India Budget 2015-16:Duty hike on Steel imports may help the industry

Photo: Reuters

February 20, 2015: India is currently the 4th largest producer of crude steel in the world as against its 8th position in 2003. But the sector is hit by an abnormal surge in imports.

On this background the metals and mines sector will be looking forward to the union budget on February 28 with the duty hike on mind. Angel Broking has said they expect the government to increase import duty on steel, in view of the increasing steel imports from China and Russia. 

Total steel imports in India during 9MFY2015 have increased 57.5% yoy, led by a slowdown in the Chinese economy, steep depreciation in Russian Rouble and free trade agreement with Korea.

The Steel Ministry is also seeking a waiver of the 2.5% import duty on all its raw materials such as iron ore, coking coal, limestone, dolomite and scrap. We do not believe this is likely.

The government may however look to reduce the export duty on low grade iron ore fines, as Indian steel-makers do not use these low-grade iron ore fines for making steel.

“We believe based on the recommendation of the Mines And Steel Minister, the government may give a differential treatment to the export of low grade iron ore fines,” Angel said.

“We believe a thrust to the infrastructure sector and steps to revive the investment cycle would in general be positive for the metals/mining sector.”

Courtesy: Hellenic Shipping News

Global steel output fell 2.9 pc in Jan, India bucks trend

[Editor: This is a positive news for India, and especially those who are holding the steel counters. Meanwhile, the government is likely to come up with measures in the budget-2015-16, to protect the domestic steel sector. In such circumstances, stay put in steel and mining spaces]

Feb 20, 2015: NEW DELHI: Global steel production declined by 2.9 per cent in January largely due to 4.7 per cent drop in Chinese output even as Russia, the US and India contributed more among major producing nations. 

Global steel production declined to 133.10 million tonnes (MT) in January from 137.09 MT a year earlier, data compiled by World Steel Association (WSA) showed. 

Even as output in China fell to 65.5 MT from 68.7 MT a year ago, its contribution remained nearly half of the global production during the month. Japan's production also fell by 4 per cent to 9 MT and South Korean production declined by 5 per cent to 5.78 MT. Russia's steel production grew by the highest rate of 6 per cent to 6.1 MT against 5.78 MT a year ago. It grew by 0.4 per cent in the US. 

India's production increased by 0.3 per cent during January to 7.07 MT compared to 7.04 MT a year earlier. Germany produced 3.7 MT, Italy 1.9 MT, France 1.3 MT and Spain produced 1.3 MT steel in January. Turkey's crude steel production for January 2015 was 2.6 MT, down by 10.4 per cent compared to January, 2014, WSA said. 

Steel production in Brazil was higher by 7.7 per cent to 3 MT. WSA said steel capacity utilisation ratio in January was 72.5 per cent. 

Courtesy: The Times of India

Secondary steel market sputters on weekend in India

Saturday, 21 Feb 2015: The brief spurt in raw material and steel prices witnessed over the last 3 days in India's secondary sector steel market, up on sentiments rather by increased demand, sputtered on weekend removing hopes of recovery in last leg of financial year

Price level of input material as well as finished had made rally over the last 3 days unexpectedly. The rally was primarily seen as firming up of domestic sentiments on the back bottoming out of iron ore and scrap levels in the international market. 

Sponge iron price declined at all major locations by INR 100 to INR 200 per tonne due to oversupply and weakening sentiment in finished market.

Scrap price levels remained firm though since IF's indulged in stock replenishment in anticipation of further price increase. However the price levels at Alang for ship breaking and plate cutting scrap dipped.

Pencil ingot price levels corrected at most important locations since there was no significant buying of finished. The rally witnessed in the last couple of days was purely speculative trying to give the market break but not supported by demand. 

Rebar market remained quiet with corrections at select locations. Structural steel price though lost at Ahmedabad, Indore and Kolkata.

Courtesy: Steel Guru (Excerpts)

WINNING STROKES: THINK DIFFERENT

Jindal Saw Ltd touched Rs.86.15 intra-day and closed at Rs.84.65 giving a break-out on the daily candle stick chart. Today it also closed above its 150D EMA. Moreover, 100D EMA is above its 200D EMA, further adding to the bullishness. The next targets for the scrip are Rs.92-97--stay invested. 

Pipavav Defence and Offshore Eng Ltd today closd at Rs.83.30 just a tad below its 52-week high price of Rs.85 made yesterday. The investors should book some profits and hold the rest with a SL of Rs.79.

UCO Bank Ltd recommended around Rs.70.50 last week today touched Rs.73.25 intra-day before closing at Rs.72.30 up 2.33%. The next targets for the scrip are Rs.77-85. Stay invested, with a SL of Rs.67.

Resurgere Mines and Minerals Ltd today hit 20% Upper Circuits at Rs.1.57, on the speculation that the government of India could reduce export duty on iron ore fines along with other low grade ores (including bauxite), in the coming budget. The company is an expert in mineral trading, if this norm is really relaxed, then the whole dynamics of the company could get a positive boost.
Rohit Ferro Tech Ltd today touched Rs.9.75, before closing at Rs.8.93, up 6.95%. The scrip will invariably move towards Rs.12-14, as the government in all probability will come up with positive measures to boost the domestic steel sector. Buy the scrip in every decline and wait for it to close above the resistance zone of Rs.9.2-9.3. 
The realty major Unitech Ltd inched up today and closed flat at Rs.18.40, even though the major indices were down. The company came out with good set of Q3FY15 numbers. Last week, the company had reported a 32% increase in consolidated net profit at Rs.43.33 crore for the quarter ended December 2014 due to lower operational expenses and interest outgo. Its net profit stood at Rs.32.82 crore in the year-ago period. Income from operations, however, declined marginally to Rs.704.56 crore in the third quarter of this fiscal from Rs.731.67 crore in the corresponding period of the previous year. Total expenditure fell to Rs.661 crore from Rs.716 crore during the period under review. Finance costs declined to Rs.7.33 crore from Rs.28.06 crore in the year-ago period. Unitech had said it has a healthy balance sheet with a net debt to equity ratio of 0.57. Net debt as of December 31, 2014 was Rs 6,300.84 crore. Unitech launched 0.64 million sq ft while delivered 3.04 million sq ft area in the first three quarters of this fiscal. The stock today closed above its 50D and 100D SMAs. It also closed above 50D EMA and closed just below its 100D EMA which is placed at Rs.18.54. The investors should accumulate the scrip on all declines, for the next targets of Rs.22-24. In a chat with ET Now, Mitesh Thacker of www.miteshthacker.com, has already given a BUY on Unitech Ltd with a stop loss of Rs.17.5 for target of Rs.19.20
Rasoya Proteins Ltd today hit the upper circuits in the BSE at Re.58, during the mid-afternoon trade but suddenly came down due to operator action. The stock closed at Re.0.55 in the BSE down 1.79%. Though the scrip closed marginally down, but this does not give any hint of the trading activities during the day. I do not understand why the surveillance system of the regulator is not able to nab the manipulators; which I can detect without any software in place. Today, the percentage of Deliverable Quantity to Traded Quantity was also not bad at 43.22%. However, unless, the operator activity in the stock is stopped, it will not move up. The modus operandi of these  guys are simple: they will sell the shares of the company in the morning to the traders, after initiating FAKE BULK DEALS and then start synchronized selling at the end of the day, pulling down the scrip. Everyday, you would find fake bulk deals of very small amounts effected to give a feel good effect on the stock, to the gullible investors. SEBI is requested through this blog, to take a special note of my views on trading activities in the scrip, on the behalf of small investors and take strong action against this group. 

WINNING STROKES: THINK DIFFERENT

Yesterday, I mentioned about buy recommendation for Jindal Steel and Power Ltd at Rs.156 for a target of Rs.162 from a brokerage house, the scrip today made an intra-day high of 200.80 before closing at Rs.195.30 up 26.24%. Now, I hear that HDFC Securities Ltd has recommended Jindal Saw Ltd at Rs.80-83, for a target of Rs.100. Today Jindal Saw Ltd made an intra-day high of Rs.84.50 before closing at Rs.83.40 up 7.89%. If you remember, the scrip was recommended at Rs.77-78, yesterday. 
Mangalore Refinery and Petrochemicals Ltd which was recommended at Rs.48.95 on 22 January, 2015 today made an intra-day high of Rs.64.40 before closing at rs.63.30 up 3.52%. In the process the stock reached all its short term targets. 

Today, the share of high-risk-high-gain, (BSE A-group edible oil producer and retailer) Rasoya Proteins Ltd (RPL) was recommended at around Re.0.60, for a target over Re.1. Rasoya Proteins Ltd is  having solvent extraction unit with vegetable refinery. It is also having a power generation plant which provides captive power and electricity to the solvent unit of the company. Over the years the company has become a leading processor of Soya seed in Maharashtra. The main products of the company are De-oiled cake, Crude oil, Refined Edible Soya oil and other various other consumer products. RPL International Trade FZE, situated in Sarjah is fully owned subsidiary company mainly engaged in the business of trading in edible oil. Last year (2014) there were media reports that the company has embarked upon Rs.400 crore expansion plan to expand the capacity of its manufacturing units across Maharashtra. While the company proposes to set up a plant for manufacturing ethanol from maize and other agro produce due to potential of increasing demand of the green fuel going forward under the mandatory blending with petrol, RPL is also looking to set up a large scale rice mill unit for processing of paddy. “With an investment of Rs 400 crore we are planning to expand edible oil and other business in agri sector. For the first time, we are entering into branded rice segment with non-basmati rice “Rasoya” brand sale. Also, we are exploring possibility to set up bran processing unit to produce rice bran oil with raw material procured from our own mill,” said Prashant Duchakke, Executive Director, RPL. Plans are underway to set up two tur dal processing units in Maharashtra to enter into branded oil segment. The company is currently, selling whole wheat floor under “Mejwani” brand in 1 kg, 5 kgs and 10 kgs pack size and caters to western Indian markets aggressively. Rasoya Proteins Ltd last year started selling of refined sunflower oil under the brand name 'Sunsafe' in various pack size. The first phase the Brand was launched in Vidarbh Region and some part of Marathwada, and later it was launched in the rest of Maharashtra. This move is in line with the diversification policy and expansion plan of the Company. The Company is taking rigorous efforts in marketing and brand building of Refined Edible Oil. The company does not have any accumulated loss for FY14. Today, the percentage of  Deliverable Quantity to Traded Quantity was whooping 54.36%, which gives some indication as what is happening in the counter. However, I again reiterate that this stock only for RISK TAKING INVESTORS--others should stay away from this counter. 
Today my recommended Firstsource Solutions Ltd touched Rs.34.75 intra-day before closing at Rs.34.30 up more than 8%. The next target for the scrip is Rs.37 on its way to Rs.42.
My recently recommended Unitech Ltd which fell today to Rs.17.35, intra-day recovered at the end of the day to close flat at Rs.18.15. Unitech Ltd, meanwhile reported a 32% increase in consolidated net profit at Rs.43.33 crore for the quarter ended December 2014 due to lower operational expenses and interest outgo. Its net profit stood at Rs 32.82 crore in the year-ago period. Finance costs declined to Rs 7.33 crore from Rs 28.06 crore in the year-ago period. Unitech said it has a healthy balance sheet with a net debt to equity ratio of 0.57. Net debt as of December 31, 2014 was Rs.6,300.84 crore. For the nine months ended December 31, 2014, the total income and net profit stood at Rs.2,661.67 Cr and Rs.34.20 Cr, respectively. The Book Value of the shares of the company is Rs.37.72. The correction is probably over for the scrip and the next targets are Rs.22-24.

Yavatmal means only farmers' suicides......?

NAGPUR, Dec 30, 2014: For an outsider with just basic knowledge of state affairs, Yavatmal means only farmers' suicides. A cotton-rich belt, it has seen the highest number of farmers' ending their lives. Cotton, which had been a cash crop for generations, has gradually become a cause of distress for the cultivators. As officials put it, the number of suicides have come down substantially in past 2-3 years, though this season has been the worst for cotton growers.

In the last half a decade, there has been gradual industrialization of Yavatmal. The biggest unit is the cement plant being built by the Reliance Group, which according to state government sources is expected to be operational by next year.

Raymond's denim unit here is already operational with Nagpur-based Rasoya Proteins' solvent extraction plant set to start production soon. 

The value of all the investment together can be pegged at Rs.5,000 crore. 

For Reliance, the place has abundant limestone mines, Raymond's has cotton, and the district also has enough soybean for the solvent extraction plant. However, experts say this is just the beginning and lot more needs to be done.

"Farmers crisis remains an issue to be resolved. The cultivators rarely get a good price for the cotton they grow. Apart from farmers, the issue of tribals should also be addressed. To bring Yavatmal into the mainstream, the district needs to be connected with the main railway line," said Kishore Tiwari, a farm activist running NGO Vidarbha Jan Andolan Samiti.

Yavatmal city has only one train reaching it, the 100-year-old Shakuntala Express, which runs on an equally archaic narrow gauge track.

Vidarbha Economic Development Council has suggested setting up a mineral processing centre in Wani, which is a coal bearing area of this district. Apart from coal, Yavatmal also has plenty of limestone and dolomite. The pending applications for mining these resources should be cleared at the earliest, says VED.

VED has also mooted a textile hub in Yavatmal, apart from other places like Hinganghat in Wardha as well as one in Amravati. The entire Vidarbha region has different cotton growing areas. So, investors also need to be given a choice rather than lobbying for a single district, said Devendra Parekh, president of VED.

Kailash Jogani, chartered accountant and president of Nagpur Chamber of Commerce Limited (NCCL), said the district certainly needs more cotton and textile-based industries. Raymond has a denim plant, however the fabric does not require much of cotton. The government should woo industries wholly dependent on cotton fabric. Cotton trading activities should be made more organized in the local marts, such as getting spot and future prices of the commodity at the market itself. This will help farmers realize a better price for their produce, he said.

Courtesy: The Times of India

Market Mantra

Jindal Saw Ltd recommended yesterday at around Rs.77-78, today touched Rs.83.45, intra-day and is now trading at around 82.30. The scrip should do well in the coming days, as the company has been coming up with good set of numbers since the last couple of quarters. 

Today's call: High Risk Taking traders can buy Rasoya Proteins Ltd (BSE Code: 531522) in NSE at R.0.60 (60 paise) or BSE at Re.0.59. This is an A-group company but due to some management issues, the scrip came down from Rs.20.80 to Re.0.57. But now it has started to show some upward movements. This is a solvent extraction company based out of Maharashtra and operates in Soya Products (Soya Cakes and Soya Oil). A group of operators are playing with this scrip since the last few months and hence the regulators like SEBI should take actions against them. How is that the surveillance mechanisms of major stock exchanges in India (BSE and NSE) are not able to detect such high level manipulations? SEBI should either stop trading in the counter or make efforts to stop high scale operator activities. However Safe players should avoid this scrip.

Firstsource Solutions Ltd today touched Rs.33.70, intra-day and is now trading at Rs.33.20. The company came out with flat numbers for the Q3FY15 and hence, I had put a hold on the scrip.

My recommended Pipavav Defence and Offshore Eng Ltd today (19/02/2015) made a new 52-week at Rs.85.00 and is now trading at Rs.78.75. It reached all its short term targets and nearly touched its medium term target of Rs.90, in just few months of my recommendation. The investors should do well to book some profits now.
In the Budget-2015, the government is likely to come up with some sops for the steel (and Ferro-alloys) sector. In such a scenario, Rohit Ferro Tech Ltd (Rs.8.40)  is a must buy for a target of Rs.12-14. 

Reliance Communications’ QIP investors lose nearly 50%

[Editor: This report does not give the true picture of Reliance Communications Ltd (Rs.73.35). It says: "Besides, as R-Com’s quarterly results statements have shown, there’s hardly anything in its operational performance to get excited about". But the point is that the company  saw profit rise of 86% over the last year, as more subscribers use smartphones to surf the internet.The company said that the data traffic increased due to a boost in both subscribers and higher data usage per customer. Now, this is a big thing as "data-revolution" is going to gain more strength in the coming days. The Wall Street Journal wrote on 18 February, 2015: 

Most of India’s new smartphone users have never owned computers. They couldn’t afford a device that could give them Internet access until smartphone prices drifted below $200. Today, close to a quarter of all smartphones on sale in India cost less than $100, according to research firm Canalys. Cellular companies have been anticipating an explosion in data usage for years, but it wasn't until cheap smartphones appeared that the boom could begin. With smartphones in their pockets, more Indians are discovering the value of being online and they are increasingly willing to shell out more rupees every month for it.“Cheap smartphones are at the heart of the growth,” said Srini Gopalan, head of Airtel’s consumer business. “A year-and-a-half ago, there were 60 million smartphone users, now there are 120 million. This has led to the explosion in data growth.” After years of delays, India is scheduled to auction new bandwidth next month but it won’t come cheap. The starting price for each block of bandwidth in the March 4 auction is 37.05 billion rupees. The final price could hit two or three times that number, say company executives and analysts.

Remember, Data business is of high margin. Moreover,  regarding the entry of Mukesh Ambani’s Reliance Jio let me quote the Business Standard of June 17, 2014:

In what will extend the telecom alliance between the two brothers beyond infrastructure-sharing, Anil Ambani-promoted Reliance Communications (RCom) is tying up with Mukesh Ambani’s Reliance Jio for a pan-India intra-circle agreement, straddling the 800-MHz and 2,100-MHz bands. Currently, their alliance is restricted to sharing towers and fibre-optic network. Through the deal, to be signed in a few days, Reliance Jio, which faces challenges in the 2,300-MHz and 1,800-MHz spectrum bands (these don’t offer subscribers high-speed data indoors), can now address this issue by using RCom’s 800-MHz band. RCom has five MHz of 800-MHz spectrum in most circles across the country and currently, this spectrum is unused. After the spectrum is liberalised, it can be used for fourth generation (4G) long-term evolution (LTE) services, too.

Therefore, there is nothing much to be worried due to the entry of Reliance Jio. If Reliance Communications Ltd faces competition, so will Bharti Airtel, Idea Cellular and Vodafone India Ltd. Besides, the text says: 

'The reason for this is that the spectrum on offer is limited, and larger companies such as Bharti Airtel, Idea Cellular and Vodafone India Ltd may well use their financial muscle to buy better quality 900 megahertz spectrum, even in circles where they aren’t compelled to bid".

Now the point is that the Financial Muscle will only be used if these companies, find the deal to be beneficial. Buying spectrum at abnormal prices, might land telecom companies in a soup. Therefore, there is no need for such Utopian assumptions. 

This article then gives misinformation as it says: 
"R-Com, on the other hand, is laden with debt and doesn't have the luxury of some of its competitors while bidding in the auctions. After the QIP issue, net debt has reduced from around Rs.40,000 crore to Rs.36,767 crore". But, then Bharti Airtel’s net debt rose sharply last quarter to $10.55 billion. Reliance’s debt rose to $5.9 billion. Hence, saying only Reliance Communications Ltd is debt-ridden, while the others are not, is an Ostrich-like approach] 

February 18, 2015: Reliance Communications Ltd (R-Com) had struck when the iron was hot in mid-2014. It raised Rs.4,800 crore through a qualified institutional placement (QIP) at a time when the risk appetite for Indian stocks had risen considerably. But the large investors who bought shares in the issue are now sitting on a loss of almost 50%. 

As far as the company goes, it may have got the funds, but from an investor relations’ perspective, the QIP issuance has turned out to be a regrettable chapter. During the time of the issue, it had seemed that R-Com would backup the fund-raising with sale of non-core assets. A report in The Economic Times had said in June 2014 that the company plans to sell its international business, Global Cloud Xchange, in the next three-four months, its direct-to-home television business in six months and its real estate holdings over a two-three year period. 

But about eight months later, there is no visibility on any of this. Monetization of the company’s non-core assets continues to look like a distant dream. 

Besides, as R-Com’s quarterly results statements have shown, there’s hardly anything in its operational performance to get excited about. In the December quarter, revenues and Ebitda (earnings before interest, taxes, depreciation and amortization) rose by 1.2% and 0.3%, respectively. In the nine months till December, Ebitda fell by 5.7%, while revenues were more or less flat. Meanwhile, competitors Bharti Airtel Ltd and Idea Cellular Ltd have been reporting strong growth in profit in the past few quarters. 

In addition, R-Com faces the greatest risk from the impending entry of Reliance Jio Infocomm Ltd. Analysts say that one of R-Com’s thriving businesses is data cards (also known as dongles), which can immediately come under pressure from Reliance Jio’s data-centric offerings. 

According to an analyst with a domestic institutional brokerage firm, in the forthcoming auctions, the company also faces the risk of not being able to get renewal spectrum to continue services in some key circles. The reason for this is that the spectrum on offer is limited, and larger companies such as Bharti Airtel, Idea Cellular and Vodafone India Ltd may well use their financial muscle to buy better quality 900 megahertz spectrum, even in circles where they aren’t compelled to bid. 

R-Com, on the other hand, is laden with debt and doesn’t have the luxury of some of its competitors while bidding in the auctions. After the QIP issue, net debt has reduced from around Rs.40,000 crore to Rs.36,767 crore. 

A silver lining is that the company is generating cash flow from its core operations. However, it has no option but to quickly monetize non-core assets and reduce debt. The longer it takes to do this, the more it will distance investors. 

The writer doesn’t own shares in the above-mentioned companies.

Courtesy: Live Mint

BSE Small-Cap index up more than 1%

[Editor: Buy Jindal Saw Ltd at Rs.77--78, for short term targets of Rs.82-84. The price of crude oil has started to inch upwards, as was expected--in such circumstances, the SAW Pipe sector should do well. The scrip has already found a support around Rs.76-77 ranges and from today's movement it seems that this level will hold. During the Q3FY15, the profit of the company rose 23.74% to Rs.619.20 million from Rs.500.40 million  in the same quarter last year. Net sales for the December 2014, quarter  rose marginally by 3.97% to Rs.17,774.30 million, compared with Rs.17,096 million for the prior year period. Meanwhile, the DIIs have increased their stake in the company to 13.13% in the December 2014 quarter as compared to 11.94% in the September, 2014 quarter. Moreover, today recommendation came from a brokerage house to buy Jindal Steel and Power Ltd at Rs.156 for a target of Rs.162] 

February 18, 2015:  After a rangebound movement in mid-morning trade, key benchmark indices trimmed gains in early afternoon trade. The market breadth indicating the overall health of the market was positive. The barometer index, the S&P BSE Sensex, was currently up 127.67 points or 0.44% at 29,263.55. The BSE Small-Cap index was up 1.01%, outperforming the Sensex. Asian stocks edged higher amid speculation Greece will resolve its standoff with creditors.

Meanwhile, the yearly SBI Composite Index, a leading indicator for tracking primarily manufacturing activity in Indian economy, inched up to a 2-month high of 52.9 (moderate growth) in February 2015 from 52.1 (moderate growth) in January 2015.

Capital goods stocks rose. Shares of power generation companies were also in demand.

Earlier, Sensex hit its highest level in almost three weeks in mid-morning trade as the two key benchmark indices -- the Sensex and the 50-unit CNX Nifty -- extended initial gains.

Foreign portfolio investors sold shares worth a net Rs 182.80 crore during the previous trading session on Monday, 16 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 280.77 crore on Monday, 16 February 2015, as per provisional data. The stock market was closed yesterday, 17 February 2015, on account of Mahashivratri.

In overseas markets, Asian stocks edged higher amid speculation Greece will resolve its standoff with creditors. In the US, the S&P 500 eked out a small gain yesterday, 17 February 2015, to close at a record level for the second time this year, after reports emerged that Greece may ask for a six-month extension on its debt obligations.

In the foreign exchange market, the rupee edged lower against the dollar.

Brent crude oil futures edged lower amid oil supply glut. Nevertheless, global crude oil prices have bounced back over the past few days after a steep slide in prices over the past few months. The recent rebound in global crude oil prices will raise concerns pertaining to India's fiscal deficit, current account deficit and fuel price inflation. India imports about 80% of its crude oil requirements. On 15 February 2015, Indian Oil Corporation announced increase in petrol price by 82 paise per litre in Delhi (including state levies) and diesel price by 61 paise per litre.

At 12:19 IST, the S&P BSE Sensex was up 127.67 points or 0.44% at 29,263.55. The index jumped 200.20 points at the day's high of 29,336.08 in mid-morning trade, its highest level since 30 January 2015. The index fell 8.97 points at the day's low of 29,126.91 at the onset of trading session.

The CNX Nifty was up 29.90 points or 0.34% at 8,839.25. The index hit a high of 8,862.20 in intraday trade. The index hit a low of 8,808.90 in intraday trade.

The BSE Mid-Cap index was up 61.04 points or 0.57% at 10,799.03. The BSE Small-Cap index was up 113.26 points or 1.01% at 11,359.71. Both these indices outperformed the Sensex.

The market breadth indicating the overall health of the market was positive. On BSE, 1,504 shares advanced and 1,107 shares declined. A total of 93 shares were unchanged.

Capital goods stocks edged higher. Suzlon Energy (up 14.16%), Pipavav Defence and Offshore Engineering Company (up 13.17%), Punj Lloyd (up 7.42%), Bharat Electronics (up 5.34%), BEML (up 4.63%), Lakshmi Machine Works (up 1.93%), ALSTOM India (up 1.84%), SKF India (up 1.61%), Jindal Saw (up 1.44%), Praj Industries (up 1.01%), AIA Engineering (up 0.89%), ABB (up 0.45%), Havells India (up 0.17%) and Crompton Greaves (up 0.09%) edged higher.

Bharat Heavy Electricals (down 0.04%), Alstom T&D India (down 0.16%), Siemens (down 0.59%) and Thermax (down 0.89%) edged lower.

Index heavyweight and engineering and construction major Larsen & Toubro was up 1.33%.

Shares of power generation companies were in demand. GMR Infrastructure (up 2.46%), Tata Power (up 2.14%), Reliance Power (up 2.08%), NTPC (up 2.05%), Adani Power (up 1.68%), JSW Energy (up 1.38%), Reliance Infrastructure (up 1.03%), NHPC (up 0.97%) and Torrent Power (up 0.76%) edged higher.

Jaiprakash Power Ventures rose 8.08%. The company won the Amelia North coal block in Madhya Pradesh for Rs 712 per tonne, according to the results of e-Auction for Schedule II coal mines announced by the Ministry of Coal yesterday, 17 February 2015.

CESC fell 1.79%. The company said on Tuesday, 17 February 2015, that following an e-auction conducted by the Ministry of Coal, Government of India on 15 February 2015 and the results thereof since posted on the Ministry's website, CESC has submitted the closing bid of Rs 470 per metric tonne (MT) for Sarisatolli coal mine in the state of West Bengal. A formal letter to the company from the Ministry allocating the said mine is expected in due course, CESC said.

The coal ministry has started auctioning coal blocks after the Supreme Court in September last year cancelled the allocation of more than 200 coal mines allotted between 1993 and 2010 after ruling that they were arbitrary and illegal.

Sundaram Finance fell 0.13% to Rs 1,545. The company announced during trading hours that Sundaram Finance (SFL) and RSA Group, UK, (RSA) have reached an agreement whereby RSA has agreed to sell its entire 26% equity stake in Royal Sundaram Alliance Insurance Company (RS), to SFL, for a consideration of Rs 450 crore, subject to all regulatory approvals. Sundaram Finance currently holds 49.9% in RS. After the completion of the transaction, Sundaram Finance and its associates would hold 100% of the shareholding of RS.

RS, the first private sector non-life insurance company to be granted a licence, in the year 2000. RS is a leading player in the general insurance sector in India.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 62.255, compared with its close of 62.1575 during the previous trading session on Monday, 16 February 2015. The foreign exchange market was closed yesterday 17 February 2015, on account of Mahashivratri.

Brent crude oil futures edged lower amid oil supply glut. Brent for April settlement was off 35 cents at $62.18 a barrel. The contract had risen $1.13 a barrel, or 1.84% to settle at $62.53 a barrel during the previous trading session.

Meanwhile, the yearly SBI Composite Index, a leading indicator for tracking primarily manufacturing activity in Indian economy, inched up to a 2-month high of 52.9 (moderate growth) in February 2015 from 52.1 (moderate growth) in January 2015. In contrast, the monthly index slipped to 48.3 (low decline) in February 2015 from 52.1 (moderate growth) in January 2015. The sharp contraction in the month on month index may be attributed to less number of working days in February compared to January, according to Ecowrap which is an economics research publication from State Bank of India (SBI). According to Ecowrap, a revival in automobile sales, capital goods and consumer non-durables productions and possible upturn in the credit offtake by the large corporates segment highlights possible recovery in the economic activity in coming months. Consumer durable sales have not yet bottomed out. Bank credit and deposits continues to remain sluggish. Interestingly, growth in credit card outstanding continues to push up credit growth. The contraction in the in the monthly index could probably drag down the yearly index after a while, according to Ecowrap.

According to Ecowrap, benign wholesale as well as retail inflation accompanied by a lower cost of borrowing is expected to boost positive sentiment in the economy in coming months and possibly drive credit cycle and growth.

The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.

Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.

The upcoming Budget session of the parliament assumes utmost importance as the government intends to replace the ordinances it had promulgated after the conclusion of the winter session of the parliament with Bills and get them cleared by both Houses of Parliament during the budget session. The Narendra Modi government promulgated a slew of ordinances after the last session of Parliament. Some of the key ordinances include raising the FDI in the insurance sector from 26% to 49%, e-auctioning of coal mines and amendment to the Land Acquisition Act.

The government has already started auctioning coal blocks for captive mining. The Coal Mines (Special Provisions) Bill that was moved to replace an ordinance issued earlier was passed by the Lok Sabha in the winter session but it could not be taken up in the Rajya Sabha. The government promulgated the Coal Mines (Special Provisions) Ordinance, 2014, in October to facilitate coal block auctions after the Supreme Court cancelled 204 coal blocks in September.

Through another ordinance, the government has raised the ceiling on foreign investment in the insurance sector to 49% from 26%. The government was unable to get the Insurance Laws (Amendment) Bill, 2008, passed in parliament during the winter session.

Amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 were brought in via an ordinance after the winter session of the parliament.

Analysts are also awaiting further progress on the Goods and Services Tax (GST) in the Budget session after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.

Asian stocks edged higher today, 18 February 2015, tracking gains in the US as fears eased over Greece leaving the eurozone. Key benchmark indices in Hong Kong, Indonesia, Japan and Singapore were up 0.16% to 1.18%.

The stock market in mainland China is closed for this entire week starting today, 18 February 2015, for the Lunar New Year holiday. The stock market in Hong Kong is open for trading for only half day today, 18 February 2015, and remains shut for the rest of the week for the Lunar New Year holiday.

In Japan, the Bank of Japan (BoJ) today, 18 February 2015, stood pat on its policy and painted a rosier picture of economic conditions, despite recent poor growth data and an inflation rate that is moving away from its 2% target. After the latest policy meeting, the BOJ's policy board voted 8-1 to keep unchanged the size of the bank's annual asset purchases worth 80 trillion yen ($670 billion), its main tool to generate higher inflation.

The central bank signaled that it mostly believes that the Japanese economy has finally overcome a hit from the government's move to raise the sales tax. Specifically, the BOJ removed for the first time its reference to the tax increase from the main language in its monthly economic assessment.

Trading in US index futures indicated that the Dow could gain 11 points at the opening bell today, 18 February 2015. US stocks closed slightly higher Tuesday, 17 February 2015, as investors continued to monitor talks between Greece and its creditors in hopes that a deal will be reached to keep the country from falling out of the eurozone.

In Europe, Greece may reportedly request a six-month extension on its debt obligations. According to reports, the newly elected Greek Prime Minister Alexis Tsipras will today, 18 February 2015, request an extension on the country's loan agreement. Talks are continuing between Greece and its international creditors on the conditions that would be attached to the extension of the loan accord, according to reports. Greece is scrambling to reach a deal with creditors before it runs out of cash. Greece's current bailout plan expires on 28 February 2015.

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FIIs Continue to Press the Sell Button

Photo: Money Control

According to the Reuters, February 17, 2015:

Earnings of India's largest companies fell more than expected in the latest quarter, adding to scepticism over a stock market rally that started in early 2014 and official figures showing the country's economic growth outpaced China's. The combined net income of 100 firms with a market valuation of more than $100 million dropped 6 percent in the three months ended in December from a year earlier. That compares with a 0.5 percent rise expected by analysts covering the companies. It was also the first decline in at least 18 quarters since Thomson Reuters started compiling the earnings data.

It was the third consecutive quarter that profits had failed to match up to expectations, meaning companies have disappointed each quarter since Prime Minister Narendra Modi was elected in May last year, a victory that drove share prices to record highs. More than half of Indian firms undershot earnings forecasts, including some of the biggest: Reliance Industries, Tata Motors and bellwether engineering firm Larsen & Toubro. The stakes are high for Modi's government, due to present its budget later this month. 

Meanwhile, Kotak Securities Ltd wrote on 17 February. 2015 : 

3QFY15 results were disappointing and underlying trends in volumes and NPLs showed no signs of recovery. We see downside risks to our FY2016 estimates with both volume and profitability likely to disappoint. The market looks expensive, as India’s improved macro position is yet to translate into earnings. The upcoming budget and budget session will be critical given that oil prices have moved up sharply in the past few weeks. 

And Finally, the Firstpost wrote on February 11, 2015: India growing faster than China is like saying Bihar's growth quicker than Gujarat. The repport goes on to say: 

Explaining this jump in growth, a Crisil Research note points out: "The Central Statistical Office’s explanation for the upward revision in GDP for previous fiscal is premised on improved efficiency. For instance, the manufacturing sector is generating more value-added from the same level of input. This has led to faster growth in manufacturing GDP which is a measure of the value added." The jury though is still out on the possible explanation for this jump in economic growth. The high frequency data doesn't explain this jump. Car sales remain muted. Tax collections have seen slow growth. Corporate profitability isn't anything to write about. The number of stalled projects continues to remain huge. Exports are on a decline. Also, it is worth remembering that the numbers highlighted above are real numbers, unlike the GDP which is a theoretical construct.

The over-hyped Narendra Modi government is yet to deliver on the plate and therefore the FIIs are giving thumbs down, to their outlook about India.

CHEAP LOANS

If  you are looking for loans at BARGAIN INTEREST RATES (6-11%, but conditions apply), from Private Financiers, then you can immediately contact me (till the fund remains) for more details at: sumanm2007s@gmail.com or suman2005s@rediffmail.com. 

You will have to pay a one time "Service Charge" of around 2-3% (conditions apply) on the loan amount; but since the interest rate would be LOW and you would get it processed at a lightening pace (Usual Time: 2-3 weeks), I feel it should not bother you. Also, the paper works are much less here....

Listed and unlisted companies (especially those who want to replace their high cost debts with low cost ones), can also approach me for project loans above Rs.500 crore (Rs.5 billion plus) at interest rate below 6% per year (Conditions apply).  

Hence, rush your applications today. Minimum Loan Amount is Rs.3 lakhs for personal loan and Rs.5 lakhs for other types of loans.

Reliance Communications Ltd: Buy

CMP: Rs.75.10

Anil Dhirubhai Ambani-owned company, Reliance Communications Ltd (Rs.75.10) which is India's fourth largest mobile phone operator by subscribers, reported an 85% jump in net profit for Q3FY15, boosted by lower cost of financing debt and as more of its subscribers used the pricier data services.

It posted a net profit of Rs.201 crore for the October-December period. Revenue rose 1.2% on year to Rs.4,799 crore. The company's net finance cost fell to Rs.652 crore from Rs.749.3 crore a year back. In May, Reliance Communications raised Rs 6,000 crore from a share sale to institutional investors to reduce its debt and ready itself for the upcoming airwave auction. It used funds raised from the sale of shares to institutional players to repay loans earlier this financial year.

According to the Economic Times, 14 February, 2015: 

The telecom industry in India has benefited from reduced competition ever since the Honorable Supreme Court cancelled 122 licences in February 2012, which allowed operators to cut down on promotional offers such as free-call minutes and raise effective call rates. Additionally, a surge in the use of smartphones has pushed up the use of premium high-margin data services. These have helped most telcos improve their key parameters such as average revenue per user (ARPU) and average realisation per minute (ARPM). The carrier's data customer base grew 5.7% to 31.4 million, of which 16.7 million were on its 3G services. Total data traffic increased 16.2% on quarter and 83.3% on year, due to a rise in data subscribers and higher data usage per customer, the company said. Data services offered at a premium and add to the spending per customer, making them more lucrative for telecom companies.

Reliance Communications had net debt of Rs.36,330 crore ($5.9 billion) at the end of September, 30, 2014, down from Rs.40,220 crore three months earlier, according to a company filing. 

The company may also bid in a government auction of wireless spectrum next month, which is expected to raise as much as $15.6 billion from service providers and put at risk their efforts to reduce borrowing, ICRA Ltd said in January. All licenses held by the company in the most popular 900 megahertz frequency band are up for renewal, according to the local arm of Moody’s Investors Service. 

Recently, there were media reports that  Reliance Communications has awarded a contract for technology overhaul of its business process outsourcing centres to US communications systems major Avaya for an undisclosed sum. A person familiar with the matter, however, said the contract may mean an outflow of Rs.400-500 crore for Reliance Communications (RCom) over three months, followed by about 15% of that to service it over the next three years. Under the agreement, Avaya will modernise tools, processes and best practices resulting in operational efficiencies by managing cost through consolidation.

Another person familiar with the deal said the move was in anticipation of work from Reliance Industries' Jio Infocomm. Reliance Communications Ltd (RCom) has a deal with Mukesh Ambani-owned Jio, under which RCom will manage the call centre operations for Jio. The Jio agreement also said RCom would upgrade its technology and fibre for the purpose. At the moment, RCom uses its legacy IVR, or interactive voice response system. Technology today allows more efficient approaches to ensure fewer drops and call back options to maintain continuity of conversation.

Besides, according to The Financial Express, 10 February, 2015:

Facebook has tied up with Reliance Communications to offer free access to subscribers of Anil Ambani-led firm to the social networking site as well as about three-dozen general information websites. Besides accessing Facebook, RCom subscribers can also access 33 websites offering news and information on weather, jobs, government services, and health without incurring data charges.

According to the Deccan Herald, 17 February, 2015:

Reliance Communications Ltd, part of the Anil Ambani-led group, which is the global telecom sponsor of the ICC World Cup 2015, has partnered with Twitter to provide its customers with a platform to follow the global commentary as the world's 14 best cricketing nations compete for the tag of the champion team, with no data charges. Customers who do not have a Twitter account can also access cricket-related Tweets by logging on to www.rcom.co.in/cricket on their mobile phones throughout the duration of this global event -- from Feb 13 to March 31, 2015, a company statement said here Tuesday. 

According to the Reuters, 17 February, 2015: 

India's Reliance Industries  and seven other firms including top mobile phone operator Bharti Airtel  have applied to participate in next month's auction for mobile phone airwaves, several people directly involved in the process said.

All these makes Reliance Communications Ltd as one of the most happening stocks in the telecom sector.. The scrip should cross Rs.100, within the next six months. The investors are strongly suggested to buy the stock at the CMP of Rs.75.10, for a short term target of Rs.84-97. This could be another Pipavav Defense and Offshore Eng Ltd (Rs.69.10), which was recommended on September 28, 2014 at Rs.38.75; after which it made a 52-week high of Rs.74.40 on 12/02/2015.

RCom Advances 4% as Q3 Net Meets Expectations

February 16, 2015:  Shares of Reliance Communications surged as much as 4.2 per cent to Rs.75 after the company reported that its third quarter net profit came in at Rs 201 crore after the market hours on Friday.

RCom's net profit for quarter ended December 31, 2014 jumped 86 per cent to Rs.201 crore from Rs.108 crore during the same quarter previous year. Total income of the company rose 5.4 per cent annually to Rs.5,435 crore from Rs 5,157 crore.

Revenues from the non-voice segment grew 12 per cent and voice segment revenues jumped 4 per cent on year on year basis.

The results came in line with what the analysts had expected.

Meanwhile, the EBITDA margins saw a soft growth in the third quarter. Gurdeep Singh, CEO, consumer business at Reliance Communication told NDTV that, "EBITDA margins were stable at 33.8 per cent and it could have been higher but due to few one time expenses on global business and employee costs the EBITDA registered a soft growth." (Watch video)

Reliance Communication ended higher by 4.3 per cent at Rs.75.

Courtesy: NDTV Ltd 

AAP’s trigger on AK - 67

~~Fakhri H. Sabuwala

Mumbai, 16 February 2015: "AAP jaisa koi meri zindagi mein aaye’ tau.......bAAP ban jaaye"...ahaa bAAP ban jaaye. Pehle AAP, pehle AAP....... the PM kept on saying and in this Lucknowi, syndrome the BJP missed the bus, whereas the Congress did not even come to the terminus". 

"The results of the Delhi Assembly polls are one of its kind and has rewritten political history. Arvind Kejriwal’s swearing in ceremony as Chief Minister took place  on Valentine's day, 14th February, which incidentally is exactly the day he quit as the CM of Delhi last year.

In the last twelve months, much water has flowed down Jumna bridge. Not only has it witnessed the country's general elections won by the BJP on the plank of development but also the installation of a non-Congress government at the centre after long. This paved the way for the BJP with its regional partners to exploit the plank of development again in state elections. Modi had thus become an epitome of change. The policy paralysis of yester years was given a go by with the promise to do things differently. Narendra Modi’s new mantras to achieve growth like ‘Make in India’, ‘Digital India’ and ‘Swachch Bharat’ caught the imagination of the people and reverberated abroad too during the PM's visits abroad or during the visits of foreign dignitaries to India. While this fetched him ground coverage somewhere down the line it appeared that the PM was getting alienated from the real problems of the masses. 

As the talk became louder with lack of follow-up action, the public became wary of NaMo’s pronouncements quite like the Lok Sabha elections when he was referred as ‘Feku’ while Rahul was called Pappu’.

The BJP government found little support in the legislature forcing it to adopt the ordinance route like its predecessor. All this led to a disdain to the ‘aam aadmi’ who was yet to see any positive change in his life in the nine months since the voluble Narendra Modi took over creating big hopes. It was in the shadow of high pitch sloganeering that Arvind Kejriwal of AAP addressed the electorate and turned the tables on the invincible NaMo and dealt a deadly blow bagging 67 out of the 70 seats with comfortable leads and losing only three only by wafer thin margins.

The results were stunning. While they took away the wind from the sails of NaMo and BJP president, Amit Shah, it left the BJP in such a state of shock that the party leaders could hardly respond. 

The BJP suffered from the same disease that the complacent Congress had developed with its 60-year rule in Delhi. Arvind Kejriwal and the AAP have ushered a new dawn that should help reduce corruption and crony capitalism since they can never be eliminated.

P.N: Mr.Fakhri H Sabuwala is a Masters in Commerce from Mumbai University. He is a Stock Broker, Investment Analyst and associated with BSE since 1982.  He is an ex- lecturer in Commerce and a visiting faculty in various school of management and professional courses.

Market Mantra

Unitech Ltd (Rs.18.50), today moved up by more than 12% intra-day and touched Rs.19, after strong Q3FY15 numbers. It was mentioned in the last report that the shares of the company would gain positive momentum on Monday, following good quarterly numbers. The stock is now trading at Rs.18.50, up more than 11%.

Today's call: Buy Reliance Communications Ltd at Rs.75--76, for a short term target of Rs.82. The company came out with superb Q3FY15 numbers. A brokerage house has confirmed a BUY on Reliance Communications for a target of Rs.82-84.. 
The shares of Allied Digital Services Ltd tanked to Rs.21.40, intra-day today and is currently trading at Rs.22.75, down more than 11%. If you remember I had given a sell on the counter above Rs.30, based on some recent developments, asking all to book complete profits.
Pipavav Defense and Offshore Ltd today touched my 3rd target of Rs.72 and is currently trading at Rs.68.80. Earlier there were media reports that  Mahindra & Mahindra, one of India's largest diversified conglomerates, is set to purchase a majority stake in Pipavav Defence and Offshore Engineering (PDOE) for roughly Rs.3,000 crore at Rs.66 a share in a three-phase deal. Along with debt of around Rs.6,800 crore and fresh equity that will be issued, the deal is seen as having an enterprise value of Rs.12,000 crore, they said.

India gold prices surge on jewellery demand

MUMBAI, Saturday, February 14, 2015:  Gold prices in top consumer India swung to a premium to the global benchmark this week, compared with discounts late last month, as jewellery demand picked up, dealers said.

Indian gold prices were at a premium of $2-$3 an ounce over the international benchmark and are expected to remain in the same range in the short term, according to trade sources.

Prices were at a discount of up to $16 an ounce last month, due to weak demand and sufficient supply in the market.

'Wedding demand has started picking up at lower prices,' said Narendra Singh, owner of Kiran Jewellers in Jaipur.

'Presently supply is smooth and gold is available as per the requirement but imports may increase in the coming months on increased demand,' he said.

India overtook China as the top gold consumer last year as jewellery demand jumped to a record high, World Gold Council data showed this week.

Gold is a popular gift at weddings in India, and is also bought for auspicious occasions.

Sustained strong demand in the top consumer could support gold prices, currently trading just above five-week lows.

Strong purchases in China ahead of the Lunar New Year holiday next week could also underpin prices, though traders warned that sales were still lower compared to last year.

'Sales of jewellery and small gold bars are good but demand is probably slightly lower than last year's levels,' said a trader at one of the importing banks in China.

Chinese consumers have recently been quite cautious in gold purchases, following record buying in 2013, when prices had slid sharply by 28 per cent. A cautious price outlook and an anti-graft drive have kept some buyers away.

Premiums on the Shanghai Gold Exchange were steady at $3 to $4 an ounce this week. This compares to premiums of about $10 and above ahead of the 2013 new year holiday, which fell on January 31 last year.

'Short-covering may lift gold for the time-being, but post Chinese New Year, we could see gold taking a tumble again,' said Howie Lee, analyst at Phillip Futures. The firm expects gold to test $1,200 an ounce by the end of the first quarter.

Courtesy: Gulf Daily News