Alternative To Equity (Stock Market) Investment

As we know the stock market has been butchered including domestic as well as the international market. The mutual funds are also performing very bad with constant reducing NAV.As the clues in the market remain such that immediate or bull run in short to medium term could not be expected.In such case we must focus on the alternatives present in the market , who are the best substitute for investment of our hard earned money.

1. Fixed Deposit
The first best alternative to equity market would be certainly Fixed Deposit , as the rate of return in the F.D is attractive and rising constantly.We should focus on the cause of rising interest rate:

1. If we look at the market inflation rate , which is near about 12% (appx.) ,whereby the interest rate on deposits at banks were about 8.5% to 9% , which is giving a negative revenue for us to meet or give a match to the inflation. In other words due to rising inflation our expense is rising by 12% p.a while our income on deposit is generated @9% making a deficit of 3% (appx.) .
thereby forcing the bank to offer there customer higher rate of interest to prevent premature redemptions.


2. In order to check inflation RBI under its credit policy issued from time to time is adopting measure to control liquidity in the market thereby hiking the lending rates and thus automatically the deposit rate get hiked.


2. Gold & Silver

It would be great to accumulate raw gold and silver in this festive season. The prices are going to soar in near to medium-long term.These metals are going to break there high in short term and will make new highs one after another , making it out of reach of general person and rewarding the investors generously.

These two alternative are the best amongst the various variants available in the market and would help investor to get generous return out of there investment.One can allocate there funds among the various options considering the two above as per there needs , funds , time of investment etc.

STOCKS TO FOCUS.

Present Scenario

At present times when the market is volatile , inflation is breaking records , interest rate are high , U.S economy is
under recession heading towards bankruptcy , Indian elections ahead , Soaring Crude Prices are all a matter of great concern.

In such unstable and volatile market , it becomes very difficult to decide the sector and the counter to enter.

Negative Counters

Reality sector will not get response soon.Among them the worst hit would be Unitech & DLF. Though Unitech has been under performing and was beaten up from long time due to sale of stake from Lehman Brothers. The counter is not expected to get well soon.

Regarding Banks , if a fresh entry is needed then preference should be given to Axis Bank. Sound company with minimum exposure in U.S market and is building up well.

INDIAN STOCK MARKETS AHEAD

A small rally is expected very recently near about the festive season , especially Deepawali.
But the rally will be for very short period where investors will get a chance to get out of the stocks , in which they have been stuck for long period of time.

Soon after this rally a severe fall is awaiting ahead , which will provide a wonderful opportunity for the traders & investors with cash in hand to invest there accumulated funds.

Technicals

In case of Nifty there is strong resistance at 4400 , 4600 and 4800 respectively. In order to cross 4400 levels it must close for atleast 4 trading session to confirm its stability. Though there may be an intra day achievements of targets but unless the stability is confirmed it is not going to cross next resistance levels.

Regarding Sensex a strong resistance at 15000 level is waiting ,so highest levels for sensex in near term is about 15000 levels and 16000, 17000 thereafter respectively.

Positive Clues To cause Rally

1. Finalization of Nuclear deal with India.

2. Sanction of 700 million dollars loan for U.S from world bank will improve liquidity and help the US govt to overcome the crisis problem in the economy for intermediate term.

MY VIEW ON GRASIM

Introduction of the company

Grasim Industries is one of the favorite stock of the traders. The brand is under the leadership of Adity Birla Group.

Financials

The financial performance of Grasim for the first quarter ended 30^th June 2008 has been flat. The high cost of raw materials and the overall slowdown in the economy seems to have taken a toll.The company’s revenues for the quarter were at Rs. 4,430 crore (Rs. 4,060 crore). Net profit was marginally higher at Rs. 672 crore (Rs. 670 crore).

Caustic soda volumes were higher by 11% and realizations were up by 30% at Rs. 22,352 per ton. Though the production and sales of cement was up at an average of 3%, margins were under pressure due to continuous rise in coal prices along with higher freight, employee and packing costs. Cement production and dispatches for the month of August 2008 stood at 21.19 lakh mt and 21.88 lakh mt, registering a decline of 8.87% and 5.39% on a YoY basis.

The Viscose Staple fibre (VSF) performance during the quarter was muted. Production was curtailed due to lower off-take. The liquidation of accumulated inventory in the value chain, substitution of VSF with other fibres on account of high VSF prices and general slowdown of the economy impacted the performance. Margins were depressed due to the record increase in sulphur prices and higher prices of other key inputs like pulp and caustic. Margins are likely to remain under pressure in the short to medium term.

Subsidiary

The performance of UltraTech Cement Limited, a subsidiary of Grasim, improved marginally. Domestic cement sales were higher by 4% but exports were affected due to the ban imposed by the Govt for six months.Though Profit margin was flat.

The production of sponge iron was lower by 27% due to planned maintenance shutdown and sales volumes declined by 35%. Realizations were high by 62%. The company is planning to hive off this division on a slump sale basis.

In current Q2, margins are expected to remain under pressure but if the company manages to sell off its sponge iron business, this one time gain would help bolster the performance.

My view

From above discussion I found the stock fundamentally strong and would advice the readers to stay invested.

Disclaimer : I do not have any personal holding in the stock.

Diversification

The Problem

The major problem our people of the country facing is the concentration of there savings and hard earned money.Their investment is too concentrated in one option, exposing them to the risks from lack of diversification. If for some reason, the business faces a downturn, many businessmen could run the risk of losing all that they had earned so far and redeployed into the business. This is particularly true of small sized enterprises that are closely held, that do not have an investment portfolio or a professionally managed treasury. It is also true of a number of small businesses run by individuals. Many of these wealthy individuals, who run a successful business, may be running the risk of concentrated investments, without being aware of it.They increase the risk of losing money, if the chosen investment goes bad.

Segment Facing The Problem

1. Businessman tend to invest most of their money back into their successful business with a justification that why seek another investment, when your own business provides a high return on capital and is also in need of funds?

2. Many investor have highest stock holding is in the stocks of their own companies. In these days of stock options and preferential allotments, many people tend to have a big chunk of their own company shares in their portfolio.

3. Many young professionals today invest a large sum of money in buying themselves a house. They save tax, and also get a house of their dreams.

4. Investors who made money in one stock, tend to like it so much, that they shift a large chunk to invest more in the same stock. These are some of the known ways in which portfolios are concentrated. Studies show that many small investors who indeed have a large number of stocks, tend to have some "dead" investments – those that were picked up on poor advice, gone sour and languish in the portfolios. Otherwise they have on an average about 6 stocks in which they have their money – not a very diversified portfolio

Solution To The Problem

Diversification is the key to keeping risks balanced. Good for your portfolio. Make sure that you don’t have more than 10% of your saving in any one asset – your business, your favourite theme or your favourite stock and perhaps not over 20% in your home. It can be painful when markets move up, but your wisdom will see you through when the markets move down. Moral of the story – make sure you diversify. It is the simplest way to make sure your portfolio is protected from risks it can do without.

ECB NORMS RELAXED

The Govt. of India has relaxed norms for External Commerical Borrowings (ECBs) for infrastructure projects. The companies engaged in building ports, airports, roads, bridges, power and telecom which could borrow only upto $100 million a year for rupee spending in India till yesterday can now borrow 5 times more ,the limit has been increased to $500 million per year.Projects with long gestation periods, mainly infra projects would be able to access these ECBs as these ECBs would have a minimum repayment period of seven years

For ECBs of three to seven years tenure, the borrowing rate has been left unchanged at 200 to 350 bps plus LIBOR. For borrowings between five-seven years, the all-in-cost ceiling has also been left unchanged at 350 bps while for those above seven years; the rate has been relaxed from 350 to 450 bps above LIBOR.

The news indicates that the Govt is going ahead with a good focus on reforms. Maybe in the current situation, where even companies with a strong balance sheet might find it difficult to get funding, for the long term, this is a positive move. The relaxation of the ECB norm, as experts say, might help bring down the dollar vis-à-vis the rupee. But probably, another way to look at it is that Govt is seeing the rupee at stronger levels in the months to come. So maybe right now, this news may not make much sense given the volatile rupee and dollar tussle. This, run up on the dollar, many say, is an aberration and once things settle down a bit, the rupee would also stabilize at better rates. So once that happens, this ECB relaxation will make a lot of sense.

Interest rates on the overseas markets would come at a much cheaper rate for large borrowings and for such long tenures would make more sense to borrow abroad than to borrow in India, where the interest rates would be higher.

The growth of India is still driven by the core sector, and with the impetus now being given to the Govt, the infra sector, which is expected to need around $500 billion by 2012 would find many takers for the ECBs.

The realty sector does not qualify for this increased ECB limit. The ECB ceiling for companies other than infrastructure companies stays unchanged at the previous $50 million. And taking a lesson or two from US, the Govt would not be in a hurry to relax this limit for realty companies any time soon.

This relaxation of the ECBs limit for infra is a step in the right direction but it will take some time to get to the desired destination.

My view On Pantaloon Retail

Financial Aspect

On a consolidated basis, the company reported a 64% rise in net sales at Rs.5840.54 crore, and despite a 66% rise in operating expense, the company managed to show a 43% rise in EBITDA at Rs.326.49 crore. But after this, it has been all downhill. Interest outgo rose 123% and depreciation was up 145%, with the company posting a loss before tax of Rs.15.30 crore as against a PBT of Rs.79.82 crore in June 07’ year ending. It posted a net loss of Rs.28.39 crore as against a net profit of Rs.79.90 crore last fiscal. This net loss would have been much higher at Rs.62.59 crore but for prior period adjustments added back at Rs.1.04 crore, goodwill written back at Rs.3.39 crore and the profit which it earned from sale of subsidiary at Rs.29.77 crore.

Then the company added back the minority interest earnings to the tune of Rs.51.22 crore and this catapulted the company back into the black, It ended 2007-08 with a net profit of Rs.21.93 crore , down 38% when compared with net profit of Rs.35.54 crore in 2006-07.

Apart from all these adjustments, during the fourth quarter ended 30^th June 2008, it changed its method of valuation of finished goods from "Retail Price less Mark up" to "At lower of cost and Net Realizable Value". Consequent to this change, the value of inventories was lower by Rs.74.37 crore. The same has been adjusted (net of tax of Rs.25.28 crore) against brought forward balance in Profit & Loss Account.

No doubt the sales have increased but the bottomlines have shown pressure. Its retail space has increased from around 7.30 million square feet to around 7.90 million square feet during the quarter. And its aim is to increase it to 15-16 million sq-ft in the current fiscal from 11 million sq.ft last fiscal.

Regarding Stock

The stock has a low at Rs.283 and currently it is hovering in the range of Rs.300-305. The great Indian retail bazaar is undergoing a change but Pantaloon has the advantage of being amongst the first in the sector and is today too big.This is a good stock to invest in.

Elliot Wave Anlysis (Dated 22/09/2008)

Drop from ‘e’ (at 15107) appeared like a 3^rd extension Impulse on intra-day charts. Impulses do not get retraced by more than 61.8%. Also the 3^rd extension impulse should find it difficult to retrace beyond 2^nd wave of this Impulse (which is at 14046-14433).At the same time the impulses in the 5^th wave or c-wave positions do get fully retraced. A move sustaining beyond 61.8% correction level, i.e. above 14133-225 area, would, therefore, indicate that we are dealing with such a situation.

From this perspective, it would be pertinent to note that the current drop (from 15107 to 12558) achieved 161.8% ratio to the previous one (from 15580 to 14002). Such an event suggests some alternatives.They show that a-b-c formation from 15580 to 12558 could either be a-b-c of a Running Expanding Triangle, or “b” of Flat from 12514 (with its “a” at 15580).

If it is Expanding Triangle, then the current rally can go beyond 61.8% up to 15107 as “d” of ET, but may not cross 15107. Note that current “d” (if true) has become larger than “b”, and has overlapped with “b” as required within an Expanding Triangle.If it is “b” leg of Flat from 12514, then the current rally would be “c” of such a Flat, and could go beyond 15107, perhaps forming as a Terminal hereafter. The “a” of such Flat (if true) is from 12514 to 15580, and “b” was from 15580 to 12558.

The neckline joining 13727 and 14002, with the structure post-12514 appearing like a Head and Shoulders formation. A strong break below 14K breaks the neckline of this traditional H&S formation. This Neckline is now getting tested at around 14225. Sustaining above the Neckline cancels the assumption of H&S formation.

The current bear market rally would be the “b” leg of the second corrective, which I said, can occur despite the fact that the market remains open for a protracted bear phase as per the 8-year cycle.

As per the Wave logic, corrective phases should consume more time than the wave getting corrected. Corrective phase consuming lesser time is allowed only in Triangle / Terminal / Diametric, which are exceptions to virtually all rules. In our case, it would indicate 2^nd corrective (post-17054) developing as an Extracting Triangle or Diametric.

Check List For New Fund Offer

1. Date of issue

Initially Check Out that you have received an up-to-date edition of the OD. An OD must be updated at least annually.

2. Minimum investments

Mutual funds differ both in the minimum initial investment required, and the minimum for subsequent investments.

3. Investment objectives

As the investors need to be sure the fund's objective matches their objective as well so it's necessary to check the goal of each fund — from income, to long -term capital appreciation.

4. Investment policies

The prospectus also include information on minimum bond ratings and types of companies considered appropriate for a fund. Be sure to consider whether the fund offers adequate diversification.An OD will outline the general strategies the fund managers will implement.You'll learn what types of investments will be included, such as government bonds or common stock .

5. Risk factors

Every investment involves some level of risk. In an OD, investors will find descriptions of the risks associated with investments in the fund. These help investors to refer to their own objectives and decide if the risk associated with the fund's investments matches their own risk appetite and tolerance. Since investors have varying degrees of risk tolerance, understanding the various types of risks in this section( eg credit risk, market risk, interest-rate risk etc.) is crucial.

6. Past Performance data

ODs contain selected per-share data, including net asset value and total return for different time periods since the fund's inception. Performance data listed in an OD are based on standard formulas established by Sebi and enable investors to make comparisons with other funds. Investors should keep in mind the common disclaimer, "past performance is not an indication of future performance". They must read the historical performance of the fund critically, looking at both the long and short-term performance. When evaluating performance, investors must look at the track record of a fund over a time period that matches their own investment goals.

7. Fees and expenses

Entry loads, exit loads, switching charges, annual recurring expenses, management fees, investor servicing costs…these all add up over time. The OD lists the limits on these fees and also shows the impact these have had on the fund investment historically.

8. Key Personnel esp Fund Managers

This section details the education and work experience of the key management of the fund company, including the CEO and the Fund Managers. Investors get an idea of the pedigree and vintage of the management team. For example, investors need to watch out for the fund that has been in operation significantly longer than the fund manager has been managing it. The performance of such a fund can be credited not to the present manager, but to the previous ones. If the current manager has been managing the fund for only a short period of time, investors need to look into his or her past performance with other funds with similar investment goals and strategies. Only then can they get a better gauge of his or her talent and investment style.

9. Tax benefits information

Mutual funds enjoy significant tax benefits under Sec 23 D and Sec 115 .

10. Investor services

Shareholders may have access to certain services, such as automatic reinvestment of dividends and systematic investment/withdrawal plans. This section of the OD, usually near the back of the publication, will describe these services and how one can take advantage of them.

VIEW ON CHAMBAL FERTILISERS & CHEMICALS.

Fundamental Aspects of the company

In the private sector Chambal Fertilisers and Chemicals is India’s largest producer of Urea .It's on the northern and western part of the country and supplies urea to nine states. Uttam Veer is the company's brand name.It has three divisions - agri-inputs, shipping and textiles. It has two subsidiaries - one in the software business and the other in the infrastructure sector. Its two joint ventures are in the fields of financial services and manufacture of phosphoric acid.

The shipping division, operating under the name of India Steamship has three Aframax tankers with a fleet capacity of about dwt 3,00,000 MT. And the textile unit, known as Birla Textile Mills, has a state-of-the-art spinning unit with a capacity of 80,208 spindles located at Baddi, Himachal Pradesh.

Financial Aspects of the company

YoY, the net sales of the company rose 35.31% at Rs.805.27 crore. 62% of its sales came from the fertilizer division. Trading earned it Rs.185.59 crore, shipping Rs.56.58 crore and textile sales was at Rs.66.40 crore. Operating expenses rose 47%. This pulled down the margins.

The shipping venture showed an operating loss of Rs.48.34 crore, while the textiles division had an operating loss of Rs.1. 22 crore, small loss but loss nevertheless. And this affected the overall operating profit of the company. OPM was down from 26.03% to 16.28%. EBIDTA was down 15% at Rs.131.10 crore.

PBT was down 25.51 crore and the tax outgo of Rs.33.51 crore as against Rs.15.31 crore in Q1FY08 pulled down the PAT, it was down by a whopping 61.43% at Rs.23.80 crore. NPM was down at 2.96% as against 10.37%, YoY.

Our result

Rs.96 was the stock high in the month June, though it has not drowned in the correction phase.Currently good but existing holder may continue there interest but any additional buying in this stock is not recommended.

Shall I Repay Loan At Lumsum Receipt ?

Sometimes we get unforeseen funds from different sources which was either unexpected or not calculated at the time of taking loan.The one shot thought we had in mind while getting a lump sum fund when we had a loan going on is to repay the but we should consider the following events before taking decision.

1 For our unforeseen contingencies we can keep it invested in reliable source where it could be liquidated immediately . Once you prepay a loan, this money cannot be easily borrowed, later.

2 If you have any unsecured debt (credit card or personal loan), pay it off at once! No risk-free investment can ever give you a higher post tax return than the post tax cost of such a loan.The difference is usually so high that even stiff prepayment penalties of around 3% to 5% will not change the decision.

3.As a thumb rule it makes sense to prepay home loans as long as the prepayment charges do not exceed 2% but we have two exceptions here:

• Where interest rates on the home loan are lower than the current ruling rate
  
  
• If principal repayment of the home loan, increases, the amount of deducted under Section 80C will also increase. This happens if you don't use the limit of deduction fully through other modes of investment such as life insurance premiums, contribution to provident funds, etc.
  

Stocks Affected By Lehman Brothers Case

Lehman brothers hold stake in several Indian listed Stocks. Most of these Indian companies were asking Lehman Brothers to have stake in there company at sometimes but now these stocks are now to be worst hit and they wouldn't be able to recover for long period.

The stocks to be affected are

1. Moser Baer

2. Dhampur Sugar

3. Triveni Engineering

4. DCBL

5. Edelwies

6. IVRCL

"LEHMAN BROTHER" NEWS WAS FLASHED BY ME LONG BEFORE

Check out the 12th posting from below with a head : "MARKET MOOD AHEAD" in green color where I had clearly declared the bad market mood with the statement that a bad news is ahead with a disclosure of bankruptcy from an American Bank.

It was flashed long back and our followers have been benefited with the opportunity to stay away from the market and hold on with cash.

INDIA GROWTH STORY

India GDP growth for the month of July ‘08 reduced from 8.3% to 7.1%

Firstly, the IIP growth figure was expected to be lower than the June growth rate and the average estimate was around 6.25% to 6.5% but when it surged above 7%, naturally. Sequentially, the growth has also gone up from 5.4% in June ‘08.

A significant rise in consumer durables growth, which YoY, grew from a retraction of 2.7% to a positive 11.2%. But industry experts warn that there is no need to be jubilant over this growth as 41% of these consumer durable goods comprised of 10 articles which are completely irrelevant, questioning the very veracity of the IIP compilation.

Capital goods sector has been listless, showed a growth at 21.9% as against 12.3% in July ‘07. Growth in the capital good sector is very good news as this means that investment activity continues to remain strong.

Manufacturing which accounts for about 80% of India’s production, on a MoM gained 7.5% from 6.1% but YoY, it fell from 8.8%.Electricity output fell 4.5% from 7.5% in July ‘07. Mining grew 5% from 3.2% YoY. Consumer-goods production increased marginally from 7.1% to 7.3%.

With inflation seemed to have been reigned in, crude prices falling and given these IIP figures, all point to the fact that India Inc is now on the revival path. There is no doubt that first quarter of the current fiscal was the most challenging in recent times, with high crude prices, higher interest rates and lower demand. Corporate profitability is expected to increase from the second half of the current fiscal and this is based on the big assumption that retail demand would pick up.Govt Of India has recently given an average 21% pay hike to about 5 million government employees, which is the highest hike in the entire Asia-Pacific region. This means that there would be more disposable income with these many people and with this money coming in exactly during the festival time, demand is sure to pick up. Once demand picks up, industrial production would rise, that is the simple economic co-relation.

As the growth symptoms are foreseen so no recent action of tightening money flow and further hike in rate of interest is not at all expected.. And later, if crude once again starts rising, it is expected that, at the most, there could be a 25 bps rate hike, but this again is based on the assumption of crude shooting up. If things remain as they are right now, it is unlikely that interest rates could be tightened any more.

CHEMCEL BIOTECH A DANGEROUS IPO

Chemcel Biotech is debuting the capital market on 9^th September 08, with a public issue of 1.54 crore equity shares of Rs.10 each at a premium of Rs.6 per share, with total issue price of Rs.16 per share, accumulating a sum of Rs.24.64 crores.The company is a pesticide formulator manufacturing pesticides for crops and had a total income of Rs.25 crores for FY 08 with PAT of Rs.1.20 crores, resulting in an EPS of less than 50 paise.

The company has managed to get its IPO subscribed from closed sources and the said source or operator is from a nearby hill station of Mumbai. The stock is likely to witness huge momentum post listing, and it will help the said operator to jack up the price of the stock after listing, if it does not receive any public response. So, interested to have negative analysis and rating on the stock.

Rightly so, the stock has no fundamentals at all. The company is entering into bio-diesel field but nothing seems to be attractive. The huge equity base of Rs.26 crores would be a big dampner.

Nothing attractive in the stock while having necessary momentum and speculative ingredients in it. Those who have inclination to ride the momentum may get attracted towards the issue.

MY VIEW :ONE SHOULD NEVER OPT FOR SUCH DANGEROUS STOCK.

RESTRUCTURING OF STERLITE INDUSTRIES

Sterlite Industries is presently under the Vedanta Group ,which has following listed entities in India.

1) Sterlite Industries (India) Ltd.

2) Hindustan Zinc Ltd.

3) Sterlite Technologies Ltd,

4) Madras Aluminium Company Ltd.

The group is engaged in production of Aluminium, Zinc, Copper, lead and Power through these companies. Since all these companies were acquired by the Vedanta Group in the last few years

Sterlite Industries, is predominantly a holding company.Madras Aluminium, is a very tiny company with capacity to produce 40,000 TPA of aluminium and this has been keeping the operations of the company stagnant. So the group has rightfully thought of merging its aluminium and energy business under this company. As the Vedanta Group has limited listed companies available, this is probably the best option to make use of a tiny company and make it a giant.

Hindustan Zinc is already growing, having created capacity to manufacture 7.20 lakhs TPA of zinc from 1.80 lakh TPA, when it was acquired by the group in 2003 – 04. Lead capacity was also raised four fold.

It is tough to analyze the valuation and prospects of Sterlite Industries, which has been holding 64.90% in Hindustan Zinc, 51% in BALCO, 100% in Sterlite Energy and 100% in Mt. Lyell Mine and Thalanga Mine referred as CMT assets. On standalone basis, the working of Sterlite Industries has been showing working of copper smelter only while consolidated working is required to be seen and analyzed to arrive at the correct valuation of Sterlite Industries.

As per restructuring plan, Sterlite Industries India Ltd. (SIIL) has decided to transfer following project to MALCO:--

1) Aluminium Foil plant at Sanaswadi.

2) 100% stake of Sterlite Energy Ltd.

3) 51% stake of BALCO.

4) 29.5% stake of Vedanta Aluminium Ltd.

MALCO will now be renamed as Sterlite Aluminium Ltd. (SAL) and the scheme shall be effective from 1^st April, 2009.

For acquiring these projects, MALCO will issue 7 equity shares of Rs.2 each of MALCO, to the shareholders of SIIL, for every 4 shares held by them in SIIL.

MALCO presently holding 246.10 lakh shares of SIIL, which will be transferred back to SIIL and lieu of this transfer, SIIL will issue 1 share of SIIL for 51 shares held in MALCO. Effectively 246.10 lakh shares of SIIL, now held by the MALCO are being distributed amongst the shareholders of MALCO and this would not result in any increase in the equity of SIIL.

Present equity of MALCO, which is now at 11.25 crore, shares would rise by another 119.68 crores shares and the capital structure and shareholding pattern of MALCO on pre and post restructuring would be as under :--

Before Restructuring

Promotor stake was 80% with 9 crore shares while Public holding of 20% with 2.25 crore shares

* shares of Rs.2 each with paid-up equity at Rs.22.50 crores.

After Restructuring

Promotrs holding reduced to 60.92% with 79.77 crore shares, Aloong with others (promoters) being 1.78% with 2.33Crore shares. Though the public hoilding will come to 1.72 % with 2.25 crore shares in the market.And Public (SIIL) with be finally the rest 35.58% with 46.58 crore shares

* shares of Rs.2 each with paid-up equity at Rs.261.86 crores.

MALCO will thus be having an aluminium capacity of 25.75 lakh tonnes by 2012 at three locations with Alumina capacity of 53.20 lakh TPA and captive power plant of 5,370 MW. In addition to this, the company will be owning 100% of Sterlite Energy.

On restructuring SIIL, it will get MALCO investment, being 246.10 lakh shares of SIIL back in itself for which 1 share of SIIL will be issued for every 51 shares held of MALCO. SIIL will also get 79.4% stake of Konkola Copper Mines Ltd. from Vedanta by merging THL KCM Ltd., Mauritius, for which, SIIL will issue 1 share of Rs.2 each of SIIL for every one share of US $ 0.01 held in THL KCM Ltd. by Vedanta.

So, on post restructuring, SIIL will hold 100% of Asarco, 64.90% of Hindustan Zinc, 100% of CMT and 79% of KCM.

The present equity of SIIL comprises of 70.85 crore shares of Rs.2 each of Rs.141.70 crores. However, due to acquisition of 79% of KCM and 100% of Asarco, equity of SIIL would rise from 70.85 crores shares of Rs.2 to 102 crore shares of Rs.2, from Rs.141.70 crores to Rs.204 crores.

Hence, hereon ownership pattern of the Vedanta group companies in India would be clear with –

1) Vedanta holding 51% of SESA Goa.

2) Vedanta holding 73% of SIIL.

3) MALCO will be holding 51% of BALCO. 100% of SEL and 15% of VAL. On group acquiring remaining stake of 49% of BALCO from the government, for which Arbitration proceedings are pending, BALCO shall be owned 100% by MALCO.

4) SIIL will be holding 65% of Hindustan Zinc, 79% of KCM and 100% of CMT, thus making it an end to end copper, lead and zinc player.

5) VAL will be holding 61% of MALCO while 85% of VAL shall be held by Vedanta while 15% shall be held by MALCO. MALCO name shall be changed to SAL.

This would make four independent companies of the group as under:--

1) Hindustan Zinc – producer of zinc and lead.

2) Sesa Goa – producer of iron-ore.

Both these companies won’t be having any investment or subsidiaries in other companies.

3) MALCO or SAL, will have aluminium and energy with 15% investment in its holding company VAL.

4) SIIL will be a direct end to end copper player with 65% stake in Hindustan Zinc. Also, if Vedanta group succeeds in acquiring remaining 29.54% stake of the government in Hindustan Zinc, it will go to SIIL. Hence SIIL is a focused end to end copper, zinc and lead player.

Though the share price of SIIL has corrected by 7.50% to Rs.575, it is a good buy at Rs.575 for a long term view. MALCO with equity base of Rs.262 crores on post restructuring basis and at the current market price of Rs.214 translates into a market cap of Rs.28,000 crores, which needs to get discovered by the market over a period of time.

The Plan for restructuring the companies is a good idea to make a justified arrangement of the company helping to analyze the stock at its best.

STOCKS TO GET BENEFITED FROM NUCLEAR DEAL.

The following companies are going to get the maximum benefit from nuclear deal.

1. Reliance Power

2. NPICL

3. JlNDAL SOUTH WEST

4. BHEL

5. L&T

6. NTPC

7. Tata Power

8. Walchandnagar Industries

9. HCC

NUCLEAR DEAL IMPACT

After a long political fight and numerous issues Nuclear deal is executed. Investors and traders are updating with the news but in fact mass public is unaware about the real impact of Nuclear deal.

1. Atomic Energy Act under which all activities in the nuclear field remain the domain of government entities need to be amended to allow pvt. sector participation, Currently, the private sector can supply equipment, even those as crucial as the nuclear reactor vessel, but the power plant can be operated only by a Government-controlled entity such as the Nuclear Power Corporation.

2. India target of 60,000 MW, with investment of Rs 600,000 crore, since each MW of nuclear power costs about Rs.10 crore could be achieved by active participation from the private sector so the Atomic Energy need to be amended.

3. India is to emerge as the “nuclear hub” for the world, where local companies would form alliances with global companies for supply of various nuclear components and reactors provided there is low cost of production in India, as the other developed countries,

4. The deal will enable India to get nuclear fuel for its reactors, which have been running at almost half their capacity

5. The biggest opportunity could come from the US but for this to happen, US based nuclear firms would have to wait for the clearance of the deal by the US Congress to commence trade with India. And once that happens, GE would be one of the biggest gainers as it already has a JV with Hitachi and it would be using this JV to enter India. It would also look for tie-ups with Indian companies as its strength lies in technology.

6. Currently in India, all nuclear power, which comes under the Government of India is run by Nuclear Power Corporation of India Ltd (NPCIL). It means it has a monopoly in India and it has already identified four reactor manufacturers — Westinghouse Electric Company, GE-Hitachi, Areva and the Russia’s atomic energy agency Rosatom. This is based on “suitability” of technical parameters for placement of orders that will form the first phase of the Centre’s plan to build 40,000 MW of nuclear capacity by 2020.

7.NPCIL hopes to set up “Nuclear Parks” or reactor clusters, which would house around 8 reactors of 1,000MW each. The orders would initially be placed for around two reactors of 1,000 MW at each of the locations, following which more reactors could be added. It has identified four coastal sites across Gujarat, Andhra Pradesh, Orissa and West Bengal.

8.Foreign reactor suppliers are unlikely to be allowed to own equity in the projects in the first phase.

9.This entry of India into the nuclear club bodes well not just for the country but also for other countries. Russia has offered India to invest in its upcoming international uranium enrichment centre in, Siberia, in lieu of paying for nuclear fuel to be supplied to the Koodankulam nuclear station. French company Areva NP (a JV between Areva and Siemens), Russian company Rosatom, USA’s GE, Toshiba Corporation, Westinghouse Electric Co would soon start queuing up for a bite into the succulent nuclear pie of India. Then there are the uranium supplying countries – Kazakh and Canada which are also eager to do business with India. Australia will supply uranium to India only if it signs the NPT.

BUZZING STOCKS OF THE DAY 08/09/2008

Aban Offshore surged by 3.19 per cent to close at Rs 2285.69 a share after the companys step-down overseas unit Venture Drilling AS won an 18-month contract from Maersk Oil Angola


Hindustan Petroleum Corporation (HPCL) flared up on Tuesday to close 12.09 per cent higher over the previous closing at Rs 225.80 after crude oil prices slipped below $106 a barrel.


GAIL India stock rose by 3.7 per cent to close at Rs 420.55 as the companys shareholders at a meeting, on Thursday, approved the issue of bonus shares (one share for every two shares.


Bilcare stocks rose 1.32 per cent to Rs 744.60 a share on reports that the firm has tied up with US largest medicine retail chain Wal-Mart to provide innovative packaging solutions


Swaraj Mazda (SML) shot up by 13.85 per cent to Rs 295.95 a share on reports that Mahindra & Mahindra (M&M) is likely to sell its 14.04 per cent stake

RESULT ANALYSIS OF " GMDC "

Gujarat Mineral Development Corporation is a Gujarat State government undertaking engaged in the business of lignite, bauxite and fluorspar mining as also power generation units based on lignite.The company is presently producing about 80 lakh MT of lignite at its three mines. New mines have been developed at the various locations at Surat to cater to South Gujarat where estimated annual production would be 10 lakh MT. 10 lakh MT of lignite production at Amod near Bharuch would fully contribute in FY09. 30 lakh tonne of lignite production is estimated from Bhavnagar mines to cater to Saurashtra region and Central Gujarat. So, in FY 09, the production of lignite would rise by about 40%. The company also has 250 MW power plant in operation based on lignite.Lignite is as brown gold, is an alternative for coal, which is in great demand, as natural resources are becoming scarce all over the world.

Net sales is down 15%, and though it managed to reduce its operating expenses, by 25% which itself is a feat given the rising costs in Q1. Despite that EBITDA dropped 3% and then interest outgo rose 215 and depreciation by 4% and this pushed down the PBT growth by 19%. And then it added back the expenses provided for overburden removal and loading of lignite and this was to the tune of Rs.38.88 crore. This boosted the PAT by 14% at Rs.72.35 crore. The company might have managed to show an increase in the last leg but the profit margins indicate the pressure. OPM slipped down from 55.08% to 48.15% and NPM from 26.53% to 19.75%.The fourth quarter of FY08 had been its best and in comparison, all else.Its income from mining fell from Rs.292.45 crore to Rs.239.40 crore. The income from power also fell, from Rs.50.91 crore to Rs.40,52 crore.

YoY, the company has done well and that to a large extent is very reassuring. The company continues to remain on a good wicket, it’s just that Q4FY08 was its best and expecting Q1CY09 to match up or exceed would be unfair, especially with many companies showing a slower growth.

The stock went ex-bonus from 1^st September and on 5^thSeptember it touched a new low at Rs.192. Currently it is quoted at Rs.195.
As the stock is fundamentally good stock and is under pressure due to bad market sentiment so one may hold on the position in the stock for short - medium - long term prospective.

ASTROLOGICAL FIGURES FOR NIFTY THIS WEEK

Astrological prediction regarding Nifty Range for the week 08/09/2008 to12/09/2008 are assumed as below :

The market to remain volatile during with the week with a target of 4050 on lower end while 4600 on the upper end.

DISCLIAMER

Contents have been given in good faith and purely with an astrological and independent view. Readers are strictly advised to use this information at their own risk. It is not an offer to act on this information or buy, sell or hold securities. Author would not be liable for any loss or profit arising out of readers acting on the information provided herein.

IPO : "20 MICRON" -A BAD INVESTMENT IDEA

With a public issue of 43.51 lakh equity shares of Rs.10 each, in the band of Rs.50 to 55 per share , 20 Microns is entering the capital market on 8^th Sep 2008, with offer for sale of 26.76 lakh shares.

The company is into mining and mineral business with its plants located at Rajasthan , Gujarat & Tamil Nadu. Financial Year 2008 topline of the company was at Rs.108 crores, which includes trading turnover of Rs.38 crores. Net profit for the year was at Rs.4.59 crores, with an EPS of Rs.3.69 (Appx).

Issue of 16.75 lakh shares even at the upper band of R.55, it would be able to accumultae Rs.9.20 crores . This would be used to finance the ongoing expansion at five places, estimated to have an outlay of Rs.19.20 crores, including issue expenses and general corporate purposes. Rs.10 crores is being mobilized as a term loan from IDBI.

Financial situation as at 31.03-08 has not been very good. Inspite of gross block of Rs.76 crores as at 31-03-08, the turnover of the company for FY 08 was just Rs.69 crores. Debt of the company was at Rs.46.51 crores on a net worth of Rs.28.20 crores, resulting in a Debt equity ratio of 1.65 to 1. Even expansion is being carried out on an estimated debt equity of over 1:1. Post issue, equity of the company, will rise to Rs.14.12 crores with promoters stake of 43% only.

Present issue, even if considered at the lower band of Rs.50, is being made at a PE ratio in double digit, which is definitely very high.

It Could be finally concluded that investment in this stock would be a bad idea.

MAJOR CORPORATE ANNOUNCEMENTS OF 08/09/2008

Aban Offshore Ltd has informed BSE that a Contract has been signed for the deployment of the new build jack-up rig Deep Driller 7 offshore Thailand, for a firm period of 3 months, extendable up to 6 months. The estimated revenue from the contract is USD 18 million (equivalent to INR 79.20 Crores) for the firm period. The rig is likely to start mobilizing to the location during the second week of September, 2008.

Sterlite Industries India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on September 09, 2008, to consider proposal for restructuring of the businesses of the Company.

Anant Raj Industries Ltd has informed BSE that the Central Government vide its notification No S O 2148(E) in the gazette of India, has notified the Company's project for setting up an IT Park as SEZ for information technology / information technology enabled services Sector in respect of 10 Hectare of plot owned by the Company at Rai, Sonepat, Haryana.

BROKERAGE HOUSES VIEWS

ICICI DIRECT.COM

1. The festive season starting next month would help bolster Auto sales. Demand is expected to increase owing to the planned newer launches and upcoming festive season, which generally sees an increase in vehicle sales.


2 . The recent volatility on the stock markets is posing challenges to investors looking for safe returns. High dividend yield stocks offer a safe haven to investors where safety is more of a priority than high returns. So even if the market remains volatile, going ahead, an investor can still get a decent return on investment , thanks to good dividend yielding stocks. The dividends are paid no matter what direction the stocks move and can provide a higher yield on investment a weak market.


RELIANCE MONEY

Weekly Technical Watch, levels of 4220 and then 4000 on weekly charts will continue to act as a strong support while on higher side levels of 4420 and then levels of 4600 will act as strong hurdle going forward.


NETWORTH STOCK BROKING

Long term valuation of Ranbaxy labs is very attractive. Networth has considered 2 scenarios, in scenario 1 it has assumed that 100% comes in for Tender and in scenario 2 it has assumed that 75% comes in for Tender. Under both the scenarios it has come to the conclusion that the long term valuation of the stock very attractive.


ANGEL BROKING

To accumulate TATA MOTORS from neutral with a target price of Rs 445 in its September 2, 2008 research report. "At current levels, we believe substantial portion of the concerns are now reflected in the TML stock price. Further, after considering the risks applicable to the consolidated entity, effects of the dilution owing to the Rights issue and conservatively assuming USD 100 million Profit in CY2009E for J&LR at 0.8% NPM (global peers have NPM in the range of 2-3%), we assign a target multiple of 9x FY2010E consolidated Earnings to the stock. Thus, considering limited downside from current levels, we upgrade the stock to Accumulate from Neutral, with a target price of Rs 445