MUMBAI: A slowdown in FII inflows triggered by Sebi’s restrictions on P-notes has taken some sheen out of the ADR/GDR market. Depository receipts (DRs) issued by Indian blue chips like Reliance Industries (RIL), L&T, ICICI Bank, HDFC Bank and SBI have witnessed a substantial fall in premium enjoyed over their respective prices on the Indian bourses, reducing the scope for arbitrage between Indian and overseas markets.
Interestingly, most of these instruments had shot up to new highs within few days of Sebi’s announcement on broader guidelines on P-notes on October 25. This, according to merchant bankers, could be because P-note clients who were desperate to buy the India story opted to invest via the DR market.
The euphoria on ADR/GDRs, however, lasted only for some days as Sebi’s order to unwind P-note positions within 18 months and a ban on fresh P-note positions by sub-accounts caused nervousness among FIIs and P-note holders. FIIs have been on a selling spree, pulling out funds amounting to Rs 4,422 crore in the current month so far (till November 27).
While tracking trends in DRs of some of the leading companies, ET found that their prices gained substantially soon after the Sebi move even though, in India, stocks witnessed highly volatile movements. For instance, RIL’s GDR price rose 9.2% from $134.5 on October 25 to $146.9 on November 15.
It, however, lost some ground during subsequent days before ending at $141 on November 27. The fall in the DR price, in fact, converted premium of 0.5% into a discount of 3.5%. GDRs and ADRs are the instruments issued to non-resident Indians against the issue of ordinary shares. While the former are listed in the US, the latter are listed on European markets like London and Luxembourg stock exchanges.
SBI is another major example which saw a significant fall in premium in the past few weeks. From a high of $133 on November 2, the GDR price declined to $117, resulting in a steep fall in premium from 16% to 0.1%. The list of losers also included L&T, ICICI Bank and HDFC Bank, a few notable examples among prominent DR issuers.
Looking forward, there may be a slowdown in Indian DRs as liquidity will be affected in the absence of fund flows from P-note clients actively trading in these instruments earlier, say merchant bankers.
Saturday, 1 December 2007
SEBI allows discount to retail investors
MUMBAI: Market regulator SEBI, on Friday, allowed companies to offer a discount to retail investors in public issues and simplified the procedure for firms to come out with a follow-on offering or a rights issue to raise funds.
However, such discounts will have to be within 10 per cent of the price at which shares are issued to other categories of investors like qualified institutional buyers, high net worth individuals, SEBI said in a circular.
"SEBI has been receiving requests to permit issuance of shares to retail individual investors at a price lower than that being offered to other categories. It has now been decided to permit companies making public issues to do so," the regulator said.
The market watchdog also permitted listed companies to come out with follow-on offer or rights issue without the requirement to file draft offer document with SEBI and stock exchanges.
These companies will now have to file only a copy of red herring prospectus in case of book building issue and prospectus in case of fixed price issue with the Registrar of Companies or the letter of offer with the bourse and SEBI.
However, such companies have to fulfil certain conditions in this regard - companies must be listed for a minimum of three years, their average market value must be at least Rs 10,000 crore and annualised trading turnover in the last six months must be two per cent of listed shares.
SEBI also reduced the minimum requirement to apply for Indian Depository Receipts to Rs 20,000 from the current Rs 2,00,000. This is subject to the condition that at least half the issue is subscribed to by Qualified Institutional Buyers.
However, such discounts will have to be within 10 per cent of the price at which shares are issued to other categories of investors like qualified institutional buyers, high net worth individuals, SEBI said in a circular.
"SEBI has been receiving requests to permit issuance of shares to retail individual investors at a price lower than that being offered to other categories. It has now been decided to permit companies making public issues to do so," the regulator said.
The market watchdog also permitted listed companies to come out with follow-on offer or rights issue without the requirement to file draft offer document with SEBI and stock exchanges.
These companies will now have to file only a copy of red herring prospectus in case of book building issue and prospectus in case of fixed price issue with the Registrar of Companies or the letter of offer with the bourse and SEBI.
However, such companies have to fulfil certain conditions in this regard - companies must be listed for a minimum of three years, their average market value must be at least Rs 10,000 crore and annualised trading turnover in the last six months must be two per cent of listed shares.
SEBI also reduced the minimum requirement to apply for Indian Depository Receipts to Rs 20,000 from the current Rs 2,00,000. This is subject to the condition that at least half the issue is subscribed to by Qualified Institutional Buyers.
SEBI norms allow for 9 working days before deals hit market
| Sources say a ‘case exists for tightening the duration’ |
Officials concede present time limits may be a bit of an overkill.
Can consider making depository directly communicate to stock exchanges as they have info on ownership changes.
D. Sampathkumar
Mumbai, Nov. 28 The Reliance Industries (RIL) stake sale in Reliance Petroleum (RPL) could have come into the public domain much earlier than it actually did but for the present norms on timing of disclosure on significant changes in ownership.
Mr Paresh Chaudhry, Group President of RIL, said that the company informed RPL about the stock sale within the stipulated time frame under SEBI Regulations. Further, RPL in turn informed the stock exchanges within the time frame stipulated for such disclosure.
SEBI Regulations prohibiting insider trading says that an investor who has in excess of five per cent of the stake in a company has to disclose any transaction that has the effect of altering his ownership stake by more than 2 per cent. It has to do so within four working days following the day when its trade resulted in crossing the 2 per cent threshold.
RIL claims that it had put through a series of transactions (the company wouldn’t say from when) of sales and that the transactions of November 14 resulted in the above limit being breached. It informed RPL, its sister company, on November 19, that it has sold 2.54 per cent of its total stake in the company.
The timeline, RIL contends, is within the 4 working days limit set by SEBI for such disclosure. RPL in turn informed the stock exchanges of the sale on November 26. This again is within the SEBI norms, as the latter allows a company to communicate to the stock exchanges within five working days following an investor’s disclosure.
Curiously however, RPL did not have to take recourse to the extended deadline allowed by SEBI when the second tranche of stake sale took place. Between November 15 and 23 RIL divested a further 1.47 per cent stake in the company and informed RPL of having done so. But RPL was able to inform the stock exchange on the first working day itself since the RIL’s disclosure.
Officials in SEBI that Business Line spoke to concede that, the present time limits may be a bit of an overkill at a time when the whole country is well networked with IT and telecommunication infrastructure. Indeed, they even agreed with a suggestion from this correspondent that there is perhaps even a case for making the depository directly communicate to the stock exchanges as they have the information on ownership changes.
Such a recourse would eliminate the possibility of any motivated delay in communicating to the stock exchanges. Incidentally, regulations impose more stringent norms of disclosure on company directors and officers when they deal in shares. As to the suggestion whether these ought not to apply to dealings by ‘group’ companies as well by suitably amending the law dealing with insider trading, the sources further said that the proposal needs to be examined in some detail.
VSNL, MTNL stocks ride on land bank
| After cancellation of Urban Land Ceiling Act |
Our Bureau
Mumbai, Nov. 30 Riding high on Thursday’s news of the annulment of the Urban Land Ceiling Act were the stock prices of telecom companies VSNL and MTNL.
The share price of VSNL touched its 52-week high of Rs 642.30 and was up by a whopping 12.14 per cent to end the day at Rs 626.60. MTNL too was up by 6.59 per cent to end the day at Rs 171.45, hitting an intra-day high of Rs 177.60. Both VSNL and MTNL have land, which they can now sell after the cancellation of the Act.
Unlock Value
“MTNL stands to benefit from this as it has a significant amount of surplus land in . The company can now unlock value in the long-term by the sale of this surplus land,” said an analyst with a stock broking firm.
With profits from telecom services plummeting, MTNL is diversifying into developing IT parks. MTNL, which has prime property in Mumbai and Delhi, will build IT parks and lease infrastructure to software, BPO and KPO firms.
The company is now in the process of getting developers to develop its land banks in both Mumbai and Delhi. In its next project, MTNL is likely to develop its 1-lakh sq ft plus property in Mumbai.
VSNL too has a large surplus of land, which they can use to unlock value, say market analysts. VSNL has a huge surplus land bank of 773 acres .
Selling land
The Government is looking to maximise the value of this land and is considering various options. “There were rumours in the market about the company selling its land after the announcement of the revoking of the Urban Land Ceiling Act, due to which the share prices seem to rise up,” said a research analyst with a brokerage.
VSNL has around 773.1 acres of surplus land at premier locations in Delhi, Tamil Nadu, West Bengal and Maharashtra.
“Of the surplus land, the company has 524 acres in Maharashtra,” he added.
Regulatory Issues“Fundamentally there have been no changes in these companies and they have under performing due to regulatory issues. Their share prices are increasing mainly due to the realty factor. As these companies hold a good amount of land and can now garner a lot of benefit due to this,” said an analyst with Kotak Securities.
Wednesday, 28 November 2007
SEBI to examine rise in Bhushan Steel shares
NEW DELHI: Market regulator SEBI will look into the sudden share price rise in Bhushan Steel stocks which rose 46% from Rs 1,086 to Rs 1,576 on Monday. SEBI director Ananthraman said the regulator would study the price movement before taking any action on it.
Prior to this, a similar run was witnessed in Essar Oil scrip on November 14, when the share price jumped by 36.5% to Rs 120.80 from the previous close of Rs 88.50. The share price continued to rise in the over the next two days too, going up 30.50% and 22%, respectively. Following the spurt, on November 16, the company announced its plan to expand its refining capacity from existing 7 million ton to 34 million ton. A senior analyst said that a section of the market was aware of the company’s plan, which led to the steep rise in the company’s share price.
In the case of Bhushan Steel, the market is strife with the speculation that LN Mittal group is acquiring a stake in the steel company. Bhushan Steel is implementing a 4.5 million ton integrated steel plant in Orissa. The first phase of the plant is likely to be operational soon, while the second phase will be completed by 2009.
Bhushan Steel chief finance officer Nitin Johari, however, denied any plan of roping in LN Mittal or any other group in the company. He said that the company had no idea why the share price witnessed such a strong rally. Its market capitalisation on Monday increased by around Rs 2,000 crore to Rs 6,682 crore.
There were rumours of the company receiving an iron ore mine for its integrated steel plan but Johri denied that too. He said, there was no communication from the government on the issue, so far. A source in mining department also denied that any such decision taken had been taken so far.
In fact, on Monday, the share price went up to Rs 1,625 - a jump of over 50% from the previous closing - but later dipped to close at Rs 1576.
Promoter Brij Mohan Singhal owns 64.18% in the company. Therefore, a merchant banker said, there was no chance of any takeover bid on the company. But, a market source said 8.5 lakh shares were traded on Monday on BSE and NSE. A large number of these shares were traded at higher levels of around Rs 1,500. Therefore, a large number of investors had information of some developments in the company, which will affect its financial performance. The source said that such price rise was possible only on the basis of insider information.
In fact, because of the skewed information in the market, a broker said, many investors have lost money. He said that as the share price was quoting at all time high at around Rs 1,100, some investors sold the stocks without having any holdings, thinking that they will squure their positions by buying them back when the price fell.
The general perception was that the price would correct during intraday trading. But, the price continued to rise the whole day. Similarly, those who had sold futures would loose their fortunes if the prices does not get corrected.
source : moneycontrol
Prior to this, a similar run was witnessed in Essar Oil scrip on November 14, when the share price jumped by 36.5% to Rs 120.80 from the previous close of Rs 88.50. The share price continued to rise in the over the next two days too, going up 30.50% and 22%, respectively. Following the spurt, on November 16, the company announced its plan to expand its refining capacity from existing 7 million ton to 34 million ton. A senior analyst said that a section of the market was aware of the company’s plan, which led to the steep rise in the company’s share price.
In the case of Bhushan Steel, the market is strife with the speculation that LN Mittal group is acquiring a stake in the steel company. Bhushan Steel is implementing a 4.5 million ton integrated steel plant in Orissa. The first phase of the plant is likely to be operational soon, while the second phase will be completed by 2009.
Bhushan Steel chief finance officer Nitin Johari, however, denied any plan of roping in LN Mittal or any other group in the company. He said that the company had no idea why the share price witnessed such a strong rally. Its market capitalisation on Monday increased by around Rs 2,000 crore to Rs 6,682 crore.
There were rumours of the company receiving an iron ore mine for its integrated steel plan but Johri denied that too. He said, there was no communication from the government on the issue, so far. A source in mining department also denied that any such decision taken had been taken so far.
In fact, on Monday, the share price went up to Rs 1,625 - a jump of over 50% from the previous closing - but later dipped to close at Rs 1576.
Promoter Brij Mohan Singhal owns 64.18% in the company. Therefore, a merchant banker said, there was no chance of any takeover bid on the company. But, a market source said 8.5 lakh shares were traded on Monday on BSE and NSE. A large number of these shares were traded at higher levels of around Rs 1,500. Therefore, a large number of investors had information of some developments in the company, which will affect its financial performance. The source said that such price rise was possible only on the basis of insider information.
In fact, because of the skewed information in the market, a broker said, many investors have lost money. He said that as the share price was quoting at all time high at around Rs 1,100, some investors sold the stocks without having any holdings, thinking that they will squure their positions by buying them back when the price fell.
The general perception was that the price would correct during intraday trading. But, the price continued to rise the whole day. Similarly, those who had sold futures would loose their fortunes if the prices does not get corrected.
source : moneycontrol
Sebi should look into Reliance Petroleum
Source : moneycontrol
A: CNBC-TV18's stocks editor, Udayan Mukherjee - Probe doesn’t mean much. Sebi is merely saying that we will look into what happened but I seriously think that somebody has to look into what’s going on in some of those stocks.
Just look at the RPL move from Rs 200 to Rs 295, it was madness the way it happened. The fall from Rs 295 to Rs 200-220 was equal madness, the way it unwound. And ask anybody on the street - everybody has his own version from placements made to diamond merchants and which companies were buying that stock and forces shorts to squeeze up. And then when the stock went to Rs 295 and the shorts were scrambling to buy who supplied the stock which came down which brought the stock down to Rs 220. Subsequent to that big Rs 200 to Rs 295 run-up who made money and therefore who picked up the RPL stock from the cash market from the promoters at 4% stake.
Everybody has a story, one does not know what’s going on but it’s abnormal to say the least that a stock with Rs 1 lakh crore market cap will suddenly move 30% in two days and come back 25% in two days. It’s absolute madness.
So I think it behooves the regulator to go out and look into what’s going on though there might be a screen beyond which they cannot look because the people involved are very smart people. But if they are pulling up Bhushan Steel then they have to pull up RPL as well and go out and look into what happened those four-five days in which the stock went berserk and came down. Because a lot of people actually lost money. People are stuck in RPL at Rs 295 even today.
So the regulator should actually look into it and find out what was going on in these stocks because these are not penny stocks not Rs 5 stock. It’s Rs 1 lakh crore market cap stock. I think it begs a lot of answers and hopefully Sebi will find some though it’s going to be difficult because difficult to prove a lot of things there.
Sunday, 25 November 2007
Investor education top priority for SEBI in 2008
| Damodaran calls for better risk management systems |
Mr M. Damodaran, Chairman, SEBI, along with Mr Bill Kwok, Chairman, ASAF, during a conference on "Asian Capital Markets-The Way Forward,” organised by Asian Securities Analysts Federation in the capital on Friday. —
Our Bureau
New Delhi, Nov. 23 SEBI has called for greater investor education and better law enforcement in the Asian capital markets, including India.
“Asian markets are big and are growing. Enforcement in our markets has to be much better, much quicker.
“We must identify mischief-makers and need to ensure investor education is taken in our jurisdiction,” the SEBI Chairman, Mr M. Damodaran, said while addressing a conference organised by the Asian Securities Analysts Federation.
Insider InformationHe also said that regulators cannot have knee-jerk reactions to the developments in the markets and will have to make rules and principle-based regulations to avoid any systemic risks.
Pointing out that some of the Asian markets are playgrounds where insider information is disproportionately present and used, the market regulator called upon analysts to have an industry code for objective and fair assessment of stocks. “Asian markets, particularly India and China, cannot gloat over the fact that their economies continue to grow at fast pace and must put in place risk management systems to see that markets function in orderly and sustainable manner.” Mr Damodaran added that we cannot sit back on the weaknesses but build on the strengths.
Investors Education“We have to put in place practices that are better suited to our markets at present and world over, investors are not given the kind of attention they deserve despite the fact that they are most critical to the markets. However, in India, SEBI and the Government have decided to make investors education the top priority in 2008,” the SEBI chief said.
HOT STOCKS for 26-11-07
STATISTICS :
Nifty will trade volatile can be range bound within 5520 to 5645 levels, so trade carefully, support for NIFTY is 5500 and Resistance is 5650 levels
FUTURES :
NIFTY : buy below 5550 for a tgt of 5700+ before nov expiry sl @ 5500
CENTRAL BANK : buy for a tgt of 130+ , sl @ 118
NIIT TECH : buy for a tgt of 250 by dec expiry sl @ 210
RCOM : buy for a tgt of 696+ , sl @ 675
RPL : buy for a tgt of 225+ by nov expiry sl @ 200
OPTIONS :
NIFTY : buy call 5600 below 70 for a tgt of 120+ , sl @ 40
ITC : buy call 185 for a tgt of 7+ , sl @ 2
SATYAM : buy call 420 below 8 for a tgt of 20+ , sl @ 5
REL : buy call 1740 for a tgt of 85+ , sl @ 45
RCOM : buy call 680 below 18 for a tgt of 30+ , sl @ 12
Nifty will trade volatile can be range bound within 5520 to 5645 levels, so trade carefully, support for NIFTY is 5500 and Resistance is 5650 levels
FUTURES :
NIFTY : buy below 5550 for a tgt of 5700+ before nov expiry sl @ 5500
CENTRAL BANK : buy for a tgt of 130+ , sl @ 118
NIIT TECH : buy for a tgt of 250 by dec expiry sl @ 210
RCOM : buy for a tgt of 696+ , sl @ 675
RPL : buy for a tgt of 225+ by nov expiry sl @ 200
OPTIONS :
NIFTY : buy call 5600 below 70 for a tgt of 120+ , sl @ 40
ITC : buy call 185 for a tgt of 7+ , sl @ 2
SATYAM : buy call 420 below 8 for a tgt of 20+ , sl @ 5
REL : buy call 1740 for a tgt of 85+ , sl @ 45
RCOM : buy call 680 below 18 for a tgt of 30+ , sl @ 12
Subscribe to:
Posts (Atom)
