Carnage on Dalal Street: Over 70 stocks hit all-time low

Riken Mehta
Moneycontrol.com

Key equity benchmarks lost over 2 percent in trade on fears of the cheap liquidity coming to an end that was fuelling the equities for some time now. Federal Reserve Chairman Ben Bernanke overnight said if the economy continues to improve the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014. Asian market plummeted in the range of 1 to 2 percent Thursday.

Back home, the local currency has also crumbled to record low of 59.93 on unwinding by the FIIs in the debt market. The carnage continues on the Dalal Street in largecaps as well as midcaps. BSE Midcap index is down close to 2 percent. Many stocks have touched record lows creating panic among investors.

Here is a list of stocks that have slumped to record lows.

Scrip Name	All Time Low Price	Group
JPINFRATEC	25.75	A
Oberoi Realty	193.2	A
Bharti Infratel	144	A
MCX	818.2	A
BITS	0.08	B
JCT Electronics	0.31	B
DJS Stock	0.58	B
Pennar Alum	0.22	B
Cyberscape	0.24	B
RISHABHDEV	1.4	B
ASSAMCO	3.88	B
Santowin Corp	0.41	B
SUP TANNERY	1.45	B
Padmalaya Tele	1.26	B
VIRGOGLOBAL	0.54	B
GTL Infra	1.35	B
Porwal Auto	3.98	B
Fact Enterprise	0.66	B
Prabhav Inds	0.87	B
VAISHNAVI	1.92	B
Aishwarya Tele	3.46	B
PRADIPOVERS	4.43	B
KS Oils-$	1.34	B
Sujana Metal	0.8	B
Archies	13.6	B
Arss Infra Proj	21.8	B
Varun Shipping	6.11	B
Sowbhagya Media	7.7	B
Classic Diam	1.61	B
Gemini Comm	1.18	B
Dynamic Port	2.79	B
Ashutosh Paper	3.8	B
Subex	6.5	B
Indiabulls Infra	2.53	B
REISIX TENR	1.32	B
Gayatri Sugars	1.68	B
BIOGRPAPER	1.82	B
SYNCOM HEAL	6.81	B
Ambica Agarb	2.7	B
Crew Bos	6.1	B
Royal Orchid	21.25	B
Acropetal Tech	4.75	B
GUJNREBNDVR	7.36	B
Pochiraju Inds	6	B
Varun Inds	6.13	B
Tijaria Polypipes	3.71	B
Everest Kanto	15.75	B
Gol Offshore	51	B
Punj Lloyd	36.2	B
JHS Svendgaard	9.69	B
Shriram Epc	44.5	B
Rushil Decor	27.1	B
VASCON ENG	22.95	B
Simplex Proj	19.55	B
Bajaj Hind	15	B
DQ Entert Intl	5.91	B
Jay Mahesh Infra	14.1	B
KGN Enterprises	38.95	B
Hira Ferro	8.8	B
Jubilant Inds	78.1	B
Dwarikesh Sugar	23	B
Zylog Systems	24.95	B
Delta Leasing	45.95	B
Allcargo Logistics	95	B
Titagarh Wag	117.7	B
Orissa Minerals Development	2105	B
OTML	6.55	M
Paras Petro	0.22	T
Gujarat State Fin	1.37	T
Exelon Infra	2.41	T
Prithvi Info	6	T
KINGSINFRA	6.89	T

Chart: FIIs sold bonds worth Rs 27000 cr since May 22

Riken Mehta
moneycontrol.com

Bond market has witnessed an unprecedented sell-off by foreign institutional investors over the last one month. That is because the weakness in the rupee, and a simultaneous rise in bond yields of US government bonds has made it profitable to sell Indian debt and buy US debt.

FIIs have sold debt instruments worth Rs 27145 crore since 22 May, as per Sebi data. In the same period, the rupee has shed over 7 percent, hitting a fresh all-time low of 59.91 on Thursday.

Currently, yields on 10-year US treasury note is around 2.4 percent, while it is around 7.3 percent for Indian 10-year benchmark yield.

"However, when FIIs take an exposure in Indian bonds, they have to hedge it against exchange rate risk, which comes to around 6 percent. So, the effective return for FIIs comes to 1.3 percent (7.3 percent minus 6 percent) as of now in Indian bonds, in comparison to 2.4 percent offered in US 10-year treasury note," SBI deputy managing director and group executive for global markets P Pradeep Kumar told PTI.

Correction overdone in Oberoi Realty, time to buy says Motilal Oswal

Brokerage house Motilal Oswal has put a ‘Buy’ rating on Oberoi Realty, citing smart entry point for medium-term investors after the stock’s 25 percent drop.

The company's long stalled project—Esquire (Goregaon)—has received IOD (Intimation of Disapproval), which according to Motilal Oswal, will act as a trigger for the stock. "The construction work should resume by July 2013, reviving sales velocity and customer collections," the broking firm said in its report dated June 18.

The company's value unlocking potential is intact (albeit delayed) and will be played out as the long pending approvals are received and the Mumbai market recovers," it adds.

However, it has revised its price target lower by 10 percent to Rs 290. "We cut our net asset value (NAV) estimate by 10 percent to Rs 290 and our earnings per share estimates for FY14/15 by 6-7 percent to factor in delay in launch of Garden City Phase III than earlier expectations and muted outlook for commercial leasing," it added.

Shares of Oberoi Realty closed at Rs 210.5, down Rs 2.9 or 1.4 percent on Wednesday.

Religare maintains 'buy' on Tata Motors, target Rs 350

Brokerage house Religare has retained its "buy" rating on Tata Motors  citing steady growth in monthly retail sales of its Jaguar and Land Rover luxury brands. The firm has a price target of Rs 350 per share.

Jaguar Land Rover's retail sales last month increased 12 percent YoY, best ever for May. However, parent Tata Motors' global wholesales in May were disappointing (down 18 percent). There was only a marginal rise in JLR wholesales.

"JLR's wholesale and retail volumes have increased by 9 percent and 12 percent respectively. Sustained momentum in the Chinese market and new product launches suggest a healthy volume run-rate in the months to come," says the Religare note to clients Monday.

"We forecast 422,500 units for FY14 (a growth of 14 percent year-on-year). Further the improving product and market mix should aid margins in FY14. We recommend buying the stock on any declines owing to lower-than-expected May wholesale volumes," says the Religare note to clients.

Shares of Tata Motors were trading at Rs 293.20, down Rs 3.90 or 1.31 percent.

Government's divestment program: A feast party for bears

The government’s stake sale in MMTC, first in fiscal year 2013-14 proved to be a feast party for bears yet again. The offer price for 9.33 percent divestment was fixed at Rs 60 apiece, a 72 percent discount to its previous day closing price of Rs 211. This led the shares of MMTC to be locked at 10 percent lower circuit on Thursday at Rs 191.

As seen from the table, the government had raised Rs 23,857 crore in the previous financial year via divestment in seven PSU companies. Analysts say, all the issues were heavily under-priced by the government barring NMDC. And that’s not all, even after the offer for sale was done, shares of Hindustan Copper, NMDC, Nalco and SAIL are currently trading at 52-week lows, making money for bears.

Company	Date	Offer price	Prev day price	Discount to previous day closing	CMP	% Chg since OFS	% Stake divested	Amount raised	Post stake sale
Hindustan Copper	23-Nov-12	155	266	-42%	84	-85%	5.58	807.91	94.01
NMDC	12-Dec-12	147	159	-8%	112	-31%	10	5979.79	80
Oil India	1-Feb-13	510	539	-5%	540	6%	10	3144.97	68.43
NTPC	7-Feb-13	145	152	-5%	150	3%	9.5	11469.39	75
RCF	8-Mar-13	45	44	2%	38.6	-17%	12.5	310.49	80
NALCO	15-Mar-13	40	44	-9%	29.5	-36%	6.09	628.53	81.06
SAIL	22-Mar-13	63	64	-2%	55	-15%	5.82	1516.17	80

India VIX hits one-year high as Nifty, rupee tumble

Riken Mehta

Foreign and domestic investors have pressed a panic button in the wake of rupee touching an all-time low of 58.95 on Tuesday. The weakness in rupee has led to a sharp fall in equities with key benchmark indices losing over 6 percent in the last eleven sessions.

Volatility Index or the fear gauge indicator is a measure of the amount by which an underlying Index is expected to fluctuate in the near-term. India VIX, a volatility index based on the Nifty index Option prices has been making higher lows and higher highs in last one month. The India VIX has touched a high of 19.85 today, a level last seen in June, 2012. As seen from the chart, India VIX is inversely proportional correlated to the Nifty.

Sanju Verma of Violet Arch Cap told CNBC-TV18, "The lower end of the India VIX has been trading in the region of 13-14, and the higher end has been trading in a band of 18-20. That is a cause of concern. If the India VIX were to breach 20 on the upside, in the intermediate to short-term there could be more trouble."

What led to massive fall in Indian rupee? Find out here

Riken Mehta 

The Indian rupee plunged to record lows on Monday, touching a level of 58.15 per dollar as the unwinding in currency carry trade is leading to the massive fall in the domestic currency.

Simply put, FIIs invested in Indian equities and debts earlier which were offering better returns compared to US 10 year bonds. However, the trade-off is becoming unviable for FIIs as the yield on these bonds have shot up significantly in the past one month on fears of Quantitative Easing (QE) or massive bond buying program coming to an end.

Back home, the Reserve Bank of India (RBI) is asking banks to cut interest rates that would lead to lower yields on deposits, reducing the arbitrage opportunities for foreign funds. If this situation continues for some more time, then one can expect massive unwinding in currency carry trades.

Last week, RBI has also pointed out that it will intervene in the forex market only to curb the volatility. Reading between the lines, the analysts believe that RBI will not try to suppress the rupee depreciation. In such a case, one cannot rule out the levels of 60/USD in the near future.

Will rupee slide speed up FII selling of Indian shares?

Santosh Nair, Riken Mehta
Moneycontrol.com

Finance minister P Chidambaram Thursday tried to pacify jittery markets, saying foreign capital flows were strong enough to bridge the current account deficit. But will the flows sustain going forward?

Theoretically, a weak rupee provokes foreign funds into selling Indian equities, as it would lower their portfolio value, if the stocks have not been performing.

Assume a foreign fund buys one share of a company for Rs 52 when the rupee was 52 to the dollar. If the stock price remains constant, and the rupee depreciates to 57 to the dollar, the value of the portfolio is now less than 1 dollar. But if the stock had risen to Rs 62, the foreign fund would not be worried, since the appreciation could more than cover up for the weakness in the rupee.

India is among the emerging market countries which have gained from the low interest rate policies of the US Federal Reserve and the European Central Bank. Generous dollops of liquidity resulting from those policies found their way into Indian shares, keeping share prices higher even during periods of weakness in the rupee.

But now market is not so sure if the liquidity flows will sustain, as there are doubts that the Fed may now start cutting back on its monetary stimulus.

Since the big sell off in global markets a couple of weeks back on these concerns, foreign fund flows into India have slowed.

And there is bad news on the debt front as well. FIIs have net sold close to Rs 4000 crore of Indian debt as bond yields are softening in anticipation of a decline in interest rates.

If capital flows slow down at this stage, this could trigger a vicious cycle of weakening rupee and foreign fund outflows. 

How Reliance Industries moves before, on and one-week after AGM

 
Sagar Salvi, Riken Mehta
moneycontrol.com

The Reliance Industries ' Annual General Meeting (AGM) has always been a big event for the company's shareholders, prospective investors and traders.

However, chairman Mukesh Ambani's plans to invest Rs 150,000 crore over the next 3 years failed to cheer the Reliance Industries stock as it ended the session on Thursday a percent down.

Reliance, India's fourth biggest company by market value, has been under pressure from investors over its slowing gas business and its drive into consumer-focused sectors such as telecoms and retail.

Remaining tightlipped, Ambani gave away few details of his plans for the long-anticipated launch of 4G telecommunications services, which was a big disappointment for the street.

Below is a historical chart of how RIL stock has moved before, on and one-week after AGM in the last five years.

Chart: India Cements lag rivals by a wide margin

Riken Mehta
Moneycontrol.com

The sordid deeds of his son-in-law may have aggravated the underperformance of N Srinivasan-controlled India Cements  shares over the last month. But even adjusting for that, India Cements shares have had a disappointing run over the last year. And the growing feeling in the market is that Srinivasan has taken his eye off the ball, at least where his primary responsibility is concerned. In contrast, shareholders in rival cement companies have made decent gains over the last one year, despite the sluggish trend so far this calendar.

Sentiment for the sector in general has soured of late, as demand is not showing signs of a sustained pick up. “We retain our ‘sell’ stance on large-cap cement players, given the rich valuations at a time when weak demand risks loom large on pricing,” brokerage house Ambit said in its note to clients earlier this week.

The outlook is even bleaker for India Cements as shareholders are worried about what the probe into the IPL spot fixing case holds for India Cements, since N Srinivasan’s son-in-law Gurunath Meiyappan is among the key accused.

Just Dial & Amitabh Bachchan: Superstar's super gains

Riken Mehta
moneycontrol.com

Amitabh Bachchan just got richer by Rs 3.77 crore today. The Bollywood superstar, who happens to be the brand ambassador of Just Dial  , a local search firm, had 0.1 percent stake in the company as per disclosure.

The red herring prospectus say that Bachchan was allotted 62794 shares at a price of Rs 10 in January 2011. His investment cost was Rs 6.27 lakhs.

Just Dial listed today in the bourses at Rs 590 apiece against an issue price of Rs 530 per share. At the current price of Rs 600, his holding is valued at Rs 3.76 crore, a whopping 5900 percent return over its investment. Retail investors were allotted shares at a discount price of Rs 483 per share.

Amitabh Bachchan was signed by the company as brand ambassador in December 2010 for a period of three years.

This is not the first time Amitabh Bachchan has bought or allotted shares of a listed company. As per March 2013 shareholding data, he also holds 1,675,000 shares or 1.4 percent in Birla Pacific Medspa. He has 4.95 percent stake or 555,452 shares of Fineotex Chemical  as well.

June seasonality: How BSE Sensex has moved in past 20 years

Riken Mehta
Moneycontrol.com

Traditionally, May has not been the best of month for equity investors, with the market declining more often than it has risen. But June seems to be the exact opposite. In last 20 years, the BSE Sensex has risen 14 times in June. This could partly be due to the pessimism in May, and the subsequent covering of short positions. But things don't look too bright for Indian equities this June.

The HSBC Manufacturing Purchasing Managers' Index (PMI) for May declined for the third successive month to hit a 50-month low of 50.1, and the widely held view is that economic recovery could be slower than what was expected.

The rupee is under pressure, political uncertainty looks likely to persist, and there are questions about the continuation of US Federal Reserve’s loose monetary policy, which has been driving the rally in emerging market equities.

Don't fool yourself! Diesel cars aren't price-efficient anymore...

Riken Mehta
Moneycontrol.com

Although the monthly 50 paise increment in diesel prices has managed to bring down under-recovery of oil marketing companies to some extent, it has impacted the auto industry negatively as far as sales of diesel vehicles are concerned.

In May last year, the difference between petrol and diesel rates was as high as Rs 33 with the latter commodity available at Rs 46 a litre. This led to boost in sales of diesel vehicles. But with continuous hike in diesel prices, the difference between the two has come down to Rs 14 which has effectively chased away buyers of diesel cars.

Mahindra and Mahindra (M&M) is one such industry player struggling to sell diesel vehicles. Speaking to CNBC-TV18, Pravin Shah of M&M admitted the industry was seeing de-growth in SUV sales on higher diesel prices. The excise duty of 3 percent levied on the SUVs by Finance Minister also impacted sales to certain extent. With the difference in petrol and diesel prices getting narrowed, sales of diesel vehicles will take a beating in the coming future.