Companies & Sectors
Air India to resume Dreamliner flights from Wednesday

 

The B-787s have remained grounded since 17th January after a fire in the lithium-ion batteries of a parked plane in Boston and a case of forced landing of another B-787 for the same reason in Japan
 
Government-owned national carrier Air India is expected to resume domestic operations of its grounded Dreamliners planes from Wednesday and their global flights from 22nd May with the government today saying the airline would cut costs to the tune of Rs2,000 crore in the current financial year. 
 
While monetisation of its assets in Delhi, Mumbai, Chennai and Coimbatore alone would generate additional funds Rs1,000 crore, oil companies are expected to provide concessions of Rs500 crore to Air India. 
 
The airline would generate additional revenue of over Rs500 crore through slashing of staff costs, savings from interest on loans and working capital and booking agency commissions. 
 
"The first commercial flight of the Dreamliner will start tomorrow from Delhi to Kolkata. Out of six of these Boeing 787 planes, two have been already modified following the battery fire incidents," civil aviation minister Ajit Singh informed the media.  
He said the first international flight of the Dreamliner would be launched from 22nd May. The national carrier would begin full-scale global operations with these planes from Delhi to Birmingham and Sydney-Melbourne from August, Rome and Milan from October and Moscow from early next year, the minister said. 
 
The remaining four of the total six Dreamliners with Air India now, would become operational by this month end, Singh said, adding another eight of these aircraft would be delivered by Boeing by December, taking the total to 14. The airline has ordered a total of 27 Dreamliners. 
 
The B-787s have remained grounded since 17th January after a fire in the lithium-ion batteries of a parked plane in Boston and a case of forced landing of another B-787 for the same reason in Japan. 
 
The minister refused to divulge the amount of compensation the US aircraft manufacturer would give to Air India but said the airline has set up an internal committee to talk to Boeing on the issue.

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COMMENTS

Chetan Surpam

4 years ago

"The first commercial flight of the Dreamliner will start tomorrow from Delhi to Kolkata. Out of six of these Boeing 787 planes, two have been already modified following the battery fire incidents," civil aviation minister Ajit Singh informed the media.
He said the first international flight of the Dreamliner would be launched from 22nd May. The national carrier would begin full-scale global operations with these planes from Delhi to Birmingham and Sydney-Melbourne from August, Rome and Milan from October and Moscow from early next year, the minister said.

Do FIIs buy high and sell low – I? Maximum buying at peak index levels

The fortunes of the Indian market maybe driven by FII inflows, but do foreign investors make the same mistake as most retail investors i.e. buying high and selling low? Here is the evidence over the last five years. The first of a three-part series shows how FIIs investment crests near market peaks 

 
The Sensex had hit 20,203 on 31st January this year, a 59-month high, and a shade lower than all-time high made in January 2008. This followed six months of relentless rally, on the hopes that the Indian economy will record stronger growth and corporate performance will duly improve especially since the new finance minister, P Chidambaram—the darling of the equity markets—took the reins in September and announced a flurry of “economic reforms”. 
 
The rally was, of course, caused by a flood of money from the source which mattered—foreign institutional investors (FIIs), a venerated group of amorphous people—from the storied names in Wall Street to the nameless and faceless multitude behind the post box addresses in Mauritius. The rally was set to continue well into the future. Many, including some very smart people working in the best of broking houses, suggested that the Sensex would hit 23,000 and higher. 
 
That month, January 2013, FIIs, the arbiters of value and price of an Indian stock and everything in between, pumped in a stupendous Rs19,198 crore. That figure was the fourth highest in the last 20 years that the FIIs have investing in India. There was only one small problem. In January, the Sensex peaked. The smart investors managing millions of dollars had invested near the market peak? That seems strange. Would you call it an exceptional situation? Are we suffering from hindsight bias—of acting knowledgeable after the event? Not really.
 
Panic buying near market peaks
Well, here is the thing. The FIIs, smart guys, act exactly like you and me, retail investors. They suffer from the same syndrome as we do after watching massive rallies unfold—the sense that the train is leaving the station, and that we have to get in anyhow. They have the knack for rushing in with huge buy orders well after a massive rally; they invest within 5% of the market peak. Time after time. Don’t believe it? Well, how about looking at the other instances FII investments that were more than January 2013? Were such large infusions followed by a rising, stagnant or a declining market?
 
These were hardly the times to be wildly bullish. The FIIs invested over Rs36,800 crore—the highest two-month investment ever—in September 2010 and October 2010. Two and half years after that the Sensex is actually down!
 
That outstanding example of FIIs investing at peak prices is rivalled by the case of February 2012, a month when for no obvious reason, Rs23,236 crore of investment came intoIndia, the highest ever!
 
Exactly timed with that, the Sensex peaked at over 18,500. By mid-May that year, barely three months later, the Sensex had crashed to about 15,800. 
 
Over September and October 2010, the largest two month burst of investment took place and the market underperformed thereafter. The second-largest two-month investment? That happened in December 2012 and January 2013.

 

A massive FII inflow of nearly Rs33,000 crore had come in when the Sensex was well-above the 19,000 mark during these two months. Almost six months later, Sensex return is near zero. We do not know whether the Sensex will regain its January peak and keep rising. What we know for sure that for the third time in three years, the maximum investment came in after the market had run up sharply from the lows. Time is running out for this peak investment to earn smart returns.

 

In the second part of the article we will look at how FIIs, like retail investors chase market rallies and while the third part will examine the behaviour of FIIs in the exact opposite situation described in this article, namely panic selling at market lows.

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COMMENTS

anantha ramdas

4 years ago

To be honest, if this gallop in the market continues, the best course of action for a small investor is to sell his shares once they have fetched him/her a return of 16% pa basis.

This will be followed by a
"correction" a word that is tossed about by "experts" when the sellers of the above category in para (1) may return back to the market and buy his/her blue chip companies.

And when IPOs come, watch out and buy when they hit the market, as past track records show that you can get them cheaper,later!

For the time being, please do not experiment - with your hard saved money and, certainly, do not borrow to invest, just because your self-styled expert broker advises you to do so.

Oh, yes, just remember, it is YOUR money, and on every transaction the broker will make a buck or two, whether you make or go broke!

Suiketu Shah

4 years ago

Indian equity market is not heading any where till elections 2014.Best to stay in cash with bank FD's currently as market wl fall quite a bit and maybe then buy large caps.Short term and middle term prospects donot look good as moneylife has pointed out in forthnightly magazine.

The rise in the sensex currently is artifically created to fool retail investors.

REPLY

Nilesh KAMERKAR

In Reply to Suiketu Shah 4 years ago

No harm in reconsidering an opinion, when outcome appears to be very different from the drawn conclusion.

Suiketu Shah

In Reply to Nilesh KAMERKAR 4 years ago

Mr Nilesh I know whose judgemnent to trust ie moneylife and whose not to trust ie fraud and cheat wealth management company still trying to act smart via their commission agent mutual fund broker.

Suiketu Shah

In Reply to Nilesh KAMERKAR 4 years ago

Investors shd stay away from buying now as the sensex wl fall quite a bit afetr reaching 21000 shortly.

No need to reconsider any option,investors also shd stay far far away from mutual funds.

This is the wrong time to buy equities totally wrong time from retail investors point of view.

anantha ramdas

4 years ago

Very interesting subject to write about, based on market movements.

We must also remember that these FIIs are "aided" by a bunch of "highly qualified, experienced Indian executives (er.. most of these guys have changed several jobs) who claim to know the "pulse" of the market and all such complimentary words. We must also bear in mind that any amount of money that comes into the market will still have to chase the existing quantum of shares available. So, this is simple economics of too much money chasing too few shares, resulting in high prices. When one big FII sells, panic sets in and others follow, resulting in a bloodbath!

Nilesh KAMERKAR

4 years ago

This analysis can act as a soothing balm for those who have missed out and are stranded with cash. . . Markets seem to be running away anyway.

REPLY

Kalpesh P Shah

In Reply to Nilesh KAMERKAR 4 years ago

This idea of buying at high and selling at low - goes in opposite direction to your series on Muutal funds.

In the end FIIs/DIIs play with others money, brokerage/charges matter. Isn't it?

Nilesh KAMERKAR

In Reply to Kalpesh P Shah 4 years ago

1)‘Buying high and selling low’ very much goes in the same direction to the series on mutual funds. Thus it is not correct to say it goes in the opposite direction of the article.

2)Play with other people’s money? Not sure if the tightly regulated investment management industry can be described as ‘playing’ with other people’s money.

The investment management industry because of its inherent complexities & contradictions becomes a soft target for hurling criticism – and in good measure unwarranted criticism. So much so that even a harmless simple two part series meant for sharing knowledge and experience attracts attention to brokerages /charges.

If you think the profession carries disproportionate rewards, the law does not stop anyone from being a part of the fraternity. Please join and help fellow citizens in investing their hard earned savings.

Ashok Kumar Rastogi

4 years ago

FII chase rising market in the world wherever they get highest return.If the return is more in Brazil they would switch over yo Brazil by selling their stakes in India without looking at index.Moreover their returns is dependent on currency value,

Naresh Nayak

4 years ago

FIIs are not patient capital. They need to chase returns, take their management & performance fee and move on. Their performance fee depends on the returns they make and therefore they cannot make any investments in stocks which are trading at a low. The basic rule of the trend is that higher highs make higher highs and lower lows make lower lows. The FIIs chase the highs hoping that the highs will lead to higher highs. Sometimes the highs do not make higher highs and it triggers stop losses for the FIIs.

Then there are patient FIIs who buy and hold. They do not have a mandate to perform in the short term. These FII can hold ITC for 15 years without making a single trade. Often these FII work for wealthy European Family Offices who like to buy and hold high dividend yielding stocks with sound corporate governance.

Also noteworthy is that FIIs always price their profit in dollars which means that a rise in the rupee and the sensex together may eat into the profit which is why FIIs sell at times when the sensex is high - it is because the rupee has fallen which triggered the stop loss. It's not only a sensex issue, it is also a forex issue for the FII.

This means that DII (domestic capital) and FIIs can do a buy and sell in a rising sensex which baffles analysts. Sometimes 2 FIIs buy and sell during a rising sensex because one reports profits in dollars and the other reports profits to shareholders in japanese yen!

http://nareshnayak.wordpress.com

rajan gupta

4 years ago

FII are not buying index levels or Nifty etc , they buy stocks to analysis may be done with reference to stocks please

pawan

4 years ago

it may be possible that FIIs dont invest when market peaks instead the market peaks when they invest.

REPLY

Suiketu Shah

In Reply to pawan 4 years ago

Very interesting point Mr Gupta

Nice food-for-thought article Mr Basu.

Suketu

SuchindranathAiyerS

4 years ago

It seems more likely to me that money launderers with a vested interest in pump priming India as an investment destination who can mint just as much money as they want were at work here

J Thomas

4 years ago

Thanks. This is good info

Nestlé India still waiting for volume growth to rebound
While the long-term picture for Nestle India is still intact, near-term growth concerns will weigh the company’s stock down, says Nomura Equity Research
 
Nestlé India's revenues and adjusted net profit growth of less than 10% during the March quarter continue to be underwhelming feels Nomura Equity Research. More important is the fact that volume growth trajectory continues to lag in low single digits, which remains a cause for concern for the company and the shareholders alike, the brokerage said.
 
Nomura said, “We believe these results show that a turnaround in volume growth trajectory is still some way off, which should hold back stock price performance from current levels”.
 
Nomura has also pointed out the favourable aspect in the company’s performance. Exports are up 51%, which have pushed the consolidated net sales up.  However, domestic business reported growth of just 7.7% (primarily lead by price increases), which was 2% below Nomura’s estimates.  Domestic sales were on the lower base of last year where growth was just 13.7%. 
 
The company’s performance is given in the table below:
 
 
“We continue to maintain a Neutral stance and believe that while the long-term picture is still intact, near-term growth concerns will weigh the stock down. The market price of the company's share is likely to fall up to about Rs4,516. Investors are advised to await the volume growth rebound,” Nomura concluded.

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