Indian Stock Market News, Information, Tips, Analysis, Reports

Investors looking for short term investing opportunities can consider investing in Anu Labs IPO for listing gains. Though the stock markets are very volatile, Anu’s lab IPO is likely to reward investors with decent listing gains since the pricing valuations of the IPO has been extremely attractively. The institutional investors category has also seen good response, suggesting the fundamentals of Anu’s Laboratories is good. Hence looking at the fundamentals of the company as well as the response it is getting from various classes of investors, I recommend Anu’s Laboratories IPO for listing gains.

Joy Alukkas Traders which is the Indian arm of Multinational Jwellery retailer JoyAlukkas will be coming out with an IPO in the near future. In a press release made by Joy Alukkas Traders (India) Limited earlier this week, the Chairman of the company Mr. Joy Alukkas said that the size of the IPO was likely to be about Rs. 400 crores. More details about the Joy Alukkas Traders IPO will be posted here soon.

AllAboutCredit.net offers a useful service which answers all your queries related to credit cards. The site already has an extensive database of questions which have been answered by credit card experts. The site also provides online credit card feedback on almost all the credit cards available in the market. Credit card holders having any queries or issues related to any of their credit cards can first browse through the comprehensive list of qquestions answered by experts in the site’s question bank. If it is found that their query has not been answered previously, they can raise the question by using the simple form available on the website. The form has 3 fields, one each for name, email ID and the question. Questions are usually answered by experts with 48 hours of being posted. As mentioned earlier, the site also provides online credit card feedback on various types of credit cards and also recommends the best credit cards in each of the categories.

The global credit crunch that has been affecting the UK’s financial markets has been making financial headlines since last summer, having wreaked havoc in all areas of the financial sector, including credit cards. However, despite the worsening credit crunch, which has deeply impacted on the availability of finance for consumers, it appears that many consumers are still falling over themselves in order to try and get a 0% balance transfer card onto which to transfer debts of high interest credit cards.

A recent report suggested that many 0% balance transfers no longer offered capped rates on their transfer fees, but this does not appear to have put consumers off, with nearly three quarters of a million cardholders trying to transfer a collective £1.1 billion every month. These figures are despite the fact that many credit card providers have tightened up on their lending criteria, and according to some industry officials around half a million consumers have a credit card application rejected every month in the UK.

The data suggests that many consumers are still facing crippling repayments on high interest debts, such as balances on expensive credit cards, and whilst many are flocking to try and transfer their balances on to 0% credit cards, thus benefiting from the opportunity to save a small fortune in interest on their debt, many will find that the increasingly stringent criteria in place from lenders will ruin their chances of being able to make this saving.

One industry official stated: ‘There is a significant market for cards offering balance transfers as our research indicates that 40% of card holders think it will take longer than one month to clear their current balance.’

Secured lender Firstplus, which has the television star Carol Vorderman advertising its loan products in glossy television advertisements, has been criticised over a loan offer that it has recently launched, which critics have described as a debt trap. The recently launched loan offers a discounted rate of interest for ninety days, enticing cash-strapped consumers to take out finance. However, after the ninety day period the interest rate on the loan nearly doubles, which means that consumers will be left having to pay huge sums of interest on their borrowing, having been drawn in by an initially enticing rate for just a short period of time.

The secured loan is only available to homeowners, as the finance is secured against the home. The initial interest rate that is offered to consumers starts at 4.9%. However, this is for ninety days only, and after this initial period the typical APR leaps to 8.5%. The minimum term of the personal loan is five years, and many consumers with less than perfect credit could end up paying a way higher rate than the typical 8.5% advertised.

The timing of the loan offer has also been slated, as it comes at a time when consumer debt levels are high, credit conditions are tight, and many lenders are reining in their lending. One official from the consumer campaign group Which? stated: ‘The initial rate is low enough to attract borrowers desperate for credit and who may be struggling to find it elsewhere. Yet 90 days offers negligible benefits and many people may not understand fully that the rate will soar in a very short time. This is a debt trap.’

Officials from the lender, FirstPlus, responded by stating: ‘Consumers don’t have many options at the moment and we are responding to this.’

Reliance Energy has gone in for a name change from Reliance Energy Limited to Reliance Infrastructure Limited. The company think tank feels that from being a pure power generation, transmission and distribution company Reliance Energy has moved on to tap the potential of the Indian infrastructure sector. Hence the name change from Reliance Energy to Reliance Infra will more aptly reflect the the space in which the company operates. The Reliance Infrastructure name change will not cause loss of any shareholder rights.

As many of you know, L&T got hammered yesterday for no reason at all. It all started with a brokerage house leaking a discussion with the L&T CFO, who mentioned that one of L&T’s subsidiaries is likely to face a 150 to 200 crore hedging loss this year. The market blindly hammered L&T shares yesterday without properly analysing the effects of this hedging loss. This is the sequence of events that happened

L&T, as a business practice, hedged against currency fluctuations in the forex derivatives market and also certain commodities which are essential for its business through the commodities derivatives market. Lets say L&T hedged Steel, which is an important raw material used for construction purposes. The purpose of hedging was to prevent its core business margins from taking a hit in case prices of steel went up drastically or there was an unfavourable movement in the currency market. L&T has been doing this for the past 3 years.

For the past 2 years, the prices of steel were on the rise and hence L&T would have taken a hit on its margins which would have been compensated by the profits made by buying steel forward in the commodities market.

This year metal prices including steel prices have taken a hit and hence obviously L&T and for that matter, all other companies which have hedged, would make a hedging loss. The market was short-sighted and only saw this hedging loss.

What the market ignored is the fact that this loss would be compensated in terms of increase in margins in their core business (which is construction and not commodity trading). Today the market realised that and the shares prices of larsen and toubro have bounced back today.

How I made Money
Yesterday 30 minutes before the closing bell, I checked the performance of my portfolio of which L&T has a weightage of about 45%. I was shocked to see the share prices of L&T down over 7% especially when the broader market was in the positive territory. When searching for the reason for this steep fall, I saw a news report saying L&T was likely to make 200 crore hedging loss this year. Since I’ve well researched L&T, I knew that it had been hedging for the pass 3 years and the reason for hedging. I knew the market would realise this fact in a short while and the share prices of L&T would bounce back soon. Since I was short of cash, I bought 5 lots L&T futures yesterday. I sold all the 5 lots today for a profit of close to Rs 40,000 which I’ve used to buy L&T shares in the spot (cash) market. My target (fair price) for L&T is Rs. 4600 per share which I’ve arrived at using a combination of DCF, SOTP and book value (investments) valuation methods.

Note : L&T has recently issued a clarification that the hedging loss has been through forex derivatives and not commodity derivatives. But the concept is similar. You hedge to protect your profit margins. So, if there is a hedging loss, higher business margins will offset it. Similarly if there is a hedging profit, lower business margins will offset this hedging profit.

REC IPO Allotment Chances  seem to be pretty good for retail investors. Retail investors category in the REC IPO has been subscribed 7.67 times which means those who applied in the REC IPO for 900 shares will get around 120 shares. The success of REC IPO in terms of listing gains offered will go long way in bringing back investors confidence in IPO’s after the horrible time investors have had in the first half of February, investing in IPO’s. Details on how to check the REC IPO Allotment status will be made available here.

SVEC Constructions IPO Issue has been closed for subscription. SVEC Constructions IPO was scheduled to close for subscription tomorrow. However, looking at the very poor response the IPO has received from investors, the promoters have seemed to have decided to call the issue off. With the fate Reliance Power IPO suffered on listing, investors will now think twice before subscribing to any IPO. GSS America IPO is also likely to be called off. Hence investors are advised to stay away from it in order to prevent their money getting locked for 15 days.

V-Guard IPO Subscription is scheduled to open on Monday, February 18, 2008. V-Guard IPO price band has been fixed at Rs 80 to Rs 85 per share. V-Guard Industries Limited is one of the leading companies in India manufacturing electrical and electronic products. The registrar for the V-Guard IPO is Intime Spectrum while Anand Rathi Securities is the lead manager for the IPO. V-Guard IPO listing will be both on the NSE and the BSE. V-Guard IPO closes for subscription on Thursday, February 21, 2008. V-Guard IPO Subscription details and V-Guard IPO Allotment details will be updated here regularly.