IPO ANALYSIS: RCI INDUSTRIES & TECHNOLOGIES LIMITED

ISSUE OPENS / CLOSES ON	30-12 -2013 /06-01-2014
PRICE	RS 40, INCLUDING SHARE PREMIUM OF RS 30
ISSUE SIZE	28,80,000 SHARES
FACE VALUE	RS10
PROMOTER	RAJEEV GUPTA
BRLM	SARTHI CAPITAL ADVISORS
LISTING	BSE- SME
REGISTRARS	RCMC SHARE REGISTRY

NILEKANI TO CONTEST FROM BANGALORE SOUTH

Infosys co-founder Nilekani will contest the 2014 LS election from prestigious Bangalore south constituency. This was disclosed by KPCC president G Parameshwara yesterday.  According to our assessment and prediction he will win the LS seat by handsome margin. 

OFS ANALYSIS: POWER GRID CORPORATION LIMITED – INVEST.

ISSUE OPENS / CLOSES ON	03-12-2013/ 06-12-2013
OFFER SIZE	FRESH ISSUE 601864295 EQUITY SHARES, OFFER FOR SALE OF 784053309 EQUITY SHARES
FACE VALUE	RS 10
PRICE BAND	RS 85-90
RETAIL DISCOUNT	RS 4.50
PROMOTER	GOVT OF INDIA
BRLMS	SBI CAP, CITI GROUP,ICICI SEC,KOTAK MAHINDRA CAPITAL,UBS SECURITIES
REGISTRAR	KARVY
NAV AS ON SEP2013	RS 61.51

RBI TO ALLOW 74 PERCENT FDI IN CREDIT INFORMATION COMPANIES

Reserve Bank may consider allowing higher FDI limits to entities which have an established track record of running a credit information bureau in a well-regulated environment.

The limit can be allowed to be increased up to 49 per cent if their ownership is not well-diversified and up to 74 per cent if the ownership is well-diversified.

DOW JONES AT RECORD HIGH

Dow Jones index closed at a new all-time high on Friday. At close of trade the Dow - which recovered from early falls, was up by 55 points, to close at 16065.

S&P 500 closed above 1,800 for the first time, up by 8.91 points.

Shares in Time Warner Cable rose close to 10% on reports it could be a bid target.

DOW JONES,S&P AT HISTORIC HIGH

Dow Jones for the first time touched 16000 level yesterday and S&P 500 surpassed 1800 mark, also for the first time, yesterday. However  DJ closed at 15976 and S&P closed at 1792.

NSE NEWS : Corporates with highest number of complaints pending

Given below are names of corporates, whose securities are suspended / withdrawn from trading on NSE within the last year, with highest number of complaints pending against them for a period of more than 2 months as on October 31, 2013.

Sr. No.	Name of the Corporate	Number of complaints pending
1	Ankur Drugs And Pharma Limited	11
2	Deccan Chronicle Holdings Limited	2
3	Dhanus Technologies Limited	1
4	IOL Netcom Limited	1

No Fundamental Reason for Rupee Volatility: Dr. Raghuram Rajan

Extract of Dr. Raghuram Rajan speech:

There has been some turmoil in financial markets across the world as fears of a sooner-than-anticipated Fed tapering have grown. In India, we have had added volatility as the market has become concerned about policy rates and about oil marketing company demand for dollars.
There are issues we have to worry about and there are issues we should not be so concerned about. It is important that the RBI clarifies its interpretation of economic events and the likely direction of policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my goal today.

External Account

First, when the likely taper was announced in May, markets focused on India partly because of the large size of its current account deficit. The latest trade data suggest we have made significant progress in curbing the size of the likely deficit for this year.

I am especially happy about the 13.5% increase in dollar exports since last October, the reduction in imports by 14.5% and dramatic reduction in the trade deficit by 48%. Our estimate is that the Current Account Deficit (CAD) for this year will be about $ 56 billion, less than 3% of GDP and $ 32 billion less than last year.

Of course, some of that compression comes from our strong measures to curb gold imports. One worry is whether gold is being smuggled in sizeable amounts, and is being paid for through the havala channel. While we do see a sizeable increase in seizures, we believe gold smuggling has increased from a low base, and is still small.
A new worry that the market has latched on to is whether the much diminished CAD can be funded through capital inflows, given FII outflows. This is a little bit like a dog chasing its tail, because a reason for FII outflows is a worry about whether the CAD can be funded. The only way to address such worries is to do the math.

Last year FII inflows, both debt and equity, accounted for 26 billion dollars. Let me assume that we get no inflows this year, and in fact outflows equal the inflows we got last year. In other words, there is a 52 billion dollar turnaround in FII flows. Remember though that we have $32 billion dollars less of CAD to finance this year, and till yesterday, we raised $ 18 billion of money through new channels. So if other financing remains the same as last year, which it seems on track for, even if foreign investors pull out significantly more money this year than they have so far, we still can break even on capital flows.

Remember also that the major outflows in summer were debt outflows. That money has not come back, indeed our FII debt exposure, both corporate and sovereign, has come down from 37 billion dollars on May 21 to 19 billion dollars today. I presume what is left is more patient money, but given its diminished size, I do not see its possible exit as a huge risk.
Note that all these calculations include meeting all the demand from the oil marketing companies (OMCs) for dollars! But still there are worries about what will happen to the exchange rate if they are fully back on the market. So let me turn to their demand. The simplest way to think about this is that the RBI sold dollars directly to oil marketing companies starting August 28, 2013, thus ensuring they would not enter the exchange market directly.

As the exchange market stabilised, we allowed oil marketing companies to return and purchase more and more dollars from the markets, starting on October 14. Today, a month later, I am glad to report that the majority of oil marketing company demand for dollars is back on market. The market absorbed the additional demand quite smoothly – in fact, participants did not even know it was back until some talk from the Finance Ministry last week.
There has been some turmoil in currency markets in the last few days but I have no doubt that once markets calm down, the remaining demand will be absorbed easily. We have no intention of rushing this process.

The OMCs have entered a swap arrangement whereby they will have to repay dollars to the RBI on various dates from February 2014 till April 2014. One worry expressed by market participants is whether the OMCs will add to further downward pressure on the rupee when it comes time for them to repay dollars to the RBI.

This to my mind is a non-issue because we have three ways of managing the repayment. One is, of course, for the OMCs to buy dollars in the market. If exchange markets are calmer, this additional demand should be absorbed. But if they are not calmer, we could roll over some portion of the swaps so they mature at a calmer time. But perhaps the easiest option would be for us to settle the swap with the OMCs by making net payments in rupees, and avoid the need for them to go back to the market for dollars. When the time comes, we will choose the most appropriate combination.

Domestic market

Let me turn from the external account to the domestic market. Yesterday’s data suggested still weak growth as the IIP numbers came below expectations. The earlier core industry growth numbers suggested an incipient recovery, and the IIP numbers have disappointed a little, partly because of the volatile capital goods sector. Nevertheless, I am still hopeful that the good monsoon and the associated pick up in consumption, the very healthy exports, and the strong growth in the power sector should lead to stronger growth numbers for the second half of the fiscal year.

Turning to inflation, the new CPI index came in at 10.1%. Food inflation is still worryingly high, and the effects of the harvest are still awaited. But looking through the headline numbers, I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 percent from 8.5 percent in September. The momentum for core inflation is also on the decline.

Markets are worried about what these data mean for policy rates. As I have said before, the RBI is concerned about the weak economy as well as high inflation. We believe the weak economy, increases in food supply, and recent policy rate hikes will provide a disinflationary impetus over time, and recent data do not dispel this view.

We will watch the incoming data carefully, especially looking for the effects of the harvest on food prices as well as the second round effects of fuel price increases and exchange rate depreciation, before we make further decisions on interest rates.

RBI to undertake OMOs for Rs. 8000 crore on November 18

Finally, the RBI is conscious of the need to keep the system adequately supplied with liquidity, as we indicated in a statement recently, so that productive sectors are well supplied with credit. While borrowing from the MSF facility has come down substantially after the RBI extended the term repo window, market interest rates suggest some liquidity tightness. To alleviate this tightness, we propose to conduct OMOs. On next Monday (November 18), we will undertake an OMO for Rs. 8,000 crore.
Let me conclude. There is no fundamental reason for volatility in the value of the rupee. We are left with fear about what others will fear and do to explain what is going on. At such times, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that.

Source : RBI Press Release

APPLE BUYS PRIMESENSE

Apple has bought PrimeSense, an Israeli maker of chips, for $345 million according to sources.

JP MORGAN TO PAY$4.5BN TO 21 INVESTORS

JP Morgan has agreed to pay $4.5bn to 21 major institutional investors who lost money on mortgage-related securities during the financial crisis.

Mortgage-related investments were a major factor in the crisis, which began in 2007 with the collapse of the US housing market.

Last month JP Morgan agreed a separate, preliminary $13bn deal with the US government over mortgage securities.

AMAZON TIES UP WITH U S POSTAL SERVICES FOR SUNDAY DELIVERY

Amazon has inked an new partnership with the U.S. Postal Service to deliver online orders from the world's largest Internet retailer on Sunday for the first time.

The service started this weekend in the Los Angeles and New York metropolitan areas and Amazon plans to expand it to a large portion of the U.S. population in 2014, including Dallas, Houston, New Orleans and Phoenix.

TWITTER'S VALUATION TOO MUCH STRESSED - SELL

Twitter Inc which made dream debut on Thursday, lost seven percent on Friday to close at $41.65. 
 

Twitter raised $2.09 billion in its initial public offerings@ $ 26 a share last week. Twitter's current valuation is driven more on sentiments and initial euphoria than under lying fundamentals. The stock will settle around $ 30 in the near term. Initial allottees can off load the holdings at current price and re enter later at sub $ 30 level.

 

TATA MOTOR'S NET SOARS

Tata Motors has reported excellent results for the second quarter. Net  profit has surged  by over 70%, compared to same quarter in the earlier year. Net profit for the quarter stood at Rs.3,542 crore. Range Rover Sport and Jaguar F-Type convertibles  have contributed most to the quantum increase in net,  favorable exchange rate also boosted earnings . Sales rose to Rs.56,882 crore from Rs.43,403 crore a year ago. Analysts had expected the firm to report sales of Rs.53,722 crore. The stock on Friday closed at Rs 389 in the exchanges. The stock has risen over 40% in the last 365 days.

TWITTER IPO PRICE LIKELY @ $ 25 A SHARE.

Micro-blogging company Twitter is likely price its initial offerings at $ 25 a share. The shares will be traded on the NYSE 06-11-2013. At this price Twitter commands a market cap in excess of $ 13 billions. The shares likely to trade at 20-25% premium on listing.

SEBI MAY CLEAR BSE IPO SHORTLY

SEBI is expected to clear BSE's IPO shortly, according to sources. The oldest bourse of Asia may hit the market before March 2014.

COGNIZANT TO CLOCK 5 % GROWTH IN Q3

Cognizant is expected to beat its Indian competitors in dollars terms growth and is likely to report a revenue of $2.31 billion for the September quarter, a growth of 5% plus, sequentially.

NSE SHIFTS 15 STOCKS TO TRADE FOR TRADE

NSE has shifted the following 15 stocks to trade for trade category.

Sr. No.	Symbol	Name of the security
1	AHLUCONT	Ahluwalia Contracts (India) Limited
2	ASIANELEC	Asian Electronics Limited
3	ATNINTER	ATN International Limited
4	BEPL	Bhansali Engineering Polymers Limited
5	CEREBRAINT	Cerebra Integrated Technologies Limited
6	GARDENSILK	Garden Silk Mills Limited
7	GLODYNE	Glodyne Technoserve Limited
8	IBWSL	Indiabulls Wholesale Services Limited
9	INDOSOLAR	Indosolar Limited
10	MIC	MIC Electronics Limited*
11	MIRCELECTR	MIRC Electronics Limited
12	PETRONENGG	Petron Engineering Construction Limited
13	SHYAMTEL	Shyam Telecom Limited
14	SUBEX	Subex Limited
15	WANBURY	Wanbury Limited

RBI'S DATA AGAIN CONFIRMS SLOWDOWN IN THE ECONOMY

The Reserve Bank of India's recent data on Deposits and Credit of Scheduled Commercial Banks for June 2013 indicates further slowdown in the economy. The data are classified according to states, districts, centers (top 100 and 200 centers), population groups and bank groups.

Highlights:

• The growth (y-o-y) in both aggregate deposits and gross bank credit decelerated to 13.5 per cent and 13.2 per cent, respectively, in June 2013 from their respective levels in the preceding quarter as well as a year ago. The growth in aggregate deposits and gross bank credit was lower across all population groups compared with a year ago.
  
• The top hundred centers, arranged according to the size of deposits accounted for 68.5 per cent of the aggregate deposits and the top hundred centers arranged according to the size of gross bank credit accounted for 76.9 per cent of gross bank credit.
  
• The offices with deposits of Rs 100 million or more accounted for 70.3 per cent of the bank offices, 98.0 per cent of aggregate deposits and 95.0 per cent of gross bank credit. The offices with outstanding gross bank credit of ` 100 million or more accounted for 49.3 per cent of the offices, 80.4 per cent of deposits and 96.0 per cent of gross bank credit.
  
• Nationalized banks, SBI and its associates, and private sector banks accounted for 52.3 per cent, 22.3 per cent and 18.4 per cent of aggregate deposits, respectively, and for 50.2 per cent, 22.6 per cent and 19.5 per cent of gross bank credit, respectively.
  
• The credit-deposit (C-D) ratio of all Scheduled Commercial Banks as on June 28, 2013 stood at 76.5 per cent. At the bank group level, C-D ratios of foreign banks (94.2 per cent), new private sector banks (83.5 per cent) and SBI and its associates (77.5 per cent) were higher than the all-India average.
  

CREDIT SUISSE DOWN GRADES L&T, WE CONTIUES TO BE BULLISH ON L&T

Larsen and Toubro shares took a beating yesterday after Credit Suisse downgraded the stock to under-perform from neutral, saying an increasing share of orders from West Asia will narrow operating margin.

L&T’s shares lost 3.73% to Rs837.25,while the benchmark Sensex lost just 0.64% to 20,415.51 points.

Credit Suisse expects L&T to cut its guidance of flat margins for the 2014 fiscal.

However we at First Choice IPO do not think so. We are bullish on the stock in the medium to long term and recommend to accumulate at current level.

HSBC INVEST DIRECT TO CLOSE ITS OPERATIONS

HSBC, which acquired IL&FS Investment's brokerage business in 2008, will be shutting its struggling retail brokerage and depository business in India. The company had pumped in over $290 million in the outfit. About 300 employees of the company stand to lose their jobs due to the decision.

IPO NEWS: TWITTER TO LIST ON NYSE

Twitter has opted to list its share on NYSE, overlooking tech-heavy NASDAQ. NASDAQ bungled Facebook Inc's IPO offerings in 2012. Twitter is now expected to kick off its investor roadshow on October 28 where it will pitch its offering to Wall Street before shares start trade in mid-November.

TCS'S REVENUE, NET UP

TCS reported a net profit of Rs 4,633 crore for Sept quarter, an increase of 34.91 per cent over the same quarter last fiscal at Rs 3,434 crore.
TCS’ consolidated total income during the quarter under review increased 31.36 per cent to Rs 20,952 crore as compared with Rs 15,949 crore in the quarter ended September 30, 2012. The stock closed flat at Rs 2216.

Foreign banks entry to be made easy - Raghuram Rajan

Reserve Bank of India will be unveiling new banking sector reforms, which would allow foreign banks to enter Indian market in a big way and even contemplate taking over Indian banks, according to RBI Governor Raghuram Rajan.
 
The banking sector reform, in particular to those facilitating entry of foreign banks in India in a "big way" is part of the five pillars of reforms, including monetary policy framework, which the RBI is going to implement in the next few years.