Master And Student - All About Stock Markets

After the success of Tata Capital NCD, here comes another issue from a Non Banking Finance Company (NBFC) Shriram Transport Finance. It has plans to raise about Rs.500 crores and additional 500 crores through debenture issue. The issue opens on July 27 and will close on August 14.

The face value and the issue price is Rs.1000 and the minimum application is for 10 debentures Rs.10,000. There are two options 36 months and 6o months.
1. 36 months - coupon rate 10.75% paid annually, redemption after 36 months.
2. 60 months - coupon rate 11% half-yearly/ 11.25% annually, redemption in the ratio of 40%, 40% an d20 % at the end of 36/48/60 months.

Also there is a 0.25% p.a additional interest for Senior Citizens. No Income tax is deductible at source on interest. CARE has given AA+ rating to the issue, while Fitch has given it AA (ind) rating.

The term deposit rates are in the range of 6-8% for deposits of more than one-year maturity. There is a premium of more than 3% in the company’s NCD offer and there is not much risk in this 30 year old company. Investors can invest in these NCDs and lock-in some higher returns.

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Yet another infra fund ! Franklin Templeton has launched a NFO - Franklin Build India Fund . This open ended scheme is launched to seek capital appreciation by investing in companies engaged in infrastructure and infrastructure-related activities.

Scheme Details :
Minimum Investment Rs.5000 and incremental investment of Re.1.
SIP facility is available and NRIs allowed to invest.
The offer is currently open and it closes on Aug 8 2009.
Franklin Templeton is one of the top performing fund houses and infrastructure sector is one of the priority sectors to invest in. So investors can consider investing a small amount with a long term view.

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No ! we are not talking about cricket here. IPO season is back (Did we say IPL ?). Suddenly there seems to be a lot of activity around the IPO markets, apart from the QIP issues. After the Mahindra Holidays expensive issue and its not-so-successful listing, many companies have lined up the queue to launch their issues. Prominent among them are Adani Power, JP Power Ventures, National Hydroelectric Power Compnay - NHPC and Oil India.

According to SEBI data, 18 more companies have lined up and finalized their plans to raise more than 6000 crores in the next 2 to 3 months. Not many of them are even worth looking at. Even Adani power needs a re-look, recently it had its Pre-IPO placement done at Rs.47 (last year) and the issue to the public is likely to be priced between Rs.100-110. Looking at such issues, I think we were right in using the word IPL - Initial Public Looting.

We can hope at least the PSU IPOs are reasonably priced. Companies make hay while the sun shines ! And Investors ?

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Adani Enterprises limited from Adani group is promoting a power project development company, Adani Power. The company is offering 301,652,031 equity shares of Rs 10 each for cash at a price, likely to be between 100-110, through a 100% book-building process.

Details of the issue:
Issue opens on July 28, 2009 and closes on July 31, 2009.
Price band - Rs.100-110
Listing at BSE and NSE.

There is an important point to note here, a pre-IPO placement was done in April 20008 at a price of nearly Rs 47 per share. And now the company is looking to price it anywhere between Rs 100-110 per share.

Though the long term power story is good, the pricing is on the higher side. There could be listing gains and people wanting these gains can invest. Otherwise one can wait and enter at a better price after the listing. Meanwhile Adani enterprises has gone up more than 40% in short term, citing this IPO.

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DSP BlackRock Global Funds have a launched a NFO. This open ended scheme is launched with a primary objective to gain capital appreciation by investing in the units of BlackRock Global Funds – World Energy Fund and BlackRock Global Funds – New Energy Fund.

This is a fund of funds schemes, which means they invest in the units of other similar overseas mutual fund schemes. They also intend to invest in money market securities and/or money market/liquid schemes of DSP BlackRock Mutual Fund.

Details of the scheme:
Minimum Investment is Rs. 5000 and increment of Rs.1000. SIP facility is allowed and NRIs are allowed to invest. The issue is open till 31 July 2009.

Investors can look out for other opportunities.

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Religare Mutual Fund has launched a New Fund Offer (NFO) - Religare Business Leaders Fund. This is an equity diversified fund. The objective of this open ended fund is to invest in equity related instruments (including equity derivatives) of companies which are leaders in their respective industry or segment.

Details of the scheme:
Minimum investment - Rs.5000 and in multiples of Rs.500.
Both dividend and growth option available.
The issue is currently open and the offer closes on 31 July 2009.
SIP method is available. NRI investment is allowed.
Investors could invest in an existing scheme, than taking the NFO route.

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Stock markets have reacted negatively to the Budget 2009. Nifty has crashed more than 250 points to close at 4150. Why this big crash? The markets had priced in significant positives from the budget and reacted likely due to the following reasons :

1.Increase in the fiscal deficit and accompanying fears of interest rates.
2.Absence of relaxation / allowance of FDI limits.
3.Lack of concrete targets on disinvestment.
4.Increase in MAT rate to 15%, which is a clear negative.

Though the budget has done whatever needed for the sustenance in growth rates of the economy, the fiscal deficit target is higher.

Budget impact on sectors.
Positive impact - FMCG and IT.
Negatvie impact - Banking,Cement, Fertilizer, Media, Real Estate, Retail,Textiles.

Post the correction,markets is set to focus on the evolving fundamentals of the economy and the corporate sectors and factors like monsoons, quarterly results, inflation and economic growth. In the medium term, the markets lack any triggers and the direction could reflect the movement in international markets.Technically market has support around current levels, and below which, the next support is at 4000/3850.

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