Market Pulse

The Key benchmark indices are trading in the Green during the morning trade. At 11.16 am, the Sensex was seen at 33,905.22 up 92.96 points or 0.27%. The Nifty was trading at 10,477.75 up 35.55 points or 0.34%.

Among secondary barometers, the BSE Mid-Cap index was up 0.61%. The BSE Small-Cap index was up 1.06%. Both these indices outperformed the Sensex.

The broad market depicted strength. There were more than three gainers against every loser on BSE. 1,798 shares rose and 563 shares fell. A total of 87 shares were unchanged.

Metal shares were in demand. Hindustan Copper (up 3.85%), Jindal Steel & Power (up 2.53%), JSW Steel (up 2.31%), Vedanta (up 1.83%), Steel Authority of India (up 1.80%), NMDC (up 1.48%), Hindalco Industries (up 1.42%), National Aluminium Company (up 1.23%), Hindustan Zinc (up 1.18%) and Tata Steel (up 0.85%), edged higher. Bhushan Steel was down 0.45%.

Meanwhile, copper price edged lower in the global commodities markets. High Grade Copper for March 2018 delivery was currently down 0.47% at $3.2625 per pound on the COMEX.

Power generation stocks were in demand. Adani Power (up 1.85%), NHPC (up 1.26%), JSW Energy (up 1.17%), Jaiprakash Power Ventures (up 1.05%), Tata Power (up 0.70%), Torrent Power (up 0.68%), CESC (up 0.50%), Reliance Infrastructure (up 0.29%), NTPC (up 0.28%) and GMR Infrastructure (up 0.23%), edged higher. Reliance Power was down 2.28%.

State-run Coal India was up 0.18%. State-run Power Grid Corporation of India was up 0.80%.

Yash Papers jumped 10.61% after the company said that the commercial production of tableware unit (phase - 1) of the company started from 2 January 2018. The announcement was made after market hours yesterday, 2 January 2018.

Overseas, most Asian shares were trading higher, tracking positive cues from US market. Japanese market was shut.

US stocks jumped overnight, with major indexes rallying to record levels in a broad rally. The Dow Jones Industrial Average rose 0.4%. The S&P 500 rose 0.8%. The Nasdaq Composite Index gained 1.5%.

Today's Calls:

#Buy State Bank of India Ltd at around Rs.305, for short term targets of Rs.309--310. With the Indian Banking system bearing the brunt of huge NPAs, thanks to loan defaulters, the country's largest lender State Bank of India collected Rs 1,771 crore during April- November 2017 as penalty from customers who couldn't maintain a minimum monthly average  balance (MAB) in their accounts. The money thus collected as penalty charges is more than the bank’s July-September quarter net profit of Rs 1,581.55 crore and nearly half of the Rs 3,586 crore it earned as net profit April-September, reported The Indian Express. In October last year, the government of India had announced a Rs.2.1 lakh crore capital infusion plan for state-owned banks, of which Rs.1.35 lakh crore was to be raised through bonds.

#Those who are holding the shares of Dena Bank Ltd (Rs.25.50) can continue to hold with a SL of Rs.24.60. There was recent media report that the government is likely to immediately infuse about Rs 10,000 crore in six state-run lenders, including United Bank of India, Dena Bank and Bank of Maharashtra, over the next few weeks, a finance ministry official said. I am expecting the shares of PSB to rise, after the government of India passed the new Insolvency Code.

#Those who are holding the shares of Housing Development & Infrastructure Ltd can continue to do the same with a SL at Rs.61.40. I feel most of the investors have not understood the theory that HDIL has less debt and more land bank that Unitech Ltd or DLF Ltd, in the Mumbai Metropolitan Region. Moreover, its Face Value is Rs.10, unlike Rs.2 (in case of Unitech Ltd and DLF Ltd). Therefore, I feel it has a better chance of appreciation than the Unitech Ltd in the short term.

#The Shares of MBL Infrastructure Ltd (Rs.27) is preparing for the next round of upmove after

Photo: The Economic Times

changes took place in the Insolvency Code. Whether it is the promoter or a good strategic investor someone will soon take charge of the company. MBL Infrstructure Ltd has a good order book position -- only problem is the debt of Rs.1700 crore. The government of India, said last week, that loan defaulting promoters can take part in the bidding process provided they clear all the dues. The promoters of MBL Infrastructure Ltd has already expressed their desire to bring in Rs.120 crore and is in discussion with the lenders. I am sure soon, a positive outcome for the shareholders will come. Add the scrip in every market decline and keep holding.

#A Buy on Jet Airways Ltd was given at around Rs.Rs.522-534 in April last year (2017). The scrip made an intraday high of Rs.845 today, which is also its 8-year high. The investors could do well to book at least 85% of profits and wait for dips to re-enter.

#Those who are holding the shares of Reliance Infrastructure Ltd from around Rs.539 can book partial profit again  at Rs.572 and hold the rest with a SL at Rs.546. The next target for the scrip is Rs.593.

#Those who are holding the shares of Reliance Communications Ltd from Rs.12 onward, can book out complete profits at around Rs.31-32 and wait for the scrip to stabilize before thinking of fresh entry. I recommended the share of RCom to some of my BMA Wealth Creator Ltd's clients at above Rs.12.

#The long term investors who are still holding the shares of Orchid Pharma Ltd (Rs. 20.10), formerly Orchid Chemical and Pharmaceuticals Ltd, should book 15% of profits and hold the rest with a SL at Rs.17. 

~~ with inputs from  Capital Market - Live News...

Pre-Session: Market may open higher on positive global cues

03-Jan-18: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could rise 21 points at the opening bell on positive global cues.

Overseas, most Asian shares were trading higher, tracking positive cues from US market. Japanese market was shut. US stocks jumped overnight, with major indexes rallying to record levels in a broad rally. The Dow Jones Industrial Average rose 0.4%. The S&P 500 rose 0.8%. The Nasdaq Composite Index gained 1.5%.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 522.74 crore yesterday, 2 January 2018, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 64.70 crore yesterday, 2 January 2018, as per provisional data.

Among corporate news, Reliance Industries (RIL) said that it successfully commissioned and achieved design throughput of the world's first ever and largest Refinery Off-Gas Cracker (ROGC) complex of 1.5 MMTPA capacity along with downstream plants and utilities. The ROGC complex is a core component of RIL's most innovative and world-scale J3 project at its integrated Refinery-Petrochemicals complex at Jamnagar. The announcement was made after market hours yesterday, 2 January 2018.

Key benchmark indices settled almost unchanged yesterday, 2 January 2018. The barometer index, the S&P BSE Sensex, fell 0.49 points to settle at 33,812.26. The Nifty 50 index rose 6.65 points or 0.06% to settle at 10,442.20.

~~Powered by Capital Market - Live News...

Market Pulse

A bout of volatility was witnessed as key benchmark indices bounced back after hitting fresh intraday low in morning trade. At 11.13 IST, the barometer index, the S&P BSE Sensex, was seen trading at 33,843.01 up 30.26 points or 0.09%, while Nifty was seen at  10,447.95 up 12.40 points or 0.12%

Among secondary barometers, the BSE Mid-Cap index was down 0.65%. The BSE Small-Cap index was down 0.74%. Both these indices underperformed the Sensex.

The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,644 shares fell and 735 shares rose. A total of 91 shares were unchanged. Breadth was strong in early trade.

Metal shares declined. Hindustan Copper (down 2.35%), Steel Authority of India (down 2.21%), Jindal Steel & Power (down 2.18%), Bhushan Steel (down 2.16%), Vedanta (down 1.56%), JSW Steel (down 0.92%), Tata Steel (down 0.91%), National Aluminium Company (down 0.82%), Hindalco Industries (down 0.55%) and Hindustan Zinc (down 0.47%), edged lower. NMDC was up 0.71%.

Meanwhile, copper price edged lower in the global commodities markets. High Grade Copper for March 2018 delivery was currently down 0.64% at $3.2795 per pound on the COMEX.

Cement shares declined. ACC (down 0.41%), Ambuja Cements (down 0.13%) and UltraTech Cement (down 0.08%), edged lower.

Grasim Industries was down 0.93%. Grasim has exposure to cement sector through its holding in UltraTech Cement.

Motorcycle major Bajaj Auto gained 0.35% to Rs 3304.95 after total sales rose 30% to 2.92 lakh units in December 2017 over December 2016. Domestic sales rose 25% to 1.49 lakh units in December 2017 over December 2016. Exports rose 35% to 1.43 lakh units in December 2017 over December 2016. The announcement was made during market hours today, 2 January 2018.

Overseas, Asian shares were trading higher. Market in Japan is closed for holiday. US markets was shut yesterday, 1 January 2018, on account of New Year's Day.

Today's Calls:

#The market it seems will trade range bound till fresh triggers come. As long as the Nifty holds the 10400-10200 ranges the BULLS will not have to worry much. The broader market went in for small correction today, after a whirlwind rally during the last few weeks. India's fundamentals are moving towards better from worse and I believe, the rally will now be more seen in shares which have a story to tell, especially from those beaten down A and B groups. 

#Those who are holding the shares of Housing Development & Infrastructure Ltd (HDIL; CMP: Rs.62.50) can continue to add on declines due to the inherent fundamentals in the counter. The company has a HDIL has a market cap is only Rs.2,715.52 crore, as against its land holding of 200.47 Million Sq. Ft as of September 30, 2016. It boasts of being the Largest Land Bank Owner in Mumbai Metropolitan Region, which it can capitalize to cut its debt. JP Morgan noted HDIL’s balance sheet cost of land is at 50-70%  lower than market value. In November, 2017, there were media reports that the shareholders of HDIL had approved the issue of up to 2 crore warrants, convertible into equivalent number of equity Shares of Rs.10 each to Sarang Wadhawan. The issue is to be carried out in one or more tranches. The issue had been approved by the board of the company in an earlier meeting on November 14. The management intends to use the proceeds of the preferential issue of the warrants for long-term working capital purposes. The warrant issue increases the number of shares held to 45.4 crore, an increase of 4.6%. It expects margins of the company to be above 30% even under affordable housing price points.
In the November, 2017, another positive news came that Andhra Bank had withdrawn a plea against it in the National Company Law Tribunal. On October 30, Andhra Bank had filed an insolvency petition against city-based realtor on failure to repay Rs.55 crore invested by the bank in the HDIL's non-convertible debentures, as per media report. The company said that the aforementioned plea stands withdrawn as it has reached a settlement with the lender and has made part payment of its balance dues, it said in the BSE filing. I still hold the target of Rs.77-84-92-97-121  for the scrip. There could be some minor correction as the scrip of HDIL is a little overbought on the daily chart.

#Those who are holding the shares of Reliance Naval and Engineering Ltd (CMP: Rs.63; Intraday high: Rs.72.65) can book some profits and hold the rest with a SL at Rs.61.50. This scrip has given wonderful returns to  the short term shareholders. Reliance Naval and Engineering Ltd recommended to the Premium Members and also in this Free Blog closed with a gain of 32.28% yesterday.

#Most analysts expect the government to focus on increasing government expenditure on rural economy as well as introduce a measure to kick-start investment cycle in the economy. I have taken some shares of Genera Agri Corp Ltd (BSE Code: 590133; GENERAAGRI; Group XT) pivoted on this theory. I am expecting the scrip to touch Rs.35-41 in the short to medium. However, this is a high-risk-high-gain game. The stock has fallen from around Rs.220-plus in 2013-14 to the CMP of Rs.9.10 and therefore has a much chance of appreciation in this BULL MARKET RALLY.

#Those who are holding the shares of Suzlon Energy Ltd (Rs.15.70) from Rs.13.60, can continue to hold with a SL at Rs.15. This, the government is likely to give a push in the renewal energy sector. The scrip is likely to touch Rs.17-19, in the pre-budget rally.

#Those who are holding the shares of MBL Infrastructure Ltd (Rs.26.80), can continue to add on declines, as the government of India is likely to bring out a change in the existing Bankruptcy and Insolvancy act, which will make the promoters of the company eligible to bid. The medium term target for the scrip is Rs.110-plus. The stock has already risen from the recommended price of Rs.24.40. It will give you multibagger returns going forward. So, risk taking investors can accumulate the scrip on all declines.

#Unitech Ltd (Rs.11.15) made an intraday high of Rs.12.25 today. Those who are holding the shares of the company from Rs.5, can book complete profits and wait for a close above Rs.12.20, for fresh entry. This company like HDIL also has huge land bank scattered across India, unlike the former whose land bank is concentrated mostly in Mumbai Metropolitan Region.

#Buy the shares of Reliance Industries Ltd at around Rs.910-911, for intra-day targets of Rs.915-920. For the short term delivery based buying, the targets could be Rs.945-951. Oil prices posted their strongest opening to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia.

#Buy the shares of Punjab National Bank Ltd at around Rs.166-167, for short term target of Rs.177-180. According to the Economic Times, 2 January, 2018, North Block will soon announce a reforms road map for PSBs, tying performance parameters to funds the lenders would receive as part of recap plan. Moreover, putting branch rationalisation plan on fast track, Punjab National Bank has placed 300 branches under watch and asked them to either shape up within a year or face closure or merger.

#The government of India, especially the likes of Sanju Verma, who shifted to the BJP from the AAP (don't know her next destination, as this fickle lady keeps on changing her location...LOL), after trying her luck in other sectors too, like HDFC Bank, is seen to tom-tom about the all time high of the Indian bourses.
But with very little retail participation and not much improvement in the number of demat account holders, I don't think this in any case reflects "The Bharat of Villages and Towns".
It is pertinent to mention here that only around 2% of Indians hold Demat accounts and the Narendra Modi Government did very little during their tenure of more than 36 months to beef up the sentiments of Indian Capital Markets. 

I am increasing the subscription charge of my Premium Services to Rs.18,000 per year from 16th January, 2017. So, rush for further details on the same at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

~~with inputs from Capital Market - Live News

Pre-Session:  Market may remain rangebound amid lack of global cues

01-Jan-18: Key indices may remain rangebound as most of the global markets remain closed today, 1 January 2018. Overseas, Asian markets remain closed due to New Year Holiday. Growth in China's manufacturing sector slowed slightly in December. The official Purchasing Managers' Index (PMI) released on Sunday dipped to 51.6 in December, down from 51.8 in November. The 50-point level divides growth from contraction on a monthly basis. The official non-manufacturing Purchasing Managers' Index (PMI) rose to a three-month high of 55 from 54.8 in November.

US stocks closed lower on Friday, 29 December 2017 as selling pressure accelerated towards the close of the session. US markets remain closed today, 1 January 2018 on account of New Year's Day.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 595.04 crore on Friday, 29 December 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) purchased shares worth a net Rs 461.37 crore on Friday, 29 December 2017, as per provisional data.

Key benchmark indices registered modest gains on Friday, 29 December 2017, boosted by an ongoing global rally fuelled by bullish bets on coordinated economic growth. The Sensex had advanced 208.80 points or 0.62% to settle at 34,056.83, a record closing high.

Among corporate news, Infosys announced that it has on 28 December 2017, signed an agreement for divestment of its entire investment in ANSR Consulting Holdings, Inc., for a total consideration of $1 million. The announcement was made after market hours on Friday, 29 December 2017.

NTPC said that unit 2 of 800 megawatts (MW) of Kudgi super thermal project, stage-I (3 X 800 MW) will be declared on commercial operation with effect from 1 January 2018. With this, the commercial capacity of Kudgi super thermal power project, NTPC and NTPC group becomes 1,600 MW, 44,492 MW and 51,383 MW respectively. The announcement was made after market hours on Friday, 29 December 2017.

Separately, NTPC said its board of directors in its meeting held on 29 December 2017 has designated Sudhir Arya, Executive Director (Finance) as Chief Financial Officer of the company with immediate effect. The terms & conditions of appointment including remuneration of Sudhir Arya, shall be as per the existing policy of the company. The announcement was made after market hours on Friday, 29 December 2017.

Axis Bank in a clarification to the media news titled Axis Bank seeks bids for controlling stake in GMR Chhattisgarh said that the bank denies the news and added that it is factually incorrect. The announcement was made after market hours on Friday, 29 December 2017.

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Reliance Infrastructure Ltd: Some Points

CMP: Rs.553.75

#Reliance Infrastructure Ltd (RInfra) on Thursday said it has signed a definitive binding agreement to

Photo: Facebook

sell its Mumbai power business to Adani Transmission Ltd for Rs.18,800 crore. The deal will see the Adani Group taking over the distribution of over 1,800 megawatt (MW) of power to roughly 30 lakh customers in Mumbai and 500MW of thermal power generation capacity.

#Reliance Infrastructure said the entire proceeds from the sale will be utilized to repay debt, and post the deal, it will turn debt-free. As of September, the company owed lenders well over Rs.10,000 crore. “This monetization is a major step in RInfra’s deleveraging strategy for future growth,” the company said in a statement.

#The focus of the company, is now clearly on its engineering, procurement and construction (EPC) and defence portfolios. “Our main focus area for growth will be EPC and defence. Today, our EPC order book, including the ones where we have been declared L1, is in excess of Rs10,000 crore and in 2-3 years will build up to Rs.50,000 crore,” Reliance Infrastructure CEO Lalit Jalan told Mint. In the quarter ended September, EPC accounted for just 11% of Reliance Infrastructure’s revenue.

#The hiving off of the Mumbai power business, however, doesn’t mean the end of the road for RInfra’s power distribution dreams. “We have our Delhi distribution business, which is twice the size of Mumbai distribution,” Jalan said. R-Infra's power distribution assets in Delhi has nearly 40 lakh customers.

#R-Infra CEO Anil Jalan told TOI the deal will deleverage the company and leave Rs 3,000 crore surplus funds after clearing its standalone debt of Rs 15,000 crore. "It will help us focus more on construction, infrastructure projects...defence.

With zero debt, we will have easier access to cheaper funds. We are almost the second-largest construction company in the country with an order book worth Rs 10,000 crore," he said.

#Reliance Infrastructure Ltd develop projects through various special purpose vehicles in several high growth areas such as power, roads and metro rail in the infrastructure space and the defence sector. The company’s board recommended a dividend of Rs.9 per share for FY17. 

#In August, 2017, Lalit Jalan, CEO of RInfra said in the EPC business, the company is targeting an at least Rs.15,000-crore order book annually as it is gearing up to bid for projects worth at least ₹1 lakh crore. The main focus areas of this vertical are roads, metros and power projects. The company is also keen on expanding the operation and maintenance (OEM) business in these areas.

#Debt remains one of the concerns, although the company could reduce its debt to equity ratio from 1.5 in FY16 to 1.2 in FY17. RInfra’s debt on a consolidated basis is about Rs.29,000 crore, as of August 2017. The company expects to receive at least 75% of arbitration awards from Delhi Metro Rail Corporation (DMRC), which, including interest, amounts to Rs.4,725 crore. The company said there is ongoing arbitration for another five projects, and it is preparing to go for arbitration for four more.

#Anil Ambani-led Reliance Infrastructure is slated to win a Rs 1,000-crore order from Nuclear Power Corporation of IndiaBSE 0.68 % (NPCI) after emerging as the lowest bidder for an engineering and construction contract for the Kudankulam plant, people familiar with the development told ET. India and the former Soviet Union agreed in 1998 to set up the Kudankulam Nuclear Power Project with six units of 1,000 MW each. So far, two units have been commissioned, one in 2013 and the other in 2016. India is building the third and fourth units. India and Russia signed a pact in June for two nuclear reactors for the fifth and sixth phase of the Kudankulam plant, which is estimated to cost Rs.50,000 crore. 

#Reliance Infra is focusing more on cash contracts as a part of its strategy to be “asset light”. The company, which has built power and road projects, is looking to scale up it EPC order book, the management said recently. 

#Reliance Infrastructure Ltd last month bagged contracts worth Rs.5,000 crore in Bangladesh which includes setting up of the entire infrastructure for a 750 MW LNG-based combined cycle power plant. The company won the projects on international competitive bidding, Reliance Infrastructure (RInfra) said in a statement.

The award comes after bagging Rs.3,675 crore EPC order from NLC India for setting up two lignite-based CFBC thermal power projects. RInfra said its EPC division has also been shortlisted for projects like the Bandra-Versova sea link, Mumbai coastal road, and the Mumbai-Nagpur expressway.

#After the divesture, what remains with the company will be the Delhi distribution business, EPC, roads, Mumbai metro and defence businesses. In EPC, the company had Rs.2,492 crore of revenues in 2016/17.

#Now R-Infra is now transferring road projects to RInfra InvIT fund to monetise its investments. Its Mumbai Metro is still in the early stages and its plans in the past to undertake renovation of small airports have not met with much success.

#The RInfra's current biggest bet is on defence. Its JV with Dassault Aviation is likely to play major role in meeting the offset obligation of Rs.30,000 crore for "Rafale 36" contract, hopes the company. Its Reliance Defence and Engineering Ltd expects to get a good share of the Rs.38,000 crore naval programmes. Its JV with Rafael Advanced Systems  (Israel), to focus on Air Defence Systems including missiles and large aerostats, targets an opportunity worth Rs.65,000 crore over next 10 years. Its partnership with Antonov (Ukraine) for transport aircraft is estimated to be an opportunity worth Rs.35,000 crore over next 10 years. It is also targeting the large scale ammunition market globally worth Rs.65,000 crore over next 10 years.

#RInfra is planning to deleverage by another ₹2,500 crore through the Infrastructure Investment Trust (InvIT) route. In September, 2017, Anil Ambani said: “With regard to Reliance Naval, the mandatory requirement for change of ownership is what we’ve achieved with our 31% shareholding. We have the ability to increase our shareholding to 36%. We will be shortly announcing a rights issue and through the rights issue, we will have the ability to increase our shareholding,” Ambani said. He also said that Reliance Infrastructure is engaging with Japanese companies with the intention of participating in India’s ambitious Rs.1 lakh crore. 

#Promoters held 49.74% stake in the company as of September 2017. At the CMP of Rs.553.75 it has a market cap of only Rs.14,563.07, EPS of Rs.49.19 and Book Value of Rs.948.49.  It is trading at a P/E of 11.26 against the Industry P/E of 16.09. The face value of the shares of the company is Rs.10. Its subsidiary Reliance Naval and Engineering Ltd (Rs.49.30) has a market cap of Rs.3,632.64 crore. Reliance Naval and Engineering Ltd, formerly known as Reliance Defence and Engineering Limited / Pipavav Defence and Offshore Engineering Company Limited has the largest engineering infrastructure in India and is one of the largest in the world. It plans bids for six submarines worth Rs.50,000 crore, Ambani said in September, 2017.

#If some of these large deals including InvIT and Mumbai electricity business fructify they could unlock huge value. While the exact amount of the debt to equity structure of these assets is not known at this point in time, debt tied to these assets will go and equity would be released. 

#The debt reduction initiatives could also have a positive impact on valuations. Currently, the market does not attribute much value to some of these businesses, which is also reflected in valuations. The company has a reported net worth of Rs.23,348 crore in FY17, is valued at price to book value of about 0.58 times. However, this could get rerated as some of these businesses are divested at higher valuations. The standalone business or power business would certainly get higher multiples than the multiple given to the consolidated entity.

#The stock has given a break out on daily charts and with RSI around 75.50 and MACD in Buy Mode, it looks attractive for the BULLS. Only concern seems to be that its short term oscillators are slightly overbought. The scrip is trading above its 50D, 100, 150D and 200D EMAs. Its next targets are Rs.577 and Rs.610. Stay Invested with a SL at Rs.522.

Bibliography: 

(i) Live Mint

(ii) The Times of India 

(iii) The Hindu BusinessLine

(iv) The Economic Times

(v) Business Today

(vi) Moneycontrol.com

The Indian Real Estate Industry: Pros and Cons

Photo: Business Today

It was another tough year for the real estate builders – with sales of residential housing units remaining weak in the 1st and 2nd quarters of 2017.

Overall, the year 2017 has been a mixed bag – as far as the performance of real estate stocks are concerned. Real estate has been the most affected sector post NDA government's decision to implement the process of demonetization of around 86% of Indian currency. On the eve of demonetization nearly 87% of transactions in India were in cash, meaning the country is more cash driven than Russia, Brazil and Mexico. This rocked the boat of the cash driven Real Estate sector. 

This year saw the effects of the implementation of demonetization, with land sales reaching stagnation due to more involvement of cash transactions. But this somewhat reduced the land prices making the end products more affordable to the consumers. 

By April 2017, when the markets were looking to stabilize, RERA and GST were announced in succession which again caused some inertia due to confusion among buyers and developers alike, with both awaiting the final set of RERA notifications/legislation from their respective state regulatory bodies. 

The triple effects of demonetization, RERA and GST, saw the sales in almost all the sectors nosediving, the 1st and 2nd quarter being the worst in case of real estate. However, at present we are observing some pickup in demand as green shoots have started to be seen in the Indian economy. The buyers of premium properties have again started to flock for site visits.

The coming year 2018 is expected to be a year of consolidation  in the real estate sector and will help the big players who already have a command in the market. More joint ventures/joint developments will be the order of the day with financially distressed developers being taken over by larger players. Cutting of debts, completion of existing projects, focusing on the affordable housing projects, etc will be prioritized over launching new ones.

The NDA Government's efforts to boost "affordable housing" by conferring "infrastructure status" to this segment and announcing various tax incentives will continue to attract more prominent developers to realign their products. Infrastructure status to the segment, will enable the real estate developers to access cheaper funds and other concessions. The finance minister also said that under the profit-linked income tax deduction for promotion of affordable housing, the carpet area would be counted (up to a limit), instead of built-up area, making a compelling case for affordable housing.

The Union Cabinet's decision to increase the carpet area of affordable units to 120 sq.m and 150 sq.m for MIG-I (income category 6-12 lakhs per annum) and MIG-II (income category of 12-18 lakhs per annum) segments respectively, coupled with an interest subsidy of upto 4%, will benefit both buyers and sellers since options increase for the former and inventories are cleared for the latter. 

Affordable housing is therefore likely to become an important segment in every developer's portfolio in 2018 and share price of the companies, in this space could show a phenomenal upward march in 2018. Moreover, if the government lowers the rate of GST (Goods and Services Tax) on affordable housing, from 12 to 8 per cent, as has been suggested in some quarters, this could benefit the development firms and eventually, reduce the rates of housing.

Meanwhile the Credit rating agency, ICRA, in its report, said that it expects the growth rates in the affordable housing segment to be in the region of 30% , adding that it would be one of the key drivers for the Indian mortgage finance market.

In the meantime, there are media reports that  a galaxy of top-notch real estate developers has lately descended with a bang on the affordable housing segment. Even lesser known ones like Puravankara Ltd (Rs.167.90) and Mumbai's Sunteck Realty Ltd (Rs.419.85) have taken similar steps, with the former setting a wholly-owned subsidiary, Provident Housing. The realty firms like Housing Development & Infrastructure Ltd (Rs.65.80), Unitech Ltd (Rs.9.25), are already into the segment. Owing to low interest rates, various sops from the government and demand from consumers, more and more development firms are likely to venture in this segment, which was once considered to be a low-profit segment by many in the industry.

Tata Housing, CEO and Managing Director Brotin Banerjee, said:  "While the 12th Five-year Plan pegged the country's housing shortage at 12.78 million units, I maintain it is higher. Our research showed a much larger opportunity in this area. We estimated a total housing shortage of 24.7 million units with 70% of it in the affordable housing space."

With India's urban population growing at an estimated 2.1 per cent per year and expected to reach 600 million by 2031, it has been obvious for years that affordable housing was a huge market. The last Union Budget spelt out the government's own commitment to this segment by promising to provide housing for all by 2022 under the Pradhan Mantri Awas Yojna, which would include building 10 million houses for the poor and homeless by 2019, and 20 million by 2022 - a forthcoming bonanza for developers willing to take the public-private-partnership (PPP) route.

Further, to stimulate housing for the not-so-poor, as mentioned earlier the last Budget increased the ambit of affordable housing, raising the maximum permissible size of such apartments to 60 sq.mt. of "carpet area" (the actual liveable area of a house), instead of "built-up area" (which includes the space taken up by the lobby, elevators, etc.) as before, except in the four traditional metros. 

It raised the time limit for completing such projects from three years to five, and introduced a new section in the Income-tax Act to allow for 100 per cent deduction of tax on profits from affordable housing. In the case of a landowner and developer putting up a housing project together, it deferred the need for landowners to pay capital gains tax till one year before the project's completion. This is expected to prove particular useful for companies like Tata Housing. 

For home buyers too, the Union Budget offered waiver of stamp duty as well as a credit-linked subsidy on loans, while for home sellers, it reduced the period for which they could hold on to their earnings without paying capital gains tax - or buying another property - from three years to two, thereby providing a stimulus to the secondary housing market. It also announced that the National Housing Bank will refinance individual housing loans worth Rs.20,000 crore in 2017/18. Since the launch of the Pradhan Mantri Awas Yojana (Urban), the government has sanctioned 30.76 lakh houses to fulfil its ambitious scheme of ‘Housing for All’ by 2022.

For ready-to-move-in properties, the tax rate is zero. This has made such properties attractive compared to the under-construction properties and is thus helping create fresh demand.

Now coming specifically to my recently recommended Housing Development & Infrastructure Ltd (Rs.65.80), which has already given a return of around 30% from the 1st recommended price of Rs.52, let us examine a few points: 

• HDIL has a market cap is only Rs.2,842.73 crore, as against its land holding of 200.47 Million

  

  Housing Development & Infrastructure Ltd 

  Sq. Ft as of September 30, 2016. It boasts of being the Largest Land Bank Owner in Mumbai Metropolitan Region, which it can capitalize to cut its debt. JP Morgan noted HDIL’s balance sheet cost of land is at 50-70%  lower than market value. It expects margins of the company to be above 30% even under affordable housing price points. 
• Now even if we consider an average price of 5000 per Sq. Ft for the land then this gives a whooping ~Rs.100250 crore for its land bank, which is mammoth as compared to its debt. As of March 2017, the company has a total debt of Rs.2,476.56 crore.
• The Book Value of the shares of HDIL is Rs.264.59, as compared to its CMP of Rs.65.80. The P/BV is only 0.25. It has a P/E of 19.55 against the Industry P/E of 44.65 giving a chance of further appreciation of the share price. 
• Housing Development & Infrastructure Ltd (HDIL) on August this year said it is in talks with Union Bank of India for a one-time settlement to stop insolvency proceedings against its arm, Guruashish Construction Ltd, which defaulted crore repayment to the bank.
• The promoters' holding has increased to 36.49% from 34.25%, a year back. In this A-group Real Estate company, Foreign Portfolio Investors hold 33.98% and Mutual funds hold 3.67%, while Financial Institutions/ Banks and Insurance companies together hold 0.47% making it an ideal medium to long term bet. 
• On November 17, 2017 Morgan Stanley (France) S.A.S. bought 29,18,400 shares of Housing Development and Infrastructure (HDIL) at Rs.64.26 on the NSE. In May, this year Morgan Stanley (France) S.A. bought 2,423,146 shares of Housing Development and Infrastructure (HDIL) at Rs.91.36 per share on the NSE. It is still more than 95% lower than its all-time high price level of Rs.1,113 hit on January 8, 2008. 
• We can look for immediate targets of Rs.84-87 (the share price) and upon breaking Rs.93 on the upside, the scrip can touch even Rs.121 in the next few weeks.
  Interestingly J P Morgan gave a target of Rs.140 in March, 2017. The Brokerage  said: "NAV based on valuing ongoing projects is at 15 per cent WACC and the remaining land at 1 time cost is Rs.294 per share”.
  Therefore, remain invested and accumulate on declines. This Mumbai based real estate company is likely to give you good and steady returns going forward.

Bibliography: 

#The Hindu Businessline

#Business Today

#Housing.com

#Live Mint
#Steel Guru
#The Economic Times

WINNING STROKES

Today was a day for the shareholders of Housing Development & Infrastructure Ltd (HDIL), as the stock which was recommended yesterday around Rs.59 to the Premium Members and also in this blog, almost around the same price rocked the boat of the bears as it made an intra-day high of Rs.66.70. The share closed the day at Rs.65.80 in  the NSE, up 11.34% but is still more than 80% lower than its seven-year-old price. Its all-time high price level was Rs.1,113 which it hit on January 8, 2008. 

According to some media reports, HDIL had land reserves of 200.47 million quarter feet as of September 30, 2016. It boasts of being the owner of largest land bank in the Mumbai metropolitan region, which it can capitalize to cut its debt. JP Morgan noted HDIL’s balance sheet cost of land is at 50-70%  lower than market value. It expects margins of the company to be above 30% even under affordable housing price points. After today's performance and recent developments regarding debt payment (NPAs), I am expecting the stock of HDIL to touch Rs.120, in the next 2-3 months. Remain invested keeping a SL at Rs.57.

Unitech Ltd which was recommended several times in this blog, starting from Rs.5 levels today made an intraday high of Rs.9.85, which is just a tad below the yearly high made on 26/12/17. The long term investors can hold the stock with a SL at Rs.9.20 on closing basis. 

The stock of Reliance Infrastructure Ltd which was recommended around Rs.539-540, today made a high of Rs.574.30 in the NSE. The scrip closed flat at Rs.555.3. Considering its order pipeline and its holding in Reliance Naval and Engineering Ltd, I am expecting the stock to cross Rs.600 in the coming days. Stay Invested with a SL at Rs.522.

Suzlon Energy Ltd which was recommended at around Rs.13.60, some weeks back, today made an intra-day high of Rs.15.70, before settling near the day's high of Rs.15.50. Accumulate the scrip on all declines for targets of Rs.17-19 in the coming days. SL: Rs.14.70.

Mandhana Industries Ltd which was recommended in this blog at various prices today made an intraday high of Rs.10.30 in the NSE before closing at Rs.9.90. I am looking for targets of Rs.14-15 in the coming days. Keep a SL at Rs.9.30.

MBL Infrastructures Ltd today made an intraday high of Rs26.70, before closing flat at Rs.26.15. After the recent media reports, I am expecting the share to cross Rs.50 very soon. The stock has already risen from the recommended price of Rs.24.40. It will give you multibagger returns going forward. So, risk taking investors can accumulate the scrip on all declines.

I am increasing the subscription charge of my Premium Services to Rs.18,000 per year from 16th January, 2017. However, those who will enroll before 31st December, 2017, will get a special discounts on my present subscription rate of Rs.15000 per year. So, rush for further details on the same at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

At the end I wish you all a Very Happy and Prosperous New Year (2018). If this year hasn’t given you something to be happy and cherish about, don’t fret. If the 31st of December signifies the end of a year, the 1st of January signifies the beginning -- go out there and accomplish all that you want. Hope you sprinkle joy and happiness wherever you go, all the days of the upcoming year and get the same in return. Hold the smile, let the tear go, keep the laugh, lose the pain, look for joy, and abandon the fear.  Happy New Year once again to all my "Dear Blog Visitors"! 

Pre-Session: Market may open on a flat note

29-Dec-17: Domestic stocks may open on a flat note on last trading day of calendar year 2017. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 3 points at the opening bell.

Among macro economic data, India's infrastructure output data for the month of November 2017 will be released today, 29 December 2017. Infrastructure output in India increased 4.7% year-on-year in October of 2017, following a downwardly revised 4.7% rise in the previous month.

Overseas, Asian stocks were trading mixed following the moderately higher close seen stateside. US stocks rose yesterday, 28 December 2017 amid thinned-out trading between holidays.

Back home, key benchmark indices, led by index pivotals State Bank of India and HDFC, logged modest losses in volatile trade yesterday, 28 December 2017. The Sensex fell 63.78 points or 0.19% to settle at 33,848.03, its lowest closing level since 21 December 2017.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 562.55 crore yesterday, 28 December 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 774.09 crore yesterday, 28 December 2017, as per provisional data.

Lupin announced that it received final approval from the United States Food and Drug Administration (USFDA) to market a generic version of Dovonex Scalp Solution, 0.005% of Leo Pharmaceutical Products. The announcement was made after market hours yesterday, 28 December 2017.

Lupin's Calcipotriene Topical Solution, 0.005% (scalp solution) is the AT rated generic equivalent of Leo Pharmaceutical Products' Dovonex Scalp Solution, 0.005%. It is indicated for the topical treatment of chronic, moderately severe psoriasis of the scalp. Calcipotriene Topical Solution, 0.005% (scalp solution) had annual sales of approximately $5.9 million in the US as per IMS MAT October 2017.

Astron Paper & Board Mill debuts on the secondary equity market today, 29 December 2017. The company had priced the initial public offer (IPO) at the top end of the Rs 45 to Rs 50 price band. The IPO received bids for 340.60 crore shares. The IPO was subscribed 243.29 times. The issue opened on 15 December 2017 and closed on 20 December 2017.

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Market Pulse

Key benchmark indices traded in a small range near the flat line in afternoon trade. Trading was lackluster and rangebound around the flat line so far during the session. Key indices opened higher and traded with small gains in early trade. Stocks traded in a small range around the flat line later during the session.

Trading may remain volatile during the latter part of the day as traders roll over positions in the futures & options (F&O) segment from the near month December 2017 series to January 2018 series. The December 2017 derivatives contracts expire today, 28 December 2017.

Among secondary indices, the S&P BSE Mid-Cap index rose 0.23%. The S&P BSE Small-Cap index gained 0.55%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was positive. On the BSE, 1,506 shares rose and 1,111 shares fell. A total of 179 shares were unchanged.

Shares of power generation and power distribution companies gained. NTPC (up 0.01%), NHPC (up 1.58%), Tata Power Company (up 0.87%), Adani Power (up 0.37%), Power Grid Corporation of India (up 0.05%), Reliance Infrastructure (up 2.12%) and Reliance Power (up 2.13%) gained. Torrent Power declined 0.95%.

Shares of  PSU coal mining major Coal India rose 0.91%.

Auto stocks declined. Tata Motors (down 0.19%), Ashok Leyland (down 0.46%), Eicher Motors (down 0.08%), Hero MotoCorp (down 1.1%), Bajaj Auto (down 0.46%) and TVS Motor Company (down 0.1%) declined. Mahindra & Mahindra (M&M) rose 0.25%.

Maruti Suzuki India (MSIL) rose 0.08% after the company entered into an agreement with the Government of NCT of Delhi to set up state-of-the-art automated driving test centres across 12 locations in the city. A memorandum of agreement (MoA) was signed between the Department of Transport, NCT of Delhi and MSIL. As per the MoA, MSIL will set up automated driving test centres comprising scientifically laid driving test tracks, advanced high definition cameras and an integrated IT system, as approved by the Transport Department. The announcement was made after market hours yesterday, 27 December 2017.

United Bank of India rose 1.14% after the bank said that it raised Rs 100 crore by issuing Basel III compliant bonds on a private placement basis. The announcement was made after market hours yesterday, 27 December 2017.

The bank has concluded issuance and allotment of 1,000 units of 11% unsecured, subordinated, fully paid-up, non-convertible, listed, Basel III compliant, perpetual debt instruments in the nature of debentures for inclusion in additional tier-1 capital aggregating to Rs 100 crore on private placement basis. The issue was fully subscribed by 3 investors. 

Overseas, Asian markets rose following a rally in oil and copper prices this week. Trade was thin ahead of the long New Year's weekend. Japan's factories and retailers posted better-than-expected growth in activity in November, while minutes from the central bank's last policy meeting showed board members raising the prospect of reducing stimulus. The 0.6% increase in industrial output in November was more than the median market projection and followed a 0.5% gain in October.

US stocks eked out a positive close yesterday, 27 December 2017 with gains in real estate and utilities offsetting declines in energy and telecommunications stocks. In US economic reports, the Conference Board's consumer confidence index fell to 122.1 in December from 128.6 in November.s

#Mandhana Industries Ltd recommended in this blog some weeks back has been hitting the upper circuits since the last few days. The investors can look for targets of Rs.14-15 in the coming days.

#Buy the shares of Housing Development & Infrastructure Ltd (HDIL) at around Rs.59.50 for a short term target of Rs.92-97.  There were earlier reports that Housing Development & Infrastructure (HDIL) is in talks with Union Bank of India (UBI) for a one-time settlement to stop insolvency proceedings against its arm Guruashish Construction.
Today  a news came in ET, that the government will give promoters of insolvent companies more time to repay their dues and participate in the resolution process of bankrupt companies in the Bill that will replace the ordinance that was promulgated last month to amend the Insolvency and Bankruptcy Code (IBC). 
The changes proposed in the Bill will also clearly allow asset reconstruction companies, banks and alternative investment funds (AIFs) to participate in bidding and clarify the status of guarantors of such companies. Entities that submitted a resolution plan but were subsequently rendered ineligible by the NPA clause of the ordinance will get an opportunity to make themselves eligible to participate....

This is a positive news for all the companies who are reeling with debt or is facing problems due to the introduction of the new clause in the IBA. As of March 2017, the HDIL has a total debt of Rs.2,476.56 crore; but it has one of the highest land holdings in Mumbai Metropolitan Region, which it can capitalize to cut debt.

#Today, as mentioned above a very good news came for the shareholders of MBL Infrastructure Ltd (Rs.26). The Economic Times wrote today that: Entities that submitted a resolution plan but were subsequently rendered ineligible by the NPA clause of the ordinance will get an opportunity to make themselves eligible to participate, said people with knowledge of the matter.  The ordinance bars a person with a non-performing account of more than a year who had not cleared the overdue amount, interest and other charges before the submission of a resolution plan from taking part in the process. The Bill, which is expected to be introduced in Parliament soon, seeks to ease some norms and iron out some of the drafting ambiguities in the ordinance. This paves the way for the promoters bringing in Rs.120 crore and take part in the bidding process. It is good to see that the NDA government has started to work in consort with the India Inc.
I am still holding on to my target of Rs.110 -- plus in the short to medium term for the scrip. The risk taking investors are suggested to buy the stock of MBL Infrastructure Ltd on intra-day dips. The company has a debt of around Rs.1700 crores, which is in the final stage of negotiation with the consortium of lenders led by SBI.

#Today my recommended, Reliance Infrastructure Ltd made an intraday high of Rs.572.70, intraday. The stock is now trading at around Rs.555, after profit booking was suggested to my clients and also into a Facebook group. The traders are suggested to carefully observe Rs.551-553 levels for fresh entry. Keep a SL of Rs.446, for any short term trade.

#Today, Dena Bank Ltd made an intraday high of Rs.25.90 and is now trading at around Rs.25.45.  The investors who have bought the stock at around Rs.24.40 on my recommendation, should do well to keep at SL at Rs.24.80 and keep holding. However, I am not too bullish on the banking sector. Hence, you can decide what to do with the scrip of Dena Bank Ltd.

#I am increasing the subscription charge of my Premium Services to Rs.18,000 per year from 16th January, 2017. Moreover, those who will enroll before 31st December, 2017, will get a special discount on my present subscription rate of Rs.15000 per year. So, rush for further details on the same. 

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Pre-Session: Market may open on a positive note

27-Dec-17: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 24 points at the opening bell tracking firm Asian stocks.

Overseas, Asian markets were mixed in early trade, with most markets shrugging off overnight declines seen on Wall Street. Meanwhile, investors in the region await the release of industrial profit numbers out of China. US stocks closed lower in light volume trade yesterday, 26 December 2017 as shares of Apple tumbled, offsetting gains in energy stocks as oil prices hit their highest in more than two years.

Back home, trading after a long weekend resumed on a buoyant note as key benchmark indices, led by Reliance Industries and Bharti Airtel, logged modest gains yesterday, 26 December 2017. The Sensex rose 70.31 points or 0.21% to settle at 34,010.61, its record closing high.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 44.07 crore yesterday, 26 December 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 544.50 crore yesterday, 26 December 2017, as per provisional data.

Reliance Communications (RCom) announced its exit from the Reserve Bank of India (RBI)'s Strategic Debt Restructuring (SDR) framework, with zero equity conversion and zero loan write-offs for lenders and bond holders. Upon completion of all transactions as announced, the balance debt in RCom is expected to be approximately Rs 6000 crore only, representing reduction of over 85% of total debt. The announcement was made after market hours yesterday, 26 December 2017.

Jindal Steel & Power (JSPL) has successfully completed a 250 ton basic oxygen furnace (BOF) marking the completion of its 6 million tones per annum (MTPA) integrated steel project at Angul, Odisha. With the completion of the new steel making facility, JSPL will utilize the full capacity of its 4 MTPA mega blast furnace, the largest in India. The BOF will also enable the company to achieve significantly higher cost effectiveness and efficiencies for steel making.

The 250 ton basic oxygen furnace will produce 3 million tonnes of high-grade steel per annum. JSPL's Angul steel making complex is the largest and most modern integrated steel plant in the state of Odisha that has been established at an investment of Rs 33000 crore. The BOF is the last major installation at the 6 MTPA integrated steel plant, marking the completion of JSPL's expansion and capital expenditure program. The announcement was made after market hours yesterday, 26 December 2017.

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Winning Strokes

Source: The Business Standard

Yesterday, was the day of Anil Ambani as most of the stocks from this group performed excellently.  Reliance Anil Dhirubhai Ambani (ADA) Group shares surged after witnessing recent volatility in stocks. Reliance Communications (RCom) (up 30.78%), Reliance Infrastructure (up 2.41%), Reliance Nippon Life Asset Management (up 1.16%), Reliance Capital (up 7.02%), Reliance Home Finance (up 0.45%), Reliance Naval and Engineering (up 5.63%) and Reliance Power (up 3.85%) gained.
Yesterday, the internet got inundated with the news that RCom plans to settle on buyers for assets including its spectrum, telecom towers, optical fibre and real estate, with all transactions to close between January and March. Reliance Communications Ltd’s planned sale of its wireless business assets by the end of March would be the latest instance of upheaval that has swept through the telecom industry since the entry of Reliance Jio Infocomm Ltd. According to media reports, Mukesh Ambani’s Reliance Jio Infocomm has emerged the front-runner to acquire the assets of debt-ridden RCom.

If you remember, I and some of my clients had entered RCom a couple of weeks back at around Rs.12, but we booked profit in between when the share price touched Rs.17-18. However, when I saw a rise in the share price yesterday, some of us again entered the counter. Now it is time to see whether the shares of Reliance Communication can close above Rs.22.50 or not. CMP (NSE): Rs.21.50, up 31.90% (Intraday high: Rs.23.20 in the NSE)

Another share from the ADA Group, which is looking superb both in terms of charts and fundamental play is Reliance Infrastructure Ltd (Rs.539.85).  

Reliance Infrastructure Limited (RInfra) is a part of the Reliance Group, India's third largest business house. The company is one of India's fastest growing companies in the infrastructure sector. It ranks among India's top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. Their presence spans across three verticals, namely Engineering, Procurement and Construction, Energy and Infrastructure.

The company is India's leading utility company having presence in across the value chain of power business i.e. Generation, Transmission, Distribution, EPC and Trading and the largest infrastructure company by developing projects in all high growth areas in infrastructure sector i.e. Roads, Highways, Metro Rails, Airports and Speciality Real Estate. 

Reliance Infrastructure Ltd has a market cap of only Rs.14,215 crore as against the FY17 turnover of Rs.11,004.34 Cr and H1FY18 earning of Rs.5922.05 crore. While its nearest competitors:

#CESC Ltd (Rs.1054.30) has a Book Value of Rs.892.60 and market cap of Rs.13,958.26 Cr against the FY17 income of Rs.7,367.00 Crore. 

#NTPC Ltd (Rs.178.45) has a Book Value of Rs.119.63 and Market Cap of Rs.146,563.1 Cr against FY17 income of Rs.79,342.30 Cr.

If we go by this logic then the share price of Reliance Infrastructure Ltd should trade above Rs.1000 in the short term. 

Moreover, around couple of months back, Anil Ambani told that Reliance Infrastructure defence arm Reliance Naval and Engineering will soon announce a rights issue for shares to increase the shareholding of the parent. The Reliance Group’s flagship infrastructure company has decided to focus on defence and engineering, procurement and construction business. It plans bids for six submarines worth Rs.50,000 crore, Ambani said. He also said that Reliance Infrastructure is engaging with Japanese companies with the intention of participating in India’s ambitious Rs 1 lakh crore-bullet train project. So, a rise in the share price of Reliance Naval and Engineering Ltd (Rs.45.60) will give a corresponding rise in the shares of Reliance Infrastructure Ltd. 

In fresh developments:

#NPCI had opened bids for EPC tenders related to the third and fourth units of the Kudankulam nuclear power project (1,000 MW each). RInfra emerged as the lowest bidder beating Tata Projects and Larsen & Toubro. The project duration is estimated at 56 months. This move is part of the government’s push into increasing the generation of nuclear power. The government has already approved 10 new nuclear reactors this year. The pressurized heavy-water reactors (PHWRs) have an aggregated capacity of about 700 MW. India plans to have a nuclear power generation capacity of 63,000 MW by 2030, from its existing levels of 6,780 MW.

#On December 6, 2017, Anil Ambani-led Reliance Infrastructure Ltd said it has bagged contracts worth Rs.5,000 crore in Bangladesh which includes setting up of the entire infrastructure for a 750 MW LNG-based combined cycle power plant. The award comes after bagging Rs.3,675 crore EPC order from NLC India for setting up two lignite-based CFBC thermal power projects.

#RInfra recently said its EPC division has also been shortlisted for projects like the Bandra-Versova sea link, Mumbai coastal road, and the Mumbai-Nagpur expressway. 

#On December 21, 2017, RInfra announced the sale of its Mumbai power business to Adani Transmission for Rs 13,251 crore. The company will sell 100% stake, valuing the business at Rs.12,101 crore and regulatory assets at Rs.1,150 crore, it said in an exchange filing. The transaction could fetch another Rs.5,000 crore through regulatory assets under approval and Rs.550 crore from net working capital. That would take the total consideration to Rs.18,800 crore. It will also be looking to monetise its cement, road and telecom tower assets to reduce overall debt, which stood at Rs.25,800 crore as of March 2017. The entire deal is a cash transaction and is expected to be complete by March 31, 2018. After the entire deal is gone through (Rs.18,800 crore), the company is expected to be debt free and would remain with a surplus of Rs.3,000 crore. The company going forward is expected to focus on its road construction and defense business.  

“RInfra will utilise the proceeds of the sell of  entirely to reduce its debt, becoming debt-free, and up to Rs.3,000 crore cash surplus,” the company statement added. Besides, in April this year, the company said over Rs.14,000 crore order is under advanced stage of arbitration. The company’s board has recommended a dividend of Rs.9 per share

#On September 14, 2016, the Financial Express carried out a report that Reliance Infrastructure will look to grow its EPC (engineering, procurement and construction) order book to Rs.30,000 crore in the next 9 months, on the back of government orders across infrastructure sectors.
The Global research firm JPMorgan maintained its overweight stance on the stock with a target of Rs.630. It said that the implied equity value of the deal is Rs.6,250 crore i.e. two times regulated equity base. It expects the transaction to conclude in a couple of quarters.

Meanwhile, Bazaar Trend and stock advisory firm has given a LONG-TERM Buy with Stoploss of Rs.513.26 & Strong Buy for SHORT-TERM with Stoploss of Rs.465.10, with immediate upside targets of Rs.553.04 and Rs.599.65. 

I feel if the stock is able to give a closing above Rs.610, then it has the potential to cross Rs.1300 in the medium term and Rs.3000 in the next 2-3 years time frame, especially if it manages to rope in Bullet Train contracts. The stock is trading above its 50D, 100D, 150D and 200D EMAs.  The investors are getting the shares of a company which is on the verge of becoming DEBT FREE.  

.

Yesterday, the shares of Energy Development Ltd which was recommended in this blog around Rs.18, touched Rs.37.60 intraday in line with the current optimism in the power sector stocks. The scrip closed at Rs.37.10, up 16.12% in the NSE. I would suggest all  to book at least 80% of profits and hold the rest with a SL at Rs.32.

Jai Balaji Industries Ltd which was recommended several times in this blog around Rs.12-14, hit the upper circuits at around Rs.26.05 in the NSE. The investors can hold the scrip with a stop loss at Rs.21.40.

Yesterday, the shares of the infrastructure company, MBL Infrastructure Ltd, one of the future multi-bagger stock due to its strong order pipeline, corrected a bit to Rs.26.60 in the NSE, after Punjab National Bank (PNB), one of the creditors to MBL Infrastructure, had appealed against the NCLT order. The bank contended that even though the corporate guarantee had not been invoked, Lakhotia was the promoter of MBL Infrastructure. Lakhotia’s resolution plan for MBL Infrastructure was found to be in compliance with the rules under the IBC by the resolution professional. However, the government had by then amended the IBC through an Ordinance barring promoters of companies with non-performing assets of more than one year, wilful and dubious defaulters or those associated with them from bidding for the insolvent companies. After the Ordinance, the committee of creditors found that Lakhotia was not eligible to bid for MBL Infrastructure. 

In my opinion, Mr.A K Lakhotia, who has built the company from a scratch does not in any case fall under the list of willful defaulters and soon we will see this reflecting in the final judgement of NCLT. Till then we need to have patience and at the same time have faith on the management of MBL Infrastructure Ltd, which has a huge order book and debt of around Rs.1700 crore.

According to a news in ET on Jun 21, 2017:  After regulatory whiplash, bankers have buried the hopes of business as usual. While they are working out strategies to emerge from the unprecedented shock, the bankers find themselves walking alongside insolvency professionals in an unknown territory with little clue on how to go about resolving the problem. But a positive outcome of this purgatorial step will be that for the first time in decades, there would be a level-playing field at the negotiating table between bankers and borrowers.. In this case either the PM minister Narendra Modi or the FMO should come up with a clarification on the newly introduced clauses in the Insolvency and Bankruptcy Code, 2016 (IBC) so that the genuine shareholders do not suffer due to wrong interpretation of the sections of the act. I would therefore, suggest you to buy the stock in every decline and look for targets of Rs.110-plus in the coming days.

Suzlon Energy Ltd recommended in this blog around Rs.13.60, yesterday made a high of Rs.15.10 in the NSE before closing at Rs.15. The investors would do well to hold the scrip for targets of Rs.17-19, which it is expected to achieve by the 1st week of January, 2017.

Today, I shall be recommending another small cap to my BMA Wealth Creator Ltd's clients. If anyone is interested to know the name shall have to either join my Premium Service or trade through my Recommended brokerage house, with a minimum portfolio size of Rs.1.5 lakhs. 
Moreover, if anyone has a fund of around Rs.3-5 lakhs we earn jointly through profit sharing (no margin trading please). With the current bullish condition of the market, I feel it will not be too difficult to generate around 10-15% per month (However nothing can be guaranteed, as this is stock market and anything can happen), as many of my recommended scrips have almost doubled during the last 2-3 months.

Sensex crosses 34,000-mark

26-Dec-17: Trading after a long weekend resumed on a buoyant note as key benchmark indices, led by Reliance Industries and Bharti Airtel, logged modest gains. The barometer index, the S&P BSE Sensex, rose 70.31 points or 0.21% to settle at 34,010.61. The Nifty 50 index gained 38.50 points or 0.37% to settle at 10,531.50. Most of the appreciation was collected in late trading. However, the boost was sufficient to take the Sensex beyond a record 34,000-point mark and the Nifty to cross the 10,500 milestone for the first time in their history. Key indices gained for the second straight day.

Stocks edged higher early in the session. Trading was characterized by a bout of volatility. Key indices traded on a flat note in morning trade after alternately moving above and below the flat line. Stocks slipped into the negative zone and hit fresh intraday low in mid morning. Indices continued to trade with small losses till afternoon trade but firmed up in late trade.

The Sensex rose 70.31 points or 0.21% to settle at 34,010.61, its record closing high. The index gained 121.58 points or 0.36% at the day's high of 34,061.88, its record high. The index fell 50.55 points or 0.15% at the day's low of 33,889.75.

The Nifty 50 index gained 38.50 points or 0.37% to settle at 10,531.50, its record closing high. The index gained 52.45 points or 0.5% at the day's high of 10,545.45, its record high. The index fell 15.05 points or 0.14% at the day's low of 10,477.95.

Among the sectoral indices on BSE, the S&P BSE Telecom index (up 2.28%), the S&P BSE Realty index (up 1.51%), the S&P BSE Metal index (up 1.23%), the S&P BSE Basic Materials index (up 0.92%), the S&P BSE Healthcare index (up 0.86%), the S&P BSE Industrials index (up 0.77%), the S&P BSE Energy index (up 0.56%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.5%), the S&P BSE Capital Goods index (up 0.45%), the S&P BSE Teck index (up 0.44%), the S&P BSE Oil & Gas index (up 0.42%) and the S&P BSE Auto index (up 0.26%), outperformed the Sensex.

The S&P BSE Consumer Durables index rose 0.21%, matching the Sensex's gain in percentage terms. The S&P BSE Utilities index (up 0.17%), the S&P BSE Bankex (up 0.11%), the S&P BSE FMCG index (up 0.07%), the S&P BSE IT index (up 0.06%) and the S&P BSE Finance index (up 0.03%), underperforming the Sensex. The S&P BSE Power index settled on a flat note.

Among secondary indices, the S&P BSE Mid-Cap index rose 0.76%. The S&P BSE Small-Cap index gained 0.64%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was strong. On the BSE, 1,679 shares rose and 1,071 shares fell. A total of 221 shares were unchanged.

The total turnover on BSE amounted to Rs 4328.79 crore, lower than turnover of Rs 4833.05 crore registered during the previous trading session on Friday, 22 December 2017.

Index heavyweight Reliance Industries rose 1.03% to Rs 928.

Most metal and mining stocks rose as copper prices edged higher in the global commodities markets. NMDC (up 3.85%), JSW Steel (up 1.19%), National Aluminium Company (up 0.55%), Tata Steel (up 1.52%), Steel Authority of India (up 5.79%), Jindal Steel & Power (up 4.45%) and Vedanta (up 1.68%) edged higher. Hindustan Copper (down 0.64%), Hindustan Zinc (down 0.26%) and Hindalco Industries (down 0.64%) fell.

Copper edged higher in the global commodities market. High Grade Copper for March 2018 delivery was currently up 0.66% at $3.26 per pound on the COMEX.

Reliance Anil Dhirubhai Ambani (ADA) Group shares surged after witnessing recent volatility in stocks. Reliance Communications (RCom) (up 30.78%), Reliance Infrastructure (up 2.41%), Reliance Nippon Life Asset Management (up 1.16%), Reliance Capital (up 7.02%), Reliance Home Finance (up 0.45%), Reliance Naval and Engineering (up 5.63%) and Reliance Power (up 3.85%) gained.

Shares of most public sector banks declined. Syndicate Bank (down 3.08%), Punjab National Bank (down 0.94%), Allahabad Bank (down 1.04%), Bank of Baroda (down 0.8%), State Bank of India (SBI) (down 0.94%), Union Bank of India (down 0.17%), and United Bank of India (down 0.29%) edged lower. Corporation Bank (up 1.13%), Canara Bank (up 0.55%), and Bank of India (up 0.38%) gained.

Shares of private sector banks gained. Axis Bank (up 0.15%), ICICI Bank (up 0.35%), Kotak Mahindra Bank (up 0.66%), Federal Bank (up 1.81%), and IndusInd Bank (up 0.8%) edged higher. HDFC Bank declined 0.62%.

Yes Bank rose 1.74% after the bank said that it has on 22 December 2017, established a Medium Term Note Programme (MTN Programme) for an amount of $1 billion, in order to enable the bank to issue debt instruments in the international capital markets, to eligible investors, from time to time, in one or more tranches and/or series. The establishment of the MTN Programme is only an enabling step and presently, no instruments are being issued by the bank. The announcement was made on Saturday, 23 December 2017.

Dr. Reddy's Laboratories rose 1.17% after the company announced that it has launched Melphalan Hydrochloride for Injection, a therapeutic equivalent generic version of Alkeran (melphalan hydrochloride) for Injection in the United States market approved by the US Food and Drug Administration (USFDA).

The Alkeran brand and generic had US sales of approximately $107 million MAT for the most recent twelve months ending in October 2017 according to IMS Health. The announcement was made during market hours today, 26 December 2017.

Overseas, European markets remained shut for a holiday. Asian stocks were mixed in trading thinned by year-end holidays as several regional markets re-opened after the Christmas break. Hong Kong, Australia and New Zealand markets remain closed today, 26 December 2017. US markets remained shut yesterday, 25 December 2017 on account of Christmas.

In Japan, the nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9% in November from a year earlier, government data showed today, 26 December 2017. The pace of price growth was just ahead of October's 0.8%.

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