Reliance Power listing is a big awaiting event for every investors on the street, who have got allotment of it shares as well as for market as it was the biggest issue in Indian Capital Market history. It is going to list on Monday, February 11, 2008.
During the issue time, experts were expecting the premium for Reliance Power nearly Rs 400-450. Everyone was very optimistic about this listing. But as the market's turmoil has been started post issue, the premium also start declining. It reduced to Rs 120-150 as per experts quote. So we will check what experts are expecting on listing?
Manisha Bhatt of Prabhudas Lilladher says, "Reliance Power is expected to list with Rs 120-130 premium. One can book partial profits during the day. The stock can go below issue price of Rs 450 if market remains subdued."
According to R S Iyer of K R Choksey Securities, "The stock is likely to list at around Rs 450-500 after looking at negative sentiment and low volumes in the market. It will not slip below issue price. People should not sell the stock due to panic, they should wait for better price. The stock will see the price of Rs 650 in near term but not on listing day. So once this sentiment would get improved in near term, investors can sell the stock at that price, till that time wait."
"It is presumed that share will list at around Rs 600 per share, on 11th February. In that situation, it is likely that majority of HNI Category investors would come to sell in the market and this category is holding about 2.28 crore shares. Since, majority investors of this category had gone for margin funding, purely from trading angle, this liquidation is likely to happen", Investment Advisor, S P Tulsian said.
He also said, "Retail Category is holding about 6.84 crore shares and since, returns to them are quite high, as compared to HNI Category, good amount of profit booking is expected by these investors as well. While talking about QIB Category, they are always smart to take the side, where wind is blowing. Since, investment of only Rs 45 per share, having made by this category of investors, interest cost to them is low at around Rs 27 per share. Hence, they will be too eager to book profit on the listing day at a price levels of Rs.600 per share."
"Hence, it is likely that selling of close to 5 crore share, may get witnessed on the listing day, from all categories of investors, put together. Due to dull sentiments now prevailing in the secondary market, matching buying may not emerge, which could keep share price soft on the listing day. Profit booking is advised in the counter upto Rs.575 level, as prices are likely to fall below this level, in the next 15 to 20 days and may get settled at around Rs.500 levels. Buying is not advised above Rs.550, for first couple of days, as lot of volatility is likely", he added.
The issue price has been fixed at Rs 450. The stock will be part of NSE F&O, the lot size is of 450 shares and options strike priced between Rs 10-1350. Reliance Power IPO was oversubscribed approximately 70 times. Portion reserved for qualified institutional buyers was oversubscribed 82.5 times, 10% of the net issue reserved for non institutional investors was oversubscribed 159.6 times and 30% of the net issue reserved for retail investors was oversubscribed 13.6 times. With approximately 42 lakh shareholders Reliance Power will be the largest shareholder base company among the companies listed on the Stock Exchanges.
Reliance Power is the flagship company of the Reliance ADA Group to develop, construct and operate power generation projects. The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under developments.
Saturday, February 16, 2008
Make real estate deals more transparent
The success story of the booming real estate market in India coupled with strong economic growth have spelt good news for the country. Nonetheless, reforms are necessary. Reforming the real estate sector in this budget will add to the success story of the country. So this budget, the Government should further reform and tighten norms for the real estate sector to protect the interests of the investors. This will encourage the actual homebuyers and NRIs who are looking to invest in India. Certain reforms are needed to ensure housing at affordable prices to appeal to the masses. The developers and builders in India have been having a field day with no control over built up and carpet areas, illegal property documents and constructions, possession related issues and other illegal entanglements. In Mumbai, rules and regulations for re-development of old buildings and the slum rehabilitation should be made more lucrative for investors and builders.Our expectations from the budget with respect to the real estate sector are as follows:1. Section 80 IB of the Income Tax should resume. This act gives tax relief to the builders who construct units less than 1000 square ft built up in metros. However, the benefits under this section have been stalled since last year. A lot of builders have created houses under this scheme and consumers are benefited through the mass construction. The only problem here is that while the builder gets tax relief there is nothing passed onto the consumer. A majority of home buyers are unaware of this tax respite which the Government had given to the builders. The Government should continue giving this subsidy to the builders as this will encourage them to make more affordable homes. This will also be in line with the Government's 10th Plan estimate where the shortage of housing units is expected to be in the range of 22.4 million square ft. This benefit is the need of the hour but with some rider that the benefit is mandatorily passed on to the consumer.2. Under Section 24 of the Income Tax, the exemption of the interest on home loans should go up from the present Rs 1.50 lakh to atleast Rs 3 lakh. This is keeping in mind the average size of the apartment price has grown 200% over the past few years. Also, the tax benefit should be given from the date of booking of the property and not from the possession.
3. Tax deducted at source (TDS) on housing rental income for individual home owners should be brought down from 16.83% to 10%. A flat slab of 15% or a tax holiday of initial 3 years should be considered on rental income for NRIs. This will boost NRI investment into the country or else they'll look towards other countries for returns on their investment. Also, this will rationalise the prices of rentals in many metros and more people will be willing to rent out properties. A lot of NRIs lock up their apartments for fear of an upfront deduction of TDS of more than 30%, which affects return. Further, a standard deduction of 30% towards maintenance should be increased to 40% for local residents and 50% for NRI houses.4. Stamp duty charges should be reduced to 2.5% from the current 5% as it will benefit the property buyers.5. The interest given on bonds should be linked to bank interest rates on fixed deposits. This is extremely helpful to elderly in ensuring their safety for future. A lot of property owners still are conservative and prefer to invest their money in capital gain bonds and earn a living out of them.
6. The buyers should be allowed to invest in residential properties from the sale of commercial properties and purchase residential properties with the money recieved from the sale of commercial properties. Buyers should also be allowed to invest in both commercial and residential properties from the proceeds of one single property.
7. The Government should take more steps to curb money made illegaly in the land deals. Cheque transactions will automatically yield in more money flowing out of bank accounts than from hidden lockers.8. Presently, not many builders are making one Bedroom-Hall-Kitchen (BHK) apartments. The builders should be given incentives to build one BHK of less than 400 square ft carpet area particlaurly in Mumbai.
9. Fringe benefit tax (FBT) for corporate employees who rent properties should be reduced from the current 20% to 5%. This is because they already have an option to get into an individual lease without paying FBT. 10. Individuals, companies and employees of multi national companies should be given 100% tax exemption for the rent paid towards renting a house on leave and license/lease basis. This will help people make a decision to lease the properties and avail tax benefits if they cannot afford to buy the properties. 11. Tax incentive should be given to owners renting out their properties for a minimum lock-in period of 3 years with no right of termination to either the landlord or the lessee, and a built in fixed escalations in the rent price. This will encourage people to change houses once in 3 years. 12. Floor Space Index (FSI) should be increased within city limits with immediate effect to bring down real estate prices. Also, builders should be strictly made to create the required infrastructure to meet the demand for water, electricity, parking and sewage system by using innovative and latest methods available.14. The Coastal Regulatory Zone (CRZ) should be further rationalised as a lot of prime properties are stuck because of this.15. Incentive in the form of higher FSI should be given to builders who re-develop housing societies because the prices of real estate are unaffordable.16. Buyers of real estate should be allowed to exit/sell after a span of two years with a lesser tax slab so that it becomes easier for them to exit. This will curb the black money movement in the market. An artificial shortage of property is created and prices are hiked because the sellers are unable to sell within a short span and also because they pay higher tax.
17. Real estate brokers / agents should be given proper licensing to practice real estate business. By doing so there will be a decline of unscrupulous transactions.
18. Benefits to be given to developers who adopt area management schemes in and around their complexes for beautification and development of the area and keeping the location neat and clean.19. The Government should manadate ratings to property developers. A regulatory body should keep a vigil on the activities of builders who create smaller dwellings of less than 100 units a year.20. An code of ethics should be cerated for real estate developers and agents to help them offer better professional services.21. Property taxes should be rationalised for leasing both residential and commercial properties.22. Information Technology (IT) and Information Techonology enables services (ITes) benefits with respect to Software Technology Parks of India (STPI) should continue but with lesser rigid regualtion.23. Commercial and retail premises given to banks/ATM’s should be exempted from property tax as they are given for longer periods of time and lesser escalations in the license fees.Real estate sector is a big economy driver and any positive step towards the interest and welfare of the small consumer will have a macro impact on the economy.
US slowdown can have positive spin-offs for India
Indian economy will attract more global investments benefiting from the US slowdown but the country should not get "psyched" by the bubble burst there, Commerce and Industry Minister Kamal Nath said on Wednesday.
However, on the cautious side a study has been initiated in his Ministry to assess the impact of US slowdown on the Indian economy.
"It will take a fortnight to do an assessment of what it means to India," he told PTI.
Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia. "All this is changing... India is becoming an important parking lot for investments," Nath said, adding gloomier the US outlook, better it was for India from an investment point of view.
"We must ensure we do not get psyched into the sentimentality of the US downturn. It should not psyche India into pessimism or into an economic impact here," Nath said.
He said the fundamentals of the Indian economy remained strong "but a fine calibration is required to ensure that the momentum continues despite the gloomy economic outlook globally".
Nath said the country's GDP would grow by more than nine per cent in 2007-08 when asked whether he shared the optimism of Finance Minister P Chidambaram. "I agree with the Finance Minister. It (GDP growth) could be higher than nine per cent," he said.
However, on the cautious side a study has been initiated in his Ministry to assess the impact of US slowdown on the Indian economy.
"It will take a fortnight to do an assessment of what it means to India," he told PTI.
Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia. "All this is changing... India is becoming an important parking lot for investments," Nath said, adding gloomier the US outlook, better it was for India from an investment point of view.
"We must ensure we do not get psyched into the sentimentality of the US downturn. It should not psyche India into pessimism or into an economic impact here," Nath said.
He said the fundamentals of the Indian economy remained strong "but a fine calibration is required to ensure that the momentum continues despite the gloomy economic outlook globally".
Nath said the country's GDP would grow by more than nine per cent in 2007-08 when asked whether he shared the optimism of Finance Minister P Chidambaram. "I agree with the Finance Minister. It (GDP growth) could be higher than nine per cent," he said.
Mkt won't move beyond 18,600 before Budget: Arpit Agrawal
Mkt won't move beyond 18,600 before Budget: Arpit Agrawal When asked whether, between now and the Budget, he could make a case for a short term market rally, especially in sectors like real estate and metals, Arpit Agrawal of Arihant Capital Markets said that there are a lot of value picks and that there’s a lot of sector and stock specific action. However, in the short-term, till the Budget, he doesn’t see the markets moving beyond 18,500-18,600 levels.
“I think the market will face resistance. It can move up by another say 800-1000 points on the Sensex from hereon, but can again face resistance. Internationally a lot of news flow has been coming in everyday, but I feel the market is going for a consolidation for a longer period, may be six-months. We may be able to just make the high we crossed in this financial year,” he explained.
“I think the market will face resistance. It can move up by another say 800-1000 points on the Sensex from hereon, but can again face resistance. Internationally a lot of news flow has been coming in everyday, but I feel the market is going for a consolidation for a longer period, may be six-months. We may be able to just make the high we crossed in this financial year,” he explained.
Chidambaram dedicates Budget to India's poor
Finance Minister Palaniappan Chidambaram on Wednesday used the fiscal elbow room provided by a booming economy and rising tax collections to deal with the twin challenges of political setbacks for his government in recent elections and rising pressure on prices.
In the Union Budget for 2007-08 he boosted spending on key growth drivers, while slashing taxes on key commodities to fight inflation, and unveiled a slew of measures targeted at India's rural poor.
Agriculture took up the bulk of the finance minister's speech — he justified the attention by quoting his favourite poet Thiruvalluvar – "If ploughmen keep their hands folded, even sages claiming renunciation cannot find salvation."
Stating that boosting agriculture was "imperative" for policy planners, Chidambram hiked planned outlays for the sector to almost a third of the entire budget.
Stressing the need for greater access to cheap farm credit, the minister said an additional 5 million farmers would be brought within the banking system in the next fiscal, with additional fertiliser subsidies and a targeted water subsidy scheme for "especially distressed districts".
He also announced a new scheme called 'Aam Admi Bima Yojana', which will provide death and disability insurance through LIC to landless rural households. The government will bear half the premium of Rs 200 per year per person, with the balance being funded by the states.
Social sectors also got a major boost, with spending on social welfare by nearly 22 per cent.
Chidambaram left personal and corporate income tax and most indirect taxes virtually unchanged, while announcing a 21 per cent jump in government spending.
With a booming economy expected to drive tax collections up by almost a fourth, the finance minister provided some relief to taxpayers by marginally increasing the exemption limit for income-tax by Rs 10,000. This, he said, will "reduce every taxpayer's burden by Rs 1,000."
However, this was offset by an additional one per cent education cess on all taxes, to fund a massive 34.2 per cent jump in spends on primary education, scholarships for the underprivileged, and enhancing employability of youth.The news was not so good for the markets, which reacted negatively to a 2.5 per cent increase in dividend distribution tax and the imposition of a 'minimum alternative tax' on India's booming and hitherto untaxed IT sector. Even as the finance minister was speaking, the Sensex tanked more than 500 points, reacting in a major way also to a meltdown in global markets.
Chidambaram also brought employee stock options, pioneered by the IT sector but now used across industry, under the ambit of the fringe benefit tax.
However, he removed a major irritant by fixing the income tax Permanent Account Number (PAN) as the sole identifier for all market transactions.
While upping spends on critical infrastructure like ports, roads and power by 40 per cent to Rs 134,000 crore, Chidambaram shifted policy focus on the agriculture sector and the rural poor.
At the end of the day, the countryside was smiling, and Bharat had grabbed the lead role into the Great Indian Growth Story.
In the Union Budget for 2007-08 he boosted spending on key growth drivers, while slashing taxes on key commodities to fight inflation, and unveiled a slew of measures targeted at India's rural poor.
Agriculture took up the bulk of the finance minister's speech — he justified the attention by quoting his favourite poet Thiruvalluvar – "If ploughmen keep their hands folded, even sages claiming renunciation cannot find salvation."
Stating that boosting agriculture was "imperative" for policy planners, Chidambram hiked planned outlays for the sector to almost a third of the entire budget.
Stressing the need for greater access to cheap farm credit, the minister said an additional 5 million farmers would be brought within the banking system in the next fiscal, with additional fertiliser subsidies and a targeted water subsidy scheme for "especially distressed districts".
He also announced a new scheme called 'Aam Admi Bima Yojana', which will provide death and disability insurance through LIC to landless rural households. The government will bear half the premium of Rs 200 per year per person, with the balance being funded by the states.
Social sectors also got a major boost, with spending on social welfare by nearly 22 per cent.
Chidambaram left personal and corporate income tax and most indirect taxes virtually unchanged, while announcing a 21 per cent jump in government spending.
With a booming economy expected to drive tax collections up by almost a fourth, the finance minister provided some relief to taxpayers by marginally increasing the exemption limit for income-tax by Rs 10,000. This, he said, will "reduce every taxpayer's burden by Rs 1,000."
However, this was offset by an additional one per cent education cess on all taxes, to fund a massive 34.2 per cent jump in spends on primary education, scholarships for the underprivileged, and enhancing employability of youth.The news was not so good for the markets, which reacted negatively to a 2.5 per cent increase in dividend distribution tax and the imposition of a 'minimum alternative tax' on India's booming and hitherto untaxed IT sector. Even as the finance minister was speaking, the Sensex tanked more than 500 points, reacting in a major way also to a meltdown in global markets.
Chidambaram also brought employee stock options, pioneered by the IT sector but now used across industry, under the ambit of the fringe benefit tax.
However, he removed a major irritant by fixing the income tax Permanent Account Number (PAN) as the sole identifier for all market transactions.
While upping spends on critical infrastructure like ports, roads and power by 40 per cent to Rs 134,000 crore, Chidambaram shifted policy focus on the agriculture sector and the rural poor.
At the end of the day, the countryside was smiling, and Bharat had grabbed the lead role into the Great Indian Growth Story.
Valentine's Day grosses Rs.262 mn for flower sellers
For the young at heart it may be just moments of love, romance or even sneaking chance to drop a romantic hint, but for flower sellers in the capital, the Valentine's Day meant big bucks pouring in. They grossed over Rs 262 million ($6.6 million) in a single day.
While retailers in the national capital registered flower sales of over Rs 252 million, the flower wholesale market in Connaught Place in the heart of the city grossed a little over Rs 10 million.
"The capital has a total of 2,100 flower retail outlets and each retailer sells about 6,000 roses on the V-Day, ranging between Rs 20 to Rs 50 per rose bud. So, retailers earn about Rs 252 million in a single day," NC Pandey, owner of Celebration Flora, a wholesale shop for fresh flowers, told IANS.
"There are about 100 wholesalers of fresh flowers in Delhi. Of them, nearly 20 deal with roses. As rose rules the roost on the occasion, its wholesalers earn no less than Rs 5 million in a day," Pandey pointed out.
Commenting on the sales, Birju Bhai Pradhan, president of All India Cut Flower Growers and Suppliers Association, said: "There are nearly 1,000 flower traders in the wholesale market, out of which about 40 are the bigger ones, who earn at least Rs 500,000 on the V-day while the income of rest ranges between Rs 10,000 and Rs 50,000."
Contrary to expectations of flower traders, the wholesale market did not witness overwhelming business this year.
"Every V-day, the market registers at least 25 per cent growth. However, this year the business was almost equal to the business we did last year - nearly Rs 10 million," said Pradhan.
But flower dealers are upbeat about the business in the coming years.
"Maybe because of cold weather, the sales were affected adversely. However, the craze of the occasion is increasing every year, so we are hopeful about next year," he added.
"In 2006, we grossed Rs 10 million on V-day. In 2007 it was Rs 15 million and this year the sales raked in almost double of last year," said Pawan Gadia, vice-president of chain flower boutique Ferns 'N' Petals Group.
"There is a remarkable increase in the business we are doing on V-Day, and I am upbeat about its future," said Gadia, who is also department head of the e-commerce and retail arms of the group.
Gadia said the country's flower market is worth no less than Rs 4 billion, out of which exotic flowers account for 25 per cent.Valentine's Day grosses Rs.262 mn for flower sellers
While retailers in the national capital registered flower sales of over Rs 252 million, the flower wholesale market in Connaught Place in the heart of the city grossed a little over Rs 10 million.
"The capital has a total of 2,100 flower retail outlets and each retailer sells about 6,000 roses on the V-Day, ranging between Rs 20 to Rs 50 per rose bud. So, retailers earn about Rs 252 million in a single day," NC Pandey, owner of Celebration Flora, a wholesale shop for fresh flowers, told IANS.
"There are about 100 wholesalers of fresh flowers in Delhi. Of them, nearly 20 deal with roses. As rose rules the roost on the occasion, its wholesalers earn no less than Rs 5 million in a day," Pandey pointed out.
Commenting on the sales, Birju Bhai Pradhan, president of All India Cut Flower Growers and Suppliers Association, said: "There are nearly 1,000 flower traders in the wholesale market, out of which about 40 are the bigger ones, who earn at least Rs 500,000 on the V-day while the income of rest ranges between Rs 10,000 and Rs 50,000."
Contrary to expectations of flower traders, the wholesale market did not witness overwhelming business this year.
"Every V-day, the market registers at least 25 per cent growth. However, this year the business was almost equal to the business we did last year - nearly Rs 10 million," said Pradhan.
But flower dealers are upbeat about the business in the coming years.
"Maybe because of cold weather, the sales were affected adversely. However, the craze of the occasion is increasing every year, so we are hopeful about next year," he added.
"In 2006, we grossed Rs 10 million on V-day. In 2007 it was Rs 15 million and this year the sales raked in almost double of last year," said Pawan Gadia, vice-president of chain flower boutique Ferns 'N' Petals Group.
"There is a remarkable increase in the business we are doing on V-Day, and I am upbeat about its future," said Gadia, who is also department head of the e-commerce and retail arms of the group.
Gadia said the country's flower market is worth no less than Rs 4 billion, out of which exotic flowers account for 25 per cent.Valentine's Day grosses Rs.262 mn for flower sellers
Friday, February 15, 2008
SBI rights issue likely on Feb 16-18: FM
SBI rights issue to raise over 16,000 crore is likely to open on February 16-18 and will invite subscription for one month, Finance Ministry sources said.
The Government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said.
When asked whether the current volatility in the stock exchanges would affect the pricing of the issue, the sources said the fluctuation would not impact the offer announced by the bank.
Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in the recent days, SBI share was ruling at over 25 per cent premium over the rights issue price. The scrip was ruling at Rs 2,131.90 in the afternoon trade on BSE, down 1.08 per cent from yesterday's close of Rs 2,155.20.
Under the issue, existing shareholders would get one for every five shares they hold.
The bank will raise Rs 16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.
SBI will increase the issued capital from Rs 526.30 crore to Rs 650.00 crore.
Clearing the SBI's rights issue, the Union Cabinet had earlier decided to contribute around Rs 10,000 crore for its 59.73 per cent stake, but this would not come in cash.
The Government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said.
When asked whether the current volatility in the stock exchanges would affect the pricing of the issue, the sources said the fluctuation would not impact the offer announced by the bank.
Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in the recent days, SBI share was ruling at over 25 per cent premium over the rights issue price. The scrip was ruling at Rs 2,131.90 in the afternoon trade on BSE, down 1.08 per cent from yesterday's close of Rs 2,155.20.
Under the issue, existing shareholders would get one for every five shares they hold.
The bank will raise Rs 16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.
SBI will increase the issued capital from Rs 526.30 crore to Rs 650.00 crore.
Clearing the SBI's rights issue, the Union Cabinet had earlier decided to contribute around Rs 10,000 crore for its 59.73 per cent stake, but this would not come in cash.
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