Government to miss sell off target by huge margin

NBCC proposes to make an initial public offer of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO

New Delhi: With one more issue of National Building Construction Corporation (NBCC) in the pipeline, the government will be able to achieve only a little over 36% of the disinvestment target of Rs40,000 crore in the current fiscal, reports PTI.

The government had filed draft prospectus with the Securities Exchange Board of India (SEBI) for 10% stake sale in NBCC last month and the approval from the market regulator is expected shortly.

“We are working hard to bring the NBCC issue in the current fiscal. Most probably the IPO will come after 16th March,” an official source said.

NBCC proposes to make an initial public offer (IPO) of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO. 

“We will conduct road shows in Delhi, Mumbai, Chennai and Singapore between 7th and 9th March. The Empowered Group of Ministers will decide on the pricing of the issue,” the official added.

So far in the current fiscal, the government has been able to raise about Rs14,000 crore through disinvestment in public sector undertakings (PSUs), against the budgeted Rs40,000 crore.

While Rs1,145 crore was raised through an follow-on public offer (FPO) of PFC, Rs12,767 crore came from 5% stake auction in ONGC.

The ONGC stake auction was the first such issue after the market regulator SEBI allowed promoters to sell up to 10% stake through the auction window of the stock exchanges.

Although there was confusion regarding the ONGC auction as the bids could not be uploaded because of technical reasons, the government expressed satisfaction over the auction process and said it would consider more stake sale through the same route after analysing it.

The government has already identified a host of companies as possible candidates for disinvestment. These include Oil India, SAIL, BHEL, Hindustan Copper and GAIL among others.

Sources said the government is considering Oil India (OIL) as the next possible candidate for disinvestment through the auction route. However, it is unlikely that it could happen in the current fiscal.

BHEL which was also under consideration for stake sale through auction route has been postponed to next fiscal.

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No reason why spectrum should not be auctioned; says CCI chief

Where there is extremely high level of demand and resources are scarce, for instance spectrum, then there is no logical reason why it should not be auctioned,” CCI chairman Chawla told reporters. He, however, added, “Auction cannot be a panacea for everything (all other natural resources) and there will have to be some calibration”

New Delhi: There is “no logical reason” as to why scarce resource like spectrum should not be auctioned, Competition Commission of India (CCI) chairman Ashok Chawla, who headed a high-level panel on allocation of natural resources, said on Sunday.

“Where there is extremely high level of demand and resources are scarce, for instance spectrum, then there is no logical reason why it should not be auctioned,” Mr Chawla told PTI in an interview.

However, the former finance secretary added, “Auction cannot be a panacea for everything (all other natural resources) and there will have to be some calibration”.

The Chawla-headed committee had submitted a report on allocation of natural resources to the government last May.

While he supported the revenue-generating auction route for telecom radio waves, his views on other natural resources, are in sync with the contention made by the government in the review petition filed before the Supreme Court.

The apex court had cancelled 122 licences awarded to telecom service providers in 2008 and said that allocation of natural resources should be done through auction route.

Mr Chawla said, for resources in sectors like education and health the auction route cannot be adopted since there is an important social objective involved.

He further said that transparency in awarding the contracts or licences—whether or not through auction—is the key. The awards of the contracts should be based on “certain rule-based framework...well articulated and known to the people”.

He said most of the policies are done though executive framework which is “not grounded in any kind” and the rules can be interpreted in different ways.

Asked whether bureaucrats are responsible for the opaque rules, Mr Chawla said, “You can, of course, blame bureaucrats or anybody, but in such matters they have limited power and authority because ultimately it is the decision of the political executive either in the ministry or in a cabinet committee or the Cabinet”.

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The correction continuing would imply that the election results and the Budget might turn out to be a damn squib

It would be interesting to see whether the bulls are able to shrug off the bears this week as normally running corrections do not last for more than two consecutive weeks. If it does then the bulls will be once again firmly in the saddle otherwise we could see this correction continue for a couple of weeks more

S&P Nifty close: 5359.40  

 
Market Trend

Short Term: Sideways Medium Term: Up      Long Term: Down

The Nifty opened marginally better but crashed to almost touch the S2 level of the week on the very first day of trading. Subsequently a recovery was seen for a couple of sessions before selling pressure saw it give up some of these gains as the Nifty closed the week with a loss of 1.29%. The sectoral indices which outperformed were BSE Healthcare (+2.01%) and BSE PSU (+0.78%) while the gross underperformers were BSE Reality (-4.64%), BSE IT (-3.04%) and BSE Auto (-1.73%).   

The weekly histogram MACD moved down but is above the median line indicating that a correction is on. As we had envisaged last week the correction in the Nifty is now a couple of weeks old and it would be interesting to see whether a small pullback materializes from lower levels. Volumes were lower as compared to the previous week during the decline which also supports the correction theory as of now. 

Here are some key levels to watch out for this week 

■ As long as the S&P Nifty stays below 5,362 points (pivot) the bears hold a slight edge in the near term even though the intermediate trend remains up. 

■ Support levels in declines are pegged at 5,265 and 5,171 points. 

■ Resistance levels on the upside are pegged at 5,456 and 5,552 points.

Some Observations

1. The Nifty came near the 61.8% retracement of the entire fall from 6,338-4,531 points, pegged at 5,648 points from where it declined.

2. Despite the sharp rise the weekly averages still continue to be negatively phased. It would be interesting to see whether prices find support around these levels in further declines.

3. 5,231 points is the 38.2% retracement level of the rise from 4,588-5629 points, hence expected to provide support. A fall below this could see the Nifty dip to the 5,050-5,150 area where strong support is envisaged.

Strategy

As expected the Nifty continued its decline for the second week. It would be interesting to see whether the bulls are able to shrug off the bears this week as normally running corrections do not last for more than two consecutive weeks. If it does then the bulls will be once again firmly in the saddle otherwise we could see this correction continue for a couple of weeks more. In this scenario the Budget and the election results will become redundant. At this moment the previous week’s high and low should be watched carefully as a close above/below this would decide the direction in the near term.

(Vidur Pendharkar works as a consultant technical analyst & chief strategist, at www.trend4casting.com)

 

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