Will the Realty Index be able to pull the Real Estate Stocks out of Dolldrums?
With the announcement of setting up of the Real Estate Index, it seems this Space (the real estate sector) is hotting up. Besides this, a real estate fund has already being created earlier, to invest in good real estate ventures. With Indian Economy growing at a scorching pace of 9% per annum, this sector cannot remain dormant; as the newer factories, will require newer homes and offices for the workers & top honchos. It is worth noting that, more than 50% of India population do not have homes and more than 70% of them do not have toilets. Hence, it is imperative that this sector has the huge potential growing forward.
Yesterday, with Kotak Securities recommending Unitech Ltd at Rs.531, with a very short term target of Rs.580, this sector has started to look even more exciting.
On Monday July 9,2007, BSE launched The Real Estate Index comprising 11 companies. The recently listed DLF Ltd. has the highest weightage of 35.9 % in the Index followed by Unitech Ltd. with 31.6 percent based on Monday's closing prices, the exchange said in a statement. Hence, we can see huge interest build up in Real Estate Sector, as we have not less than 20 very good companies, already dotting the space.
Yesterday, the source, who tracks the company closely, confirmed me that Ansal Buildwell Ltd has an intrinsic worth of Rs.500--Rs.600, per share, considering the land bank and other fixed assets of the company....He further said the company has a great potential going forward. When I asked him, what if the Great Rakesh Jhunjhunwala learns about this scrips hidden value and takes 10--15%,stake in Ansal Buildwell Ltd or any Ansal Group Companies and starts bullying the management like he is doing in Titan and Aptech?? He first tried to obfuscate the question, but then with repeated questioning, he added, "How can he do that with the management holding 51% stake?".
But I said, "He always enters undervalued good companies and takes helfty stake, in it, to enter the board" But he said, "What is the guarantee that everyone will be given a place in the board??". I said this is very much possible, with names like Rakesh Jhunjhunwala(a CA) around.....then he laughed and said," Yes if Rakesh Bhai takes a stake in the company, then one has to give him a place in the board, but I think Ansal Board will bully him." I laughed....and said the time will tell, in which direction the boat will flow.....I then asked him, that there are rumours going around that, 'Rakesh Bhai, is thinking of entering Real Estate Sector in an Indirect way, like purchasing land, instead of taking stake in the Real Estate companies, per se...'
He said that, "It will be very good for companies who are holding land banks, as such moves will invariably increase the valuation of land and Ansal Buildwell, will be greatest beneficiary, with land holding in Gwalior, Cochhin, Amritswar, and many more place acros India". Then I humoured him saying, "Can we think Mr. Rakesh J. as the next board member of Ansal Group". He laughed and refused to comment.......
Srinivasa Hatcheries Ltd, with its great long term potential, has started to attract investors from all hues. I think the stock has every potential to close above Rs.100 in 6--8 months time, with the price of poultry products expected to hit the roof in the days ahead, due to high input costs(maize, Soyabean and wheat mainly).
Zigma Software Ltd, the Kolkata based diversified company, hit the third consecutive circuits. Those who are holding please continue to hold.
W S Industries Ltd, with its long term potential yesterday also clocked good volumes. It is rather surprising, to find this company with such a great story ahead is still languishing around Rs.56--R.58, range. I think people should stop investing, looking only at the E.P.S. of companies. I have mentioned time and again, E.P.S. never and will never reflect true value of companies. Yesterday, my Coral India Finance Ltd took a breather,....the stock will look good after 6 months time, when some of the projects will be at near completion stage. I have already set a target of Rs.60 for the stock in 12 months time frame.
Yesterday, I got the information from close sources that Jamna Auto Industries Ltd, will declare results at the end of this month, after discussing about the much talked about new Preference Issue of shares. The rumour mills have already started to pour stories that the company's results will be above expectation this time. The last quarter's results would also have been in the green, had not management gone for write offs. In contrast Jai Parabolic's results were excellent, with a huge jump in net profits. Last Fiscal, the sales had been robust for Jamna Auto, with the addition of lot of clients to its list. It is to be noted that Jamna Auto is the OEM, to a large number of reputed companies both in India and overseas. This time if the preference issue comes, it will be at a higher price according to a source who tracks the company closely and who refused to be identified. It is because the last one(Preference Issue)was able to clear most of the debts of the company. THE MOST STRIKING PART IS THAT THE MANAGEMENT IS INVESTOR FRIENDLY, UNLIKE ANSAL BUILDWELL LTD.
Today, I will be recommending another SCRIP to the Premium Group members, and later on this blog.....Keep watch on Real Estate Counters from today....Today, a big result is coming which to some extent, will decide the future course of IT sector---but will reflect only 70% of the sectors' outlook; as many IT companies like Rolta Ltd, till today source 70%--80% of their revenues from the domestic market. Hence, it will be wrong if we say Rupee Appreciation will act as impediment for all Indian IT companies. Besides, that some companies has started to use Euro--Rupee fixations, instead of Dollar--Rupee, for overseas billings.
BSE Realty Index gains on debut:
The BSE Realty Index – an index tracking shares of property developers which was launched by BSE on, 10 July 2007, surged on its debut.
Meanwhile the market pared gains on profit booking at higher levels, after striking all time high in early trade
At 11:32 IST, the BSE 30-share Sensex was up 35.97 points to 15,081.70. It opened higher at 15,100.13 and surged to strike an all-time high of 15,114.95 at 10:34 IST, a gain of 69.22 points for the day. It slipped to a low of 15,046.64 at 10:48 IST, a gain of just 0.91 points for the day.
The S&P CNX Nifty was up 1.20 point to 4,420.55, after striking an all time high of 4,434.45.
The market breadth was positive on BSE with 1,275 shares advancing as compared to 1111 that declined, while 77 remained unchanged.
The total turnover on BSE amounted to Rs 1758 crore as compared to Rs 925 crore by 10:30 IST
The BSE Realty Index was up 0.91% to 7,400.36, after striking a high of 7,402.44. The BSE Realty Index comprises of 11 listed firms, representing about 95% market capitalisation of real estate development companies which are part of the BSE-500 index.
Recently listed realty giant DLF has the highest weightage of 35.94% in the BSE Realty Index. Unitech is another heavyweight in the index, with a 31.57% weightage.
Unitech (up 1.15% to Rs 531.50), DLF (up 0.15% to Rs 575), Indiabulls Real Estate (up 4% to Rs 466.40), Parsvnath Developers (up 1.65% to Rs 378.60) and Ansal Properties & Infrastructure (up 1.10% to Rs 308.80) advanced from realty pack.
Among the Sensex pack, 18 advanced while the rest declined.
Auto major Tata Motors surged 2.84% to Rs 736, on 1.28 lakh shares, and was the top gainer from Sensex pack.
IT stocks saw continued buying support. Market men reckon that the underperformance of IT stocks in recent months provides a good buying opportunity due to strong core fundamentals of the sector.
Satyam Computers (up 2.10% to Rs 502), Infosys Technologies (up 1.45% to Rs 2,022), TCS (up 0.82% to Rs 1186.25), and Wipro (up 0.15% to Rs 526), edged higher.
Infosys Technologies declares its results on Wednesday, 11 July 2007.
Index heavyweight Reliance Industries was down 0.35% to Rs 1706 on 72,728 shares.
Cigarette major ITC declined 0.96% to Rs 154.25, on 1.92 lakh shares and it was the top loser from the Sensex pack.
NTPC (down 0.60% to Rs 156.20), ACC (down 0.70% to Rs 1039) and HDFC (down 0.80% to Rs 1906), were the other losers.
Kothari Products (up 20% to Rs 803.85), Lokesh Machines (up 11.85% to Rs 128.35), Orbit Corporation (up 11.49% to Rs 314.95), Ankur Drugs (up 10% to Rs 428.60), and Euro Ceramics (up 8.24% to Rs 185.90), edged higher from small-cap and mid-cap pack.
Asian indices were trading mixed on, 10 July 2007, with Japan's Nikkei 225 declining on banking stocks such as Mitsubishi UFJ Financial Group, while South Korea's Kospi and Singapore's Straits Times Index touched intra-day record highs. Nikkei slipped 0.16% to 18,232.90.
However, Taiwan's Taiwan Weighted (up 0.10% to 9,378.78), Hong Kong's Hang Seng (up 0.26% at 22,876.17), Singapore's Straits Times (up 0.38% or at 3,640.35) and South Korea's Seoul Composite (up 0.42% at 1,891.53) edged higher. Shanghai Composite was down 0.34% to 3,870.04
Wall Street edged higher in an erratic session on Monday, 10 July 2007, as investors were reassured by a drop in treasury bond yields. The Dow Jones industrials rose 38.29 points, or 0.28%, to 13,649.97. Broader market indexes also moved higher. The Standard & Poor's 500 index rose 1.41 points, or 0.09%, to 1,531.85, and the Nasdaq Composite index added 3.51 points, or 0.13%, to 2,670.02.
Brent crude oil eased on Tuesday, 10 July 2007 after a seven-day rally lifted prices to their highest in 11 months. London Brent crude fell 31 cents to $75.47 a barrel. US crude inched down 7 cents to $72.12 a barrel.
As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 841.64 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 236.85 crore on Monday, 9 July 2007. [With inputs from the Internet]
Till then good bye and happy investing.....
Suman Mukherjee
India.
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