A strong overnight market in the US, a surge in Asia and a very positive opening in Europe could generate a lukewarm move in India. Time to go neutral
The market was volatile today, with trading limited in a narrow range. The Sensex ended the day at 17,745, higher by 51 points (0.29%), and the Nifty ended at 5,322, higher by 18 points (0.35%). The market started the day with a sharp gain, but it soon slid from there. It pared its gains in morning trading.
Japanese stocks led the rally in Asian equity markets on economic reports pointing to faster growth and after concerns over Greece’s debt crisis abated. Key benchmark indices in Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by 0.53% to 2.3%. China’s Shanghai Composite fell 0.47%. US stocks rose to a 19-month high on Friday (23rd April) as concerns eased over the impact of healthcare reform. Sales of new US homes soared 27% in March 2010, climbing the most in 47 years. The Dow gained 70 points (0.6%), to 11,204.28. The S&P 500 rose 8.6 points (0.7%), to 1,217. The Nasdaq added 11 points (0.44%), to 2,530.
Closer home, the government said that the monsoon is likely to be normal this year. Rainfall is likely to be 98% of the long-term average, said the Indian Meteorological Department. Rainfall may go up due to the weakening of the El Nino phenomenon—which disrupts normal weather patterns—and the heat wave prevailing in northern India. The monsoon wind brings around 75%-90% of the total rain in most parts of India. The Reserve Bank of India (RBI) has expressed optimism over the ease of inflation on the event of a normal monsoon. The Indian Banks’ Association said that banks need not increase interest rates now as there was enough liquidity in the system.
Foreign institutional investors were net buyers on Friday of Rs339 crore. Domestic institutional investors bought stocks worth Rs29 crore. The rupee weakened against the greenback on month-end dollar buying by oil refineries. A new shift in the World Bank voting powers has increased China’s voting share. It is now in the third place behind the US and Japan in term of voting share. The US Federal Reserve is likely to keep interest rates near zero and it is also likely to repeat its promise of an extended period of very low rates at the conclusion of a two-day policy meeting on Wednesday, 28 April 2010. The US interest rate regime has been in a range of zero to 0.25% since December 2008.
Binani Cement (up 0.9%) has approved a share buyback at Rs90 a share for a 7.14% stake. EID Parry (down 0.4%) will acquire majority stale in GMR Industries. It is making an open offer for GMR Industries at Rs110.69 a share. Gujarat NRE Coking Coal, a subsidiary of Gujarat NRE Coke (up 7.3%) has entered into a contract worth $90 million with Joy Manufacturing Company. Divi’s Laboratories (up 1%) has received a letter of approval from the Visakhapatnam Special Economic Zone (SEZ), for setting up and development of a new manufacturing unit in the Zone for pharmaceutical ingredients. Marg, an infrastructure development company, has announced that its capital issue and allotment board has approved the issue of equity shares not exceeding Rs1.5 billion through qualified institutional investors. The QIP will be issued on 26 April 2010; it has fixed the minimum average floor price at Rs189.88. Vipul (up 9%) has fixed 5th May as the record date for a 2-to-1 stock spilt. Bank stocks rose on an expected increase in credit growth in the current year in a reviving economy.
Most of the IPOs in the recent past have been oversubscribed, despite being assigned average grading by ratings agencies
It is the same story again. Indian investors do not really bother about grades for initial public offerings (IPOs) before investing when the market is hot. And then they invariably regret. As many as 23 companies have gone public since January 2010. Of this, a total of 20 companies have been rated IPO Grades ‘2’ & ‘3’ by ratings agencies, Credit Analysis & Research Ltd (CARE), ICRA Ltd and Credit Rating Information Services of India Ltd (CRISIL). Of this, 11 have been graded ‘3’ and nine have been graded ‘2’. Almost all these issues have been oversubscribed. Just two IPOs have managed to get a grading of ‘4’ indicating ‘above average’ fundamentals.
The IPO grades are assigned on a five-point scale from ‘1’ to ‘5’. An ‘IPO Grade 5’ indicates ‘strong fundamentals’ and ‘IPO Grade 1’ indicates ‘poor fundamentals’.
An ‘IPO Grade 5’ is rarely assigned to a company. The grading is assigned on the basis of a number of factors like the company’s financial performance, its track record, managements’ qualifications and experience, business prospects and corporate governance practices.
“If a fundamentally poor company is available at a cheap price then it can be an attractive investment. IPO grade talks about the fundamentals of the company without commenting on the price. NTPC is fundamentally a very good company but if it is priced at Rs300 then it will not be suitable for investors. If the same company with weak fundamentals is available at Rs100 then it can be a good investment opportunity for investors,” said a top official from CRISIL.
Mandhana Industries Ltd and Jaypee Infratech Limited (JIL), which are set to debut on 27 April 2010 and 29 April 2010 respectively, also appear in the IPO Grade category ‘3’. The hydroelectric power generation company Satluj Jal Vidyut Nigam Ltd, a public sector unit (PSU) has been assigned ‘IPO Grade 4’. None of the IPOs have got a grading of 5/5.
“Most of the IPOs that have come recently have yielded some returns to the investor, irrespective of the grading. Lay investors base their decision on the grey market prices rather than the IPO grading. It’s a pleasant fact or a pleasant coincidence that the market has been on a bullish trend since January,” said Alok Churiwala, MD, Churiwala Securities Ltd. “Institutional investors generally don’t rely on third-party assessments. They have their own wherewithal within their organisation to assess how good or bad an IPO is,“ added Mr Churiwala.
According to CRISIL, ‘IPO Grade 2’ means that a company has ‘below average’ fundamentals. Tarapur Transformers Ltd, which hits the market today, has been assigned ‘IPO Grade 1’ by CRISIL, which indicates 'poor fundamentals’. Infinite Computer Solutions (which was available at a price band of Rs155-Rs165 per share) which was assigned ‘IPO Grade 2’ was subscribed 43.22 times while Vascon Engineers Limited (Rs165-Rs185 per share) which was assigned ‘IPO Grade 3’ was subscribed 1.21 times.
(With additional inputs from Rudreshwar Malkani)
The first 16-digit number under this project will be rolled out by February next year
The government’s ambitious unique identity project aiming to give a 16-digit number to all citizens of the country was today renamed ‘AADHAAR’ and its new logo unveiled, reports PTI.
The Unique Identification Number project of the Unique Identification Authority of India (UIDAI) chaired by Nandan Nilekani was renamed ‘AADHAAR’ (foundation) as part of the government’s efforts to “reach out to the common man.”
“UID itself is very confusing. Some people call it DUI, somebody calls it IUD and so forth. So it was getting a little difficult to explain all this various permutations, combinations of this acronym,” Mr Nilekani said.
“Therefore, we wanted a name that could effectively communicate its transformational potential and its promise to residents. Something that had a national appeal that could be recognised across the country, could resonate in different languages and easy to remember and speak,” he said.
Mr Nilekani said that the same standard was also set for the making of the logo. The new logo, with a sun in yellow and a fingerprint in the centre, was also made public at a seminar organised by the UIDAI.
The logo, selected after a nationwide competition, was unveiled by Dhaneshwar Ram, a resident of Azamgarh in Uttar Pradesh, who was invited by the UIDAI to speak on the hardships faced by the common man in getting an identity at present.
The logo creator, Atul Sudhakarrao Pande, a Mumbai resident was given a cheque of Rs one lakh after his design was selected among over 2,000 entries.
Speaking to PTI, Mr Pande, who is a designer by profession, said, “My sister told me about this competition. I read through their concept notes and knew that I had to create something which is easily recognisable. Any rural person would be able to easily recognise the sun and the fingerprint.”
Mr Pande, who will turn 39 tomorrow, said, “My winning the competition is the best birthday present that I have received. It will be taken to millions of people and will be at the front of this ambitious project.”
Mr Nilekani said that the project was aimed at the underprivileged and the poor who are left out of the government’s social schemes because of lack of identity proof.
R Chandra Shekhar, secretary, department of information technology, said, “AADHAAR is the first identity project which is aiming at the poor and marginalised. Earlier all such schemes use to cater only to security but AADHAAR caters to both.”
UIDAI director general RS Sharma said that the first 16-digit number would be rolled out by February next year.