Stocks
Nifty, Sensex rally may pause: Monday closing report
The on-going rally may pause for breath but the trend is up
 
In our Thursday’s report, we mentioned that as long as the NSE’s CNX Nifty remains above the days’ low of 7,739, the uptrend will continue. On Monday, 18 August 2014, though the 50-share Nifty opened slightly in the negative, it was well above the previous day’s low of 7,739. The Nifty came out of the red within the first 30 minutes of day’s trade and continued its upward momentum. The Nifty closed at 7,874 (up 82.55 points or 1.06%), an all-time closing high, minutes after hitting its all-time intra-day high of 7,880. 
 
The BSE’s S&P Sensex opened at 26,123 and hit a low of 26,075, after which it rose 315 points to end the day at an all-time closing high of 26,390 (up 288 points or 1.10%), 23 points below its all-time intra-day high of 26,413. 
 
On the Nifty, as many as 42 stocks advanced while eight closed in the negative. Among the 30 stocks on the Sensex, 24 stocks closed with a gain, while five declined and one remained unchanged. Of the 3,031 scrips traded on the BSE, 1,930 advanced while 1,003 declined and about 98 remained unchanged.
 
Among the top gainers on the Nifty were oil stocks such as BPCL (5.42%) and ONGC (4.80%), gaining on lower crude oil prices. Crude oil declined by 1% to $94 per barrel in international markets from a close of $95 on 15 August 2014. Crude oil has eased considerably from a peak of $106 seen on 20 June 2014.
 
Among other gainers on the Nifty were Cipla (5.05%), Axis Bank (4.78%) and Tata Motors (4.22%). Cipla’s June quarter results reported that its operating margins increased by 4 percentage points to 20% sequentially. The management maintained its revenue guidance for FY2015-16. Tata Motors reported a 12.24% increase in sales, year-on-year for luxury brand Jaguar Land Rover, in the month of July.
 
Software and IT stocks declined on fears of the appreciation of the rupee. Three software stocks were among the bottom five losers on the Nifty. ITC (-1.86%), Infosys (-1.51%), HDFC (-1.09%), HCL Technologies (-1.04%) and TCS (-0.75%) were at bottom of the 30-share list. The rupee closed on a strong note on Thursday, below the Rs61 per dollar level.
Delivering his first Independence Day speech on Friday, Prime Minister Narendra Modi emphasised the need for better governance. He further mentioned that he wanted to turn India into a manufacturing and export powerhouse, coupled with employment generation. Modi also proposed an ambitious financial inclusion plan, to enable the poor to open bank accounts, with an insurance cover of Rs1 lakh. 
 
Among the NSE’s sector indices, the CNX PSE (Public Sector Enterprise) index, and the CPSE index were the biggest gainers, rising 2.92% and 2.72%, respectively. The gains were also supported by a rally in the stocks of oil marketing companies as well. The government is also said to be planning to launch a new exchange traded fund with SUUTI and PSU stakes.
 
A new set of guidelines is expected to be announced shortly for appointment of independent directors on bank boards. According to newspaper reports, the government wants to split the role of the chairman and managing director of the PSU banks. It says that the chairman would be a reputed person from the industry while the managing director-CEO will run the daily functioning of the bank. The MD would have a fixed term of three years, which could be extended by two more years. The Bank Nifty gained 2.92% while the CNK PSU Bank index gained 2.22%.
 
Among the losers were the CNX FMCG index and the CNX IT Index which declined by 0.45% and 0.47% respectively.
 
Trading volumes on the NSE was lower compared to that on 14th August. The exchange recorded a trading volume of 793 million shares on Monday compared to 903 million shares traded on Thursday. Foreign investors had pumped in Rs625 crore on Thursday, marking the third day of consecutive inflows.
 
In the world market, a few Asian indices closed the day’s trade in the red. The benchmark indices of Taiwan, Singapore and South Korea closed lower. China’s Shanghai Composite index closed in the black even though China’s new-home prices declined in July. Prices fell in 64 of the 70 cities last month from June, according to the National Bureau of Statistics. 
 
Later in the day, European stocks rallied on expectations of easing measures by the European Central Bank (ECB). The ECB is speculated to begin quantitative easing to strengthen the faltering recovery in the region. The US is to report private sector data on the housing market later in the day. US index futures were trading sharply higher in premarket trading.

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Rajasthan ACB files FIR against directors of private firm, UltraTech Cement
Rajasthan ACB has registered case of fraud and corruption against four directors of a private company, three directors  of UltraTech Cement and senior  officials of its mining department in a case of lease transfer in Nagaur district
 
The Rajasthan Anti-Corruption Bureau (ACB) has filed a first information report (FIR) against senior officials from the Mines Department, former shareholders of Gotan Limestone Khanji Udyog Pvt Ltd and three directors of UltraTech Cement, for alleged illegal transfer of a limestone mine in Gotan area in Nagaur district.
 
The FIR was filed on a complaint by BJP leader Kirit Somaiya against Ram Vallabh Chauhan, Suresh Chauhan, Ramesh Chauhan and Ram Avtar Chauhan, all former shareholders of Gotan Limestone Khanji Udyog Pvt Ltd, its present directors CK Birla, Rahul Mahnot and MB Aggarwal (all three directors of UltraTech), the Director of Mines and Geology and other concerned officials of the department, an ACB official said.
 
The matter is related to the leas of 1,000 hectares of land near Dhanapa village in Nagaur district, which in 1984 was allotted to partnership firm Gotan Limestone Khanij Udyog. Its partners, formed a private limited company, Gotan Limestone Khanji Udyog Pvt Ltd in March 2012 and got the lease transferred, despite the rule that lease of natural resources cannot be transferred or sold or sub-leased, under political influence during the previous regime, complainant Somaiya had alleged in his complaint submitted in May this year.
 
"After the lease was transferred, the company sold its stake to UltraTech in August 2012. The four shareholders (Chauhan brothers) resigned and three directors of the UtraTech Cement (CK Birla, Rahul Mahnot and MB Aggarwal) took over. This way, the lease was sold to UltraTech Cement under a conspiracy and the Mines department officials facilitated it," Somaiya alleged.
 
After verification of the facts and examining papers, the FIR was registered against the accused under relevant sections of the IPC and the Prevention of Corruption Act, according to the ACB official.

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Why Kumar Birla’s rumoured exit from Living Media is no surprise
Kumar Birla had called media a 'sunrise sector’ in 2012 with one the best opportunities for ‘value creation'. We had disagreed, calling it a messy, unprofitable and sunset sector
 
Aditya Birla group, which in May 2012 bought 27.5% stake in Living Media India Ltd, a holding company of TV Today Network, claiming media as a 'sunrise sector' is planning to exit from the Aroon Purie-controlled media group, say media reports. This would not be a surprise for the readers of Moneylife. More than two years ago when Kumar Birla had invested in Living Media, declaring that media was a sunrise sector, we were deeply sceptical of the move and how this (the deal) will play out. Immediately after the deal, Moneylife had said that Kumar Mangalam Birla's investment was not in a 'sunrise' but in a messy, unprofitable and sunset sector
 
In May 2012, IGH Holdings Private Ltd (IGH), an investment company of industrialist Kumar Birla-led business conglomerate bought 27.5% stake in Living Media. Living Media is largest stakeholder in TV Today Network with its 57.02% stake. TV Today Network manages broadcasting assets of the group, including Aaj Tak and Headlines Today along. Living Media’s original business is printing (Thomson Press) and its publishing business with India Today as the flagship publication.
 
In their filing before the Competition Commission of India (CCI), both the companies have said that the said purchase of shares of Living Media by IGH may go up to a maximum of 49%, and the proposed acquisitions and valuation adjustments would be completed within six months from the end of FY2015-2016.
 
In a regulatory filing in May 2012, Kumar Mangalam Birla was quoted as saying, “the media sector is a sunrise sector from an investment point of view. I believe that Living Media India offers one of the best opportunities for growth and value creation.”
 
According to media sources, the Aditya Birla Group has invested over Rs350 crore to buy the stake, thus valuing Living Media at about Rs1,250 crore to Rs1,400 crore at that time. On 18 May 2012, the day when the deal was announced, TV Today Network closed at Rs54 on the BSE. Next trading day i.e. on 21st May, it hit the upper circuit of 20%, to close at Rs64.80. On Monday, 18 August 2014, TV Today Network was trading at around Rs153 to Rs159 on the BSE.
 
As per the details provided by the companies to CCI, there were certain conditions preceding the share subscription and purchase agreement (SSPA) which related to certain transfer to and from Living Media, pursuant to which some businesses of Living Media, including Thomson Press (India), its subsidiaries and some other businesses would be hived off.
 
After such transfers, the subsidiaries and associate firms of Living Media would include TV Today Network, ITAS Media, Today Retail Network, Today Merchandise, Harper Collins, Mail Today Newspapers, India Today Online, Universal Learn Today, Integrated Databases India and Automotive Exchange Pvt Ltd.
 
After the transaction, IGH would have had certain statutory rights in Living Media, along with the contractual rights of the shareholders agreement.
 
We had mentioned in 2012 that media is hardly a business. The economics of the media business in India has completely been vitiated over the past decade or so. It is not a business where the more efficient thrive. It is not a business which is delivering improved quality of products and services to masses. Indeed, many of the better media companies are financially crippled today because the competition for advertising revenues is too intense. So, why doesn’t the supply of media products and companies shrink? Because poor quality media companies are not pushed to the wall and do not go out of business. Their losses are supported by politicians and businessmen for their own vested interests.
 
Over the past two years, since the Aditya Birla group bought stake in Living Media, there have been multiple changes across the media. US media giant Turner Broadcasting System, which had surprised all by acquiring Imagine TV from NDTV, abruptly shut it down on 11 April 2012, in less than two years. Anil Ambani group reduced its stake in TV Today Network to 4.5% from 14.9%, while Oswal Greentech, promoted by Abhey Oswal, bought 14.2% stake in NDTV. However, the biggest deal was between Raghav Bahl and Reliance Industries Ltd. Bahl, the promoter of Network18 Media and Investments Ltd and TV18 Broadcast Ltd, in July 2014 sold majority and controlling stake to Independent Media Trust (IMT) a subsidiary of Reliance Industries Ltd (RIL).
 
According to Moneylife, none of these investments and exits was based on hard commercial considerations but on other considerations, ranging from influence-peddling to suspected hawala deals. If Kumar Birla had entered the media business with a commercial intent, probably he found the reality quite different from what he had imagined. Or, his entry or exit too was for reasons other than commercial. 

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COMMENTS

singaraju

3 years ago

You are talking about the past & present of Indian media sector - yes, messy & unprofitable. But you totally failed to notice the changes taking place. Investing is about the future not past - you are driving looking into rear-view mirror, not wind shields. Sorry for your poor analysis, you are missing something big. You better reserve your right to regrets!

MOHAN SIROYA

3 years ago

I only say, "Der Aayad Durust Aayad". Those houses who re still controlling Media, needless to say as already said by Sucheta, have other vested interests than the Commercial angle.

Prem Bajaj

3 years ago

Birla Group getting out of media. Ambani Group expanding and establishing its positions... is three something to all of this.

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