Murthy, the co-founder infosys plans India JV with Amazon: Paper

Infosys Ltd  co-founder NR Narayana Murthy is close to entering into an e-commerce joint venture in India with Amazon.com Inc through his investment firm, Catamaran Ventures, India’s Economic Times reported.

Catamaran confirmed the planned venture with Amazon Asia, the business daily reported on Thursday.

Amazon and Catamaran were not immediately available for comment.

Catamaran will hold a 51 percent stake in the business, as required under India’s foreign direct investment rules, the newspaper reported, citing sources.

Murthy built up Infosys into one of India’s top outsourcing service companies. He stepped down as executive chairman of the company earlier this month.

Infosys stock price

On June 27, 2014, Infosys closed at Rs 3221.95, up Rs 32.55, or 1.02 percent. The 52-week high of the share was Rs 3847.20 and the 52-week low was Rs 2392.85.

The company’s trailing 12-month (TTM) EPS was at Rs 177.52 per share as per the quarter ended March 2014. The stock’s price-to-earnings (P/E) ratio was 18.15. The latest book value of the company is Rs 733.03 per share. At current value, the price-to-book value of the company is 4.40.

RBI sees better days ahead for economy

But says supply-side concerns need to be addressed; bank capital also a challenge

The worst might be over for the economy following the formation of a stable government, though supply-side issues needed to be solved to help monetary policy bring down inflation, the Reserve Bank of India (RBI) said in its bi-yearly Financial Stability Report on Thursday.

The overall tone of the report reflected optimism generated by the thumping majority scored by the Bharatiya Janata Party in the recently-concluded general elections. “Going forward, with the formation of a stable government, the prospects of recovery appear bright,” the RBI said.

The central bank drew comfort from reduction in both fiscal and current account deficits and moderation of consumer price index (CPI) -based inflation.

The report also said the general risks facing the Indian economy were expected to come down. However, the supply-side constraints needed to be addressed to complement the RBI’s efforts to contain inflation.

“Markets expect more decisiveness in government policy formulation, as well as greater efficiency in implementation,” RBI Governor Raghuram Rajan said in the foreword to the report.

“Further progress on fiscal consolidation, a predictable tax & policy regime and low and stable inflation rates will be the key anchors in promoting India’s macroeconomic and financial stability,” Rajan added.

RBI said easing of domestic supply bottlenecks and the progress on implementation of stalled projects that had already been cleared should further improve the growth outlook.

 

SBI’s Budget wishlist: Target job creation, MSMEs, infra

Arundhati Bhattacharya, chairman and managing director,  State Bank of India says the Finance Minister Arun Jaitley should announce such a Budegt on July 10 that leads to tremendous amount of job creation.

Speaking to CNBC-TV18, Bhattacharya says job creation is one mean to ensure the economy starts moving and this growth will help both public as well as private banks.

One of the sector that can generate lot of employment, she says, is the medium and small enterprises (MSMEs).

“However, the sector is plagued by lack of capital and an inability to receive payments on time. So, if the FM can address these issues, it could help revive the economy,” she further adds.

Anuj: What would be on top of agenda in terms of the PSU bank sectors expectations from Budget?

A: The economy is basically something where if there is growth all the banks will benefit; PSU or otherwise. So, therefore if you ask me what are the banks expectations then I would like to take it as that rather than only the PSU banks.

The banks expectations are various steps that will ensure that the economy starts moving. So, if you look at the government, currently the important challenge before them is of job growth. For job growth we believe the MSME sector is one sector which can give a lot of job growth and therefore we do expect some steps in the MSME sector to ensure that this sector does better.

We have always said that there are two major issues with the MSME sector other than a host of other minor issues. However, the major issues are lack of capital and secondly their inability to receive their payments on time. So, hopefully towards this lack of capital the government may think of creating some kind of funds, some kind of way to ensure the deserving MSMEs get the capital that they need in order to scale and thus keep on creating jobs.

Similarly for the working capital cycle whether we could have some kind of a platform wherein bills could be put and industry majors would have a reasonable time say 30 days in which to either accept or refuse the bills so that accordingly these smaller players, they would be in a position to raise finance.

If you look at the agriculture side also, if you look at the reports that have come from Reserve Bank of India (RBI) and otherwise, in agriculture we have been told in India the problem is fragmented land holding. Now, that is not really something that we should take as a given because if you consider China, they too have fragmented land holding then how is it that their productivity is from 6 to 190 percent more?

India is very well endowed with the right kind of climate to have three crops a year. So, we need to see how agricultural productivity can go up and towards that end there needs to be more capital formation in the agri segment itself. Also, there needs to be non-farm income otherwise your man-to-land ratio is so skewed that your agricultural productivity will never show an up tick. So, certain things in this area is also warranted.

Sonia: I just wanted to take the point forward that you made about recapitalisation of state owned banks. In the interim-Budget there was a proposal of Rs 11,300 crore, do you think the new government will stick to that particular limit or do you think there could be a hike?

A: At this point of time at least the media reports that you all have carried say that there is no possibility of a hike. I don’t really have any further information beyond that. However, having said that, I do believe that the government will come up with a clear roadmap as to what they intend to see regarding capitalisation of banks and there have been a lot of discussions with the banks themselves as to their capacity to raise various kinds of capital.

Sonia: What about the clarity as far as the creation of that holding structure for PSUs? Do you think we would get clarity on that in the Budget and a decision would be taken?

A: These things are very complicated because not only do you need to change the law you would also need to find out what should be the structure, you need to find out whether there would be capital adequacy required. So, this is not a simple subject that can be decided on in the space of 40 days. Therefore, I don’t see any clear roadmap on that matter. These matters are all under deliberation and they will take their time. They are complicated matters therefore only thing that can come in the Budget would be a statement of intent. There cannot be a very clear roadmap in this matter. It will take a lot of time.

Anuj: What is happening on whole  United Spirits (USL) issue and the Kingfisher Airlines issue because I believe you have a lot of United Spirits shares as collateral? Have you tendered those shares in open offer and if yes if you could tell us how many shares have you tendered and how many are still there as collateral?

A: I dislike discussing individual accounts on media however, let me tell you it is not USL shares that we have. It was  United Breweries Holdings Limited (UBHL) guarantee and the personal guarantee of Mallya. So, those are the securities against which we are proceeding. Whatever is required to be done as per procedures everything is getting done.

Sonia: What about the loans that you have sold to the asset reconstruction companies (ARCs)? What could be the quantum of that loans because we were speaking with the head of ARCIL a couple of days ago and he said that Rs 24,000-25, 000 crore of loans have been offered for sale right now; the highest that they have seen in the first quarter?

A: Now the things are in a little better shape. The RBI also has urged us to try and clean up our balance sheets. We also believe that they do a better job at resolution than we do. Not only that, certain checks and balances have also been put on the ARCs to ensure that they perform, that they don’t just take these loans and they charge management fee year after year and simply write it off. So, there are a lot of checks and balances that they have put in. The banks also have been able or rather been allowed to amortise any losses that they incur on the ARC sales over a period of two years. So, all of these things are now making it easier for us to look at the ARC routes. There are quite a number of players; now there are 14 ARCs so it is easy for us to showcase it to all and get a fair price discovery as to what the asset could be really worth to them. So, these are the enabling features that have happened as a result of which you are seeing ARC sales.

Don’t see pre-Budget rally; like auto cos: Motilal Oswal

The gas price hike deferral will be negative for companies like ONGC and Oil India, is the word coming in from Manish Sonthalia of Motilal Oswal Asset Management. He, however, does not see it impacting GAIL in a major way.

He advises investors to be in the wait and watch mode and see whether the Rangarajan formula gets implemented before buying stocks in the oil and gas sector. There is some debate on the need for a new formula, he adds.

On the overall market, going by the current state, he does not expect a pre-Budget rally. He says at the most it can consolidate side ways. Plus, any negative development in Iraq could also impact the market.

He is bullish on auto as well as the auto ancillary sector. He believes the government’s decision to continue with low excise duty for six months till December 31 is a huge positive for the sector. Also, the sector will be one of the biggest beneficiaries of an improvement in the economy going ahead, he adds.

Sonia: What would you do with oil and gas stocks after the reaction that you see today?

A: I think there is nothing negative about the oil marketing companies per se; you will have the Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) will not get impacted. There will be a negative kneejerk reaction to Oil India, Oil and Natural Gas Corporation (ONGC) because the earnings per share (EPS) cut because of six months delay, the sensitivity is like this that for every dollar delay increase for six months reduces ONGC’s EPS by 5 percent, for Oil India 3.5 percent. Therefore, these stocks would be negatively impacted. GAIL, I do not think would get impacted at all.

Sonia: What would you do with this cut on ONGC? Would you buy into that dip because as most people have pointed out, this is just a delay, it is not a complete scrapping of the decision. So in a sense if you do give a benefit of doubt to the government, this may in the longer term be a good buying opportunity as well?

A: The whole argument regarding gas pricing has opened up variable fronts. One, whether it is going to be on the existing supply of gas or only for incremental production for gas and if it is only on incremental production of gas then ONGC negatively impacted. One would do well to wait and watch out whether Rangarajan’s formula is going to be implemented because there is a whole new debate now whether there is a need to discuss a new formula for pricing of gas. Therefore, these stocks would remain under pressure or my sense is there is no immediate case for buying into them, only if one has a long-term view, the government has said three months so maybe after three months there will be more clarity but till then it is anybody’s guess.

Reema: Is there further upside in auto stocks on account of the extension of excise duty?

A: That is very positive news and autos are the leading indicators of the economy and if the economy is to pickup then there should be a boost to the manufacturing sector and autos would be an important component of manufacturing. So, autos would definitely get a leg up. This sector is expected to remain extremely positive going into the future whether it be autos or even auto components, the likes of Bosch etc, they would tend to do quite well.

Why Abenomics and Modinomics are poles apart

Two leaders with clear economic agendas to revive their country’s economic prospects, and stock marketsriding high on waves of optimism.

It’s not too difficult to see the similarities between India’s Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe, but perhaps the links end there.

“Our view is that India and Japan face very different sets of problems, so ‘Modinomics’ and ‘Abenomics’ cannot be readily compared,” said Clem Miller, investment analyst with Wilmington Trust Investment Advisors in Baltimore, using the terms often used to describe the economic policies of Modi and Abe.

“India’s biggest problem is a massive infrastructure deficit – it needs power plants, highways, railways, clean water. It has a growing population with rising incomes, but the infrastructure deficit constrains Indian growth,” he said. “By contrast, Japan’s biggest problem is a zero-growth, aging population.”

Abe came to power roughly 18 months ago, determined to end a cycle of deflation and lackluster growth in the world’s third biggest economy through a three-pronged strategy involving monetary and fiscal stimulus and long-term structural reforms.

Monetary stimulus and optimism about Abenomics fuelled a 57 percent rally in the blue-chip Nikkei stock index last year.

India’s stock market meanwhile surged to a record high after last month’s landslide win for the pro-business Modi, triggering comparisons between Abenomics and Modinomics.

“Commentators have been quick to conclude that the rally in Tokyo’s stock exchange that followed Japan Prime Minister Shinzo Abe’s victory, could be mimicked by the Indian markets,” analysts at DBS Bank said in a research note last month.

“While the upgrades/re-rating to the Indian equity markets is not surprising, the comparison ignores some ground realities. Of all the catalysts that triggered the surge in Japanese stock markets last year, only one is applicable to India’s situation: a stable government at the center,” they added.

Differences

Miller at Wilmington Trust Investment Advisors adds that because India is decentralized, Modi is constrained in what he can do to at a national level to boost the long-term growth prospects of an economy hampered by high inflation.

“By contrast, Japan is highly centralized, so Abe can achieve a lot with monetary policy, taxes, and incentives, if he can obtain political backing at the national level,” he said.

The Bank of Japan is committed to pumping 60-70 trillion yen ($589-$687 billion) into the economy a year to boost inflation and Tokyo just announced plans to cut the corporate tax rate to 30 percent in the years ahead from around 36 percent now.

Honeymoon

over Abe, however, has also come under criticism for not doing more in terms of long-term structural reforms.

“I’m afraid that some of what Abe may be doing are half measures and may not be going far enough,” Douglas Wolford, president at Convergent Wealth Advisor in Washington, told CNBC earlier this week.

“Take by contrast, what Modi is doing in India. India was rated by the World Bank as the 134th best place to do business in the world out of 189 countries. It came in just in front of the West Bank and Gaza and Modi recognized that — just recently he increased rail fares 14 percent, freight rates 6.5 percent,” he added.

“These are typically hot tropics politically in India – everybody stays away from rail fares. I think Abe needs to do some of the same things in Japan,” Wolford said.

In addition to last week’s hike in rail passenger to help fund investment, Modi’s government has cheered markets with taking immediate steps to help contain inflation such as ordered a crackdown on hording to contain rising food prices.

The danger for Modi, say analysts, is that a failure to maintain the reform agenda could lead to the same disappointment that has undermined Abenomics and the Nikkei’s stellar rally.

“The Modi government is still in the honeymoon phase, while Abe’s government no longer enjoys that advantage,” said Miller.

See Nifty rallying to 8K post Budget; like L&T: Sanju Verma

The recent rally in the market can at best be called volatile. Sanju Verma of Violet Arc Global Managers does not expect a pre-Budget rally, but feels Nifty will rally to 8000 post Budget. She feels the rally so far has been more aspirational than anything else.

According to her the Narendra Modi government is getting crushed under the weight of expectations.

She likes  L&T and  Hero MotoCorp among large caps, but believes the best is yet to come for BPCL . She says ex-valuation of Brazilian gas field, BPCL valuation is cheap. “Increase in marketing margins for BPCL will be phenomenal. Also, capital appreciation will fuel rally in stocks like BPCL,” she adds. As of now, she does not think investors should play BPCL for dividend yield alone.

Verma also believes  Arvind is a good play on business restructuring.

Sonia: What is the feeling you are getting about the markets now, we have had a pretty good run up so far but now it has stalled a bit ahead of the Budget, do you think we could still eek out a pre-Budget rally?

A: The fact that this is a secular multi-year bull market now seems to be a no-brainer and a given. From asking questions last year as to whether the Nifty will cross 6400, which is where it has plateaued over the last three-four years, we are now asking whether we will touch 8,000 pre-Budget or post-Budget and whether we will see 10000 on the Nifty by March 2015 or even earlier, so much for positive sentiment.

Coming to your query, specifically talking about the market direction in terms of momentum, the key thing to note is the expiry tomorrow. Yesterday we had a brilliant run up after four consecutive sessions of losses. If we close positively tomorrow over today’s close — this is an observation not a rule that if on the expiry day, the market closes higher than its preceding close, the next few days normally reflect extremely positive momentum and the markets inch up. So I will keenly await the Nifty close tomorrow. Should we close lower than today’s close tomorrow then I think the momentum will sag.

Putting everything in perspective, I personally feel that given that maximum Put writing has happened at 7,500 levels and a large part of Call writing and Call outstanding is at 7,700 levels, pre-Budget will be a narrow range between 7,500 and 7,700. I do expect a rally to 8,000 but I belong to the camp which believes that there will be a post-Budget rally not a pre-Budget one.

Anuj: What would lead that post-Budget rally? Would stocks like  State Bank of India (SBI) and Larsen and Toubro (L&T) lead that rally as has been the case? You have been bullish on SBI from sub Rs 2,000 level, it is at Rs 2,600 now, how would you be approaching some of these stocks, the market leaders?

A: What will lead the rally post-Budget is a fact that I think while the Modi government is obviously being crushed under the weight of expectations and the rally that we have seen so far is more aspirational than anything else. The fact of the matter is that most multi-year bull market rallies have nothing to do or very little to do with valuations, liquidity does matter but most importantly it is sentiment that counts and I can corroborate that. I was on your channel sometime last year when I said that I do not like L&T and I think the broad market consensus was that nobody was willing to touch L&T at Rs 850 sometime last year at which it was trading at something like just 15 times price to earnings which is the lowest that we have seen L&T trade in the last four-five years. Look at L&T today, at more than Rs 1650 levels, L&T trades at something like 30 times current year earnings and about 23-24 times one year forward and you will still have bulls saying that it is great to buy cyclicals when the P/Es are high and that basically tells you that there is headroom for more.

So the point I am trying to make is that there has not been a 180 degree but a 360 degree shift in sentiment. I think we have not even seen a large part of the global liquidity coming in here, I think that is still to play itself out. If you compare the liquidity flows that have come in particularly from FIIs, I think if you extrapolate the money flows that we have seen now, vis-à-vis say what we saw in 2010 when China pulled in USD 50 billion and India pulled in something like USD 29 billion, compared to that the liquidity flows still have a lot of catch up to do. Though, of course the large part of the year is still ahead of us.

I think what will lead the rally is the fact that this Budget will be short on rhetoric and it will be long on doables. I think the instances of the last few weeks with the Modi government barely being in the seat for a month, be it a radical step like deciding to do away with all the 85 EGoMs which was nothing but the super structure over and above the Prime Minister’s Office (PMO) or be it delisting fruits and vegetables and thereby ensuring that farmers get the best price for their produce and curtailing thereby the powers of the agricultural produce market committee (APMC) or deciding to go ahead and increase the price of kerosene by Re 1 a litre which of course will curtail under-recoveries only by Rs 850 crore or thereabouts. But the fact of the matter is it sends out the message that this government means business.

Investors need to see reforms; bullish on ONGC, TVS: Ambit

There is a great deal of optimism about India, but at the same time, there is also concern about the pace of reforms, feels Saurabh Mukherjea of Ambit Capital.

In an interview with CNBC-TV18’s Anuj Singhal and Sonia Shenoy, Mukherjea says investors will be watching for meaningful reforms beyond fiscal consolidation. The FY15 fiscal deficit target will be one of most closely tracked number in the upcoming Budget, but more important will be the roadmap for achieving the target, he says.

Mukherjea sees the auto sector doing well over the next few years. He is bullish on stocks like TVS Motors , Ashok Leyland , and in the auto ancilliaries space, Balkrishna Industries .

He is bearish on Apollo Tyres and is advising investors to book profits in the stock, as he feels the rally is done. Instead,  MRF could now be a better play on the tyre sector, he says.

In the oil gas and gas space, Mukherhjea sees  Oil and Natural Gas Corporation (ONGC) as the most straightforward play.

Anuj: What is the general investment mood like at the Ambit India conference?

A: Clearly, there is a great deal of optimism about India both amongst corporate and foreign institutional investors (FIIs). The only note of caution is a fair bit of concern about the pace at which reforms will come and a degree of concern as to whether FY15 or the current fiscal will see any meaningful reform beyond fiscal consolidation and the announcement of goods and services tax (GST). So on the core issues of banking sector reforms, power and infrastructure, can we really move forward decisively in FY15? That perhaps is the key note of caution and concern emerging from FIIs.

Anuj: Since you spoke about reforms and we just had a discussion on oil and gas space, there is a lot of talk about gas pricing and other reforms, what is your broader call on oil and gas space?

A: The fuel-subsidy regime being pulled back, diesel getting deregulated, liquefied petroleum gas (LPG) and kerosene subsidies gradually being cut over the next two-three years, the straight forward play remains ONGC and there is obviously plenty of discussion with investors on ONGC as to how much of a structural play is it on the National Democratic Alliance (NDA) government’s willingness to cut back subsidies. The more debatable issue is, what will be the new gas price. The NDA has said publicly that they are revisiting USD 8.40 recommendation of the Rangarajan committee. Where exactly the USD 8.40 will settle down, is it USD 7 or USD 6 is a matter of speculation amongst FIIs. We don’t pretend to have any clear answers to that.

Sebi orders close scrutiny of AstraZeneca India delisting

Suspecting violation of norms to check fraudulent and unfair trades, Sebi today ordered close monitoring of a proposed delisting of Indian unit of global pharma giant AstraZeneca  .

The capital markets regulator also said there appeared to have been a coordinated and concerted attempt by the Swedish promoters of AstraZeneca Pharma India and a Hong Kong-based fund house Elliott Group during a previous Offer for Sale of the company’s shares.

This is the second case within a month where a Hong Kong based fund has come under scanner for suspected foul play in an Offer For Sale (OFS) through use of participatory notes (P-Notes) and sub-accounts. While Sebi is still continuing its probe into the matter, the regulator passed a seven-page late night order asking BSE and NSE to “closely monitor the entire delisting process of AstraZeneca Pharma India Ltd and allow the final delisting of its shares only after satisfying themselves that the process has been fair and transparent”.

Last week, the company had informed that shareholders through postal ballot have given their go-ahead to a delisting proposal. The two stock exchanges have also been asked to promptly report any aberrations noticed in the delisting process, while the promoters of the company would be able to finally purchase the shares from public shareholders only after seeking approval from the BSE and the NSE.

The Sebi order has come into effective effect. The regulator said its preliminary probe raises “suspicion that Elliott group might be working in collaboration/concert with the promoters of AstraZeneca Pharmaceuticals Sweden to facilitate the delisting of AstraZeneca Pharma India Ltd”. During an Offer for Sale undertaken by the Indian company’s promoters in 2003, Sebi said, the seller broker (ICICI Securities) had conducted more than 60 road shows prior to the OFS and the OFS floor price was at significant discount to prevailing market price.

“Still only Elliott group was allocated 94.02 per cent of shares offered through OFS and the the Floor price was kept at Rs 490 against the previous day’s closing price of Rs 805.3, which made the bids (2.84 times over-subscription) in the OFS hover around this price only. “This facilitated the Elliott group to mop up almost all the shares (that is 94.02 per cent) offered in OFS at an average price of Rs 625.35 which is lower than previous day’s closing price by Rs 179.95,” Sebi said.

Sebi said “if suspected concerted/coordinated action of AstraZeneca Pharma Sweden and Elliott group is found true then their act/conduct may amount to contravention of Sebi (Prohibition of Fraudulent and Unfair Practice Relating to Securities Market) Regulations, 2003. “The matter requires further examination in this regard,” the regulator said, but allowed the delisting process to go ahead at this stage in the interest of retail investors and keeping in mind the “facts and circumstances” as of now.

Sebi further said its probe found that the OFS bid prices of Elliott group were significantly above the floor price and the then prevailing indicative price. Elliott group placed their bids in the OFS in synchronised manner through six FIIs/Sub-account and the final bid modifications were made few seconds ahead of the market closing. Also, the Elliott group had no previous exposure to the scrip of AstraZeneca Pharma India and the present delisting offer has been made within one year of OFS.

“Earlier delisting offers were unsuccessful/rejected as retail shareholders were either demanding price of Rs 3000 per share or were not keen to delist the company. The present delisting offer would not have been through without favourable voting by Elliott group,” Sebi found. The Elliott group and the participating FIIs, with their current shareholding of 15.52 per cent, as against retail investors’ 8.89 per cent stake, are in position to ensure that the delisting process goes through even if none of the retail investors offer their shares.

Sebi further said Elliott group had “the potential to influence the delisting price in the proposed delisting offer in the manner that could be detrimental to the interest of these retail shareholders.” Sebi had launched its probe in this case after coming across certain reports stating that the OFS carried out by the company promoters was a deliberate attempt to subsequently get the shares at ease. “It was also reported that more than 94 per cent of total shares offered through OFS had been subscribed by six Foreign Institutional Investors (FII),” Sebi said.

A further probe by Sebi of the information provided by these six FIIs — DB International, Suffolk Mauritius Ltd, Morgan Stanley Asia (Singapore), BNP Paribas Arbitrage, Mansfield Mauritius Ltd and Merrill Lynch Capital Markets Espana — found that end subscribers of the shares sold to them were related to Elliott Group through participatory notes and sub-accounts.

Incidentally, another probe is currently underway after Sebi prima facie found irregularities in Offer for Sale of shares of another company L&T Finance earlier this year and in that case also a Hong Kong-based fund is under scanner for misuse of P-Notes and sub accounts. In the present case, Sebi said AstraZeneca Pharma India has failed twice in its previous delisting efforts, while another delisting offer was announced earlier this year.

The shareholder approval for the proposed delisting through postal ballot was announced last week. In 2004, the delisting could not happen as the delisting price of Rs 3,000 per share discovered through a reverse book building process was not acceptable to the promoters. In 2010, a delisting proposal was not approved by shareholders of the Indian unit.

As on March 31, 2013, Swedish promoters had 89.99 per cent stake in the Indian company and in order to comply with Minimum Public Shareholding Norms they carried out an OFS for sale of 14.99 per cent stake. Later, AstraZeneca announced a voluntary delisting in March 2014 and sought shareholders’ approval for the same. From the voting pattern, it was found that 76.1 per cent of the total votes cast and 87.97 per cent of votes in favour of delisting were cast by the two entities of Elliott group.

“Thus, the entire voting rights of Elliott group were exercised in favour of delisting proposal. From such voting pattern it may be seen that the present delisting would not have been through without favourable voting by Elliott group,” Sebi observed. For a delisting offer to be successful, the post offer shareholding of the promoter group should be higher of 90 per cent, or the total of the pre-offer promoter shareholding and 50 per cent of the offer size.

In the present matter, it would be required for Swedish promoter to take its shareholding from current 75 per cent to minimum 90 per cent to make the delisting successful. Incidentally, Elliott Group holds 15.52 per cent stake, putting them in a position to ensure success of the delisting offer even if none of the retail investors (with their aggregate 8.89 per cent stake) offer their shares, Sebi said.

AstraZeneca stock price

On June 25, 2014, at 11:16 hrs AstraZeneca Pharma was quoting at Rs 1123.65, down Rs 28.6, or 2.48 percent. The 52-week high of the share was Rs 1285.00 and the 52-week low was Rs 634.00.

The latest book value of the company is Rs 39.70 per share. At current value, the price-to-book value of the company was 28.30.

Bet on financials, auto, mining; sell PSU banks: Ambit

Investors are focussed on the long- term growth of India on back of optimism surrounding the new government and expectations of speedy reforms, Pramod Gubbi, Director (Institutional Sales), Ambit Capital said.  In an interview to CNBC-TV18, he said most investors are bullish on India at this point.

Though the recent steep railway fare and freight rate hike is seen by many as an anti-populist move, it has boded well with long-term investors, he said.  Also, they expect Modi government’s maiden Budget, scheduled on July 10, to be pragmatic.

On sectors, funds are rotating from defensives to cyclicals and valuation gap between cyclicals and defensives has narrowed, he said. He expects earnings of cyclicals to be upgraded in the near-term. Gubbi is bullish on financials, auto and mining.

He added that one is looking for structural changes in banks if recommendations of the Reserve Bank of India (RBI) are implemented. Public sector lenders may be re-rated if recommendations of PJ Nayak Panel are executed.  Ambit is a seller in most PSU banks at current levels and expects private sector b to come under pressure going forward. It strongly recommends  City Union Bank  and Ing Vysya Bank . It also finds  LIC Housing Finance  and  Magma FinCorp  attractive.

On the flipside, he continues to be cautious on high-leveraged plays. According to him, valuations upside in oil marketing companies may be capped.

Meanwhile, Gubbi is hoping for a tight Budget and added that government’s mandate is to take longer term decisions to aid recovery.

Anuj: What is the sense you are getting when you talk to your institutional clients? Is India still among the hot markets after the kind of rally we have seen or is this a market where there could be some profit booking over next few days?

A: A lot of our clients tend to be pretty much relatively long-term oriented. The reason they are excited about India is the mandate of the new government, which allows it to take some long-term decisions. These are positive for economic fundamentals and as a consequence for the stock markets in general. Optimism continues to remain and is getting strengthened by government’s decisions so far, particularly the likes of the railway tariff hike, which  augurs well for the upcoming big event, the Budget. Investors are expecting similar tough decisions to be taken, which are positive for the economy from a long-term perspective. People are seeing that India is on the move and they want to participate in this change.

Ekta: Which are the sectors that people are mostly wary of something like an  ITC  at this point?

A: Unlikely to do with anything specific to the Budget. People are looking for a fairly pragmatic Budget, which is long-term oriented and moving towards long-term structural reforms – be it taxation or building infrastructure, allocationing spends and making social spends far more productive. Those are the sort of cues that investors are looking out for rather than any specific impact on particular sectors. The emphasis is on long-term investing and particular incentive in this year’s Budget is unlikely to make a big difference in their investment decision making.

Having said that, the mood remains the same in terms of sector preferences. We are in a structural rotation out of defensives to cyclicals given that we have had a long three-year period where defensives have outperformed cyclicals. We think that rotation will take that much longer and we continue to play financials, industrials, autos, energy, metals and mining over something like consumer staples, ITC being a part of that. Pharmaceuticals and IT will be losers on that front.

Budget likely to favour infra; no rate cuts soon: Religare

Concerns over the ongoing conflict in Iraq could dampen sentiment for India in the near term, but only if the situation worsens, feels Gautam Trivedi of Religare.

“There is no dearth of appetite for India or Indian paper; the Iraq air pocket has slightly slowed down things,” Trivedi said in an interview to CNBC-TV18′s Anuj Singhal and Sonia Shenoy.

“If the situation in Iraq does not worsen, the event will get baked into the valuations,” he said.

Trivedi is bullish on cement and infrastructure, Religare’s top sectoral picks.

He is hopeful that the upcoming Union Budget announcing measures to boost infrastructure spending. Trivedi rates  Larsen and Toubro (L&T) as his top pick in the infrastructure space. In the IT space,  Infosys and  Tata Consultancy Services (TCS) are Trivedi’s top bets. He is also bullish on state-owned banking shares.

And while he is bullish on infrastructure stocks, Trivedi does not expect the sector to get relief on the interest rates front. He says a reduction in interest rates is likely only in the first quarter of calendar 2015.

He sees asset sales as being the key driver for infrastructure companies. Companies that are able to sell assets at good valuations and reduce debt on their balance sheets will be the ones to watch out for, he says.

Trivedi says the current rally in sugar shares in purely event driven, and the uptrend could continue for a while.

Anuj: What is your call now? Are we good for a pre-Budget rally or would you say that the kind of consolidation that we have seen over the last few weeks is going to continue?

A: The consolidation on the midcap fund has been very limited. It has been all of 4 percent for the CNX-midcap index and about 3-3.5 percent for the BSE midcap index. So it has not been the huge correction as yet.

I think if the situation gets significantly worse in Iraq then we have a major problem but until we do not see the Iraq problem getting worse, I think at some point this will get baked into the valuations and price. So there is no dearth of appetite to buy India or buy Indian paper for that matter. However, the current air pocket for the Iraq crisis has slowed things down.

Sonia: How enthused would you be about the recent developments from the government’s front, be the hike in freight rates as well as the sugar sector reforms? Do you think the next leg of the market rally will be spurred by some of these announcements?

A: Yes, these have been the two major announcements that we have seen since the government is in power. The fact that railway Budget is still some time away but the government did take a bold step of hiking railways rates as much as they did, has been taken mostly positively by the institutional investor segment. However, from the end consumer on the ground – that has not been taken too well. I appreciate their concerns and the fact that inflation already is still pretty high. But from the fact that the government has the ability to take bold decisions, it has been taken very positively.

Anuj: You have a buy on Infosys after the appointment of new CEO, can you explain that and would that be your top pick in the IT space?

A: Infosys has been one of our top picks. We also like TCS and that inspite of being most expensive, still remains one of our favorites. People need to give some time to Vishal Sikka to settle in and see the next two quarters the steps he is going to take to rejuvenate growth at the company. That is what we are playing for.

Sonia: So what should the strategy be now for an investor from now until the Budget, should you wait for the Budget to pan out and then increase your fund allocation or do you think now the time is right because of all the right noises we have been hearing from the government?

A: The time is right for certain sectors and certain sectors could get impacted by what finally comes in the Budget. For example, in infrastructure there is no doubt people remain extremely positive and hopefully the Budget only improves the situation in terms of where infrastructure can go from here on. Inspite of the fact that some of the smaller infrastructure companies have had big rallies year-to-date. However, cement and infrastructure remain our top picks not withstanding what comes in the Budget. With respect to  ITC as an example, which had a huge fall yesterday on potential excise hike in the Budget. For stocks like that, you would want to wait and see the fine print before taking a final call.