upbeat about business prospects.

What is a rights issue?

Rights issues are shares issued by a company only to its existing shareholders. In fact, rights issue is a method of raising further capital from the existing shareholders/debenture holders by offering additional shares on a pre-emptive basis, usually at a discounted price. The number of shares offered depends on the number of shares already held and other terms made in the offer. For example, if you hold 200 shares in XYZ and it makes an offer of one-for-two, you can buy up to 100 shares at the price stated.

Why the discount?

The main idea behind this is to make the issue attractive for its shareholders. Also, as the shares of the company usually fall post-issue due to equity dilution, it makes sense for the company to offer the shares at a discount.

Why does the company offer a discount and not go in for a further public offering (FPO)?

It’s money and nothing else. The company makes the offer to raise capital. This is done either to expand its existing business, set up a new plant, or even pay back loans. “It is largely because the company want to pass on the benefit to its existing shareholders that it makes the rights issue rather than going in for an FPO,” says SBI MF manager Jayesh Shroff. Also, the transaction cost for a rights issue works out to be lower than going in for an FPO.

I’m not a shareholder, can I still benefit from rights issue?

Yes, provided you become a shareholder of the company before the record date. While declaring a rights issue, a company also declares the record date or the date on which a shareholder must officially own shares in order to be entitled for the issue. For SBI, it is February 4, 2008.

One thing to be kept in mind is that you will not be entitled for rights issue if you buy the share on this date. You need to buy the stock two days before the record date for becoming a shareholder. Another important date to keep in mind is the closing date.

What options do you have?

Rights issue is offered to all its existing shareholders individually and you have the choice to reject it (which means, not to subscribe for any shares), accept it in full (subscribe for all the shares offered) or accept it in part. So you do have a right to say no to it.

Can I go in for more shares than offered?

Usually, shareholders are given a chance to subscribe for more shares than offered. Although, there is no guarantee that those number of shares will be allotted.

Is rights issue transferable?

Yes. You can sell them in the open market or transfer it.

Should one always go for it?

“Provided the investor is confident of the company’s management and the business model, one can go for the issue for the simple reason that he is getting the stock at a discount than the present market price,” adds Mr Shroff. Although, in a falling market, the lucrativeness of the offer is falling day by day, one may consider these issues as one is aware of the trading history and performance of the stock.

The Invisible hand -- By Adam Smith

...every individual necessarily labours to render the annual revenue of the
society as great as he can. He generally, indeed, neither intends to promote the
public interest, nor knows how much he is promoting it. By preferring the
support of domestic to that of foreign industry, he intends only his own
security; and by directing that industry in such a manner as its produce may be
of the greatest value, he intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was no part
of his intention. Nor is it always the worse for the society that it was no part
of it. By pursuing his own interest he frequently promotes that of the society
more effectually than when he really intends to promote it. I have never known
much good done by those who affected to trade for the public good.

In this passage, taken from his 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations" Adam Smith set out the mechanism by which he felt economic society operated. Each individual strives to become wealthy "intending only his own gain" but to this end he must exchange what he owns or produces with others who sufficiently value what he has to offer; in this way, by division of labour and a free market, public interest is advanced.
Smith is often regarded as the father of economics, and his writings have been enormously influential. Nowadays, "invisible hand" explanations are invoked to explain all sorts of phenomena, from scientific progress to environmental degradation. In the modern context, mathematicians study "invisible hand" processes as part of Game Theory, the branch of mathematics that deals with payoffs and strategies.

Smith was profoundly religious, and saw the "invisible hand" as the mechanism by which a benevolent God administered a universe in which human happiness was maximised. He made it clear in his writings that quite considerable structure was required in society before the invisible hand mechanism could work efficiently. For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation. Theft was, to Smith, the worst crime of all, even though a poor man stealing from a rich man may increase overall happiness. He even went so far as to say that the purpose of government is to defend the rich from the poor.

Here is a description of the way Smith imagined the universe operates:

There is a benevolent deity who administers the world in such a way as to maximise human happiness.
In order to do this he has created humans with a nature that leads them to act in a certain way.
The world as we know it is pretty much perfect, and everyone is about equally happy. In particular, the rich are no happier than the poor.
Although this means we should all be happy with our lot in life, our nature (which, remember, was created by God for the purpose of maximising happiness) leads us to think that we would be happier if we were wealthier.
This is a good thing, because it leads us to struggle to become wealthier, thus increasing the sum total of human happiness via the mechanisms of exchange and division of labour.

It is clear why Smith says that moral norms are necessary for such a system to work - in order for exchange to proceed, contracts must be enforceable, people must have good access to information about the products and services available, and the rule of law must hold.

The modern "Invisible Hand"

Nowadays, something much more general is meant by the expression "invisible hand". An invisible hand process is one in which the outcome to be explained is produced in a decentralised way, with no explicit agreements between the acting agents. The second essential component is that the process is not intentional. The agents' aims are not coordinated nor identical with the actual outcome, which is a byproduct of those aims. The process should work even without the agents having any knowledge of it. This is why the process is called invisible.

The system in which the invisible hand is most often assumed to work is the free market. Adam Smith assumed that consumers choose for the lowest price, and that entrepreneurs choose for the highest rate of profit. He asserted that by thus making their excess or insufficient demand known through market prices, consumers "directed" entrepreneurs' investment money to the most profitable industry. Remember that this is the industry producing the goods most highly valued by consumers, so in general economic well-being is increased.

One extremely positive aspect of a market-based economy is that it forces people to think about what other people want. Smith saw this as a large part of what was good about the invisible hand mechanism. He identified two ways to obtain the help and co-operation of other people, upon which we all depend constantly. The first way is to appeal to the benevolence and goodwill of others. To do this a person must often act in a servile and fawning way, which Smith found repulsive, and he claimed it generally meets with very limited success. The second way is to appeal instead to other people's self-interest. In one of his most famous quotes:

Man has almost constant occasion for the help of his brethren, and it is in
vain for him to expect it from their benevolence only. He will be more likely to
prevail if he can interest their self-love in his favour, and show them that it
is for their own advantage to do for him what he requires of them. Whoever
offers to another a bargain of any kind, proposes to do this. Give me what I
want, and you shall have this which you want, is the meaning of every such
offer; and it is the manner that we obtain from one another the far greater part
of those good offices which we stand in need of. It is not from the benevolence
of the butcher, the brewer, or the baker that we expect our dinner, but from
their regard to their own interest. We address ourselves, not to their humanity
but to their self-love.

For Smith, to propose an exchange is to attempt to show another that what you can do, or what you have, can be of use to the other. When you carry out the exchange, it means the other person recognises that what you can do or that what you have is of value. This is why so much of a person's self-esteem is bound up in their job - a well-paid job is supposed to be a sign that others value your contribution and find it worth exchanging their own resources for.
How wise is the Invisible Hand?

The theory of the invisible hand is certainly persuasive, and its simplicity is also very attractive. No doubt every reader can see that it describes the way that things really work on many occasions, and, whether we find it palatable or not, we probably all recognise the truth of Smith's assertion that paying for your dinner is a more reliable way to get it than appealing to the benevolence of others.

But, even assuming all the correct conditions, does the invisible hand theory really lead to the maximisation of human economic wellbeing in some sense, as Smith asserts? This is where mathematics, in the form of Game Theory, can provide us with some insights.

The Prisoner's Dilemma

The "Prisoner's Dilemma" is a very famous "paradox" in Game Theory. It describes two people in a simple situation, acting in an informed manner, both attempting to maximise their wellbeing, and yet making choices that lead to an unnecessarily poor outcome for both.

Two people, who are suspected of being accomplices in a crime, are held prisoner in separate, non-communicating cells. The police visit each prisoner, and tell both that if neither confesses, each will be sentenced to two years in jail. However, if exactly one prisoner confesses, implicating each other, the one who confesses will get off scot-free as a reward, and the other, who didn't confess, will receive a punitive sentence of five years. If each confesses and implicates the other, both will be sentenced to three years.

What should a prisoner in this situation do? Suppose that the other prisoner doesn't confess. Then the best course of action is to confess, and go free. Even if the other prisoner does confess, it will be better to have done likewise - at least the sentence will be lower. Both prisoners will reason thus, so both will confess and end up serving sentences of three years - even though, if both had remained silent, both would have served sentences of only two years.

It may not be immediately clear what the relevance of the Prisoner's Dilemma is to Smith's theory of the Invisible Hand. In fact, it has a number of implications for economic behaviour.

The temptation to default

We can think of the prisoners as being asked to decide whether to keep a contract they have made with each other (remain silent) or to default (confess and betray the other). Similar choices have to be made all the time in economic society. When two people freely agree to exchange goods or services to their mutual benefit, each must decide whether to try to cheat the other by defaulting, or handing over counterfeit goods, or whether to act in good faith and risk the other party defaulting. Obviously, both parties are better off if neither default than if both default - after all, we suppose they willingly contracted with each other - but each would like to get something for nothing, and each is afraid the other will feel the same. The result may well be that the parties are unable to carry out the exchange as arranged, and both lose out.

The reason we don't see this behaviour too often is because we live in a society where courts can enforce contracts. This reduces the fear of the other party defaulting, and makes it easier to hand over goods ahead of receiving whatever is to be exchanged for them. In illegal exchanges, for example, receiving stolen goods, default is more common, and rather difficult for criminals to guard against.

Enforcing laws of contract requires cooperation and resources from someone else - in democratic societies, the courts on behalf of the government and the people. But courts and prisons and police cost money and most of the costs fall on people who were not party to the contract in the first place - who are therefore paying for a service that doesn't directly benefit themselves. Such courts fall into the category of "public good" - we are all better off in a society where the rule of law is upheld - but are not created and maintained by any invisible hand mechanism. Courts are set up deliberately to carry out a public good; and, although they may not always work the way they are intended to, there is nothing unintended about their use to enforce contracts.

Subsidy-seeking

In a democratic society, there is a strong temptation for "special-interest" groups to form and lobby the government to provide tax-payers' money to the group in the form of subsidies. Politicians find the prospect of buying the loyalty of the group attractive, and the group sees the prospect of getting other people's money for nothing. Clearly, everyone would be better off if no one sought subsidies - by definition, subsidies are only needed for unprofitable activities, that is, activities that other people do not value sufficiently to pay their own money for. However, if other people seek and gain subsidies, anyone who doesn't bother trying to do the same for themselves will end up subsidising others while receiving no subsidies themselves. This fear may force large numbers of people to spend their time lobbying the government for subsidies, rather than simply engaging in more profitable activities - a classic example of the Prisoner's Dilemma, and one over which no court has jurisdiction.

A very similar situation occurs regarding monopolies. Since pretty much every producer is a consumer, it is probably to everybody's benefit overall if no producers attempt to raise prices by monopolising their market; however, attempting to enforce a monopoly can be very attractive to individual producers. Smith rather sardonically observed that

People of the same trade seldom meet together even for merriment and
diversion, but the conversation ends in a conspiracy against the public or some
contrivance to raise prices

Arrow's Theorem

Arrow's Impossibility Theorem says that, in a certain sense, it is impossible to produce a consistent group preference by aggregating individual preferences. It is normally stated in terms of votes and elections, and, in this format, says that is impossible to use information about individual voters' preferences to decide what is "the will of the people". Every voting system in current use throws up anomalies, such as "flip-flops", which occur when a third candidate enters the race and overturns the group preference between the other two candidates (think of Ralph Nader in California, splitting Al Gore's vote and handing George Bush the election).

The "will of the people"

Again, the relevance to allocation of public goods is not immediately obvious - until you recall that an essential part of the invisible hand process is that producers respond to an single signal that is meant to be an aggregate of all signals by consumers. Arrow's Theorem is often interpreted as saying that there is no consistent way to aggregate the preferences of individuals to give a single preference which can be regarded as the preference of society - or "the will of the people".

An economic version of the flip-flop could occur if a majority of customers would prefer to buy Product X to Product Y, but some of that majority actually like Product Z even better (the equivalent of splitting the vote); the producer may end up producing Product Y even though more people would have liked Product X, and presumably it would have been more profitable to produce it. If this happens, then the invisible hand cannot be said to have worked to maximise economic wellbeing.

In a centralised society a few individuals make decisions on how to spend everyone's money and direct everyone's effort.

How far does the invisible hand reach?

How economic systems work and what can be done to improve them is still very much a live area of research for economists. Mathematicians are currently grappling with the implications of game theory for all sorts of social choice, in particular, what meaning, if any, can be attached to the expressions "the will of the people" and "the public good".

The results of such analyses will not be the only factor in deciding whether societies move towards or away from laissez-faire economics ("laissez-faire" means "let alone" and is shorthand for leaving things to the invisible hand). Political will, whether the world becomes more peaceful or less, and the practicality of any alternatives will also be factors. Alternative systems tend to require much more intervention and more stringent rules. In the real world, such rules automatically introduce more and more opportunities for mistakes and corruption, which might mean that another system, even if better in principle, would be worse in practice.

Perhaps the strongest reason for leaving the allocation of effort and reward to the invisible hand is that when it misappropriates goods, it is likely to be on a small scale. More centralised methods of allocating goods are more prone to corruption and waste. Smith described people given the spending of other people's money thus:

..being the managers of other people's money than of their own, it cannot
well be expected that they should watch over it with the same anxious vigilance
with which partners in a private copartnery frequently watch over their own.
Like the stewards of a rich man, they ... consider attention to small matters as
not for their master's honour and very easily give themselves a dispensation
from having it.

It is useful to remember the context in which Smith developed his theories - that of a heavily planned and rather dictatorial society, where some individuals were above the law and others were effectively without any rights. In a centralised society a few individuals make decisions on how to spend everyone's money and direct everyone's effort. As Smith said

It is the highest impertinence and presumption, therefore, in kings and
ministers to pretend to watch over the economy of private people, and to
restrain their expense...They are themselves always, and without exception, the
greatest spendthrifts in the society.

Ameria's outlook on the rest of the world!!

There are times when you are left wondering is this how Americans think of us poor, unlucky people who were not born as an American!!

Agar main cricketer hota to..

It's not often that I question my decisons or choices or that of my parents. But after hearing of the bids in the auction round of IPL, I sure am left wondering as to why didn't my parents let me become a cricketer or something like that.. For my dear readers, here is a sample..

Aisa nahi hai ki mujhme cricekter banne layak qualities nahi hai.. Maine
mere first 13 years Jharkhand me hi bitaye, so I could have been the Indian
captian and the nation's biggest sensation, like Dhoni! Or, look at my height..
I'm of the same height as Sachin and Gavaskar, so I believe I could pretty well
have been the next Tendulkar or Gavaskar by now.. Arre ye bhi nahi to
take a look at my hair only.. mere or veeru me se kiske sar pe baal jyada
hai?? Those of you who have seen me recently, kyun, ho gaye na confused??

Aur rahi sahi baat, to ji main itne saalo se calcutta me hu, main to dada ki jageh
lene k liye hi paida hua tha.. Kuch nahi to take a look at the number of years I
spent in Nigeria.. Kam se kam mujhe Zimbabwe ka captain hi bana dete!! Ye sada
mujhe shikayat rahegi mere parents se.. Arre wo to bade the, unhe to mujhse
jyada akal thi...

Kaash mujhe unhone cricketer banaya hota!! .. !! To unka bhi har baat pe TV wale interview lene pahuchte, unhe phone kar k mera updates dete.. Magar ye ho na saka.. aur ab ye aalam hai ki hum raat k baarah baje bhi apne lappie me ye keypads khatkhata rahe hai.. Kabhi kabhi mere dil me khayal aata hai ..

Paison ki Barsaat!!

Glenn McGrath and Michael Hussey have been bought for US$350,000 by Delhi and Chennai respectively. McGrath went at his base price while Hussey was bought for US$100,000 more.
All the rest were sold at their base prices. Mohali bought both Simon Katich (US$200,000) and Ramnaresh Sarwan (US$225,000). Shivnarine Chanderpaul was bought by Bangalore for US$200,000, Loots Bosman went to Mumbai for US$175,000 and Justin Langer to Jaipur for US$200,000.

Mohammad Yousuf and Ashwell Prince were the only two players who were withdrawn. Of the 79 players, 77 players were sold at the base price or above.

Squads as of now:

Jaipur Shane Warne (US$450,000), Graeme Smith (US$475,000), Younis Khan (US$225,000), Kamran Akmal (US$150,000), Yusuf Pathan (US$475,000), Mohammad Kaif (US$675,000), Munaf Patel (US$275,000), Justin Langer (US$200,000)

Chennai MS Dhoni (US$1.5 million), Muttiah Muralitharan (US$600,000), Matthew Hayden (US$375,000), Jacob Oram (US$675,000), Stephen Fleming (US$350,000), Parthiv Patel (US$325,000), Joginder Sharma (US$225,000), Albie Morkel (US$675,000), Suresh Raina (US$650,000), Makhaya Ntini (US$200,000), Michael Hussey (US$350,000)

Mumbai Sachin Tendulkar (icon), Sanath Jayasuriya (US$975,000), Harbhajan Singh (US$850,000), Shaun Pollock (US$550,000), Robin Uthappa (US$800,000), Lasith Malinga (US$350,000), Dilhara Fernando (US$150,000), Loots Bosman (US$175,000)

Bangalore Rahul Dravid (icon), Anil Kumble (US$500,000), Jacques Kallis (US$900,000), Zaheer Khan (US$450,000), Mark Boucher (US$450,000), Cameron White (US$500,000), Wasim Jaffer (US$150,000), Dale Steyn (US$325,000), Nathan Bracken (US$325,000), Shivnarine Chanderpaul (US$200,000)

Hyderabad Adam Gilchrist (US$700,000), Andrew Symonds (US$1.35 million), Herschelle Gibbs (US$575,000), Shahid Afridi (US$675,000), Scott Styris (US$175,000), VVS Laxman (US$375,000), Rohit Sharma (US$750,000), Chamara Silva (US$100,000), RP Singh (US$875,000), Chaminda Vaas (US$200,000), Nuwan Zoysa (US$110,000)

Mohali Yuvraj Singh (icon), Mahela Jayawardene (US$475,000), Kumar Sangakkara (US$700,000), Brett Lee (US$900,000), Sreesanth (US$625,000), Irfan Pathan (US$925,000), Ramesh Powar (US$170,000), Piyush Chawla (US$400,000), Simon Katich (US$200,000), Ramnaresh Sarwan (US$225,000)

Kolkata Sourav Ganguly (icon), Shoaib Akhtar (US$425,000), Ricky Ponting (US$400,000), Brendon McCullum (US$700,000), Chris Gayle (US$800,000), Ajit Agarkar (US$330,000), David Hussey (US$675,000), Ishant Sharma (US$950,000), Murali Kartik (US$425,000), Umar Gul (US$150,000), Tatenda Taibu (US$125,000)

Delhi Virender Sehwag (icon), Daniel Vettori (US$625,000), Shoaib Malik (US$500,000), Mohammad Asif (US$650,000), AB de Villiers (US$300,000), Dinesh Karthik (US$525,000), Farveez Maharoof (US$225,000), Tillakaratne Dilshan (US$250,000), Manoj Tiwary (US$675,000), Gautam Gambhir (US$725,000), Glenn McGrath (US$350,000)

The IPL - Gloassary: The Basic Know-How..

What is the Indian Premier League?
The Indian Premier League (IPL) is a franchise-based Twenty20 competition organised by the BCCI, and it has official sanction since it has the backing of the ICC. It features the world's best cricketers playing - their affiliation decided by open auction - for eight city-based franchises, owned by a host of businessmen and celebrity consortiums. The inaugural edition of the tournament will run from April 18 to June 1.


What are the logistics of the IPL?
The tournament will begin on April 18, when Bangalore take on Kolkata at the Chinnaswamy Stadium in Bangalore. The tournament will feature 59 matches in total, the teams playing each other on a home-and-away basis. Click here for the full list of fixtures.


Why is the IPL generating such a buzz?
Two main reasons why. One the football-club concept of the IPL, which is unlike anything cricket has known. The best players from across the world playing not according to nationality but according to market forces. Second, the sheer financial scale of the IPL is unprecedented at this level of cricket. The BCCI has already made close to US$ 1.75 billion solely from the sale of TV rights ($908 million), promotion ($108 million) and franchises (approximately $700 million). Players are expected to earn close to US$1 million for a three-year contract. It's an entire cricket economy out there.


Who are the top cricketers involved?
There are 77 names in the fray, the top current players: Dhoni, Ponting, Gilchrist, Shoaib Akhtar, Jayawardene, Jayasuriya, Yuvraj, Hayden...The notable absentees are from England, because the IPL will clash with their domestic season, and Australia's Michael Clarke, who opted to focus on his regular cricket.


Who are the franchise owners - celebrities and others?
Mukesh Ambani, the Reliance Industries chairman, acquired the Mumbai franchise for $111.9 million over a 10-year period; beer and airline baron Vijay Mallya, who also owns a Formula 1 team, won the Bangalore franchise for $111.6 million; Bollywood actor Shah Rukh Khan's Red Chillies Entertainment won the Kolkata franchise for $75 million; the biggest surprise was the Chandigarh franchise, which went to Preity Zinta, another Bollywood star, and Ness Wadia, together with two other industrialists, for $75 million. The winning team will get richer by $3 million if they win the first edition of the tournament.

How are the players paired with teams?
The BCCI will conduct a player auction on February 20, in which the respective franchises can bid for a maximum of eight international players from pool of 89 players who have been contracted to the board. But Sachin Tendulkar, Sourav Ganguly, Rahul Dravid, and Yuvraj Singh are not up for auction as they have been given 'iconic' status by the BCCI - which means that they have to represent the city in which they are based. Another exception to the bidding process is with regard to the Australian players - a clause in the rules of Cricket Australia has meant that each team can select a maximum of two Australians.

Whose idea is the IPL?
The IPL is the brainchild of Lalit Modi, the vice-president of the BCCI, and is modeled along the lines of club football in Europe, specifically the English Premier League. Though there is a school of thought that the idea came about in the 1990s, the announcement that such a tournament would happen, and which it would be a precursor to Twenty20 Champions League, cricket's version of the European Champions League, came only after Subhash Chandra, the owner of Zee Televison said, in April last year, that he was intending to start an unofficial league called the Indian Cricket League, fuelling speculation that is was a reactive idea rather than a proactive one.


How different are the IPL and ICL to each other?
The IPL is an official sanctioned Twenty20 tournament, and unlike the ICL, which is not recognised by any of the national boards or the ICC, it will have a better status, international reach, players, and the requisite infrastructure by default. Since the IPL is sanctioned by the ICC, players don't have the danger of bringing their international/first-class careers to a halt - as is the case with the ICL - whose players have been banned by the various boards. Another major difference is with regard to franchises - the ownership of the team rests with the individual owners and not one single entity.

To invest or not to invest in REC IPO?? Presenting a SWOT Analysis..

The REC IPO has already been subscribed fully. Sensible companies will always have a market because this IPO has being priced very attractively. This company lends largely to the power sector projects, especially to the transmission and to the generation space of it. It also mainly participates in the rural power generation projects.

If one takes a look at what this company is likely to do, there is a whole host of business opportunities waiting for it. This company may be looking at putting in USD 592 billion in the 11th Power Plan that the government has laid out - about 15-20% of the total outlay in the 11th Plan will be fully funded by REC. So the company has been growing about 23% CAGR from FY04-FY07 and from here to FY10, they are likely to grow in a CAGR of 20-21%; as per CNBC-Tv18 analysis.

But one biggest concern of this company has been, the spread that they get it on. The biggest positive for REC hs been the cost of funds that they have been able to raise largely because of funds coming in from the government and the section 54 EC bonds that they have been able to raise.

If you take a look at how it is panned out over the past few years, the quantum of bonds that can be given under section 54 EC has been cut down. REC and NHAI are the only two institutions that can come out with these bonds. For REC, they have capped it at Rs 80 billion - REC wanted to raise Rs 45 billion in FY08, of which it has taken only Rs 15 billion in FY07.

The CBDT (Central Board of Direct Taxes) has said that they are rolling it forward. So in this year also, they can raise this money from the market.

But the cost of funds raising after FY09 gets a little bit murky because what happens to the government concession that they have been giving? Will the concession and the Section 54 EC continue? If these don’t continue, the cost of fund which is rather attractive at 6%, which they have been able to lend at 9%, incremental lending at 10%; that is likely to go down. So this is one concern that we have in REC.

But it is very attractively priced at Rs 90-105 on the upper band of Rs 105. On a price-to-earnings basis, it’s at 8.6-times FY08, whereas PFC is at 17.8 and IDFC is at 31.2 FY08 earnings. Being an NBFC, we also looked at the price to book one-year earnings and it is at 1.5-times price-to-book, whereas the PFC is at two-times and IDFC is at 6-times price-to-book. Even on the returns ratio, whether it is returns-on-assets or returns-on-net-worth, it is very attractive compared to these two peers. That’s why you are seeing institutional interest coming in this IPO and it’s also a very good dividend play.

Now, the question is, is there any reason to suspect that this concession received under section 54 EC will not be continued? That is where one has to give the benefit of doubt that maybe at least for these two companies, it will continue. This is because raising funds for these two companies- the list used to be as big as five companies, it is being cut down to two companies in the previous Budget. So whether they will be allowed to, is going to be the important thing.

But attracting cost of funds for these companies has becoming harder and since they are giving it for the rural infrastructure growth only, maybe the government may be happier to just let these two companies continue as it is.

Ranbaxy trades up floowing approval of demerger

The Board of Ranbaxy Laboratories Limited (Ranbaxy) cleared a Scheme of De-merger of the Company’s New Drug Discovery Research (NDDR) Unit into a subsidiary, Ranbaxy Life Science Research Ltd. (RLSRL). This is subject to requisite approvals.

Ranbaxy believes that this is a significant step in creating an independent pathway for NDDR with dedicated resources and an enhanced focus for long-term growth. Ranbaxy has state of the art Research infrastructure and a highly skilled scientific talent pool. These strengths can be more effectively leveraged through an independent vehicle that better aligns assets with priorities to accelerate the company’s drug discovery programmes. The resulting operational freedom and flexibility will also help to open up new growth opportunities while providing a platform for increased collaboration. The demerger will result in cost savings of approx. US $ 25 Million in the current year for Ranbaxy, a recurring expense, likely to increase significantly in the coming years.

Speaking on the occasion, Mr Malvinder Mohan Singh, CEO and MD, Ranbaxy Laboratories Limited, said, "The de-merger of our NDDR Unit into a separate entity establishes a robust structure to carry out pathbreaking research at the cutting edge of modern medicine. It will also enable RLSRL to create intellectual property at a faster pace while positioning it for the future".

Under the Scheme, the shareholders of Ranbaxy will be entitled to receive one equity share of Re.1 each of RLSRL, without any payment for every four equity shares of Rs.5 each held in Ranbaxy, as on the Record Date, to be fixed for this purpose, after receipt of requisite approvals. All assets, liabilities, research personnel and pipeline related to the NDDR Unit will be transferred to RLSRL.

The Appointed Date for the Scheme to come into effect after receipt of all the requisite approvals is January 1, 2008.

Ranbaxy has subscribed to redeemable preference shares of RLSRL aggregating Rs.200 Crores, to meet its business needs. Post the De-merger, the equity capital of RLSRL will be approx. Rs. 12.6 Crores. Ranbaxy and RLSRL Employees Welfare Fund Trust will respectively hold 19.8% and 4.9% of the equity share capital of RLSRL . The balance will be held by the shareholders of Ranbaxy.

It is proposed that equity shares of RLSRL will be listed on the National Stock Exchange and the Bombay Stock Exchange while GDRs will be listed at the Luxembourg Stock Exchange.

Free ATM Withdrawals..

Customers will not be charged for ATM withdrawals from April 1, Reserve Bank of India deputy governor V Leeladhar announced in Mumbai on Monday.

Addressing a function to mark the Union Bank of India's 2001st branch under its core banking solution, Leeladhar said that at present many banks are levying a charge on withdrawal of cash from their ATMs by customers of other banks with which they have no tie up.

"These costs are at times ridiculous as even for withdrawal of a paltry sum of Rs 500 from ATM the customer has to shell out as much as Rs 250," he observed.

He said before moving to a system of cash withdrawal from ATM without cost, as was prevalent in the United Kingdom and many other countries, from financial year 2009-10, the RBI has decided to allow only Rs 20 per transaction for such withdrawal from April 1 next.

"The commercial banks are racing against each other to post hundreds of crores of rupees (billions) as profits and therefore they must not be fussy about meagre costs involved in cash withdrawal from their ATM by customers of other banks," he said, adding that even the cost involved in installing an ATM has come down from Rs 30 lakh (Rs 3 million) to Rs 6 lakh (Rs 600,000).

Fertilizers awashed with government-issued bonds worth Rs. 3600 cr

The Government has issued 7.95% bonds maturing in 2026, worth Rs 3,610 crore to 23 fertilizer companies. The Government has said that the bonds to fertiliser companies do not qualify for the statutory liquidity ratio (SLR) status.

Reliance Power to discuss bonus issue

In a board meeting scheduled for February 24, 2008, the Board of Directors of Reliance Power is going to discuss a bonus issue to cheer up the investors who have been left holding their heads due to the poor listing of the Power issue which some had wildly expected to double their investments.

I expect the borad to come out with a 1:4 or a 1:5 bonus issue.. It would be tremendous if the company could give a 1:2 or a 1:3 and simply dumbfounding if the bonus issue is a 1:1 issue.. I am currently not speculating on any firther issue ratios!

Well, atleast the investors got something to lessen their losses......... Oh

Meet Mr. C.B. Bhave, the new SEBI Chief!

It's like a homecoming for Chandrasekhar (Chandu) Bhaskar Bhave, the newly-appointed chairman of India's capital market regulator. The 1975-batch IAS officer of the Maharashtra cadre was the executive director in charge of the secondary and later the primary markets between 1992 and 1996.

That was the time when the Securities and Exchange Board of India was taking its initial steps to reform the stock exchanges and putting in place systems that help in investor protection. The Bombay Stock Exchange was then known as a brokers' club and Bhave was on the board of the exchange in his capacity as a representative of Sebi.

It was during his stint in Sebi that his boss, G V Ramakrishna, banned badla. Bhave also played a pivotal role in ensuring that market players get sophisticated hedging tools and are properly regulated. Bhave maintained that the capital market regulator's primary job is to protect individual investors and simultaneously develop systems that take care of the interests of issuers -- companies and intermediaries. He also ensured that the new National Stock Exchange's surveillance systems were top class.

The slimly built Bhave, who plays tennis regularly, has a self-effacing style, but is a tough administrator. As the head of the National Securities Depository Ltd (NSDL), he revolutionised the capital market by getting market players to accept the new system of dematerialised shares and debentures. He won buyers' support by arguing that demat would eliminate bad deliveries of shares and impressed upon the sellers that this would facilitate early settlement and early payments.

Setting up of a depository that converts physical share certificates into electronic form was not at all easy. For example, the UK has still not been able to implement it. But under Bhave, NSDL set up the depository at under Rs 100 crore (Rs 1 billion), or a seventh of the original estimate, and achieved paperless trading within just three years, the fastest in the world.

All this experience will come in handy when Bhave takes over as the sixth chairman of Sebi. For, the challenges are many as the investment climate is much more dynamic now than when he was the executive director.

He is also coming in at a time when the market sentiment is not favourable for small investors and many of them have had huge losses in some of the recent high profile IPOs. Also, the Indian capital market has seen the entry of thousands of new investors into the system. Private equity players are getting stronger and more influential in the market and there is a demand to regulate them. This is an international issue and the Indian market regulator will have to face it, too.

There is a need to reform the primary market to speed up the processes as well. The price discovery mechanism, for example, is not efficient even in book-building as institutional investors are paying just 10 per cent and putting bids for 10 times of the amount they pay in IPOs.

Short selling and physical settlement in derivatives are the other issues that need to be looked into. The allotment and listing also need to be much faster. His predecessor M Damodaran has ensured that the homework for all these is ready and it is up to Bhave to "implement" them.

It's also an irony of sorts that Bhave, 57, is joining as the regulator. His organisation, NSDL, has been fighting a bitter legal battle with Sebi since April 2006, when Sebi uncovered a massive scam involving the cornering of share allotments in IPOs for small investors. In November 2006, Sebi ordered NSDL and a few others 'implicated' in the IPO scam to return Rs 115 crore (Rs 1.15 billion) in "illegal profits" made from IPO deals. Of this, NSDL's share was Rs 45 crore. NSDL appealed to the Securities Appellate Tribunal (SAT), which, in December, set aside the Sebi order, describing its action as a clear "violation of the principles of natural justice."
Sebi investigation on the IPO scam isn't concluded. So as the new Sebi chairman, Bhave will have to resolve this tricky issue. As a regulator, he cannot be seen to be hurting the interest of the organisation which he founded.

Heights of creativity!!

Funds chasing finance stocks!!

An interesting article on the Economic Times website..

Financial stocks and funds are fast emerging as the preferred choice of
asset managers and investors who believe rising income in the world's second
fastest growing major economy will boost demand for financial products.

Diversified equity funds have nearly tripled allocation to finance stocks
in the past year to about Rs 247 billion, making it their second favourite
sector after engineering, data fund tracking firm ICRA showed. ICICI Bank Ltd
and State Bank of India were among the top-three preferred stocks by value in
the Rs 5.5 billion in Indian mutual fund industry at end-January. Banking funds
have risen 56.1 per cent on an average in one-year period ending February 13,
comprehensively outperforming the 20.3 per cent gain in India's benchmark index
and have seen assets under management surge more than five times.

"The sector as a whole is beginning to look interesting given the linkage
it has with the overall growth plans of the country," T. P. Raman, managing
director of Sundaram BNP Paribas Asset Management, said. Financial Services
consulting firm Celent expects that 8 percent plus economic growth in India will
turn 42 million households into consumers of wealth management products in the
next five years, as compared to around 13 million households now.

In a report released in December, Celent said India's wealth management
space would see assets quadruple to about $1 trillion by 2012, channelling huge
amount of money into financial sector and spurting demand for products giving
access to the segment. Two exchange traded funds launched in the last five
months track the banking index, while three more are awaiting the regulator's
nod to launch finance sector funds. Raman, whose proposed fund is awaiting
approval, said earnings of India's financial firms were likely to remain robust
as interest rates were stabilising and they remained untouched by the crisis in
global financial firms. "They have got their acts together very well and they
don't have this kind of subprime woes and other things that international banks
have," he said.

India's five-year bull run, that helped the BSE Bankexrise 47.7 per cent
annually in the last five years beating the benchmark index's 39 per cent gain,
paused last month, making valuations softer and attracting more investments.
Diversified equity funds used a 6.2 per cent slide in the banking index in
January to raise exposure to the financial sector to 16.13 per cent of their
equity assets as compared to 13.59 per cent a month earlier, data from ICRA
showed.

R. Rajagopal, chief investment officer of DBS Cholamandalam Asset
Management, said most of the state-run banks were available at price to adjusted
book value of 1-2 and private bank at 2-4, making them more attractive than the
BSE index's 5.8. "We will remain overweight," he said, adding there were signs
of improvement in credit growth and moderating interest rates would further
assist it, boosting outlook for banking stocks.

An unusual rose

Well, instead of gifting a red rose on valentine's day, how about some chocolatey gifts?? I am hoping that someone, someday gifts me such a rose on Valentine's Day!!

Just cozzz I'm a guy, does that mean that the notion of gifts is a one-way street?? Even guys have emotions and of course, getting such a gift sure is anice way of touching a guy's heart!! After all, the way to a man's heart is through his tummy & in some cases, his sweet buds!!

:D ...

Back again with the stocks to buy!!

U.S. markets opened in the positive for the second successive trading session and if recent data and the incentives announced to revive the economy are to be believed, then the fears of the U.S. economy slipping into an recession have been blown away for some time. Despite the poor show of the Reliance Power IPO and lack of investors' interest in the IPOs post the Reliance Power issue, the Indian markets look set to gain some lost ground in the coming days. A careful analysis of the large, mid and the small caps will help you make a killing and pick up some cheap stocks at a heavy discount! So here are my picks, which I expect to do well in the first half of this year.. So, get set readers, the Sensex is ready to put on the rocket boosters and make a high jump!!!!!!!!! Here are my picks for the forthcoming months:


1) NTPC -- http://www.ntpc.co.in/


With an installed generating capacity of over 28,ooo MW and with expansions plans to raise the generating capacity to over 50,000 MW by 2012, this goveernment-owned power company is set to grab a major chunk of the $250 billion which is going to be pumped into India for the improvement of the country's infrastructure. Much better valued and placed than either Reliance Power and Tata Motors, shares of this undervalued company may prove to be the real diamonds in one's portfolio.



2) Ranbaxy -- http://www.ranbaxy.com/


One of the Indian Pharmaceutical giants, this company is set to grow via acquisitions and unlock the value inherent in the company via demergers. It is a good defensive stock to own in one's portfolio. Sample this: In the last 1 month, when the market has corrected by over 25%, this stock fell by only 5%.. just goes to show the fundamentals of this stock! Truly, a gem to treasure.


3) DLF -- http://www.dlf.in/


Please forgive me if I'm misconstruing a lot of statistics and facts when I state that DLF is the FACE of the Indian Realty Sector. An innovator, a great thinker, a trend setter and an inspirer, DLF has delivered results where others have only promised! With the proposed listing of the company's Real Estate Investment Trust on the Singapore Stock exchange (SGX) by June 2008, this realty giant will give you the BANG for your bucks!


4) Indiabulls Financial Services (ILFS) -- http://www.indiabulls.com/


Almost all the financial services sector are diversifying into other arenas and markets, none will be able to match the speed of diversity with which ILFS will consolidate its hold in the financial services sector to carve out a niche for itself in lucrative arenas like infrastructure, casino and gambling.. This seems like the right time to build a position in this stock as the shares are down relatively; this is a sharp shooter and expect handsome gains from this stock. However, a word of caution here -- ILFS shares tend to touch and then slip off the peak.. So keep an eye on the movement of this stock!

Currently I have time to give you a brief insight into these select stocks only.. I'll be looking to publish another post shortly with a few more names which will help you to strike the right balance between aggression, caution and retuns! So, keep tuning in to this space!

Consumer spending pushes up U.S. markets in initial trade!!

The Sensex finally snapped its losing streak yesterday, closing in the positive after 7 consecutive days of closing in the negative.. Retail report issued by the U.S. Government last night pointed to an unexpected increase in consumer spending despite rising oil prices, a choppy stock market and worsening credit squeeze in the real estate sector. Additionally, unexpected strong growth in Japan in the last quarter of 2007 sparked off a rally in the Asian markets which were up 2%-3% @ 9:30 a.m. .. So, worried investors, breathe easy, initial indications are that the Indian marekts may open in the positive for a second consecutive day..

However, Indian investors are still wary of re-entering the market. A strong closing of the market over a session or two will give some confidence to these investors. Indication are that a lot of investor money is currently waiting on the sidelines, investors are hesitant to enter the market currently but an improving scenario and strong closing of the Sensex and Nifty will lead to increased money inflows.. Advice remains to invest in stocks with a long-term horizon. Near-term investors would be advised to book their gains at every rally because the uncertainty is not out of the market yet. Experts believe that the markets may re-test the levels touched in January 2008 again before staging a comeback rally!

Received a funny mail today which took a dig on the stock market and the sale season going on.. Got it in a PDF format, trying to see if I can upload it here. But one good thing to come out of the market's downfall is that a few defensive stocks have come in the limelight. One such stock is Ranbaxy, the Indian pharmaceutical giant. The stocks of this company declined by only 5% in the period when the marekts declined by as much as 25%. This stock is a good long-term play and with the demerging of the NDDR business unit, an unlocking of asset value will drive the shares higher.

To be or not to be .. .. !! .. ..

In early morning trades, U.S. markets were up a couple of percentage points after U.S. Billionaire Warren Buffett . offered to come to the rescue of troubled bond insurers. Warren Buffett has offered a second level of insurance on up to $800 billion in municipal bonds. The generous offering held out by the billionaire seems to have cheered the investors who rushed to pick up cheap stocks, which had taken a huge beating off late. Although Buffett's offer to help out the troubled insurers is limited only to municipal bonds and not the financially risky and complicated financial instruments, investors and market experts are hopeful of experiencing relief from the worsening credit situation.

Additionally, the Fed also auctioned off $30 billion to commercial banks at interest rates of 3.01% on Tuesday. The current inflow of funds should be able to stem the credit squeeze which the markets had witnessed off late. But will the world markets, especially, the Indian stock markets, respond positively to the inflow of liquidity in the U.S. markets? Chances are they will.. The Indian markets seem to have bottomed out; analysts believe that a correction of no more than 10% is likely from current levels. The December industrial output figures which were released earlier today were encouraging and in-line with expectations. Additionally, the retail investors could have just found the short-term trigger which will drive them back to the primary markets. Though investors remain wary and shaky after the events of the past few days, they are likely to respond positively on signs of the U.S. economy improving.

By the way got an interesting picture to share with you all.. hope you like it..


A very scary roller coaster ride, isn't it??

Reliance Power Disappoints..

Hey readers, how many of you are left crest-fallen with the listing of the Reliance Power?? I am sure many of you are left holding your heads in your hands; with Reliance Power listing @ 430 (vs. an issue price of 450 and a listing price fixed @ 610), experts, investors and first-timers alike are left wondering as to what to do!

I have read a lot on this issue and in none of my readings did any expert expect the issue to list below 525!! Yes, the minimum premium for the shares was Rs. 75 and that was supposed to be a PESSIMISTIC ESTIMATE!! The energy shares have not taken to the listing all that kindly; last checked, both Reliance Energy and Tata Power were trading 5% lower.

However, after listing @ 430, Reliance Power seems to have made some sort of a recovery, with the shares now trading @ 450. One can only hope, pray and keep fingers crossed that the stock closes above Rs. 500 today. A close above 500 would not only make Ambani Jr the richest Indian on earth, it would also signal that maybe, just maybe, there is some light @ the end of the tunnel!!

After the events of the last fortnight, I hope none of you are left wondering over why this site is called the "The Sensexxxational Ride"!! ;-) Abhi picture baaki hai mere doston, hang on!! :-D

Reliance Power to list today!

Finally the day is upon us when we will know how strong the Ambani name is in the market. Reliance Power, India's biggest IPO to date, received a tremendous response, being oversubscribed by as much as 73x. However, times have changed for the markets since the IPO opened to the public on January 15, 2008. At the time of the IPO opening, experts had expected shares of Reliance Power to list at Rs. 900/- .. Compare it to the current expectations of the IPO listing at Rs. 550 - Rs. 600 and you know something really bad went on during this interim period.

So what caused a sharp decrease in the premium for Reliance Power? I believe the slowdown in the U.S. market led to heightened fears of recession, which in turn caused a severe correction in the Indian markets. This has affected the investors' appetite for IPOs; this is very much evident from the withdrawals of the IPOs for Emaar MGF and Wockhardt Hospitals last week. Both the comapnies saw a poor response to their IPOs and have now decided to raise money from the primary market at a later date when market conditions are more favorable.

The markets too have been trading in the negative for most of last week and everyone's eyes are now on the listing of the IPO for Reliance Power. A blockbuster listing for Reliance Power should see some short-term bullsih momentum enter the market. The Indian markets severely need some positive indicators to stem the outflow of FIIs and generate some liquidity in the primary market. I'm keeping my fingers crossed for no matter how flawed Reliance Power may be as a company, the name RELIANCE can make or break the Indian market! There is just no denying the fact that divided, the Ambani brothers stand taller!!

Financial Derivatives -- Identifying the lesser of the two devils..

Hello Readers!! I'm back and hey, the markets have not been too good off late! Good is the last word on your minds for the time being, right?? Heart breaking is more like it! Okay, okay, so I'm being over dramatic but the bitter truth is that events of the last 6 months have left most investors reeling from the awe with which the Sensex rose and then the shock and mouth-gaping horror at the fall it registered.. Now isn't that precisely the reason why I call this space "The SenseXXXational Ride" .. It's a gut-wrenching ride and not for the faint hearted, let me mind you!

Investors entering the market around August 2007 were gingery because the Sensex had crossed the 15,000 mark, the skeptics were crying foul warning anyone who cared to listen that a correction was imminent but with the FIIs pouring in funds like never before, India's growth story was shining brighter than ever. Then came a big blow --- the SEBI banned, or shall I say, limited the investments made by Participatory Notes (PNs). This sent the markets crashing but heck, was anyone using any common sense? No ways dear readers, the markets again resumed their upward climb and then came the final big blow, a below-the-belt blow -- Fears of the U.S. economy going into a recession sent the Sensex on a downfall .. A never ending nadir, it seemed!

Now why this big intro?? Well, these last 6 months can be distinctly divided into 2 phases -- The rise which was then followed by the fall!! Long-term investors and investors owning stocks need not worry, the markets will rediscover the Midas touch, albeit a bit later than what we estimated. It's the investors dealing in futures who were emboldened by the meteoric rise of the Sensex. The lure of doubling the money in a short time was ample to hook -- and suck -- both new and experienced investors into this black hole which not only drained their investments but also saddled them with huge losses!!

Now, those of you who cocked a nose at us simple investors dealing in ONLY shares, where are you people now?? Investing in futtures is risky, so why not hedge or atleast protect your downside? Atleast buy a put option on the futures -- if the markets fall, atleast your loss is defined or limited, to say.

I believe trading in options is safer than dealing in futures. I mean, if you have to dine with the Devil, then why not ensure that you got something to help you digest the food as well? Ok, that sounds like a shit Simili.. I will try to compose a better one next time!! :D

Even options are not without risk; however, I would assume that you will be more cautious after the recent experience with the markets! So, suppose, with the markets poised at the current levels, you expect the markets to rise, i.e, you are bullish on the markets making an up move.. So ideally, one should buy a Call option on Nifty futures (lot size 50) expiring in February, i.e. the current month. This basically gives you an option to buy 50 nifty futures at a predetermined price; but does anything come for free? Ha ha, no readers! You got to pay a small premium, say Rs. 150 for one Nifty future for a strike price of Rs. 5300/- .. So, the maximum loss you can suffer is the premium that you paid for the call option, i.e., Rs. 150 x 50 = Rs. 7500 .. Theoretically, I've assumed that the call option has an ending value of 0, i.e., at the time of expiry. However, in the real market, you will be able to get some value for the call option; hence, your maximum loss is capped at Rs. 7500/- .. The breakeven Nifty level for an investor is Rs. 5450 (strike price Rs. 5300 + the call premium Rs. 150) .. So as long as the Nifty stays above Rs. 5450, your call option will be in the money ..

Gosh I'm tired after writing this post; I hope to come out with a follow-up on this article and more complex derivative strategies in my next post! Hope you enjoy this post!

The OriGin of Indian Stock Market!!....A Non-Economic NOTE!!!

Guess going through the following you would have a slight knowledge of how the idea of Indian stock exchange cropped up..its primarily for the beginners in this field ;)....have a nice time reading this amusing piece!!

Once upon a time in a village, a man announced to the villagers that he would buy monkeys for Rs 10. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.The man bought thousands at Rs 10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs 25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!The man now announced that he would buy monkeys at Rs 50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs 35 and when the man returns from the city, you can sell it to him for Rs 50."The villagers squeezed up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!

Welcome to the 'Indian Stock Market'!! ;))

Authored By: Meenakshi Sharma @ The Tweeessty Expedition of MY LIFE!!http://sharmameenakshi.blogspot.com

India & Pakistan --- The Defining Difference

Hey readers, received an interesting article today which I thoughht of posting on the net for your benefit.. This article has supposedly been written by a Pakistani writer..

The two Ambani brothers can buy 100 percent of every company listed on the Karachi Stock Exchange (KSE) and would still be left with $30 billion to spare. The four richest Indians can buy up all goods and services produced over a year by 169 million Pakistanis and still be left with $60 billion to spare. The four richest Indians are now richer than the forty richest Chinese.

In November, Bombay Stock Exchange's benchmark Sensex flirted with 20,000 points. As a consequence, Mukesh Ambani's Reliance Industries became a $100 billion company (the entire KSE is capitalized at $65 billion). Mukesh owns 48 percent of Reliance.

In November, comes Neeta's birthday. Neeta turned forty-four three weeks ago. Look what she got from her husband as her birthday present: A sixty-million dollar jet with a custom fitted master bedroom, bathroom with mood lighting, a sky bar, entertainment cabins, satellite television, wireless communication and a separate cabin with game consoles. Neeta is Mukesh Ambani's wife, and Mukesh is not India's richest but the second richest.

Mukesh is now building his new home, Residence Antillia (after a mythical, phantom island somewhere in the Atlantic Ocean). At a cost of $1 billion this would be the most expensive home on the face of the planet. At 173 meters tall Mukesh's new family residence, for a family of six, will be the equivalent of a 60-storeyed building. The first six floors are reserved for parking. The seventh floor is for car servicing and maintenance. The eighth floor houses a mini-theatre. Then there's a health club, a gym and a swimming pool. Two floors are reserved for Ambani family's guests. Four floors above the guest floors are family floors all with a superb view of the Arabian Sea. On top of everything are three helipads. A staff of 600 is expected to care for the family and their family home.

In 2004, India became the 3rd most attractive foreign direct investment destination. Pakistan wasn't even in the top 25 countries. In 2004, the United Nations, the representative body of 192 sovereign member states, had requested the Election Commission of India to assist the UN in the holding elections in Al Jumhuriyah al Iraqiyah and Dowlat-e Eslami-ye Afghanestan. Why the Election Commission of India and not the Election Commission of Pakistan? After all, Islamabad is closer to Kabul than Delhi.

Imagine, 12 percent of all American scientists are of Indian origin; 38 percent of doctors in America are Indian; 36 percent of NASA scientists are Indians; 34 percent of Microsoft employees are Indians; and 28 percent of IBM employees are Indians.

For the record: Sabeer Bhatia created and founded Hotmail. Sun Microsystems was founded by Vinod Khosla. The Intel Pentium processor, that runs 90 percent of all computers, was fathered by Vinod Dham. Rajiv Gupta co-invented Hewlett Packard's E-speak project. Four out of ten Silicon Valley start-ups are run by Indians. Bollywood produces 800 movies per year and six Indian ladies have won Miss Universe/Miss World titles over the past 10 years.

For the record: Azim Premji, the richest Muslim entrepreneur on the face of the planet, was born in Bombay and now lives in Bangalore.India now has more than three dozen billionaires; Pakistan has none (not a single dollar billionaire).

The other amazing aspect is the rapid pace at which India is creating wealth. In 2002, Dhirubhai Ambani, Mukesh and Anil Ambani's father, left his two sons a fortune worth $2.8 billion. In 2007, their combined wealth stood at $94 billion. On 29 October 2007, as a result of the stock market rally and the appreciation of the Indian rupee, Mukesh became the richest person in the world, with net worth climbing to US$63.2 billion (Bill Gates, the richest American, stands at around $56 billion).
Indians and Pakistanis have the same Y-chromosome haplogroup. We have the same genetic sequence and the same genetic marker (namely: M124). We have the same DNA molecule, the same DNA sequence. Our culture, our traditions and our cuisine are all the same. We watch the same movies and sing the same songs. What is it that Indians have and we don't?

Indians elect their leaders.

Disclaimer: This is not an original publication.

Bharti Infratel: In the news..

Kohlberg Kravis Roberts to invest in Bharti Infratel

Bharti Infratel, a wholly owned subsidiary of Bharti Airtel Limited, announced that leading private equity firm Kohlberg Kravis Roberts & Co. (KKR) has agreed to invest USD 250 million in Bharti Infratel. The investment will be made by KKR’s Asia dedicated private equity fund and its global private equity fund. This is in addition to the investment of USD 1 billion in Bharti Infratel by leading international investors Temasek Holdings, The Investment Corporation of Dubai (ICD), Goldman Sachs, Macquarie, AIF Capital, Citigroup & India Equity Partners (IEP) in December 2007.

The enterprise valuation of Bharti Infratel will be in the range of USD 10 to 12.5 Billion with the final valuation to be determined on the basis of Bharti Infratel’s actual operating performance in FY 2008-09. This investment reinforces the confidence of leading global investors in the Indian telecom sector, which is now the fastest growing telecom market in the world, and the Bharti Group. It is also an endorsement of the Indian Government’s visionary policy on sharing of passive infrastructure.

Stock of Bharti Airtel should exhibit an upward movement because of this news! The U.S. market is exhibiting positive movements with investors rushing to pick stocks which were bettered in yesterday's session. The Indian market too should witness some buying across all sectors, with particular bias towards the IT sector which witnessed heavy selling pressure today.

Bharti Infratel owns over 20,000 sites and holds an approximately 42% stake in Indus Towers, the recently announced joint venture between Bharti, Vodafone and Idea, which has over 70,000 sites. Bharti Infratel and Indus Towers will provide passive infrastructure services to all wireless telecom operators in India on a non-discriminatory basis. Sharing of passive infrastructure results in capex and opex savings and higher capital efficiency for all wireless operators, enabling quicker roll out of services, especially in rural areas, thus benefiting millions of people across India.

Time to look at the fertilizer stocks..

Well, we're witnessing yet another correction with the markets opening another 700 points lower in early morning trade. This came on the back of dismal services data in the U.S. The service sector reported a slump after nearly 4.5 years and investors across the globe fear that the U.S. as well as Europe are slipping into a recession at the same time.

The Fed rate cuts in the last 2 weeks, together amounting to 1.25 percent, have done little to ease the concerns of the investors. More robust need to be implemented if the Fed is to be successful in putting the U.S. economy back on the recovery path. Asian markets too have been trading lower odue to poor global outlook.

In the long-term, however, Asian markets stand to gain from the dismal performace of the world's economies. Who knows, during the course of the current recessionary period and the subsequent recovery, the center of power may shift to Asia!! Wild thought, but stranger things have been known to happen!!

Oh, and I almost forgot, with the Budget round the corner, its time to bild some position in the fertilizer industry. The fertilizer stoks have regained some ground in the last couple of trading sessions and have tended to outperform the market hsitorically, around the time of the Budget.. Look at parking some funds in Nagarjuna fertilizers...

Also, I expect sharp appreciation in the values of Neyveli Lignite & Deep Industries in the coming days! So, keep a sharp eye on these counters and continue tuning in to the SenseXXXational Ride!!

Reliance power listing date.. Stay invested in RCOM!!

Reliance Power will list on February 11. The IPO price was of Rs 450/share and is expected to list at Rs 610/share. It was the largest IPO ever for India and it raised Rs 11,5000 crore.

Today, Reliance Communications was also in the news as it filed a Draft Red Herring Prospectus (DRHP) for Reliance Telecom Infrastructure, valued at Rs 5,000 to Rs 6,000 crore. Reliance Infratel Ltd. is expected to have 60,000 towers by FY09 and Reliance Communications will hold 95% of the company. Today, Reliance Communications closed at Rs 685, up 12% on the BSE. Shares of Reliance Communication advanced on reports that its subsidiary Reliance Telecom Infrastructure, is planning to hit capital market with Rs 5,000-6,000 crore initial public offer.

Reliance Telecom will sell nearly 10 per cent of its post-issue share capital through the IPO which will put its valuation more than double of what it achieved in July 2007 when it privately placed 5 per cent stake to a group of institutional investors.

RTIL, a 95 per cent subsidiary of Reliance Communications, sold the stake for Rs 1,400 crore to a host of investors including George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital in a deal which had put its valuation at Rs 27,000 crore.

Going by the IPO size, the equity valuation of RTIL, a company engaged in the business of building, owning and operating communications towers, will be around Rs 50,000-60,000 crore. This will translate into nearly Rs 250-300 per RCOM share.

RCOM demerged its tower assets in RTIL last year in a move which was followed by most telecom companies in India. RTIL has a presence in all 23 telecom circles in the country. It has a 10-year master services agreement to provide passive telecom infrastructure to RCOM

In my post dated December 31, 2007, I'd given the following reasoning for an investment in Reliance Communication (RCOM):

Having established itself as a dominant player in the CDMA segment, RCOM is all set to take the GSM segment by storm when the company will launch its GSM operations in 2008. The company is also planning to introduce a net-enabled phone at only Rs. 480/- per handset. This marks a steep discount to the currently available internet browsing phones at a cost of Rs. 1,400/-! The company intends to place an initial order for 12 million handsets. It will target the 600 million rural population and sell around 1 million pieces a year in the rural and semi-urban areas. The company is also looking at roping in the labour ministry that is looking at digitisation of communication technology and making mobile phones affordable to farmers.

Reliance Communications is looking to expand its tower business to take on the mega tower company created by the big three GSM players of the Indian mobile market. For this purpose Anil Ambani's tower company seems to be targeting an unlikely partner, the state owned telecom giant Bharat Sanchar Nigam Limited (BSNL). The company had earlier invited bids from private players for taking towers on rent but this venture will be different as towers will be shared on a reciprocal basis. Reliance tower infrastructure limited has about 17,000 towers while BSNL has about 36,000 towers putting their total tower strength at 53,000 towers. Both of them are not very far from the 70,000 towers under Indus tower, the joint venture tower company of Bharti Airtel, Vodafone and Idea. All these factors combined should push the share price of RCOM in the Rs. 850 - Rs. 900 range!

Reliance IPO money refunded!!

With the Reliance Power IPO money being refunded to QIBs (Qualified Institutional Buyers) and non-institutional buyers on February 1, I expect the markets to rise in the coming week due to increased liquidity and the cheap levels the markets are at the moment. Additionally, global sentiments seem positive at the moment and with the U.S. markets closing in the green in yet another session on Friday, chances of the Indian market opening higher are pretty high on Monday!

I would like to advise those investors with a bit of a risk appetite to buy a Call option (Strike price 5500, expiry 28 Feb 2008) on Nifty (lot size: 50 Nifty). The call option was trading at a price of Rs. 170 - Rs. 180 on Friday, towards the close of trading. It is likely to go higher on monday on the back of psoitive global sentiments. Still, I expect the market to move higher because 1) Refund of the Reliance power IPO money has provided investors with a lot of cash, 2) FII buying could provide a boost to the market. Historically, the FIIs have made 20% of their annual investment in Feb and FIIs were back in the thick of action on Friday. 3) Global sentiments coupled with average to positive Q3 results should help the markets stage a rally now, and finally, 4) Sentiments remain positive ahead of the 2008 Budget and with the Fed cutting rates by another 50 bps, I strongly believe that RBI too will have to follow suit, albeit with a lower rate cut.

So while you are busy reading this latest entry and analysing/digesting what I've said, I'll sneak across and warm myself with a hot cup of coffee!! Anyone interested in 1??

N.B.; Take whatever profits you get, the market may surprise negatively in the near-term and a lot of these so-called support levels will be tested if the markets face a down-turn.. Every rally is a time to book profits; currently not the ideal time to buy! Hey, also invest in the Reliance Natural Resources Fund. I apologise for the delay in bringing across this mutual fund to your attention! Risk-avoiding people should look to invest in Mutual fund schemes!

Extremely strong at 42% net margins: Puravankara

Speaking to CNBC-TV18, Ravi Ramu, Director-Finance at Puravankara Projects said that on a QoQ, the margins have been pretty flat and high at 42% net margins, it is only the gross margin which has come down a tad by 2% but still extremely high at 45%, he said.



Excerpts from the exclusive interview with Ravi Ramu:



Q: The margin seems to be gone up on a YoY basis from 30% to 38%, but on a QoQ basis, they seem to have come off from about 45% to 38%, Is there any specific reason for that?



A: In fact on a QoQ, we have been pretty flat and high at 42% net margins, it is only the gross margin which has come down a tad by 2% but still extremely high at 45%. Last quarter, we had some exceptional sales of some high-earning villas and these will continue in the next few quarters as well but on a margin story, we are extremely strong at 42% net margins and operating margins are also very high.



The other important feature of the margin story is our general and admin expenses have done extremely well, it is not just a trading story but it’s the way we have controlled our costs and we expect those benefits to come through in the coming quarters as well.



Q: So you expect margins at the operating level to stay around that 38% to 40% for FY09 or do you think it could inch at about 43% or 44%?



A: There is an inching up story there, partly buoyed by the fact that our JV with Kepel, our developers will contribute quite handsomely to the bottom line as well, so the margins will get a boost. We have had our second project of the JV launched, in Kolkata and that has had an excellent response. It has sold very well in fact and increased prices out there. so we expect the JV to contribute much more handsomely in the coming quarters.



Q: Two numbers from you, how many million sq. ft of land did you spend acquiring in the third quarter and how many million sq. ft of land did you actually develop in the third quarter?



A: We had two major acquisitions, one in Chennai and other in Hyderabad, both totaling at 10.4 million sq. ft, about 6 sq ft in Hyderabad and 4.4 sq. ft. in Chennai. So that’s been significant. We have got them at a much lower than market rates and therefore there is already a locked in profit out there. We have big plans for those bits of land. In terms of what we have developed, the actually production is well over 7,50,000 sq ft in terms of constructed space in the quarter which has gone up quite considerably over the previous sequential quarter at about 1,00,000 sq ft up. So we are on a good growth trajectory, it is not just a margin story but the volume pickup is looking great and so is the sales pickup.



Q: The general concensus is that the interest rates are pretty much plateau at this time, we have spoken to Unitech and DLF over the past couple of days and they have given the indication of a fairly stable pricing. You are fairly dominant in the southern part of the country, what’s your sense on how pricing will pan out in the next say 12-18 months?



A: We have been in the last few months and we expect the next 12-18 months to have an upward trajectory in prices. Some of our key projects, we have increased the prices since the last few days or weeks and we don’t see any end to that kind of scenario. We can’t paint the whole industry with the same brush. Our projects are well priced and are well located with high value with additions coming in on the other facilities we provide on our projects and that could be one significant reason why we are seeing such an upside and uptake in prices.

Q3 results of Maruti & TVS Motors!!

India's largest car maker, Maruti Suzuki has announced its January sales numbers. It has sold 68,107 units in the month of January 2008 as against 65,341 units in same period of last year. Current sales numbers included export of 4,648 units.

Domestic sales in January 2007 was 62,248 numbers. Maruti’s volume in the domestic A2 segment went up by 3 per cent, while in A3 segment the domestic volume grew by 12 per cent, compared to January 2007. In C segment the sales grew by 17% per cent during the month compared to sales in January 2007.


TVS Motor Jan 2-wheeler sales at 93,385 units

TVS Motor Company registered total two wheeler sales of 93,385 units in January 2008 against 121,147 units in the corresponding period of the previous year and 97,576 in previous month. Exports witnessed quantum growth of 84%.

During the month the company’s motorcycle sales stood at 38,961 units in comparison to 69,634 units recorded in January 2007 and 51,293 units in previous month. In the scooter segment, TVS Scooty reported 18,594 units in January 2008 in comparison to 20,534 units in the corresponding period the previous year and 14,568 units in previous month.

Over the course of the next two months, the company plans to launch several new products into the market including a new entry level StaR Sport to overcome the hurdle of restricted availability of retail finance, high rates of interest and stringent norms followed by financiers.

The new StaR Sport motorcycle will come with best of class mileage and reliability. The company will also launch the new Scooty Teenz Electric and the Apache RTR Efi. TVS Motor Company will also make its foray into the three-wheeler market.

Exports reported sales of 13,108 units of two wheelers in January 2008 as against 7,049 units in the corresponding period of the previous year thereby recording 86% growth.

Hero Honda reports good results!

Strong quarter in terms of sales nos: Hero Honda

Hero Honda in Q3 FY08 has reported consolidated net profit of 275.01 cr versus Rs 209.18 cr on YoY basis. During the same period, net sales at Rs 2743.07cr versus Rs 2666.05 cr on YoY basis.

Speaking to CNBC-TV18, Pawan Munjal, MD at Hero Honda said that third quarter is always a strong quarter in terms of sales numbers due to the festive season.





Excerpts from the interview with Pawan Munjal:



Q: How has the 3rd quarter been in terms of sales?



A: Third quarter is always a strong quarter in terms of sales numbers due to the festive season. We have actually held back on our expenditure on promotions, which we normally do in the Q3 around Diwali. We did have a promotion, which was just on one of our models -CD Deluxe. So that was one of the big saving. The commodities have been behaving pretty well in the past many months, this quarter we had a very steady quarter, which also has helped us on the overall material cost and finally on our other expenditure again some marketing costs, there has been some savings.



Q: We see roughly Rs 52 crore as your other income coming in. Where is this money coming from and your EBITDA margins are way above our expectations, we estimated around 11.7% but it is at 14%?



A: The other income is majorly the treasury income where also we are as a company fairly conservative with the markets the way they are, we normally tend to be conservative. After all we are a motorcycle manufacturing company - that’s where our focus is.



Q: EBITDA margins are above our expectations. How did you manage that and going forward will you be able to sustain it?



A: Again the reasons, I just mentioned for a strong Q3 PAT, same reasons for the EBITDA, all that stuff that we did on holding back on the promotions and the marketing expenditures and the commodities cost in terms of the material cost, we have seen a strong EBITDA and going forward, I am very confident that we will continue this trend. This is obviously a departure from last many quarters where I have been saying that there is going to be a pressure on the margins but this time I am very confident that this particular trend will continue for us going forward.

Yes, I'm ALIVE!!

Hey guys, for those of you wondering that since when has this blog become a news highlight, lemme assure that it is certainly not so! The only reason for me posting Q3 results is that there are a lot of companies reporting results at the moment and wouldn't it be good if you could check all of them right here on this page? I don't have much to add to the earnings results as yet because I've not begun my financial modeling services for the Indian market, so my comments are likely to represent the market's views only!

Besides, the snapping of the internet cable sure has affected my Reliance NetConnect connection! It takes me more than 10 minutes to open my Gmail from, can you beat that?? I to doze off while waiting for the sites to open; anyways, I pray that the connection gets restored soon!!

Oh well, a cold wave alert has also been sounded in Calcutta for the next 48 hrs; gosh, Calcutta has never felt cooler in the 6-odd years I've been here!! N this certianly is the coolest February of the year!! The shopping season is on as well and its heartening to see almost every brand offering 50% (close to it anyways) off on their merchandise.. & still making a profit out of the sales. Just makes you wonder how much it really costs them to make these apparels and how high their margins must be! The cost of a brand sure couldn't have been higher!!

Well, I sure have been feeling real lazy for the last week or so! Just eating and trying to sleep for longer than 12 hrs everyday!! That's a bit of an exaggregation newazz.. I don't think I've logged in more than 8 hrs on any of these last few days but heck, that can't stop me from dreaming for a 12-hr sleeping marathon, can it??

Don't wonder any more guys, this blabber ends here!! I hope to return with a more meaningful post!!