May sanity prevail post Liposuction of stock markets
The fall in the Indian equity market over last one week may have left investors poorer by a few lakh thousand crore rupees (market capitalisation of BSE reduced by Rs 14 lakh crore or USD 35 billion. This means it lost about 20% of its m-cap within seven trading sessions).
Post loss, however, the market looks slim and trim. The flab or the exuberance as some might say is gone to a great extent. Stocks had run a great mile in last few months with valuations for many marching beyond what fundamentals could support.
Now that the big crash is behind us, investors may see some value picks. However, care needs to be taken while selecting them as many are trading at a discount of as much as 50% to their pre-crash levels. So, almost entire market may look cheap at present.
There are some stocks that were not a party to the earlier rally in a big way. Especially the IT and pharma sector companies were laggards. Even though these scrips did not rise to staggering levels, they were got beaten during the last week’s turmoil. Thus, there is a chance that some of these may look good may be based on the dividend yield or the growth prospects. But, there are no easy answers and investors need to do some homework rather than depending upon the so called ‘sure shot’ tips from their brokers.
Labels: Money matters
RPower IPO: Costly dreams
The legend of late Dhirubhai Ambani and the aura behind it seems to be ever lasting. As expected, the IPO of Reliance Power (RPower) was fully subscribed within minutes of its opening. And within an hour, it was oversubscribed by 6-7 times.
Had Shakespeare known the Ambanis, he would have never asked what lies in a name? (That can also be true for the name Gandhi for that matter!!). It is difficult to find any other logic in the enthusiasm of investors towards RPower but the gravity pull of the name that promotes it. RPower is the big project of Anil Ambani, the youngest of the two sons of Dhirubhai.
As of now the company is in the business of selling dreams. It has plans to set up thousands of megawatts of power plants in India but all this is a part of distant future, as distant as next half a decade.
Ok, that was true even for Reliance Petroleum (RPL), a company promoted by the elder brother Mukesh Ambani. At the time of its IPO in mid-2006, RPL was not having any business operations to boast off, very similar to RPower. RPL had raised money to build a petroleum refinery, a project that would take at least 18-24 months to commence. But it needs to be noted that Reliance Industries, the promoter of RPL had an experience in building and running a world-class refinery of similar size. RPower on the other hand doesn’t enjoy this advantage. Reliance Energy, which holds 45% stake in RPower, lacks any major experience in power generation.
Thus, as it turns out, people are not minding to buy dreams at whatever cost. For a logical mind, the RPower IPO appears to be a high priced affair. This may get even pricier if it gets a good listing on the bourses. But the scrip may even be bought at a cheaper rate some time later. This may be a possibility given the long gestation period of the RPower’s projects and turbulent times on the bourses.
Labels: Money matters
A Gentlemen's game? No more ....
It seems that our cricketers are playing really well in Australia! How otherwise can one justify or even think of committing the cheating business that is going on at the Australian turf?
It was a mind numbing show of how a so called superior team can go to any level just to defend their superior status during the second test match. There is nothing much to write as nothing that happened yesterday could be explained using any logic. Also, most of the Indian media would nibble on this issue the whole of today.
The ball is in BCCI’s court and it needs to be seen what kind of reaction it adheres to. One thing is for sure, time has come for India to say enough is enough and show an attitude of denying any undue abhorrence. But this is easier said than done as it has been noticed in the past that financial interest of BCCI is bigger than the ethereal concepts of national pride and self esteem.
Labels: Cricket
