Master And Student - All About Stock Markets

Aster Silicates recently came out with an IPO of about 50 lakh equity shares at a price of Rs.118 and got listed around 130.While the markets were rangebound, the stock went up 90% before closing at 205.

The stock witnessed 241 bulk deals on NSE, with the total volume exceeding 9.6 crore shares on both the BSE and NSE exchanges.The volumes were 20 times more than its issue size and the total delivered quantity was at 41.3 lakh shares. Today the stock was locked at upper circuit for most of the day at Rs.246, which came off later in the day.

So what's the buzz?
Aster is engaged in the business of manufacturing of sodium silicate, primarily used by the FMCG, tyre and pesticides industry. The financial performance is not much encouraging, as the company's FY10 EPS was Rs. 5 and the book value is Rs. 23.

The PE multiple at current market price works out to 50 times, which is definitely high, as such chemical companies trade about PE of not more than 5. This is yet another case of operator driven mid-cap rush.There have been many such stocks like Resurgere Mines,GSS America, Selmcl, Ackruti city, Thinksoft  driven up by such operators, which are now substantially below the price traded during the listing period.

Sure it can run some more, but this is not the cup of tea for everyone. Buyer Beware !

SKS Microfinance has come out with an IPO of of 1.68 cr equity shares of Rs.10 each, in the price band of Rs. 850 to Rs. 985 per share. The company is basically an NBFC, with a network of 2,029 branches in 19 states, catering to 67.8 lakh women borrowers and is the largest micro finance institution in India.

Details of the issue:
Issue Open: Jul 28, 2010 - Aug 02, 2010.
Issue Size: 16,791,579 Equity Shares of Rs. 10 each.
Issue Price: Rs. 850 - Rs. 985 Per Equity Share.
Market Lot: 7 Shares.
Listing At: BSE and NSE.

Fundamental Updates:
The company has reported an EPS of Rs.27 and has a book value of about Rs.145. At the current offer price the stock would be trading at 30 P/E and 6 times the Book value. Though the topline as well as bottomline of the company has witnessed the CAGR of more than 100% from FY08 to FY10, the offer price is expensive.

There is a lot of hype being created for this issue, mainly due to Infosys - Narayana Murthy and George Soros - Quantum fund being PE investors in the company. But they have been alloted these shares around Rs.300 and the IPO is price is much higher at 850-985.

But still the issue is likely to get good response from the institutional investors and may be well subscribed. Hence investors looking for listing gains (which is always risky)  may apply, since it has got market fancy. But but other than that, the issue is definitely expensive.

Engineers India (EIL) is making a follow-on public offer (FPO), for 3.37 crore equity shares of Rs.5 each, in the price band of Rs. 270 to Rs. 290 per share. EIL,is one of the leading engineering consultancy company, has its focus on oil and gas and petrochemicals industries.

Details of the issue:
Issue Open: Jul 27, 2010 - Jul 30, 2010
Issue Size: 33,693,660 Equity Shares of Rs. 5.
Issue Price: Rs. 270 - Rs. 290 Per Equity Share
Market Lot: 20 Shares.
Listing At: BSE, NSE.
Discount of 5% is available for retail investors.

Some Fundamentals:
For FY10, the company reported net profit of Rs. 444 crore, resulting in an EPS of Rs. 13.19 on the present equity of Rs. 168 crore. The company is expected to report FY11 EPS of about Rs.15. At the upper end of the price band of Rs. 290, the issue is priced at a PE multiple of 19.33 times, based on FY11 earnings estimates.

Though the current price of EIL is around Rs. 310, the issue is not terribly expensive. Hence big listing gains cannot be expected, but one can apply with medium view, since the prospects are good as well as the 5% discount offers some cushion.

Once couldn't find better time to write about this top performing fund than now, as its Net Asset Value (NAV) hits all-time high . Yes ! HDFC Top 200 Fund which has outperformed most of the funds in its category, reaches NAV of Rs.200. Though the fund has dividend option and you would have got regular dividends, we are analyzing the performance of the Growth option.

The interesting point to note here is that, the NAV of this fund was Rs.170 when the Sensex hit all-time high of 21,000 in 2008 and now the NAV is Rs.200. Which means even if you had invested in this fund at the peak of 21,000, you are still making good 18% returns above that, while the Sensex is still at 18,000.

Snapshot of the fund:
HDFC Top 200 is an open-ended fund which predominantly invests in BSE 200 stocks, with a higher exposure to Midcap stocks. The entry load is 0% and exit load of 1% if redeemed withing 1 year, after which no exit load. Though the fund size is quite large of about 8000cr, one needn't worry too much its management.

Performance:
The fund has given stupendous returns of 24% per annum since inception and its past 3 year and 5 year returns stand at 16% p.a. and 27% p.a. respectively. The 10-year SIP return is at 32% p.a and one couldn't ask for better performance.

Disciplined Systematic Investment in this fund has certainly generated spectacular returns, which are one of the best for a passive investor. Hence even if you haven't invested in this fund yet, you can invest through a SIP method for long term. It is one of the best funds to be in, for long term.

Watch out for review of this fund and  more such funds in this category.

As we all know Nifty futures is available for trading  from 19 Jul 2010 in Chicago Mercantile Exchange CME, more details have come into flow.  Two futures contracts, namely E-mini Nifty Futures and E-micro Nifty Futures would be available almost 23 hours all trading days. The first one will be valued at $10 times the current value of nifty index on the NSE, the other one, will be valued at $2 times the nifty index value at that time.

The interesting point is, since nifty futures is also traded on the Singapore Exchange (SGX) ,  traders can take a position on any of the two bourses and offset it at the other exchange and this is because SGX has mutual offset agreement with CME. It would provide good arbitrage opportunities for institutions and traders having access to both the exchanges.

The live rates can be accessed from E-Mini Nifty Futures and E-Micro Nifty Futures .

The Union cabinet of the Indian government unveiled a new rupee symbol joining the club of other international currencies, such as, dollar, pound sterling, euro and the yen. The new currency symbol reflects India’s aspiration to become a leading player on international financial markets.

The new symbol represents:

An amalgamation of the Devanagari ‘Ra’ and the Roman capital ‘R’ without the stem.

The new symbol has a lot of similarities with the euro and many felt it should have been more Indian. But there is no doubt that this symbol make the rupee more internationally recognizable.Proper marketing campaign is necessary to create an awareness and to bring it to everybody's notice.

On the international front, India’s status in international financial markets will go up one notch and and will bring some visibility to the Indian currency.

HDFC AMC has launched an NFO with the name 'HDFC Gold Exchange Traded Fund'. This is yet another Gold ETF, apart from existing schemes like Gold Bees, Rel Gold etc which are already traded in NSE. The fund will invest in 90-100% of assets in Gold Bullion.

Some of the features include:

The fund will be listed in NSE and can be easily bought and sold like any other stock on the exchange through terminals spread across the country.
The minimum investment is Rs.5000/- and the NFO is open till Jul 23 2010.
Can be bought/sold anytime during market hours at prices that are expected to be close to actual NAV of the scheme.
Post-listing, the minimum purchase would be 1 unit .

Can one invest in this NFO?

Gold has been one of the biggest outperformers of most of the asset classes, recently and can be still considered for investing.  Hence, investors who don't have exposure to Gold ETFs, can consider investing in this fund.
There are many other Gold ETFs like Gold Bees, Rel Gold etc which are currently traded in NSE, which can also be considered for investments.

With Indian economy moving on an up cycle during FY10, FIIs infused $20bn in Indian capital markets, and retail participation has also improved through direct investments through stock brokers,  insurance and mutual fund route. There is a significant jump in number of online trading by retail traders and this trend is likely to continue its upward journey. So let us throw some light on this brokerage sector, albeit cyclical in nature.

Corporate fund raising activity (through QIPs, IPO, and debt syndication) has gained momentum during FY10, along with the secondary capital market volumes which has clocked a growth of 60% yoy.  This has aided capital market intermediaries’ fee-income substantially. Operating cost of capital market intermediaries is largely variable in nature but still cost effective distribution model - franchisee and online trading through portals helps in keeping a check on operating cost. And, thus operating and net profit margins are likely to remain stable.

India Infoline, Edelweiss Capital and Motilal Oswal  are the prominent listed stocks in this sector. Post correction, these stocks are trading at discount to the benchmark index valuations. The valuations are reasonable, which make them stocks to watch on any declines.