Latest Posts

At Yahoo: Good Stock. Bad Stock.

My article at Yahoo: Good Stock. Bad Stock.

(Reproduced in full)

Tata Steel showed some gutsy results in the last few quarters, with phenomenal year-on-year growth in their net profits. As western economies have recovered (ever so slightly) the Corus acquisition has helped them in scaling up.

But, the impact of such results for investors has been less than stellar. When Tata Steel announced the Corus acquisition in early-2007, it decided to finance that acquisition through a rights issue and compulsorily convertible preference shares (CCPS), sold to existing investors. The Rights issue allowed an investor with 5 shares to buy one more at Rs. 300 per share. The CCPS was priced at Rs. 100 per share, convertible in 2009 at 6 CCPS to one equity shares, valuing the equity share at Rs. 600 then.

This sounded cheap! The stock price in November to December 2007 — the dates of the rights issue - was between Rs. 800 and 900, much higher than any of the rights or convertible prices. In fact, just the rights issue would have taken your purchase price to the Rs. 750 levels. And the CCPS at 600 looked juicy.

Short Take: Conversations With Ramki

Just a blog plug to the video:  In the first in the series, Deepak Shenoy speaks with N. Ramakrishnan, popularly known as Ramki. Ramki has over 25 yrs of experience with markets, and has rich and deep knowledge of the Elliott Wave Theory. His views are sought after by leading banks and hedge fund managers around the world.

He now runs the treasury of a bank in the Middle East. He writes at www.wavetimes.com - a must visit for traders.

(See Video: 45 minutes)

Conversations With Ramki: BankNifty, TataSteel, DLF

This isn't entirely a "short" take but it's a series we intend to continue: Conversations.

In the first in the series, Deepak Shenoy speaks with N. Ramakrishnan, popularly known as Ramki. Ramki has over 25 yrs of experience with markets, and has rich and deep knowledge of the Elliott Wave Theory. His views are sought after by leading banks and hedge fund managers around the world.

He now runs the treasury of a bank in the Middle East. He writes at www.wavetimes.com - a must visit for traders.

(45 minutes)

PI Inflation up at 15.77% for Feb 12, 2011

Primary Articles Inflation on 12-Feb 2011 has bumped itself up to 15.77%, according to the latest data.

Primary Articles Inflation Chart

Brent Crude at $120

To continue the oil story: Brent Crude is now at $120.

Brent crude on Thursday spiked nearly USD 7 in the 90 minutes to 0800 GMT. It rallied as much as USD 8.54 a barrel to a peak of USD 119.79, trimming gains to trade up USD 6.00 at USD 117.25 by 0902 GMT. The contract has risen nearly 14% in four days.

HDFC Bk and ICICI Raise Rates, CDs quoting at 10%+

HDFC Bank and ICICI Bank have both hiked up lending rates by about 50 bps, says ET. This takes ICICI's base rate to 8.25% and HDFC Bank's base rate to 8.2%. Banks can't lend below the base rate. Most existing customer loans are linked to a "Benchmark Prime Lending Rate" (BPLR) which has also been raised appropriately.

The commercial paper (CP) and Certificates of Deposit (CD) markets seem to have gone berserk; government owned bank CDs are trading above 10% yields.

Rs. 150 Coins Will Be Here

Inflation is really really getting to us. The government will issue coins of Rs. 150, it seems.

For the first time in the country's minting history, government will issue coins of Rs 150, marking the number of years of taxation in India.

The special coins, to be released by Finance Minister Pranab Mukherjee before his Budget speech, will also be brought out in Rs 5 denomination on the occasion of completion of 150 years, from 1860 to 2010, of the Income Tax department.

This is the first time that coins of Rs 150 denomination are being minted by the government. The Department of Economic Affairs under the Finance Ministry recently notified the order.

The Rs 150 coin, made of an alloy of Silver, Copper, Nickel and Zinc, will have an international design with ''Satyameva Jayate'' and ''India'' on the front side while a portrait of ''Chanakya and lotus with honeybee'' on the reverse side.

I imagine the honeybee is to indicate how much it hurts to have to pay Rs. 150 with coins.

(I'm just kidding.There are just 200 such coins, no big deal!)

Crude up 9% on the Libyan Unrest

Crude oil is up more than 7 dollars at 94 dollars, a rise of 9%, which is HUGE. Libya is seeing huge unrest after Egypt's revolution, and the Great Gaddafi is likely in some trouble after about 40 years at the helm. Bahrain, too, is seeing serious protests, and oil supply is under some threat, it seems. Or at least, the markets think so.

Brent Crude, more relevant to India, is at $104+.

BP and Reliance = $7.2 billion

BP will pay $7.2 billion to Reliance Industries to take 30% stake in 23 oil and gas blocks, and another $1.8 bn based on performance. This is the second BP deal worldwide, after a $8 bn equity swap with Rosneft in Russia. BP will also set up a 50:50 joint venture for marketing LNG.

This is a good deal for RIL. It was getting flak for not being able to pump in more gas or explore more, and it really hasn't built deepwater capabilities yet. BP can also augment the near-term lack of gas by external supplies and feed into the distribution setup RIL has built which is currently not used much. It's huge for the gas industry in India if the distribution setup takes off - NG is an amazing fuel and if you fix transportation it can change our energy profile.

RIL went up 2% yesterday to 957. But nothing spectacular in terms of volumes, honestly. 555 crores on an expiry week is par for the course. Let's see how the markets react today.

At Yahoo: Budgets and Stock Markets

I write about Budgets and Stock Markets in my first piece on this Year's budget, in Yahoo's Special Budget Edition.

(Reproduced in Full)

The budget has traditionally been an important part of the financial year, with the government announcing exactly what it wants to do for the next year, and how it has succeeded grandly at what it said it wanted to do last year*.

Part of the budget is an economic survey that gives you lots of figures on government spending and income, and the remaining part is the budget speech which tells you what they intend to do in the coming year.

(* The failures are hardly given a mention.)

Stock markets tend to react violently the budget. Both directly and indirectly, listed companies benefit or get hurt by provisions in the budget. A look at stock markets on budget day itself - the change from the previous day to the next: