Analysts Picks

Aban Offshore
Reco price: Rs 4,886
Target price: Rs 6,150
Current market price: Rs 5075.95
Upside: 26 %
Brokerage: Anand Rathi
Anand Rathi expects phenomenal growth in Aban Offshore mainly due to the re-pricing of present contracts, deployment of new rigs, aggressive growth plans and the general buoyancy in the offshore rig market.

The recent buoyancy in crude oil prices has led to oil and gas companies urgently accelerating production and reserve accretion.

Going forward, the annual spend on offshore assets, world-wide, is estimated to rise from $193 billion in 2006 to $248 billion in four years. Looking at world rig addition of not more than 18 per cent in the next four years and a world-wide aging rig profile, day rates for offshore rigs are expected to remain firm.

The company has revised the pricing for some of its contracts to the tune of 2-3 times the day rates for its ongoing contracts. These provide visibility to the company's earnings, which the brokerage expects, to grow at a compounded annual rate of 61 per cent from FY07 to FY10.

Add to this, the company’s fleet will also see four new rigs delivered in the coming 18 months, which are likely to fetch premium rates. The stock trades at a price-earnings multiple of 8.1 times and an EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) of 6.4 times estimated FY10 earnings.

Anand Rathi puts a 12-month target price of Rs 6,150 based on 10 times estimated FY10 earning per share of Rs 615 and rates the stock an “outperformer”.

IVRCL Infrastructure
Reco price: Rs 485
Target price: Rs 571
Current market price: Rs 505
Upside: 18 %
Brokerage: India Infoline
IVRCL’s core construction business is on a strong footing buoyed by order inflows from water supply projects, its key area of strength.

Increasing government focus on enhancing water availability and strong outlook for industrial capex should translate into continued order inflow momentum in the segment.

Order inflows from irrigation and water supply projects is likely to gain further momentum as the Jawaharlal Nehru National Urban Renewal Mission, a central government sponsored programme, gathers steam. Projects totaling approximately Rs 19,800 crore have received funding approvals with water supply and sanitation projects constituting 70 per cent of the programme.

India Infoline estimates a 35 per cent compounded annual growth in IVRCL’s earnings over FY07-FY10, driven by strong growth in revenues and slight improvement in margins.

Listing of real estate subsidiary has helped set valuation benchmarks for the land assets. Value resident in build-operate-transfer (BOT) assets would gain visibility as the projects approach completion.

India Infoline recommends a “buy” with a target price of Rs 571, an 18 per cent upside from the recommendation price. At Rs 485, the stock traded at 32.7 times and 22.2 times estimated FY08 and FY09 earnings, respectively.

Dabur
Reco price: Rs 106.45
Target price: 130
Current market price: Rs 110.40
Upside: 22 %
Brokerage: Macquarie Research
Dabur’s growth in the past 2–3 quarters has been driven by the strong performance of the oral care, shampoo and home segments. These segments benefit from the expanding market and market share gains. Macquarie expects this to continue into 2008.

The brokerage expects Dabur to relaunch its toothpaste brand Meswak, a recently launched milk additive and surface cleaners. Further, the company may also launch some brand extensions in the health food and the ready-to-eat category.

In addition, Dabur continues to scout for acquisitions in its focus markets of Asia, Middle East and parts of Africa. The company plans to utilise its strong cash position to bring new brands into incumbent markets and enhance existing distribution network.

Macquarie expects Dabur’s earnings to be boosted by 3-5 per cent from FY09 onwards due to the company’s H&B retail initiative. The brokerage remains bullish on Dabur given its consistent track record of delivering 20-50 per cent earnings growth with margin expansion in each of the past five years. Macquarie rates the stock “outperform” with a 12-month target price of Rs 130.

MindTree Consulting
Reco price: Rs 430
Target price: 338
Current market price: Rs 434.90
Upside: -21%
Brokerage: IL&FS Investsmart
In FY07, MindTree derived 65 per cent of its revenues from application development, a project-based business. Since the impact of a potential slowdown in the US on project-based revenues is high, the company is exposed to the risk of instability in revenues.

In spite of higher offshore revenues, the company reported lower than normal operating margins at 18.6 per cent in FY07 and 16.2 per cent in Q2 FY08. Low utilisation and higher selling, general and administrative (SG&A) expenses have also impacted the margins.

Further, the brokerage believes that, although MindTree provides the gamut of services to its clients, its service offerings, apart from application development and maintenance are small and lack critical mass.

Despite enjoying long-term relationships with its clients, MindTree’s revenue per client is amongst the lowest in the industry, which makes it necessary for the company to mine its clients better.

MindTree is also exposed to the risk of fluctuations in the rupee-dollar exchange rate. The rupee has already appreciated by about 13 per cent in the first half of FY08, impacting the company’s growth in revenues and profitability. MindTree is expected to post an earning per share of Rs 28.2 and Rs 33 in FY08 and FY09 respectively, implying a two-year EPS compounded annual growth rate (CAGR) of 17.54 per cent.

The brokerage assigns the company a price-earnings multiple of 10.3 times estimated FY09 earnings, and hence arrives at a target price of Rs 338, which is 21 per cent lower than the current market price. The brokerage recommends a “sell”.

Current market price as on November 16

Analysts Picks

Raymond
CMP: Rs 427
Target Price: Rs 475
CITI has reiterated a 'buy' rating on Raymond while increasing the target price to Rs 475 after taking into account the company's thrust on branded retailing and core worsted fabric business. According to the brokerage, the company is planning to expand its brand portfolio and network of 430 stores in FY07 by adding 100-plus stores by March 2008.

“The recent launch of Park Avenue and Colorplus brands in women's wear has received an encouraging response. We forecast revenues CAGR of 15% over FY07-10E and higher EBITDA margins of 10% (versus 5-6% of peers) given its premium positioning; however, near-term earnings could be muted due to store roll-outs,” adds the report.

The report further says that most of Raymond's garmenting subsidiaries and fabric joint ventures, except the denim business have showed an improved performance in second quarter of FY08. “We believe this could be early signs of these businesses starting to contribute towards Raymond's overall growth going forward,” it goes on to add.

Everest Kanto Cylinders
CMP: Rs 349.45
Target Price: NA
Prabhudas Lilladher has lowered the rating on Everest Kanto Cylinders to 'underperformer' on account of concerns like high gestation projects, highly skewed segmental results and creation of low yield capacities. According to the brokerage, the company had raised around Rs 2.40 billion in the last one year, which have been earmarked for taking its cylinder manufacturing capacity from 0.606 million units in FY06 (no expansion in FY07) to 1.421 million units by the end of FY09.

“Considering the threat of high project gestation periods, these funds will pull RoCE down from 24.6% in FY06. We expect the RoCE to fall to 17.4% in FY09. This may limit valuation expansion, which at 22.4 times FY09E (with EV/E at 13.3) is at a lifetime peak”, says the report. According to the brokerage, the one-year forward rolling PE chart clearly outlines the recent jump in valuation.

“After trading around the 20 times PE multiple for seven months till October 2007, the current rolling PE at 25.5 times indicates a 27.7% jump in just a fortnight”, says the report. We believe that the company's rich valuation clearly ignores the emerging concerns and hence we expect a correction, it adds.

Nestle India
CMP: Rs 1,395
Target Price: Rs 1,768
Motilal Oswal Securities has maintained a 'buy' on Nestle India with a target price of Rs 1,768 after factoring in the strong pickup in growth and the company's position to tap huge opportunity in processed foods. “Food processing is likely to emerge as one of the fastest growing areas due to changing lifestyles and trends.

The company is uniquely placed to exploit this growth opportunity on account of strong brands, technology support from parent and ability to launch a variety of nutritional products,” says the report. The brokerage also feels that strong brands and launch of new products and variants would enable the company post sales and PAT growth of 17.2% and 24% over CY07-09. “The stock trades at 25.1 times CY08E and 20.5 times CY09E earnings. (We) maintain buy with target price of Rs 1,768”, adds the report.

State Bank of India
CMP: Rs 2,279.60
Target Price: NA

Emkay Research has recommended a 'hold' for State Bank of India (SBI) as it feels that the stock will show upward momentum due to possible positives like the rights issue and a re-rating based on FY10 estimates a quarter down the line. “SBI has plans to raise anywhere between Rs 100 billion to Rs 180 billion through a rights issue”, says the report adding that “SBI's Tier-I CAR should comfortably remain above 8% after raising the fresh capital including equity. We expect the bank to maintain risk capital levels above 11.5% in FY08 and FY09.”

The report further says that according to the SBI management's estimates, the bank shall need about Rs 500 billion over a period of next five years to meet its business expansion plans. SBI has already raised Rs 100 billion in the current financial year through a mix of Tier-I and Tier-II debt”, it adds.

In terms of valuations, the report adds that the SOTP (some of the parts) calculation reveals a consolidated value of Rs 2,276 that includes SBI, banking subsidiaries, SBI Life, SBI MF and strategic investments in UTI MF and NSE. “Though the scrip trades above our fair value, we recommend hold”, adds the report.

Disclaimer: The above stocks are picked up at random from research reports of brokerage houses. Investors are advised to use their own judgement before acting on these recommendations.

HDFC Unit Linked Pension Plan - Invest

HDFC Unit Linked Pension Plan could give you a bigger corpus for your retired years
Unit-linked Pension Plan (ULPP) from HDFC Standard Life Insurance Company (HSLIC) is different from traditional pension plans in that the flexibility of a unit-linked plan could get you higher returns over the long term.

Features: ULPP invests premiums (minimum of Rs 10,000), net of all charges, in your chosen fund till the time you want your pension to start. This is called the accumulation phase, which can be 10-40 years. The vesting age, when pension payments start, is 50-75 years. You can enter the plan between 18 and 65 years of age.

This plan has no life cover and, therefore, no mortality charges. If the policyholder dies during the accumulation phase, the nominee gets the fund value and the policy ends.

Options during accumulation phase. First, you have to decide the annual premium and the vesting age. Premiums go into one or more of the seven fund options, which you can change any time. Ideally, go for the growth fund option during the initial years and then move to less riskier options as you get closer to the vesting age.

Options at vesting age. There is no option to get the entire accumulated fund at vesting age. The maximum you get as a lumpsum is a third of the fund value, tax free. On the remaining two-thirds, the insurer starts paying you a regular pension based mainly on the then prevailing interest rates. You have the option of shifting your corpus to any life insurer which you think will give you a higher pension.

Early exit: Since ULPP is a long-term plan, early exits should be avoided. If you don't want to exit, but would not like to pay regular premiums, you can stop doing so after the first three years.

Funds already invested would grow till vesting age and then pension would be payable. Ideally, this feature should be used only in case of an emergency

Costs: HSLIC has fewer charges than most other insurers. The front-end premium allocation charge is 25 per cent for years one and two for annual premiums up to Rs 1.99 lakh, and 1 per cent the third year onwards. Policy administration charge of Rs 20 per month is applied on the fund value all through the term of the policy. The fund management charge is the lowest among all insurers at 0.8 per cent of the fund value across all fund options. The lower FMC leaves that much more in your fund, which can become a substantial amount at vesting age.
Performance. The portfolio is disclosed every month. The website has a chart analysis showing year-on-year performance of funds against a comparable market index through the 'rolling performance'. As on 30 September, the growth fund, which is actively managed, was 96.54 per cent exposed to equity. It had invested in more than
18 sectors, with about 56 per cent in capital goods, finance, transport equipment and oil (see At A Glance).

What to do: This is the unit-linked pension plan with the lowest fund management charge. The clarity in the structure of charges makes it easier to understand. Over the long term, the fund has shown higher than benchmark returns. A must-consider if you are planning retirement finances.

This report is not to be considered as an offer to sell or the solicitation of an offer to buy any stock or fund or derivative in any jurisdiction where such an offer or solicitation would be illegal.It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser

The Party is still on...

Don't miss this one. And use the regular investing mantra—it still works

For each 1,000 points that the Sensex soars, the collective heart of household savers and investors sinks a few notches more. With under 5 per cent of the household savings in the market, the average retail investor has watched the party from the sidelights. As this market gallops ahead, it gets increasingly clear that the rhetoric of the index collapsing back to 4,000 has been just that. Empty rhetoric. But we’ve not been totally left out of the ongoing mass affluent urban Indian party. As employees, we’ve made great career moves and got better jobs and higher hikes. As consumers, we’ve celebrated with our shopping baskets—our purchase list now shows more comforts and luxuries and a smaller proportion goes towards basic food.

While we’ve made the transition into behaving like workers and consumers of an economy growing at 9 per cent, our investment habits remain ancient. Even those who invest in stocks find that less than 10-15 per cent of their total portfolio is in the market. A large chunk that we forget to include in our asset allocation is the contribution to provident fund—a good 24 per cent of our basic salary. Almost a quarter of our monthly surplus is growing at 8.5 per cent. The Sensex returned 51.34 per cent between 1 November 2006 and 1 November 2007. One calculation shows that the provident fund money condemned to earning risk-free returns would have done upwards of 22 per cent in the last three years had a small part of the total corpus been invested in an exchange-based index fund. Clearly, an upgrade is needed in our investing habits. The fear factor today is: are the markets too high, should we be getting in at these levels? These questions was asked each time the Sensex breached 1,000 points from 6,000 points onwards. The question is valid for a bullet one-time investment, but for those with ongoing investment plans, there seems to be little reason to suddenly liquidate all investments and sit on cash.

With growth rates predicted to continue in the range of 8 to 10 per cent a year for the next decade and more, it's still not too late to participate in the bull run. What to do now? Pull out the simple boring wisdom once again. Apportion a part of your money for stocks—directly or indirectly—and invest in the market every month, irrespective of where the market is. And stay away from the three emotions that cost big money. Remove fear, the biggest reason why we are missing this party. ‘What if my money loses value?’ is the question that first-time investors ask, but remember, nobody builds wealth by zero-risk investing. Remove greed, which accompanies sure-shot stock tips. The greed for quick, no-effort money has pushed many to take risks that far exceed their risk appetite. The market usually punishes greed. Remove overconfidence. Small successes at the beginning of the investing career make people take the rapids without adequate training, saying: I can beat the market. But it is the market that usually beats them. What do you need? Level-headedness, stability, commitment and hard work. Just good old boring stuff that still works.

On Insurance

What is a traditional insurance plan and is it better than Ulip?
The traditional insurance plan is called traditional because it has been around for many years. Ulip means a unit-linked insurance plan. It was introduced in the Indian market at the turn of the millennium. In a Ulip, the customer decides whether he wants to invest his money in equity, debt or money markets; in traditional plans, the money is invested in a predetermined manner as decided by the insurer within the guidelines laid down by the regulator. A traditional insurance plan, by and large, has some inbuilt guarantees which assure you a certain sum, both in the event of death and maturity. Many traditional plans also have guaranteed returns over and above this sum assured. Hence, the sum assured plus the returns are guaranteed.
In Ulip, usually the sum assured is guaranteed on death only. Also, in Ulip, you will assume the investment risk and participate in possibly higher returns as well.
I am 39 and earn Rs20,000 per month. I have five life insurance (endowment) policies worth Rs5.6 lakh, with an annual premium of Rs32,000. Please advise me whether the existing policies will cover my insurance requirements.
The human life value (HLV) of a person at your age should be around 10-12 times the annual earnings. This is a thumb rule. The sum insured should be equal to an amount which, if invested, should fetch a regular income for the dependants of the insured. In case there are any liabilities, these should be added to the amount of insurance required.The life insurance plans taken by you are of an endowment type (that is, a mix of savings and protection). I would recommend you take a pure term policy which will cost you around Rs8,500 per annum and will give you a cover of close to Rs15 lakh for 25 years. This will also depend on your health parameters. If you have children, you also need to invest in a plan with a greater savings component.

This week’s expert is Rajesh Relan, managing director, MetLife.

Rising oil wealth taking Islamic banking to financial mainstream

Wealthy Arabs shifting funds from US, UK to cash in on Asia’s growth and avoid scrutiny; fuel Islamic financing rush
Rising oil wealth is lifting Islamic banking—banking that adheres to the laws of the Quran and its prohibition against charging interest—into the financial mainstream.
Big banks, including Citigroup, HSBC and Deutsche Bank, as well as financialcapitals such as London, Tokyo and Hong Kong, are all going into the Islamic banking business. An estimated 300 Islamic financial institutions hold at least $500 billion (Rs1,970,000 crore) in assets, and deposits are increasing more than 10% a year.
In addition to Islamic loans, there are Islamic bonds, Islamic credit cards and even Islamic derivatives. Loans and bonds that conform to the Quran are already available in the United States (US). And Britain, Japan and Thailand are contemplating issuing Islamic bonds of their own.
In Islamic banking, financiers are required to share borrowers’ risks, meaning that depositors are treated more like shareholders, earning a portion of profits. Financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
“This is an industry on its way from a niche industry to becoming a truly global industry,” said Khawaja Mohammad Salman Younis, the managing director for operations in Malaysia for Kuwait Finance House, the world’s second-largest Islamic bank after Al-Rajhi Bank. “In the next three to five years you’ll see Islamic banks coming out in Australia, China, Japan and other parts of the world.”
The stampede into Islamic finance is mostly an effort to tap an estimated $1.5 trillion of funds sloshing around West Asia, largely from higher oil prices. While a lot of this oil money was parked in the US, Britain and Switzerland before 11 September 2001, bankers say many wealthy Arabs are investing closer home, in partto avoid increased scrutiny.At the same time, many West Asian investors are eager to capitalize on Asia’s break-neck growth.
By some estimates, as much as $800 billion of Arab money has moved from the US and Europe to other regions. Those investments have helped spark an economic revival throughout the Muslim world at a time of increasing religious conservatism among Islam’s 1.6 billion faithful.
The result is expanding demand for financial services that adhere to Islamic law, or Shariah. “The middle class have the luxury of making these Islamic versus non-Islamic decisions,” said Nordin Abdullah, who runs KasehDia, a firm in Kuala Lumpur that advises companies on how to comply with Shariah. “They’re educated and have money.”
Last year, Saudi Arabia’s largest lender, National Commercial Bank, overhauled its entire retail business to make it Shariah-compliant. Tunisia and Morocco authorized their first Islamic banks this year.
And while the biggest Islamic banks are in the wealthy Gulf states, the most attractive potential markets are Turkey and in North Africa, and among Europe’s Muslims. Indonesia, the most populous Muslim nation with more than 190 million Muslims, is the mother lode.

Once market darling, Infosys now a pariah

Shares of the Bangalore-headquartered Infosys closed at Rs1,558 on Friday, continuing a losing streak that began in mid-February

Infosys Technologies Ltd, for long India’s software bellwether stock and the bulwark of many a respected portfolio, has lost more than Rs43,631.95 crore—equivalent to 32.9%—of its value, measured by market capitalization, in the past nine months. Foreign institutional investors, or FIIs, have stopped chasing the blue-chip stock even as the rising rupee and fear of the impact of the US subprime crisis on that economy’s financial services industry continue to hurt the outlook for its future revenues.
Shares of the Bangalore-headquartered Infosys closed at Rs1,558 on Friday, continuing a losing streak that began in mid-February, when the stock hit Rs2,415, the highest in the last 12 months. At Friday’s price, Infosys’ market cap is Rs88,994.50 crore.
The share of FII ownership in Infosys has declined from 36.1% at the end of the second quarter of fiscal 2007 to 32.7% at the end of the quarter just gone by. Investors such as Merrill Lynch Capital Markets España and Copthall Mauritius Investments Ltd have partly pared their stake.

STAKING IT AT INFOSYS
Local mutual funds (MFs) have also pruned their Infosys ownership. The quantum of stake held by MFs in the firm was about 3.9% at the end of September 2006; at the end of the second quarter this fiscal, it dropped to 2.9%. Other private investor groups have also cut their holdings in Infosys.
The two other Indian IT giants, Tata Consultancy Services Ltd (TCS) and Wipro Ltd, have also seen significant erosion in their market cap.
While Wipro lost 34.8% of its share price, TCS lost about 24% in the past nine months. However, unlike in the case of Infosys, FIIs have not cut their exposure to TCS and Wipro. On the other hand, they have accumulated these two stocks in the year gone by. FII ownership in TCS went up as high as 8.1% from just 5.9% a year ago.
Analysts say two factors—the information technology (IT) spending by financial services firms in the US and the change in rupee’s value against the dollar—will weigh heavily on the Infosys stock in the coming weeks. Infosys derives 37% of its revenue from clients—a bulk of who operate in the US—in the banking and financial services industry, most of who have been affected by the subprime lending crisis in the US. Tech forecasting firms have predicted a flat growth—5-6%—in tech spending in 2008, but a final picture will emerge in the coming weeks when large US corporations firm up their budgets.
Any change in the IT budgets of the US financial services firms will be known only around January or February 2008, says Pankaj Kapoor, who tracks Infosys for ABN Amro Securities Ltd. “Until then, the Infy (Infosys) stock is likely to trade in a neutral territory.”
However, there is no indication from any of its clients in the US financial services sector of potentially shrinking their IT spends, says Shekhar Narayanan, an investor relations executive at Infosys, adding the firm is increasing its revenue exposure in other economies.
“It is a challenging situation,” says Narayanan. “We are largely diversifying into other markets and business verticals. We are negotiating potential acquisitions in Japan and in the European region, mainly Germany and France, in the $50-200 million (Rs198-792 crore) range. Also, we have decided to concentrate more on niche areas such as management consulting and enterprise resource planning (ERP).” Such niche businesses are profitable.
And the rupee, the currency that Indian tech vendors meet expenses with locally, has gained more than 10% since the beginning of this year, against the dollar, putting extra pressure on its profits.
Nimesh Mistry, a Mumbai analyst at Man Financial, the brokerage arm of MF Global, calls it a “double whammy” for Infosys. “If there is another interest rate cut from the US Federal Reserve, the rupee will continue its sharp appreciation, leading to lower profit margin for Infosys. On the other hand, if the Fed does not cut rates, the worries in the financial services sector in the US will continue to increase, which could lead to lower IT spends,” says Mistry.
The Federal open market committee of the US Fed will meet in December to formulate its monetary policy.
There might be trading opportunities in large IT counters in the short- and mid-term, according to N. Krishnan, head of equity research in India at CLSA India Ltd, the arm of CLSA Asia-Pacific Markets. “However, the long-term outlook on the IT sector is highly bearish,” he says.
Still, there are some investors who still believe Infosys is a “buy”. India’s largest domestic investor Life Insurance Corp. of India Ltd (LIC), for instance, has been accumulating Infosys shares in past nine months. LIC’s shareholding in the company has gone up from 1.9% in December 2006 to 3.1% in September 2007.
Some FIIs, such as government of Singapore, Fidelity Management & Research and Abu Dhabi Investment Authority, too, have increased their exposure to Infosys.

Bull & Bear Markets

I was recently asked, “Where do the names Bull and Bear market come from?”.

Starting with the basics, a ‘Bull Market’ is a term used to describe a stock market that is increasing in value. It is characterised by optimism, investor confidence and expectations of continued growth. A ‘Bear Market’ is a term used to describe a stock market that is decreasing in value. It is characterised by periods of pessimism, lack of investor confidence and general feelings of doom, gloom and despair about the future of the stock market.

The term Bull Market is derived from how a Bull attacks an opponent. When a Bull attacks it does so by thrusting its head & horns upward and in doing so throws its opponent into the air. By doing so the Bull’s opponent rises into the air, hence the term ‘Bull Market’ to describe a stock market that is increasing, or rising, in value. When a stock increases quickly in value, its price movement is described as ‘bullish’.

The term Bear Market is derived from how a Bear attacks an opponent. When a Bear attacks it does so by rising up on its hind legs and attacks its opponent by pulling it to the ground using its claws and body weight. By doing so the Bear’s opponent is either thrown to the ground or crushed in to the ground, hence the term ‘Bear Market’ to describe a stock market that is decreasing, or falling, in value. When a stock decreases quickly in value, its price movement is described as ‘bearish’

Kolte Patil public offer oversold 45 times; to use funds for growth

The company entered the capital market with a public issue at a price band between Rs125 and Rs145 per equity share
The initial public offering (IPO) of Pune-based real estate developer Kolte Patil Developers Ltd has been oversubscribed 45 times on the closing day of the issue, which suggests that investors still have a large appetite for real estate stocks, even though their values have softened in the last six months because of rising interest rates.
According to PTI, the issue received bids for 857.6 million shares, against 19 million shares on offer as of 8.30pm on Thursday. The offer opened for subscription on 19 November and closed on 22 November.
The company entered the capital market with a public issue at a price band between Rs125 and Rs145 per equity share.
The issue makes up 25.25% of the post issue paid-up equity capital of Kolte Patil. The company will use the money to finance the acquisition of development rights, finance the construction and development costs for some of the proposed projects, and fund expenditure for general corporate purposes. Kolte Patil develops residential and commercial properties, a majority of them in Pune and Bangalore.
As of 30 September, Kolte Patil developed and constructed 25 projects, including 22 in Pune and three in Bangalore.
Promoted by Rajesh Patil and Milind Kolte, the firm has been in the real estate development business since 1991. As of 30 September, the company has a land bank of 32.88 million sq. ft.
It plans to expand its footprint into Hyderabad, Chennai, Nashik, Goa, Nagpur, Aurangabad and Mysore. Analysts, who were willing to be quoted on the record, could not be reached for this story. However, they said the price band was very reasonable and would attract investors.
The downside is that Kolte Patil’s projects are concentrated only in a few cities compared with developers with larger scale and property in markets in various stages of maturity in terms of development. Kolte Patil’s IPO comes before the proposed public offer of real estate developer Emaar MGF Land Ltd. Emaar MGF, a joint venture of Dubai-based property developer Emaar Properties PJSC and India’s MGF Developments Ltd, recently filed its draft red herring prospectus with the Securities and Exchange Board of India for its IPO of 117 million shares.
According to investment bankers close to the issue, Emaar MGF could raise Rs4,000-6,000 crore from the issue, which would make it the second largest real estate offering after that of DLF Ltd, which mopped up about Rs9,000 crore earlier this year.
This year, several real estate developers such as Omaxe Ltd, and Puravankara Projects Ltd raised money from the capital markets as traditional sources of funding, such as bank loans, have dried up.
Not all firms have had issues that were greeted with overwhelming interest from a majority of investors. Puravankara Projects had to revise the terms of its issue after it failed to find enough takers for the offer.
Still, real estate developers have been queuing up to raise money from selling equity., after India’s central bank, the Reserve Bank of India, asked banks to go slow on lending to the realty sector on fears that easy availability of funds will lead to a bubble in the real estate sector.

AXIS Bank - Buy

A Leading Research Firm in its report comments...
Axis Bank surpassed our expectations in Q2’08 by registering a strong 60.5% yoy increase in net profit to Rs. 2.2 bn. Net interest income grew 72.9% yoy to Rs. 5.8 bn on account of lower cost of funds, which, in turn, also led to an impressive increase in NIM by 36 bps yoy to 3.28%.
Besides displaying a robust growth in advances and deposits, the Bank’s asset quality improved significantly with net NPA ratio declining 19 bps yoy to 0.55%. Further, the capital adequacy ratio of the Bank rose 607 bps yoy to 17.6% due to the capital infusion of Rs. 45.3 bn during the quarter. Based on the strong numbers in Q2’08, we increase our target EPS for FY08E by 8.5% to Rs. 26.8.

We maintain our positive outlook on the Axis Bank based on its strong business model, high CASA ratio, and increasing NIM. The Bank is well poised for a strong growth in its balance sheet on account of recent capital infusion. It is aggressively expanding the retail business and also foraying into asset management business. Given such strong results and the likelihood of similar performance in the future, we maintain our Buy rating on the stock.

This report is not to be considered as an offer to sell or the solicitation of an offer to buy any stock or derivative in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser

Markets on Monday

Anuj Anandwala, analyst, KJMC Capital Services, said that market had a extremely volatile session today (November 23), but closed on a strong note. Sensex was up 326 points at 18,853 and Nifty ended up 89 points at 5,608.

Realty, power and metal sector outperformed markets today. Three bomb-blasts at UP affected market only for few minutes, said Anuj. Overall, it was a troubled week for the markets. Pressure was there due to weak global markets, recession in US economy and Rupee Dollar issue. In this entire week selling was seen at higher levels pulling markets down.

He expects an upside opening on Monday as the government has sanctioned pension funds.

Since banking sector ended weak, some buying can be seen in them and movement would be there in fertilizer stocks. Markets are likely to trade above 19,000 on Monday, he added.

Rohit Mehta, Head Equities, Dimpi Investments, stated that after a pretty volatile session market closed firm. Realty and power stocks performed well at the bourses.

He says that overall market looks good and expects a positive opening on Monday but will continue to take cues from other global markets. Inflows are still strong, International markets are not much worried about recession in US and sub-prime crisis. There are no major outflows seen from domestic fund houses, which is a positive sign for the economy.

One can do value picking from FMCG and pharma sector and also from IT which has been battered down, he added.

Inflation dipped 3.01% in the week ended 10 Nov 07

The market estimate stood at 3.20%

Annual inflation, based on the wholesale price index (WPI), dipped 3.01% in the week ended 10 November 2007 compared with 3.11% in the week ended 3 November 2007.

The market estimate stood at 3.20%. WPI stood at 5.39% in the corresponding week in the previous year.

The slight fall was due to lower prices of fruits, vegetables, condiments and spices. Prices of primary articles declined 0.4%.

Manufactured products became dearer by 0.1% from the previous week. The index for the fuel group remained unchanged.

Annual inflation rate for the week ended 15 September 2007 was revised upwards to 3.51% as opposed to 3.23% reported earlier.

Sensex gains 327 points on bargain hunting

The market shrugged off blasts in Uttar Pradesh and galloped in late trade on a volatile day of trading. It snapped the last six day losses by posting decent gains today. Reliance Industries surged in late trade. Reports of three blasts in Uttar Pradesh had pulled the market off higher level in mid-afternoon trade. It instantly recovered from lower level later. Earlier, the market had surged in afternoon trade.

Three consecutive blasts outside civil courts in Lucknow, Varanasi and Faizabad in Uttar Pradesh today killed five people and injured many more.

Capital goods, power, realty, metal stocks gained. Reliance Energy and DLF were the major gainers whereas Maruti Suzuki india and HDFC Bank were major losers from Sensex pack. The market breadth was strong. European markets which opened after Indian market were firm. Asian markets, which opened before Indian market, were mixed.

India's wholesale price index rose 3.01% in the 12 months to 10 November 2007, below the previous week's rise of 3.11%, government data released today afternoon showed. The annual inflation rate was 5.39% during the corresponding week of the previous year.

The 30-share BSE Sensex rose 326.55 points or 1.76% at 18,852.87. Sensex hit a low of 18,548.05 in mid-afternoon trade. At day's low, Sensex was up just 21.74 points for the day. Sensex hit a high of 18,910.46 in early afternoon trade. At day’s high of 18,910.46, Sensex had gained 384.14 points.

The S&P CNX Nifty rose 89.25 points or 1.62% to 5,608.60.

BSE clocked a turnover of Rs 6140 crore, lower than Thursday (22 November 2007)'s Rs 7,127.32 crore.

Nifty November 2007 futures were at 5620, at a premium of 11.40 points as compared to spot closing of 5608.60.

NSE’s futures & options (F&O) segment turnover was Rs 66,744.48 crore, which was lower than Rs 71,149.36 crore on Thursday, 22 November 2007.

The market breadth was strong. On BSE, 1,727 stocks advanced, 1,034 stocks declined and 33 stocks were unchanged. 22 out of 30 stocks from the Sensex pack were in the green.

The BSE Mid-Cap index rose 1.7% to 8,228.50 and the BSE Small-Cap index up 1.1% to 10,171.43. Both these indices underperformed Sensex.

BSE Auto index (up 1.49% to 5,256.55), BSE Bankex (up 0.08% to 10,414.36), BSE FMCG (up 0.36% to 2,111.34), BSE Health Care index (up 0.01% to 3,810.92), BSE IT index (up 1.44% to 4,017.10) and BSE PSU index (up 0.81% to 9,502.09) underperformed Sensex.

BSE Capital Goods index (up 2.66% to 19,316.12), BSE Metal index (up 3.42% to 16,594.08), BSE Oil & Gas index (up 2.53% to 11,987.47), BSE Power index (up 3.16% to 4,282.35) and BSE Realty (up 3.45% to 9,783.36) outperformed Sensex.

Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries was up 3.03% to Rs 2,811.45.

Metal stocks surged in late trade. Sterlite Industries (up 4.6% to Rs 879.10), Steel Authority of India (up 1.94% to Rs 251.75),Hindalco Industries (up 0.86% to Rs 188.05) and Tata Steel (up 0.19% to Rs 820.50) edged higher.

India’s largest truck maker by sales Tata Motors rose 3.27% to Rs 714.65 after union leaders at Ford Motor Co's Land Rover and Jaguar brands agreed on Thursday, 22 November 2007, to support the Indian firm's bid for the brands. Tata Motors, Mahindra & Mahindra and buyout firm partner Apollo, and JP Morgan-backed One Equity Partners, are reportedly in race to acquire the Ford brands.

Power stocks surged. India's biggest power generation firm by revenue NTPC rose 3.98% to Rs 236.60. NTPC announced after market hours on Thursday, 22 November 2007 that the company and Uttar Pradesh Rajya Vidyut Utpadan Nigam (UPRVUNL) have signed a memorandum of understanding for the formation of a joint venture company (JVC) for establishing and operating a coal based thermal power project at Meja Tehsil or any other suitable site in Allahabad district in the state of Uttar Pradesh.

Reliance Energy (up 7.48% to Rs 1,725.10) and PowerGrid Corporation of India (up 6.59% to Rs 151.20) edged higher.

Realty stocks gained. India’s largest real estate developer by market capitalisation DLF rose 5.58% to Rs 868.65. As per reports, Fortis Healthcare and DLF are close to signing an agreement to set up 15 hospitals in the next five years on lands situated in the real estate giant’s townships in India. As per some other reports, leading US quick service restaurant (QSR) chains Burger King and Wendy's are having talks with India's largest real estate company DLF for a foray into the Indian market.

Indiabulls Real Estate (up 1.86% to Rs 614.05), Unitech (up 3.58% to Rs 339.95) edged higher.

Capital goods stocks surged. Larsen & Toubro (up 4.02% to Rs 4,100.50), Bharat Heavy Electricals (up 2.34% to Rs 2,543.20) and Suzlon Enegy (up 0.14% to Rs 1,859.75) edged higher.

India's biggest dedicated housing finance firm in terms of revenue HDFC rose 4.12% to Rs 2,666.30.

Maruti Suzuki India (down 2.07% to Rs 946.70) Cipla (down 0.93% to Rs 181.25) and ITC (down 0.57% to Rs 184.15), HDFC Bank (down 1.97% to Rs 1,562.70) and ONGC (down 0.32% to Rs 1,145.85) edged lower.

Jindal Steel rose 20.7% to Rs 12,096 and was the top gainer from A group shares on BSE. Neyveli Lignite (up 18.3% to Rs 214.30), Welspun Gujarat Stahl Rohren (up 7.7% to Rs 399.30), Escorts (up 8.42% to Rs 148.15) and Indian Bank (up 10.03% to Rs 166.75) edged higher.

Tata Teleservices Maharashtra rose 7.09% to Rs 48.35 and clocked the highest volume of 2.52 crore shares on BSE. Reliance Petroleum clocked the second highest volume of 1.75 crore and it rose 0.29% to Rs 209.50. Reliance Natural Resources clocked the third highest volume of 1.63 crore and it rose 6.75% to Rs 158.20. Ispat Industries rose1.16% to Rs 39.10 and clocked the fourth highest volume of 1.12 crore shares.Essar Oil rose 12.5% to Rs 194.45 and clocked the fifth highest volume of 1 crore shares.

Reliance Petroleum clocked the highest turnover of Rs 367.34 crore on BSE. Reliance Energy (Rs 291.3 crore), Reliance Natural Resources (Rs 252.75 crore), Reliance Industries (Rs 232.69 crore) and Reliance Capital (Rs 202.84 crore) were other turnover toppers on BSE in that order.

Khaitan Weaving Mills hit 5% upper circuit at 293.45 after it fixed 14 December 2007 as the record date for the purpose of determining the entitlement of right offer of equity shares in the ratio 6:1.

Shares in DCM Shriram Industries hit 5% upper circuit at Rs 88.05 on reports that the founders offered to raise the warrants subscription price to Rs 90 each from Rs 52 at a Company Law Board hearing. The move was in response to a petition from a large shareholder seeking a stay on the preferential issue of warrants due to low pricing.

Asian Oilfield Services hit 5% upper circuit at Rs 205.15. It announced after the market hours on Thursday, 22 November 2007 that a meeting of the board of directors of the company will be held on 23 November 2007, to consider the issue and allotment of equity shares and/or warrants on preferential basis to strategic investors.

European markets were firm. France’s CAC 40 (up 0.63% to 5,450.46), Germany’s DAX (up 0.26% to 7,581.80) and UK’s FTSE 100 (up 0.97% to 6,215.10) edged higher.

Asian markets were trading mixed today, 23 November 2007. Hong Kong's Hang Seng (up 2.06% at 26,541.09), China’s Sanghai Composite (up 0.96% to 5,032.13) and Singapore's Straits Times (up 0.39% to 3,325.89) rose. However, Taiwan's Taiwan Weighted (down 1.85% at 8,342.20) and South Korea's Seoul Composite (down 1.45% at 1,772.88), slipped. Japanese stocks market is closed today for Labour Thanksgiving Day.

US markets remained closed for Thanksgiving day yesterday, 22 November 2007.

Crude oil prices climbed back above $97 a barrel in thin trade on Friday, 23 November 2007 buoyed by the unrelenting decline in the US dollar. London Brent crude rose 35 cents to $94.85 a barrel, while U.S. light crude for January delivery stood at $97.35 a barrel.

Pay Slip - Decoding

It’s the pay cheque that gets all our attention with only a cursory glance being reserved for the pay slip. Many people disregard it completely, apart from the ‘net pay’ part of it, which they know very well in any case. The rest, be it deductions, allowances or taxes, is regulation babble our eyes are accustomed to skimming over. However, far from being an incomprehensible and useless piece of paper, a pay slip can give an indication of the current state of your finances and indicate the direction they are headed.

It can also give you signals for corrective action. “The CTC (cost to company) offered could be higher, but the in-hand salary may be lower; it’s the in-hand salary that one is interested in,” points out Vishal Chhiber, head of human resources, India, Kelly Services.

So, how do you decode the signals of a pay slip? Here’s an indicative guide of what the eight most important components commonly found in a pay slip are all about. Three other components could feature in a pay slip. One is the leave travel allowance (LTA)—paid for travel undertaken by you and your family within the country while on leave with tax breaks for a maximum of two journeys in a block of four calendar years. The second is medical reimbursements (on submission of relevant bills), tax-free up to Rs 15,000 annually. The third is a deduction of professional tax that varies from state to state with the maximum tax levied on you as a professional hovering around Rs 200 per month if you earn in excess of Rs 10,000 per month.

Basic
What’s this? It’s the monthly base amount you are entitled to. This is the biggest part of your pay, typically 50-60 per cent of your cost to the company (CTC). The basic tends to form a higher portion of the salary at junior levels. At senior levels, the proportion of basic goes down and variable pay components such as target-linked bonuses come into the picture. It is also the largest source of the income tax payout, be it at source (your employer), or at the end of the year.

Why it’s important? Your basic determines the other components of your pay, such as provident fund (PF) contribution (both by you and your employer) and house rent allowance. Entitlement to loans by employers and, sometimes, designations and salary grades are linked to the basic. Figure out your basic in the compensation package being offered in a new job to get a fix on your take-home pay.

Conveyance allowance
What’s this? This is paid to cover your work-related travel needs. Up to Rs 800 is exempt from tax every month.

Why it's important? This component helps make the pay more tax-efficient and influences the take home pay of those at lower levels of pay.

Performance Bonus
What’s this? This is pay that is linked to performance, often evaluated on the basis of pre-determined targets and other metrics. This comes to you as a lump sum at a certain time of the year. At the time of hiring, your employer might mention the minimum target or maximum amount you are entitled to under this head.

Why it's important? While this adds to your income, it also increases your tax payout as it is taxed at the applicable income tax rates. During an economic boom, as in the last few years, this tends to be high and, as a result, the tax payout doesn’t hurt as much. It is excellent for investments in higher risk, higher reward investments such as equity funds through staggered investments via systematic transfer plans (STP).

Education allowance
What’s this? Rs 100 per month per child is tax exempt for up to two children.

Why it's important? This combines with a deduction of tuition fees for a maximum of two children under Section 80C.

Loans From Employers
What’s this? When you take a loan from your employer, often at a concessional rate, you need to repay a portion of it every month, much like EMIs of commercial loans. This gets deducted from the pay every month. The differential between the market interest rate and the employer’s rate is taxable under the applicable tax rate.

Why it's important? It reduces your take-home pay and also your ability to service other loans.

House Rent Allowance (HRA)
What’s this? You are compulsorily entitled to a certain sum of money from your employer under the HRA subhead. This will vary with your designation and role in the band of 10-35 per cent of your Basic. HRA is exempt up to a certain limit provided you are actually paying house rent and furnish the lease document or rent receipts. The lowest of the following three amounts is exempt:

1. Fifty per cent of your Basic if you live in any of the four metros—Delhi, Mumbai, Kolkata or Chennai. Forty per cent of the Basic if you live in a non-metro.

2. Actual HRA received till the time you occupy a rented accommodation.

3. Rent paid in excess of 10 per cent of your Basic.

HRA in excess of the of the lowest of the above three amounts is taxable.

Why it's important. What follows from the above is that the tax outgo on HRA will be zero if HRA itself is the lowest of the above mentioned three amounts. That's the ideal situation as far as tax is concerned. That may not be possible all the time, but, from the tax point of view, your pay is more efficient if the HRA is lower.

Income Tax
What’s this? Tax deducted at source by your employer according to your tax slab. Currently, these slabs for working males are: Rs 1,10,001-Rs 1,50,000 is taxed at 10 per cent, Rs 1,50,001-2,50,000 is taxed at 20 per cent and salary above Rs 2,50,000 is taxed at 30 per cent. In addition, an educational cess of 3 per cent is levied. Employers take into account evidence of rent or lease receipts, tax-saving investments, among other things, while deducting taxes.

Why it's important? It influences your take-home pay. Your loan repayments should not exceed 45 per cent of your take-home pay. Deductions up to Rs 1 lakh under Section 80C and Rs 15,000 under Section 80D (for health cover premiums) can not only provide insurance cover and create wealth for you, but also save you taxes.

Provident Fund
What’s this? It is the mandatory deduction of 12 per cent of your Basic every month by your employer, who makes a matching contribution. The accumulations earn interest at a rate earn announced every year by the Central Board of Trustees of the Employees' Provident Fund Organisation (the last announced rate was 8.5 per cent). The contributions get tax exemption under Section 80C. A person may increase his own contribution up to 100 per cent of his Basic (there is no compulsion on the employer to increase its contribution beyond 12 per cent of the employee's Basic).

Why it's important. This funds retirement expenses. By default, it is a debt component in your investment portfolio. Supplement it with higher risk and higher growth investments to meet long-term goals such as retirement.

Brokers Outlook: Market momentum looks good for Friday

Rohit Mehta, head equities, Dimpi Investments, stated that markets opened in deep red in the morning hours of the trade due to weak global cues and selling pressure by FIIs. There was panic seen in the early trading session but eventually market recovered from its morning fall to close down 76 points at 18,526. Buying was seen in the entire Reliance pack during the end of the trading session. Overall market looks good, added Rohit, but volatility would hover till this month`s F&O expiry.

He expects market to move up by 200 to 300 points on Friday. Stocks recommended for trading are Reliance Industries and Reliance Petroleum.

Ashwin Gada, dealer, Networth Stock Broking, said that today (November 22) market was down 400 points in the morning session mirroring China`s Hang Sang index. It recovered almost 350 points in the last hours of the trading session to close at 18,526 level due to fund houses doing some major buying.

He expects market to remain positive in the next trading session. He is bullish on banking sector and recommends Dena Bank and Vijaya Bank for buying.

IT Sector Fact Sheet

Birla Sun Life Mutual Fund - Sector Rotation Fund

Birla Sun Life Mutual Fund has filed an offer document Birla Sun Life Sector Rotation Fund. It is 3 year close ended equity scheme with an automatic conversion into open ended on the expiry of 3 years from the date of allotment. The new fund offering (NFO) for the scheme will be Rs. 10 with an applicable entry load during NFO period. The fund house seeks to collect a minimum corpus of Rs. 1 crore for the scheme.

The minimum initial subscription amount is Rs. 5000 and in multiple of Re. 1 thereafter.

The scheme offers investors a growth option and a dividend payout option. The dividend option will offer dividend payout and dividend reinvestment.

The primary investment objective of the scheme is to generate long term growth of capital by investing predominantly in a portfolio of equity and equity related securities of few selected sectors.

The scheme will charges an entry load as well as exit load to the investors investing in the scheme.

The fund will invest 80%-100% in equity and equity related securities issued by domestic companies and 0-20% in fixed income securities including money market instruments including investment in securitised debt up to the extent of 5% of the net assets of the scheme. The scheme may invest up to 50% of the net assets of the scheme in such derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing.

Mutual funds in selling mode in equities

Mutual funds (MFs) sold shares worth a net Rs 151.10 crore on Wednesday, 21 November 2007, compared to their buying of Rs 138.20 crore on Tuesday, 20 November 2007.

MFs’ net outflow of Rs 151.10 crore on 21 November 2007 was a result of gross purchases of Rs 640.70 crore and gross sales Rs 791.80 crore. The 30-share BSE Sensex lost 678.18 points or 3.52% at 18,602.62 on that day.

MFs were net buyers of shares worth Rs 27 crore in this month, till 21 November 2007.

Sensex sheds 76 points in choppy trade

The market bounced back in late trade as banking and auto stocks jumped amidst volatile trade. State Bank of India surged. Reliance Industries came off lower level. Realty, capital goods, power stocks declined. The market breadth was weak. BSE Mid Cap and Small Cap indices underperformed Sensex. Asian markets were mixed. Chinese stocks declined sharply. European markets were mixed.

The Sensex ended down 76.30 points or 0.41% at 18,526.32. Sensex hit a low of 18,182.83 in afternoon trade. At day’s low of 18,182.83, Sensex had lost 419.79 points. Sensex had surged to a high of 18,744.55 at the onset of the trading session. At day’s high of 18,744.55 Sensex gained 141.93 points.

The S&P CNX Nifty ended 41.7 points or 0.75% lower at 5,519.35.

The market breadth was weak. On BSE, 780 stocks advanced, while 1,963 stocks declined and 34 stocks were unchanged. 17 out of 30 stocks from the Sensex pack were in green.

The BSE Mid-Cap index declined 1.55% to 8,090.84 and the BSE Small-Cap index was down 1.99% to 10,060.87. Both these indices underperformed Sensex.

BSE Auto index (up 0.16% to 5,179.16), BSE Bankex (up 1.75% to 10,406.24), BSE Health Care index (down 0.08% to 3,810.63) and, BSE Oil & Gas index (down 0.33% to 11,692.07) outperformed Sensex. BSE FMCG index was flat at 2,103.72, outperforming Sensex

BSE Capital Goods index (down 2.53% to 18,815.18), BSE IT index (down 0.7% to 3,959.90), BSE Metal index (down 1.28% to 16,045.12), BSE Power index (down 2.25% to 4,151.07) and BSE Realty (down 4.99% to 9,457.37) underperformed Sensex.

Nifty November 2007 futures were at Rs 5600, at a huge premium of 80.65 points as compared to spot closing of 5519.35.

NSE’s futures & options (F&O) segment turnover was Rs 71,149.36 crore, which was higher than Rs 70,758.86 crore on Wednesday, 21 November 2007.

BSE clocked a turnover of Rs 6976 crore compared to Wednesday (21 November 2007)'s Rs 7,952.29 crore.

Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries gained 0.25% to Rs 2,728.80, off session's low of Rs 2,666.80.

Banking stocks surged in late trade. State Bank of India (up 4.04% to Rs 2,241.80), ICICI Bank (up 2.16% to Rs 1,126.90), HDFC Bank (up 0.7% to Rs 1,594.04) edged higher.

Auto stocks also gained. Maruti Suzuki India (up 1.65% to Rs 966.75), Bajaj Auto (up 2.08% to Rs 2,472.55), Tata Motors (up 0.8% to Rs 692), Mahindra & Mahindra (up 0.49% to Rs 710.65) edged higher.

Realty stocks were major losers. Unitech (down 8.67% to Rs 328.20), DLF (down 5.49% to Rs 822.75), Indiabulls Real Estate (down 2.02% to Rs 602.85) edged lower.

Capital goods stocks declined. Larsen & Toubro (down 4.06% to Rs 3,941.90), Suzlon Energy (down 2.51% to Rs 1,857.20) edged lower.

India's biggest power equipment maker in terms of revenue Bharat Heavy Electricals declined 0.04% to Rs 2,485.10. It recovered from session’ low of Rs 2,380. It said today that it had received a contract worth Rs 2108 crore ($535 million) for steam generators and steam turbines in Jharkhand.

Power stocks declined. Tata Power Company (down 1.23% to Rs 1,145), Reliance Energy (down 5.18% to Rs 1,605.10), NTPC (down 4.99% to Rs 227.55) edged lower.

India’s second largest cement producer by sales ACC rose 2.21% to Rs 1,103.30.

India's largest oil exploration firm by sales ONGC declined 3.61% to Rs 1,149.55.

Ranbaxy Laboratories, India's largest drug maker by sales declined 1.4% to Rs 393. The company said on Wednesday, 21 November 2007, it had approval from Canadian authorities to manufacture and market tamsulosin hydrochloride capsules. Meanwhile, as per reports Ranbaxy Laboratories has reached an out-of-court settlement to market the generic copy of an innovator drug worth over $1 billion in the US.

Ispat Industries declined 7.98% to Rs 99.65 and was the biggest loser from A group of shares. Corporation Bank (down 7.93% to Rs 407.30), HTMT Global Solutions (down 6.89% to Rs 460), Jindal Saw (down 5.79% to Rs 745.65) and GE Shipping company (down 5.71% to Rs 445.70) edged lower.

Reliance Petroleum rose 2.68% to Rs 208.90 and clocked the highest volume of 2.46 crore shares on BSE. Reliance Natural Resources declined 1.04% to Rs 150.25 and clocked the second highest volume of 2.16 crore shares. Ispat Industries grossed the third highest volume of 1.73 crore. Tata Teleservices Maharashtra declined 2.27% to Rs 44 and clocked the fourth highest volume of 1.63 crore shares. IFCI declined 0.17% to Rs 86.40 and clocked the fifth highest volume of 1.23 crore shares on BSE.

Reliance Petroleum clocked the highest turnover of Rs 504.45 crore on BSE. Reliance Natural Resources (Rs 311.58 crore), Reliance Industries (Rs 288.65 crore), Reliance Capital (Rs 283.01 crore) and Larsen & Toubro (Rs 238.80 crore) were other turnover toppers on BSE in that order.

European markets were trading mixed. France’s CAC 40 (up 0.41% to 5,403.92) and UK’s FTSE 100 (up 0.35% to 6,092) edged higher. However, Germany’s DAX (down 0.2% to 7,503.01) edged lower.

China's Shanghai Composite index lost 4.41% at 4,984.16. Other Asian markets were mixed. Japan's Nikkei (up 0.34% at 14,888.78), and Taiwan Weighted (up 0.18% at 8,499.37) rose. However, South Korea's Seoul Composite (down 0.44% at 1,799.02) and Singapore's Straits Times (down 1.03% at 3,312.88), Hong Kong's Hang Seng (down 2.3% at 26,004.92) declined.

US stocks fell to the lowest in three-months on Wednesday, 21 November 2007 following growing unease over the economic outlook and weakening credit markets. The Dow Jones industrial Average ended the day with a loss of 211 points at 12,799. The Nasdaq Composite index slipped 34 points at 2,562. S&P 500 lost 22.9 points at 1,416.

Crude oil traded near $97 a barrel in New York after falling from a record yesterday, 21 November 2007 amid signs of slowing demand growth in the US, the world's largest energy consumer. Crude oil for January delivery was at $97.44 a barrel, up 15 cents, in after-hours electronic trading on the New York Mercantile Exchange in Singapore.

Lotus India AMC launches Quant based ELSS Scheme

Lotus India AMC has launched India’s first Quant based ELSS Scheme: Lotus India AGILE Tax Fund (Alpha Generated from Industry Leaders Fund). The investment objective of this scheme is to generate capital appreciation by investing in a passive portfolio of stocks selected from the industry leaders on the basis of a mathematical model designed by the LIAMC Team. (Check out - Mutual Fund New Fund Offer )

The New Fund Offer priced at Rs 10 per unit opens for purchase on November 15, 2007 and closes February 15, 2008. The fund will invest 90-100% in equity and equity related instruments and 0-10% in debt and money market instruments. The fund offers two options i.e. Growth and Dividend. The Dividend option offers Dividend Payout and Dividend Re-investment facilities. Investments made under this scheme will have a lock-in for a period of 3 years.

Lotus India Agile Tax Fund is a Closed Ended Equity Linked Savings Scheme with a maturity of 10 years that will invest in 11 stocks (9% each) determined by a mathematical model. The portfolio will be reviewed and reset every month.

Speaking on the occasion of the launch, Ajay Bagga, Chief Executive Officer, Lotus India AMC said, “We had pioneered the Quant fund segment in India with the launch of the Lotus India Agile Fund, a first of its kind product in the Indian asset management industry. We believe that there is significant potential for products following this “model” based approach. The launch of the Lotus India Agile Tax Fund is aimed at reinforcing the product offering in the Quant based segment. This fund will offer our customers the benefit of investing in a model based approach, along with tax benefits under Section 80C. This latest offering is part of our continued endeavour to offer our customers a wide portfolio of innovative products and investment options.”

Renaissance IPO subscribed 23.63 times on closing

Initial public offering of Mumbai-based Renaissance Jewellery (Q, N,C,F)* (RJL) was subscribed 23.63 times on closing day till 5.30 p.m. It received 125.82 million bids as against issue size of 5.32 million shares. A total of 18.17 million bids were received at the cut off price.

The issue closed today. The price band has been fixed between Rs 125 to Rs 150 a share. The issue of equity shares will constitute 29% of the fully diluted post-issue paid-up equity share capital of the company prior to exercise of detachable warrants and the issue shall constitute 37.99% of the paid-up equity share capital of the company after exercise of detachable warrants, assuming full exercise of detachable warrants.

Edelweiss Capital will help the company to raise maximum of Rs 798.64 million via this equity issue. Shares of the company, offered through this IPO, are proposed to be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

ICRA assigned `IPO Grade 2` to the proposed initial public offering Renaissance Jewellery (RJL) indicating below average fundamentals.

Promoted by Dhanak Mehta, RJL Incorporated in 1989, is engaged in the business of manufacture and sale of studded gold, platinum and silver jewellery and is primarily focused on international markets including the USA. The company also markets studded jewellery products through its retail stores operated by its subsidiary, Renaissance Retail Venture (RRVPL). It has been in the studded jewellery business for over a decade and operates through three manufacturing units of which two units are located at SEEPZ-SEZ at Mumbai and one 100% EOU at Bhavnagar in Gujarat. Besides, its subsidiary Renaissance Retail Venture has a manufacturing facility at MIDC, Andheri for catering to the domestic retail market.

DSPML World Gold Fund - Glittering Performance

The recently-launched DSPML World Gold Fund has certainly treated its investors well. Its returns have added to the cheer of the festival season. The fund, which was on offer from July 25 to August 23, 2007, has yielded an over 36 per cent return (as on October 30).

The fund offered its units at Rs 10 along with an entry load of 2.25 per cent. The fund listed on September 18 with a NAV of 11.4971, a gain of 12.44 per cent. Had you invested on the last day of the NFO, you would have made a neat 24 per cent in a month.

At first blush, the returns of the other four gold funds in the country pale in comparison. But it must be noted that the other funds are exchange traded funds (ETFs); a stark difference from DSPML World Gold Fund which actually buys stocks of gold mining and producing companies. It does so by investing predominantly in units of Merrill Lynch International Investment Funds - World Gold Fund (MLIIF -WGF).

According to September portfolio of the fund, the top three companies where the fund invested are Australia-based Newcrest Mining, Canada-based Barrick Gold and China's Zinjin Mining.

The gold ETFs in India are all less than a year old. Gold Benchmark Exchange Traded Fund, the oldest fund in this category, was launched in February 2007 and its returns since launch at 7.6 per cent are way behind DSPML World Gold Fund. Kotak Gold Exchange Traded Fund, launched in July this year, has posted the highest returns since launch of 15.6 per cent. UTI Gold Exchange Traded Fund's returns since launch stands at around 7 per cent. The latest entrant is Reliance Gold Exchange Traded Fund, which has just concluded its NFO period. Taking the four ETFs as a category as a whole, the returns were 13 per cent during the August 23 - October 30 period.

Naturally, the performance of these funds will rise or sink based on the movement of gold prices in the international markets. Since gold is trading at an all-time high over the last three decades, it has been reflected in the performance of the gold funds.

Religare Enterprises ends with 182% premium

At Rs 521.70 on BSE Religare Enterprises settled at Rs 521.70 on BSE, a premium of 182% over IPO price of Rs 185.

On BSE, 1.11 crore shares of the scrip were traded.

The stock debuted at Rs 323.75, a premium of 75% over the IPO price. It touched a high of 600 and a low of 323.75.

At the current market price of Rs 521.70, the PE multiple works out to 158.09, based on the year ended March 2007 EPS of Rs 3.3.

The company had fixed the IPO price at the top end of the Rs 160-185 price band.

The Religare Enterprises IPO had ended on 2 November 2007 with 160.56 times subscription. The IPO received total bids for 121.64 crore shares as against the issue size of 75.76 lakh shares.

The qualified institutional buyers (QIBs) category was subscribed 184.94 times. The non institutional investors category, made up of corporates and high-net individuals, was subscribed 215.44 times. The retail investors category was category was subscribed 93.50 times.

The company plans to use the IPO proceeds to finance expansion of its domestic operations, and investing in subsidiaries Religare Securities and Religare Insurance Broking.

Religare Enterprises, a financial services provider, is a holding company of 11 subsidiaries, targeting retail, high net worth individuals, besides corporate and institutional clients.

Indopark Holdings, a subsidiary of Merrill Lynch, recently bought 5% stake in the company for Rs 60.6 crore.

Religare Enterprises reported a net profit of Rs 24.87 crore on total income of Rs 320.12 crore in the year ended March 2007.

Sensex drops 678 points on weak global markets

The market declined sharply in late trade. NTPC, Bharat Heavy Electricals, ITC, and Reliance Energy were major losers from Sensex. were major losers from Sensex. All the sectoral indices on BSE were in red. Capital goods, banking, power, metal stocks were major losers. Market breadth was weak. Profit taking was witnessed across the board as mid-cap and small-cap counters faltered.

Data showing heavy FII sales on Tuesday, 20 November 2007, weighed on the market sentiment. The sentiment was also impacted by media reports that the government is considering raising the securities transaction tax (STT), with one of the options being increasing the ceiling to 0.5%. Finance minister P Chidambaram could move an appropriate amendment to the Finance Act, 2007, in Parliament in the current winter session for raising STT, reports suggest.

Persistent worries about the impact of sub-prime mortgage defaults on US economy pulled stocks across Asia and Europe. The Japanese yen strengthened to a two-year high against the dollar and also gained against the euro as investors reversed carry trades, where they borrow yen to buy high-yielding but risky assets.

The 30-share BSE Sensex lost 678.18 points or 3.52% at 18,602.62. At day’s low of 18,515.30 Sensex had lost 765.50 points.

The broader CNX S&P Nifty was down 219.85 points or 3.8% at 5,561.05.

Foreign institutional investors (FIIs) were net sellers to the tune of Rs 4,201.14 crore in the futures & options segment on Tuesday, 20 November 2007. According to data released by the NSE, FIIs were net sellers of index futures to the tune of Rs 2,897.67 crore and bought index options worth Rs 35.34 crore. They were net sellers of stock futures to the tune of Rs 1,334.46 crore and sold stock options worth Rs 4.36 crore.

FIIs sold shares worth Rs 1072.10 crore in the cash market on Tuesday, 20 November 2007. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 463.95 crore on Tuesday, 20 November 2007, as per provisional data.

The market breadth was weak. On BSE, 614 stocks advanced, while 2,184 stocks declined and 29 stocks were unchanged. All the 30 stocks from the Sensex pack were in the red.

BSE clocked a turnover of Rs 7301 crore compared to Tuesday (20 November 2007)'s Rs 8,623.31 crore.

Nifty November 2007 futures were at 5,536.25, at a discount of 24.8 points as compared to spot closing of 5,561.05.

NSE’s futures & options (F&O) segment turnover was Rs 70,758.86 crore, which was lower than Rs 73,178.98 crore crore on Tuesday,20 November 2007.

The BSE Mid-Cap index declined 4.73% to 8,217.84. The BSE Small-Cap index declined 3.98% to 10,265.23. Both these indices underperformed Sensex.

BSE Bankex (down 4.99% to 10,227.71), BSE Consumer Durable index (down 3.97% to 5,119.74), BSE Capital Goods index (down 5.14% to 19,302.78), BSE FMCG index (down 4.28% to 2,103.82), BSE Metal index (down 6.11% to 16,253.59), BSE Power index (down 5.91% to 4,246.51), BSE Realty index (down 4.73% to 9,953.63) underperformed Sensex.

BSE Auto index (down 3.15% to 5,170.85), BSE IT index (down 1.65 to 3,987.66), BSE Oil & Gas index (down 3.34% to 11,730.99) outperformed Sensex.

Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries declined 2.33% to Rs 2,722. The stock came sharply off session's high of Rs 2,800. As per reports, Reliance Industries (RIL) has signed production sharing agreement (PSA) for two exploratory blocks 34 and 37 located in the Jeza basin of eastern Yemen, taking its total number of overseas exploratory blocks to nine.

FMCG major ITC declined 5.95% to Rs 184.85. As per reports it is preparing for a series of acquisitions to strengthen its food business, the fastest growing segment among the new businesses under its umbrella.

Banking majors declined sharply. ICICI Bank (down 5.5% to Rs 1,003.10), HDFC Bank (down 2.98% to Rs 1,583), and State Bank of India (down 5.48% to Rs 2,154.65) edged lower.

Power stocks plunged. NTPC (down 8.03% to Rs 239.50), Tata Power Company (down 4.76% to Rs 1,159.25), Reliance Energy (down 5.65% to Rs 1,692.85), PowerGrid Corporation of India (down 7.7% to Rs 146.90) edged lower.

Capital goods stocks declined. Larsen & Toubro slipped 5.25% to Rs 4,108.60 on BSE, after the company said on Tuesday 20 November 2007 it had signed an agreement with Raytheon for the US defence major's multi-role fighter jet programme, besides co-operation in defence projects. Bharat Heavy Electricals (down 6.33% to Rs 2,486.10) and Suzlon Energy (down 6.66% to Rs 1,905.05) were other losers from capital goods sector.

Metal stocks declined for the second day in a row due to falling global metal prices. Sterlite Industries (down 7.65% to Rs 885.50), Hindalco Industries (down 4.94% to Rs 184.55), Steel Authority of India (down 6.89% to Rs 245.45) edged lower.

Tata Steel declined 4.37% to Rs 822. As per reports, Riversdale Mining, Tata Steel’s partner in Australia, has discovered around 1.2 billion tonnes of coal at northern Benga in the Moatize district of Mozambique which happens to be the world’s largest unexplored coal province.

IT stocks declined due to persistent worries about US economy. Wipro (down 2.7% to Rs 436.55), Satyam Computer services (down 1.56% to Rs 412), Infosys (down 1.04% to Rs 1,548.10) and Tata Consultancy Services (down 1.25% to Rs 948.50) edged lower.

India’s largest real estate developer by market capitalisation DLF declined 4.12% to Rs 870.50. Indiabulls Real Estate (down 6.94% to Rs 615.30) and Unitech (down 5.48% to Rs 359.35) edged lower.

ACC was down 0.48% to Rs 1,079.40, off session's low of Rs 1,050. The company said today, 21 November 2007, it had sold surplus assets, including land in Haryana state, for Rs 205 crore.

Religare Enterprises settled at Rs 521.70 on BSE, a premium of 182% over IPO price of Rs 185. It was listed on the bourses today, 21 November 2007.

Chambal Fertiliser & Chemicals declined 13.9% to Rs 64.40 and was the top loser from BSE's 'A' group shares. Dena Bank (down 11.52% to Rs 78.45), Escorts (down 11.6% to Rs 142.95), Gujarat Narmada valley Fertilisers Company (down 10.1% to Rs 174.85) and Neyveli Lignite (down 10.92% to Rs 185.60) were other major losers from A group.

Tata Teleservices Maharashtra declined 8.88% to Rs 46.20 and clocked the highest volume of 2.22 crore on BSE. Reliance Petroleum clocked the second highest volume of 1.93 crore and declined 2.09% to Rs 203.45. IFCI declined 10.87% to Rs 86.55 and clocked third highest volume of 1.85 crore shares. Reliance Natural Resources declined 9.84% to Rs 149.75 and clocked the fourth highest volume of 1.78 crore shares. Bellary Steels and Alloys declined 2.88% to Rs 5.06 and clocked the fifth highest volume of 1.54 crore shares.

Reliance Petroleum clocked the highest turnover of Rs 400.9 crore on BSE. Reliance Natural Resources (Rs 278.47 crore), Reliance Industries (Rs 270.54 crore), Reliance Capital (Rs 213.29 crore) and Reliance Energy (Rs 178.54 crore) were other major turnover toppers on BSE.

Among side counters, Inhouse Productions (up 72.81% to Rs 22.05), Orient information Technology (up 19.03% to Rs 19.45), Acrysil (up 19.93% to Rs 70.70), Dharani Sugars (up 18.59% to Rs 22.65) edged higher.

Rama Pulp & Paper (down 15.08% to Rs 38), SQL Star International (down 14.44% to Rs 44.45) and Chambal Fertilisers, Triveni Engineering (down 13.65% to Rs 129.05) and Chemicals (down 13.9% to Rs 64.40) edged lower.

European markets were weak. France’s CAC 40 (down 2.09% to 5,391.78), Germany’s DAX (down 1.91% to 7,484.65) and UK’s FTSE 100 (down 1.55% to 6,130.20) edged lower.

Asian markets fell today after the Federal Reserve said US economic growth would probably slow in 2008. Hong Kong's Hang Seng (down 4.15% at 26,618.19), Japan's Nikkei (down 2.46% at 14,837.66), Singapore's Straits Times (down 2.65% at 3,347.25), Taiwan's Taiwan Weighted (down 2.27% at 8,484.11), South Korea's Seoul Composite (down 3.49% at 1,806.99), edged lower.

Oil prices resumed their march toward $100 a barrel. Light crude for January delivery surged $3.39 to settle at a record $98.03 a barrel on the New York Mercantile Exchange.

A large number of foreign investors want to register in India to participate in the booming stock market, Securities & Exchange Board of India (Sebi) chief M. Damodaran, told a business conference on Wednesday, 21 November 2007.

Edelweiss IPO Subscribed 109 times

The initial public offer of brokerage firm Edelweiss Capital got subscribed over 109 times on the final day of its public issue today.

The issue received bids for 92.08 crore shares as against 83.86 lakh shares on offer, according to the latest data available with the bourses.

Till yesterday, the portion reserved for Qualified Institutional Buyers (QIBs) was subscribed by over 20 times with bids for 10.21 crore shares, majority of which came from FIIs, the data reveals.

The domestic financial institutions, such as banks, mutual funds and insurance companies who also belong to the QIB category, submitted bids for 1.51 lakh shares so far for the public issue, yesterday's data show.

The portion for retail investors has received bids for about 1.43 times, while the shares reserved for employees have been oversubscribed 5.5 times.

The other non-institutional investors, which includes corporates and non-retail individual investors, segment has also been oversubscribed with bids for 10.82 times of the total shares reserved for them.

The price band for the issue has been fixed between Rs 725-825 per share. The book building process began on November 15.

The company is planning to raise about Rs 700 crore of which Rs 378 crore would be utilised for strengthening operations of its unlisted securities arm Edelweiss Securities Ltd (ESL) and Rs 57 crore would be used in its own operations.

Kotak Mahindra Capital, Citigroup and Lehman Brothers are the book running lead managers to the issue.

IPO Monitor

IPOs Open Now
Issue Name	Date of Closure	Offer Price (Rs)	Min Invst (Rs)	Retail Subscription (times)*	Review
Kaushalya Infrastructure Development Corporation Limited	23-NOV-07	50-60	5000	0.02
Kolte Patil Developers Limited	22-NOV-07	125-145	5000	N/A
Renaissance Jewellery Limited	21-NOV-07	125-150	5625	0.51
* as on date

Top Performing Recent IPO's

Mutual Fundas - New Fund Offers

Sundaram BNP Paribas Energy Opportunities
This three-year closed-end equity scheme from Sundaram BNP Paribas Mutual Fund will invest in energy sector companies. The new fund offer period will last till December 11, 2007

Lotus India AGILE Fund
Lotus India Mutual has announced the launch of India's first Quant based fund. The selection of stocks for its portfolio would be made on the basis of a mathematical model

DWS Money Plus Advantage
DWS Mutual Fund has come out with a new offering which is primarily a fixed income fund but may invest a small portion in equities to enhance returns

Reliance Gold ETF
There is one more addition to the list of Gold ETFs. This open-ended fund from Reliance Mutual will track domestic prices of gold through investments in physical gold

Sahara R.E.A.L Fund
Sahara Mutual Fund has come out with a new offering after a long gap. The fund would be targeting on the retailing, entertainment, auto and logistic sectors

HDFC Arbitrage Fund
HDFC Mutual has expanded its product range by launching an arbitrage fund. The fund that will benefit from the opportunities between cash and derivative market

Lotus India Infrastructure Fund
Another fund being added to the kitty of infrastructure funds, this time it is from Lotus India Mutual Fund. As the name suggests, the fund would primarily invest in infrastructure stocks