Money Tree

The stock markets are punishing those companies which are coming out with poor results and it is the IT sector which is disappointing with numbers. Today Hexaware and Polaris came out with numbers and clearly the appreciating rupee and soaring salaries have eaten their profits.

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DLF was listed at Rs. 582 in the morning as against its issue price of Rs. 525 and then it came down and is currently trading around Rs. 542. The stock has made a high of Rs.583.95 and a low of Rs.526.60 till 11.45 a.m. The poor listing impact has been felt across the board in the real estate sector and most of the real estate players have corrected significantly. Unitech is down more than 5 percent at Rs. 523, Parsvnath is down about 6 percent at Rs. 354, Mahindra Gesco is down about 3.5 percent at Rs. 554 and Indiabulls Real Estate is down about 5 percent at Rs. 428.

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Bharti Airtel is buying back the 5.6 percent stake of Vodafone in it and the money to be paid for this stake buy might come in from selling 5 percent of its stake to Singapore Government’s Investment arm Temasek. The other major holder in Bharti Airtel is Singtel which currently holds 30 percent stake in the company and Singtel is also controlled by Temasek (more than 50% in Singtel is held by Temasek). After these deals the stake of Singapore Government in Airtel would rise to nearly 35 percent. The price at which the stake is being sold is yet not confirmed.

The cement companies have raised the prices of cement by Rs. 3 to Rs. 5 per 50 Kg bag across India as per the reports displayed in a business news channel. The move comes after the Finance Minister Mr. P Chidambaram said on a news channel that the Government is not controlling cement prices and there is a free play in the market. The cement stocks are up on the back of this news, ACC is up 3 percent at Rs. 970, Gujrat Ambuja is up 3 percent at Rs. 129 and Grasim Industries is up more than 1 percent at Rs. 2734.

The weekly inflation numbers are out and the inflation has come down to 4.28 percent for the week ended on 9th June 2007 as against 4.80 percent for the previous week. This has been better than the market expectations of 4.43 percent.

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Vishal Retail saw more interest among investors as compared to DLF as the issue is oversubscribed 81 times. The issue closed yesterday and the final figures of oversubscription were as under.

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The Promoters of Mount Everest Mineral Water are likely to sell 11 percent stake to Tata Tea and it would take the total holding of Tata Tea in Mount Everest to more than 42 percent. Mount Everest is the market leader in mineral water market with its brand Himalaya having 75 percent market share. Both the stocks have reacted to the news today and Mount Everest is locked in the upper circuit at Rs.127.65 and Tata Tea is up more than 3 percent at Rs. 910.

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We had recommended Dish TV on 3rd May 2007 at Rs. 110-112 with a short term target of Rs. 135. Today the stock traded above our target price for a long time and closed at Rs. 134.15 today. We had maintained that once the stock crosses Rs. 110 level decisively then it would have its next target placed at Rs. 122 and then Rs. 135. Today it has aceived our final short term target and the stock afer crossing Rs. 110 level did not go below that as indicated in our recommedaiton.

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The rupee has appreciated more than 10 percent in the last one year and the rally seems to be continuing. The exporters are holding their nerves witnessing this seemingly uncontrollable rise against the dollar. But why the rupee is appreciating and is RBI taking any measures to put reins on it and is it good for economy or will it create problems going ahead. We will endeavor to answer all these questions in the following discourse.

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The much awaited DLF ipo is expected to open on 11th June 2007 and the price band is likely to be Rs. 510 to Rs. 600 per share. The total issue size is expected to be near Rs. 10,000 crores, one of the biggest issues in Indian primary market.
SEBI has given its nod to the OMAXE IPO and the same should also hit the markets in the month of June or in early July. The last real estate player to come out with an IPO was Orbit Corporation which came out with a successful IPO last month.
The overall real estate sector is in an uptrend with Unitech recently making its all time high and other players like Ansal Properties, Parsvnath Developers, Mahindra Gesco, Sobha Developers, etc also in an upmove.