Stocks
KPIT Technologies stock tanked before the results
The share price of KPIT Technologies fell sharply before the weak March quarter results
 
In just over a month, KPIT Technologies tanked 53% to Rs106 as on 30 April 2015, from Rs224 as on 3 March 2015. Prior to the results announcement on 28 April 2015, the stock had already tanked 31%. On the day after the results the stocks went down another 20% and got locked in the lower circuit. Why was there such a sharp correction before the results? There was a sequence of events that unfolded over the past two months.
 
As on 31 December 2015, the promoters of KPIT Technologies had pledged around 9.73% of their stake. On 5 March 2015, Kotak Mahindra Bank, in whose favour 600,000 shares were encumbered, released 250,000 shares. Then again on 9 March, the promoters took back another 100,000 shares pledged to the Bank, leaving the Bank with 250,000 pledged shares. By this time the stock price fell by 5% to Rs214 from the peak of Rs224 on 9 March. The release of pledged shares took place after the promoters had pledged 250,000 shares to another related entity—Kotak Mahindra Investments on 18 February. 
 
On 16 March, the technology solutions company issued an update stating their Q4FY2015 revenues will be flat as compared to the revenues of the same quarter in the previous year citing a negative cross currency impact. Further, they stated that there will be marginal growth in profit after tax for the same period. This sent the stock into another downtrend. On 19 March the stock closed at Rs182, down 19% from the peak.
 
After Kotak Mahindra Bank released as much as 350,000 shares, the promoter pledged another 60,000 shares to Kotak Mahindra Investments, increasing the number of shares pledged to the finance company to 310,000.
 
On 26 March 2015, promoters pledged 20,000 shares to Kotak Mahindra Investments according to disclosures on the BSE. On 26 March the stock price was around Rs180. Then again on 22 April, as the price move lower, the promoters pledged another 40,000 shares to Kotak Mahindra Investments. The price of the stock bottomed to around Rs153.
 
Poor results made matters worse. Though revenues increased by around 14% year-on-year in the quarter ended March 2015, operating profit declined nearly 30% over the same period. Operating profit margins which were around 22% in the previous quarters declined to 14% in the latest quarter.
 
The issue of pledged shares has gained importance after it was discovered that the entire promoter stake of the fraud-hit Satyam Computers was pledged with various financial institutions. Securities & Exchange Board of India has since made it mandatory for companies to disclose details related to pledge shares.

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British Petroleum's application for retailing jet fuel rejected
The government has rejected British oil major BP's application for selling aviation turbine fuel (ATF) to airlines because the company's investment does not qualify it for a retailing licence, Petroleum Minister Dharmendra Pradhan said on Wednesday.
 
"To get marketing rights for transportation fuels, namely, Motor Spirit (MS), High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF), applicants must meet the requirements that inter alia include investment or proposed investment of Rs.2,000 crore in exploration or production, refining, pipelines or terminals," Pradhan told the Rajya Sabha in a written reply.
 
"With reference to this application dated June 11, 2014, the directorate general of hydrocarbons has reported that BP's share of expenditure was $508 million between 2011-12 and 2013-14 of which the capital expenditure component and operational expenditure component is $171 million and $337 million, respectively."
 
"This did not meet the joint requirements of Clause 3(I) and 3(IV) of the Marketing Resolution dated March 8, 2002 and thus the application was rejected," he added.
 
BP Exploration (Alpha) Ltd., a wholly-owned subsidiary of BP, had submitted an application for authorisation to market ATF, or jet fuel, claiming to have invested $477 million in India.
 
Pradhan said that of the $477 million invested in India, $259 million was said to be capital investment and another $2.3 billion was proposed to be further invested.
 
BP's $7.2 billion spent in buying 30 percent stake in 21 exploration blocks of Reliance Industries in the eastern offshore is not being considered as capital investment.
 
To qualify for a fuel retailing licence as per the 2002 fuel retailing guidelines, a company should have made capital investment of Rs.2,000 crore, or $500 million.
 
The petroleum ministry had written to BP in March that it could apply afresh, detailing future investments to qualify for an ATF licence.

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Residential market sees marginal sales, inventory remains high in March quarter
According to Liases Foras, during the March quarter, new launches in affordable segment has kept residential market prices in check. However, the inventory level remains unchanged at 39 months 
 
Residential market in six major cities witnessed marginal growth in sales as well as in inventory. While the average prices in these six cities remained stable in March 2015 quarter compared with previous quarter, Mumbai Metropolitan Region (MMR) saw price decline mainly due to new launches in affordable segment, says non-brokerage real estate research firm Liases Foras.
 
 
According to the latest quarterly report by Liases Foras, overall sales across Bengaluru, Chennai, Hyderabad, Pune, MMR and National Capital Region (NCR) inched by 2%. Sales in Bangalore and MMR surge by 31% and 25% respectively, while NCR and Hyderabad witnessed decline in sales by 27% and 16%, respectively from previous quarter.  
 
During the March 2015 quarter, new supply increased by 21% from previous quarter with 36% of the new supply coming in the cost range of Rs50 lakh to Rs1 crore, followed by the cost range of Rs25 lakh to Rs50 lakh at 29%, Liases Foras said.
 
 
According to the report, 2BHK constitute 36% of new supply followed by 3BHK with 35%. MRR’s average price of new supply is lower by 31% compare to existing supply. Chennai, Bangalore, Pune and NCR show decrease in new launch prices  compare to existing supply prices by 16%, 10%, 6% and 4% respectively, while Hyderabad shows increase in new launch prices by 4% compare to existing supply. Bangalore and MMR constitute 31% and 28% of new supply, respectively. 
 
Liases Foras said, MMR witnessed historic new launches with 18.16 million sq ft of new launches during this quarter. This was the second highest new lunches in a quarter in MMR. The highest new launches so far were during Q1 FY 10-11. 
 
Talking about inventory level, the report says the level in these six major cities increased by 2.48% to 6.88 lakh units admeasuring 919 million sq fts. Chennai, NCR and Pune show quantum of sales is higher than new supply while Bangalore and MMR shows sales is lower than new supply during last quarter. 
 
At India level, month inventory remained un-changed at 39 months from last quarter. NCR showed the worst months inventory at 71 months, while Pune market represents the least months inventory 18 month. MMR market stands at 46 months of Inventory. In ideal condition, a market should maintain 8-12 months of inventory, the report says.
 
 
The average price of six cities remained stable from previous quarter. MMR witnessed the maximum fall of 2.18% in weighted average prices compare to other cities, this is primarily due to new lunches in affordable segment. Pune shows slight increase in prices by 1.38% from previous quarter, Liases Foras added.

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