Reliance Communications to buy Sistema's India wireless business 

[Editor: Today both Reliance Communications Ltd (Anil Ambani Group, CMP: Rs.79.90) and Reliance Industries Ltd (Mukesh Ambani Group) are up. If you remember Reliance Industries Ltd was recommended in this blog at around Rs.943; today it touched Rs.960. I feel the other Reliance Group companies are soon to follow the trend. Meanwhile, there are recent media reports that the Mukesh Ambani-promoted Reliance Jio Infocomm, will lead the 4G subscriber market share despite the 4G network launch by Vodafone, Idea Cellular and Bharti Airtel]

Photo: Ibnlive

MUMBAI: Reliance Communications Ltd on Monday announced plans to acquire Sistema Shyam's wireless service business for a 10% equity in the combined firm to Russia's Sistema. 

The company which runs the only all-CDMA technology based network under the brand MTS will come without any debt, as its promoters will repay all loans prior to the merger, a joint statement said.Reliance Communications will undertake Rs 392 crore of annual spectrum payment for the next 10 years that are due from Sistema for the 3.75 MHz of airwaves it holds in nine circles. 

While Sistema will not get any board seat of veto rights, for the moment its management continue to run its operations, as per the agreement. 

Courtesy: The Economic Times

TV18 Broadcast Ltd: Latest Shareholding Pattern

CMP: Rs.32.70

You can see in the above photo, that both the FIIs and DIIs have increased their stake in TV18 Broadcast Ltd (A Mukesh Ambani Group company), in the September, 2015 quarter, speaking sequentially.

Moreover, Rekha Rakesh Jhunjhunwala, Reliance Capital Ltd and Government Pension Fund Global are holding 2.32%, 1.21% and 2.67% of the shares of the company, respectively. Also, do you know where, Pension Funds generally put their money (invest)? Please search Internet to get the answer.....

It is to be remembered that on 29 May last year, in the biggest ever deal in India's media sector, Reliance Industries acquired control in Network18 Media & Investments Ltd, including its subsidiary TV18 Broadcast Ltd, for Rs.4,000 crore. Subsequently, the company made open offers to acquire a controlling stake in media group Network18 and its subsidiaries.

In January 2012, Network18 Group and Reliance Industries had joined hands for a multi-layered deal, under which the Mukesh Ambani-led corporate giant sold part of its interest in ETV channels and got access to content and distribution assets of the electronic media group. 

The share of TV18 Broadcast Ltd (Rs.32.70) is moving up with good volume today. The total volume of the shares traded in the NSE has already crossed 1.5 million and is nearing 2 million (Current Volume: 1,807,011). 

It is to be noted that Eenadu Television sold its non-Telugu businesses to the TV18 group, now controlled by Reliance Industries Ltd’s Mukesh Ambani.

In a significant development, Petrochemical major Reliance Industries Ltd, the parent company of TV18 Broadcast Ltd, had earlier beat street expectations with its September, 2015 quarter standalone net profit rising 3.8% sequentially to Rs.6,561 crore, driven by strong operational performance in refining business.

Meanwhile, a buy call was given to the Paid Group members, on Infinite Computer Solutions Ltd on Sunday, August 30, 2015 at Rs.168.70, for a short term target of Rs.200; the scrip touched Rs.196, intra-day.  

Join the Paid Services (both Web/Net and Mobile) to make maximum from the markets. To join any of the above services, kindly send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com. 

DO YOU KNOW?

There has been some unconfirmed reports that Reliance Industries Ltd (Rs.943), is headed for a big bang realignment of its business model; which could be just around the corner or which could happen within the next few months--may be it will commence definitely in this quarter.

Astute investors should now take their call because when a company of the size and stature is aligning its business model, pumping huge chunk of its block in a new business, it could turn out to be a jackpot.

Meanwhile, the statistics say that, percentage change in Open Interest in the scrip is (-)5.69, while the price is down 1.29% at Rs.943. This gives an ideal buy signal for the stock, with a very short time price target of Rs.960.

TV18 Broadcast Ltd: Buy

CMP: Rs.32.75

TV18 Broadcast Ltd. is an India-based television (TV) broadcast network. The Company offers telecommunication, broadcasting and information supply services. It operates through segments, including broadcasting and content, and film production and distribution. The broadcasting and content segment consists of television content and airtime sales. The Company offers news channels, such as CNBC-TV18, CNBC Awaaz, CNBC-TV18 Prime HD, CNN-IBN, IBN7, and IBN-Lokmat, a Marathi regional news channel. It also operates a joint venture with Viacom, Viacom18, which houses a portfolio of entertainment channels, such as Colors, Colors HD, Rishtey, MTV, MTV Indies, SONIC, Comedy Central, VH1, Nick, Nick Jr., Nick Teen and Viacom18, among others. It manages and broadcasts the channel, History TV18. It offers regional channels, such as ETV Urdu, ETV Rajasthan, ETV Bihar/Jharkhand and ETV MP/Chhattisgarh, among others. It also operates digital commerce properties, such as HomeShop18 and bookmyshow.com.
Media company Network18 Media and Investments Ltd, controlled by Reliance Industries Ltd, narrowed its loss to Rs.27.42 crore for the quarter-ended 30 September, benefiting from lower interest costs. The company posted a loss of Rs.36.46 crore in the same period last year. Revenue for the second quarter rose 8% to Rs.801.1 crore from Rs.744.8 crore.

Revenue from its subsidiary TV18 Broadcast Ltd, the company’s television and motion pictures business that also operates news channels CNN-IBN and CNBC TV18, rose 9.8% to Rs.608.5 crore from Rs.553.7 crore.

Colors Infinity, an English GEC channel, was launched during the current quarter, and incurred a loss of Rs.19 crore.

In H1 FY16, there was loss of Rs.19 crore on account of new ETV news channels; there was also a one-time expense of Rs.10 crore for rebranding ETV regional entertainment channels as Colors.

H1 FY15 profitability vis-à-vis H1 FY16 was significantly influenced by advertisement income on account of the General Elections and the Union Budget. 

This means from the following quarters we could see, some improvement in the share price of the group company TV18 Broadcast Ltd. The fall in interest rate, will also act as positive boost for the company.

It is to be noted that today, the 30 plus channels that constitute the TV18 network inform, entertain and engage with disparate audiences across genres and languages.

Moreover, according to the latest shareholding pattern, both the FIIs (from 8.84% to  8.88%) and DIIs (from  3.55% to 4.92%) have increased their stake in the company. Rekha Rakesh Jhunjhunwala holds 2.32%, while Reliance Capital Ltd holds 1.21% of the shares of the company.   

What must have attracted Rakesh Jhunjhunwala to invest in TV18 Broadcast is probably the following:

(i) Liberalized foreign investment (FDI) norms for the broadcasting sector pursuant to which the foreign investment limit has been raised from 49% to 74% in teleports (setting up up-linking HUBs/teleports), Direct to Home (DTH), Cable Networks (Multi-System-Operators operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability). Foreign investment up to 74% in mobile TV is also permissible;

(ii) Digitization of cable TV will benefit the broadcasters by boosting subscription revenues...

(iii) Reasonable valuations: A market cap of Rs.5000+ crores for a dominant player is not that exorbitant.


Meanwhile, BCG-CII report says India's media & entertainment sector is likely to expand nearly 6-fold in near future, with vast demand, growing market and tech boom...

Buy the scrip of TV18 Broadcast Ltd at the CMP of Rs..32.80, for a short term target of Rs.35-37, SL--Rs.31.70.

ZEEL, Network18, TV18 collective ad spends rise 10.8% to Rs.456 crore in Q2 

Oct 16,2015: The results of three of the top TV networks i.e. Zee Entertainment Enterprises Ltd. (ZEEL), Network18 and TV18 emerged recently. 

While ZEEL saw very good results as its profit after tax (PAT) margin rose by 17.8%, its advertising revenues grew by 35% to Rs.843.3 crore during the quarter. TV18’s quarterly operating revenues on a consolidated basis stood at Rs.608.5 crore in Q2 FY16, up 10% YoY from Rs.553.7 crore in Q2 FY15. 

Network18, on the other hand, posted a net loss of Rs.27.42 crore which is a decline in the net loss since the same quarter last year which was at Rs.36.46 crore. The total income from operations grew by 7.5% to Rs. 801.13 crore in Q2FY2016 from Rs.744.83 crore in Q2FY2015. 

During the last quarter, Q1FY2016, all the three broadcast networks had posted a double-digit growth in revenues. ZEEL’s total income from operations grew by 26.6 per cent in comparison with the corresponding quarter during the previous year. The income from operations grew in Q1FY2016 to Rs.1,339 crore from Rs.1,055 crore in Q1FY2015. 

Network18’s total income from operations grew by 12% since the corresponding quarter last year. The income from operations for Network18 in Q1FY2016 was Rs.786.1 crore and in Q1FY2015 it was Rs.699.7 crore. TV18 operating revenues grew by 13 per cent in comparison with Q1FY2015. 

In Q1FY2016 the operating revenues was Rs.596.7 crore in comparison with Rs.629.7 crore in Q1FY2015.

Ad spends matrix

The ad and promotion spends of ZEEL, Network18 and TV18 in Q2FY2016 grew by an average of 10.8% from the same quarter last year. The ad spends together accounted for Rs. 456.18 crore in Q2FY2016 from Rs.411.49 crore in Q2FY2015. ZEEL saw the maximum growth in ad spends from the same period last year. The network’s ad spends had grown by a high 64.6% to Rs.120.90 crore in Q2FY2016 from Rs.73.45 crore in Q2FY2015. TV18 however saw a smaller growth as its ad spends increased to Rs. 127.03 crore in Q2FY2016 from Rs.117.32 crore in Q2FY2015. 

Network18 on the other hand had seen a slight decline in its ad spends during this quarter in comparison to the corresponding quarter last year. Its ad spends in Q2FY2016 was Rs.208.25 crore which had declined from Rs.220.72 crore in Q2FY2015.

Lower growth of 2.8% in ad spends from last quarter

The ad spends of these three major networks however grew by a low 2.8% since the previous quarter Q1FY2016. The ad and promotion spends of ZEEL, Network18 and TV18 in Q1FY2016 amounted to Rs.443.7 crore. This has grown to Rs.456.18 crore during Q2FY2016. 

The reason for this is that, while ZEEL has had a major rise in the ad spends during this Q2 from Q1, Network18 and TV18 has seen a slide in ad spends during the quarter. ZEEL’s ad spends increased to Rs.120.90 crore in Q2FY2016 from Rs.96.6 crore in Q1FY2016. 

Network18’s ad spends declined marginally to Rs.208.25 crore in Q2FY2016 from Rs.211.2 crore in Q1FY2016. TV18’s ad spends too declined to Rs.127.03 crore in Q2FY2016 from Rs.135.9 crore in Q1FY2016.

Q1 comparison

ZEEL’s advertising and publicity expenses rose by a high double-digit in Q1FY2016 to 20% in comparison with Q1FY2015. Advertising and publicity expenses grew to Rs.96.6 crore in Q1FY2016 from Rs.80.3 crore in Q1 last year.

TV18’s marketing, distribution and promotion expenses increased significantly by 32.9% since Q1FY2015. The ad and marketing spends accounted to Rs.135.9 crore in Q1FY2016 from Rs.102.2 crore in Q1FY2015.

Network18’s ad and marketing spends grew by high single-digit of 9.8%. It increased to Rs.211.2 crore in Q1FY2016 from Rs.192.2 crore in Q1FY2015.

Courtesy: www.exchange4media.com

WINNING STROKES: THINK DIFFERENT

Please Click on the Photo to Expand

Yesterdays' recommendation, HCC Ltd today shot up to the Rs.29.20, intra-day before closing at Rs.27.70. The scrip reached both the targets today. Join the Premium Group and make most from the stock market.............moreover, if you are having around Rs.50 lakhs to Rs.1 Crore, for investing in the equity market, do let me know....we can strike a deal with 50:50 profit sharing ratio. The markets are on a run and this is the time to make money.....you have the money, I have the expertise---I believe both can gel and give good returns (over a period). 
Today, a buy call was initiated in Vedanta Ltd, for the Mobile Group at Rs.103 and for the Web Group at Rs.104. The scrip today made an intra-day high of Rs.105.95 before closing at Rs.105.05. What is the target of the scrip? Anyway, recently, there were some media reports that Vedanta Ltd is expecting its iron ore exports from the state of Goa to be much higher than its permitted mining capacity of 5.5 million tonnes in the fiscal year to March, as it bids for ore in government-run auctions. The natural resources conglomerate said in a statement yesterday, that its iron ore division shipped its first cargo of iron ore, after resuming mining operations in August in Goa. Iron ore mining was banned in the state of Goa since late 2012 amid allegations of rampant illegal mining and environment damage. The ban was eventually lifted but with an upper limit of 20 million tonnes late last year with an aim to preserve the resource for future generations. It is pertinent to mention here that, the brokerage house Emkay Global Financial Services,  in its research report dated June 15, 2015 gave a buy rating on the scrip, with a target price of Rs 235.

Meanwhile, the company has declared, 30/10/2015 as the cut-off date for the Interim Dividend. The 52 Week High (adjusted) and Low (adjusted) for the share are Rs.263.55 and Rs.76.70, respectively. 

Proteins Ltd, today closed at the upper circuits at Re.0.26. The scrip is going to give good returns to the investors over a period. 

WINNING STROKES: THINK DIFFERENT

Today, a buy call was given in the shares of Hindustan Construction Company Ltd (HCC Ltd) to the Mobile Premium Group members at Rs.23.30 and to the Web Premium Group members at Rs.23.70. The scrip touched a high of Rs.25.20, intra-before closing at Rs.24.80.  The scrip is likely to cross Rs.30, within a short time. 

Premium Members were today, asked to book profit in Gitanjali Gems Ltd, after it was seen that the scrip was finding difficulty to cross Rs.42. The stock touched an intra-day low of Rs.39, before closing at Rs.39.25.

Rasoya Proteins Ltd today closed at Re.0.26. I will soon speak with the sources and update you about the latest developments. However, the CMD is trying all options to open the main plant, at the earliest. 

My recommended Reliance Communications Ltd at Rs.72, today touched Rs.82.70, before closing at Rs.80.50. Now what to do with this scrip....? These days, unless you are an expert in the equity market, it will be very difficult to make money, even if you get a buy call at the right time because, it is more difficult to sell a scrip than to buy. Therefore, join the MOBILE PREMIUM GROUP, to make maximum from the equity markets.

Announcement

Photo: Tricks Machine

After speaking with various market participants I have understood (discovered) that these days it has become very difficult to make money consistently (from the equity markets) without proper guidance; because the market is now in control of HIGHLY PROFESSIONAL INDIVIDUALS, which included MBA (Finances), MBA (Investments), Chartered Accountants, Cost Accountants, Company Lawyers, Engineers with MBAs and so on......

In  view of this I am starting a new type of Premium Service, where you would get BUY/SELL calls directly on your mobiles during the market hours. There will be a little phase lag, between the calls sent to the Mobile Group and Web Group. Hence, the charges for the Mobile Premium Group will be a little higher than the latter.

Those who want to register for this kind of Paid Service, kindly send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

The calls will be based both on the Fundamentals and Chartical Patterns (Technicals). The first 5 persons/individuals will get a discount of 20% on the subscription cost. Hence, Hurry Up!!

Gitanjali Gems Ltd: Waiting for a blast to happen......

The platform - India Leadership Conclave 2015, under the flagship brand of Media property Network 7 Media Group announced Nakshatra, a flagship brand of Gitanjali Group as a winner in the “India’s Most Admired & Valuable Jewellery Brand 2015” category and Mr.Nehal Modi, CEO, Gitanjali USA & Samuels Jewelers Inc. as the “Emerging Entrepreneur of the year 2015”.

The winners were chosen by a selection committee review process that included representatives from government, the industry and general public at large. The questions were posed to 1254 HNI in Tier 1 & Tier 2 Cities.

Meanwhile, the Hindu Business Line, 16 October, 2015 writes:

Gold prices remain firm at 3-1/2 month highs on Friday at the international market, thanks to a recovering dollar. Spot gold was ruling firm at $1,182.73 an ounce at 7 pm IST. In the Mumbai bullion market, standard gold (99.5 purity) closed at Rs.26,895 per 10 grams. 

Jewellery shares, such as Titan Industries, Thangamayil Jewellery, Gitanjali Gems, TBZ, PC Jeweller, Tara Jewels and Rajesh Exports will remain in focus. 

Also, as India increases its focus on developing manufacturing hubs, there is a significant opportunity for the US companies to bring in technological expertise in sectors like gems and jewellery, says a PwC report.

Solid comeback…Sensex shuts above 27,000 mark

Commenting on the same, Amar Ambani, Head of Research, IIFL, said, “LIC Housing Finance’s Q2 FY16 performance was stronger-than-expected with robust NII growth of 34% yoy and net profit increasing by 19% yoy. A combination of brisk loan growth, margin expansion and stable credit cost should drive significant earnings growth for the company over the next couple of years. RoA is estimated to improve materially from the current cyclical low of 1.3%. Valuation at 2.2x FY17E P/BV remains attractive in the above context.

October 15, 2015: After being under pressure for the past three trading session, the Indian equity market made a smart comeback. Indices closed near day’s high with the Nifty just managing to close near the 8,200 mark while Sensex closed above 27,000 levels. Today’s rally was led by auto stocks, followed by metals, oil & gas, capital goods and power stocks. Even the mid-cap and the small-cap stocks participated in today’s rally. Only the IT stocks ended with losses. TCS continued to decline as it missed street expectations. Wipro and Infy were among the other laggards.

Shares of LIC Housing gained by over 2.5% after announcing quarterly results. The Company posted a net profit of Rs. 4117.368 mn for the quarter ended September 30, 2015 as compared to Rs. 3413.516 mn for the quarter ended September 30, 2014.

Commenting on the same, Amar Ambani, Head of Research, IIFL, said, “LIC Housing Finance’s Q2 FY16 performance was stronger-than-expected with robust NII growth of 34% yoy and net profit increasing by 19% yoy. A combination of brisk loan growth, margin expansion and stable credit cost should drive significant earnings growth for the company over the next couple of years. RoA is estimated to improve materially from the current cyclical low of 1.3%. Valuation at 2.2x FY17E P/BV remains attractive in the above context.”

The BSE Sensex opened at 26,842, touched an intra-day high of 27,038 and low of 26,837. It finally ended with a gain of 230 points at 27,010.

The NSE Nifty opened at 8,134 hitting a high of 8,191 and low of 8,130, before signing off with a gain of 72 points or 0.8% at 8,180.

The India VIX (Volatility) index was down 3.1% to 17.17.

On the global front, China's Shanghai Composite index rallied 2.3% and Hang Seng closed up 2%.

In Europe, The FTSE 100 was marginally up 0.8%. On the other hand, DAX and the CAC 40 gained 1%.

The Indian currency was quoted at 64.93 per US dollar, up 25 paise from the previous trading session.

Zee Ent, Tata Motors, BPCL, Bank of Baroda, BHEL, Maruti Suzuki and Hero MotoCorp were among the gainers on NSE, whereas Cipla, M&M, Wipro, TCS, HUL, Tech Mahindra and NTPC were among the losers today.

Out of 1,748 stocks traded on the NSE, 649 declined and 857 advanced today.

Adani Enterprises rallied 14% at Rs.96. According to reports, the Australian environment ministry cleared Adani’s $7 billion Carmichael coal mine.

Mastek tumbled 18% at Rs. 144 after the company posted Q2 results. The net profit for the quarter ended stands at Rs. 2.6 crore, while sales for Q2 was at Rs 131.7 cr vs Rs 133.3 cr, down by 1.2 % QoQ.

Spicejet soared 7% at Rs. 41. The airline announced its very first red-eye flights within the domestic network on the Delhi – Bangalore route along with a new flight on Delhi – Nanded route, both commencing its operations on 2nd November 2015.

Cyient closed higher by 5% at Rs. 620. The company reported 9.2% rise in net profit at Rs. 98.5 crore for the quarter ended September 30, 2015 as compared 30, 2015 as compared to Rs.90.2 crore for the quarter ended September 30, 2014.

Lakshmi Vilas Bank jumped 3% to Rs. 91. The net profit for the quarter stands at Rs.44.8 crore. Gross NPA for the quarter stands at 1.89%, while Net NPA for Q2 was at 1.01%.

A total of 39 stocks registered a fresh 52-week high in trades today, while 6 stocks touched a new 52-week low on the NSE.

Alpa Laboratories Limited, Ashima Limited, Bafna Pharmaceuticals Limited, Balaji Telefilms, Bombay Rayon Fashions Limited, Can Fin Homes Limited, Cerebra Integrated Technologies Limited, Cyient Limited, Dalmia Bharat Sugar and Industries Limited, Dhampur Sugar Mills Limited, Dynacons Technologies Limited, Emmbi Industries Limited Filatex India Limited, Future Market Networks Limited, Gayatri Projects Limited, Godfrey Phillips India Limited, GP Petroleums Limited, Himatsingka Seide Limited, Hubtown Limited, ITD Cementation India Limited,JB Chemicals & Pharmaceuticals Limited, Kajaria Ceramics Limited, KCP ,Lypsa Gems & Jewellery Limited, Mangalam Drugs And Organics Limited, Mahindra Holidays & Resorts India Limited, NCL Industries Limited, Ortin Laboratories Limited,Palred Technologies Limited, Parenteral Drugs (India) Limited, Rama Steel Tubes Limited, Sakthi Sugars Limited, SKM Egg Products Export (India) Limited, SREI Infrastructure Finance Limited, Themis Medicare Limited, Triveni Engineering & Industries, Vikas GlobalOne Limited, Zee Entertainment Enterprises were some of the prominent stocks to log a fresh 52-week high.

Austral Coke & Projects, Birla Cotsyn (India), Cyber Media (India), KSS, The Peria Karamalai Tea & Produce Company, Visesh Infotecnics  were some of the notable stocks to record a new 52-week low.

Sensex top gainers: The top gainers in the Sensex were Tata Motors  (up 8.2%), BHEL (up 3.2%), Maruti Suzuki (up 3%), Tata Steel  (up 2.8%) and Hero Motocorp (up 2.6%).

Sensex top losers: The top losers in the Sensex were Cipla  (down 1.2%), Wipro  (down 1%), Hindalco (down 0.9%), Hindustan Unilever (down 0.7%) and NTPC  (down 0.7%).

Nifty top gainers: The top gainers in the Nifty were Tata Motors  (up 8.2%), Bank Of Baroda (up 3.7%), BPCL (up 3.6%), BHEL (up 3.2%) and Maruti Suzuki (up 3%).

Nifty top losers: The top losers in the Nifty were Cipla  (down 1.2%), Mahindra & Mahindra (down 1%), Wipro  (down 1%), Hindalco (down 0.9%) and Hindustan Unilever (down 0.7%).

Mid-cap index gainers: The top gainers in the Mid-Cap index were Adani Enterprise (up 14.1%), Gitanjali Gems (up 6.5%), Godrej Industries (up 4.4%), Suzlon Energy (up 4%) and India Cements (up 3.8%).

Mid-cap index losers: The top losers in the Mid-Cap index were Karur Vysya Bank (down 3.7%), Piramal Enterprise (down 2.8%), Hindustan Zinc (down 2.6%), Tv18 Broadcast (down 2.2%) and Bharti Infratel (down 2.1%).

The BSE IT index: The top gainers in the IT sector were Mphasis (up 2.3%), Financial Tech (up 1.3%), Oracle Financial (up 1%), HCL Tech  (up 0.2%).

The top losers in the IT sector were Sasken Communication (down 1.7%), Wipro  (down 1%), TCS (down 0.6%), Tech Mahindra (down 0.5%).

The BSE Metals index: The top gainers in the metals sector were Tata Steel (up 2.8%), Jindal Steel (up 1.8%), Tata Metaliks (up 1.4%), Ispat Industries (up 1%) and JSW Steel  (up 0.8%).

The top losers in the metals sector were Monnet Ispat (down 1.6%), Sunflag Iron (down 1.5%), Bhushan Steel (down 1.5%), Jindal Stainless (down 1%) and Adhunik Metaliks (down 0.6%).

The BSE Oil & Gas Index: The top gainers in the oil & gas space were BPCL (up 3.6%), HPCL (up 2.8%), ONGC (up 2%), GSPL (up 1.2%) and IOC (up 0.8%).

The top losers in the oil & gas space were Hindustan Oil (down 1.5%), Great Offshore (down 1.4%), Essar Oil  (down 1.1%), Chennai Petroleum (down 0.9%) and MRPL (down 0.8%).

The BSE Auto Index: The top gainers in the auto space were Tata Motors  (up 8.2%), Maruti Suzuki (up 3%), Hero Motocorp (up 2.6%), Eicher Motors (up 0.7%) and Bajaj Auto  (up 0.5%).

The BSE Banking Index: The top gainers in the banking space were Bank Of Baroda (up 3.7%), Yes Bank  (up 2.8%), Canara Bank (up 2.8%), State Bank Of India  (up 1.9%) and Union Bank Of India (up 1.5%).

Courtesy: Indiainfoline.com

Does Investing in Gold Make Sense?

October 14, 2015: For many of us, purchasing gold coins during Diwali is considered auspicious. So it begs the question: does it really make sense to invest in gold?

Historical Gold Trends

Generally speaking, gold has been regarded a safe haven for many people. In recent years, gold prices have been volatile. In 2013, the gold price dropped more than 25%! 

Looking at the chart above, you can see that if you invested $1 in gold in 1802, its value would be $3.21 in 2013, a mere 0.6% increase. Stocks, by comparison, would turn your $1 investment from 1802 to $930,550 in 2013.

Does this mean investing in gold is a bad idea? Not necessarily. Given the right economic conditions, gold can be a great investment! The key is to have the right mix of investments, gold being one of them.  

How is Gold Priced?

Gold prices are fixed twice daily in US Dollars by the London Bullion Market Association (LBMA).

There are ten price participants who have been accredited to contribute to the LBMA Gold Price. This serves as an indicator and basis for the market price, also known as the spot price.

When you search “gold price today” in your favorite search engine, what you see is the spot price for gold. The retail gold price is generally greater than the spot price for the following reasons:

Cost to Create Gold Coins 

When you purchase physical gold coins, gold bars known as bullion are melted and molded into coins. This leads to an additional cost that is passed to the purchaser.

Brand of Gold

The four well-known brands of physical gold are the American Gold Eagle (most expensive), Canadian Maple Gold Leaf, South African Krugerrand and Credit Suisse Gold Bar (least expensive). What you pay for is the brand and there is no difference in the “quality” of gold. Unbranded gold rounds are also available from private mints and cost less than branded gold coins and bars. 

Gold Purity

Karat (symbolized as K) is a measurement for gold purity with 24K being the purest  and most expensive form of 100% gold with no mixed metals. 22K gold has 91.6% pure gold that is mixed with 8.4% of other metals. Similarly, there is 18K (75% purity), 14K (58.5% purity), 10K (41.7% purity) and 6K (25% purity) gold.  

  

Ways to Invest in Gold

There are many different ways to invest in gold each with it’s pros and cons. 

Gold coins, Bars and Rounds

Branded and unbranded physical gold can serve as a safety net against inflation or should physical currency ever disappear. 

Gold Jewelry

Gold jewelry serves as a fashion accessory and also an investment. However, there are additional costs associated with making gold jewelry, which makes the net price per gram of gold significantly greater than the spot price.  

Exchange Traded Funds (ETF)

A Gold Exchange Traded Fund is a marketable security that can be traded like a common stock thereby removing the need to store and secure physical gold.  Generally, there are additional fees and commissions associated with ETFs, which may offset any potential upsides in gold prices. You can also purchase stocks of gold mining companies. However the rise in gold prices may not necessarily correlate with the increase in stock price of a gold mining company due to factors such as mismanagement, flooding etc.  

What Experts Say

When it comes to investing, you may have heard about asset allocation and diversification. What this means is that you diversify your investments across various asset classes such as gold, commodities, stocks and bonds and allocate specific percentages of your money to each of these asset classes.  In his book, Money–Master the Game, Tony Robbins, a motivational coach and personal finance instructor, discusses Ray Dalio’s all-season portfolio. Dalio is the founder of the investment firm Bridgewater Associates. Dalio’s portfolio consisted of 30% stocks, 40% long term US bonds, 15% intermediate bonds, 7.5% commodities and 7.5% gold. 

The key here is to remember to regularly re-balance your portfolio. It is also important to note that gold prices are very volatile and it is hard to predict the right time to buy and sell gold. Whether gold is the right investment choice for your portfolio depends on your tolerance for risk and investment goals. Happy Investing and Happy Diwali! 

Kunal Sampat is part of Sampat Jewellers Inc, a family owned business based in San Jose and Mumbai. This article was inspired by Kunal’s own personal curiosity of what it means to invest in gold. 

Courtesy: India Currrents

Gitanjali Gems Ltd: Turns Bullish...

A buy call was given on Gitanjali Gems Ltd, a couple of days back, for a short term target of Rs.45; after the Index of Industrial Production (IIP) rose 6.4% in August, compared with 4.1% in July and 0.5% in August last year, data from the statistics office showed on Monday---among sectors, gems and jewelry, electricity, mining and apparel contributed to growth while steel and instant food mixes were the slowest growing. 

The company's outstanding debt as on March 31 was Rs 8,715 crore, while the reserves and surplus was Rs.4018 Cr, as per the Economic Times, 3 June, 2015. 

It is to be noted that the bullishness of the gems and jewelry sector increases with any rise in GDP. 

The Book Value of the shares of Gitanjali Gems Ltd is Rs.292.67 while its market cap is ONLY Rs.379.73 Cr. Its P/E is 14.23, as compared to the Industry P/E of 35.84. Today, the shares of Gitanjali Gems Ltd closed at Rs.38.70 (BSE), up 6.03%.

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Photo: Sahul Trading

Raising serious concern on the huge upsurge in the prices of soyabean futures,  which in turn is leading to increase in physical soybean prices as well, the Soyabean Processors Association of India (SOPA) has urged the Securities Exchange Board of India (Sebi) to immediately put a stop to futures trading in soyabean seed.

In a letter to Sebi Chairman UK Sinha, chairman, SOPA has alleged that ‘unscrupulous operators’ are rigging prices of the commodity which has hit the processing industry. Rampant speculative activity by a few vested interests has made it prone to their market domination and genuine players have been sidelined, the body said. The speculation is not only ruining the soyabean industry but also adversely affecting domestic users in  poultry,  fisheries and aquaculture and livestock feed industry, which are major feed users, SOPA has stated in the letter.

The upward price movement between September 1, 2015 and Tuesday is about 14%, which has no justification whatsoever because the new soyabean crop has just started arriving and this is the peak season for soyabean harvest and arrivals and prices during October and December always remain subdued, Davish Jain, chairman, SOPA mentioned in the letter.

The current rally is driven by speculators and it has become the nature of the market that now physical market is following the futures rather than the other way round.

“The net effect of this speculation driven price rise is that the soyabean industry is suffering from huge disparity in crushing. Not only are we not able to export soyabean meal, we are also finding it difficult to sell in the local market because of high prices,” he said.

“More than 50% of the soyabean crushing plants have already closed down due to this speculation-driven price manipulation by just a few unscrupulous operators and we are afraid that if this is not checked very soon, the entire industry will have to shut shop,” Jain said.

The consequences of this will be disastrous for the farmers who depend on the industry to sell their produce, he said, adding that no industry can survive if it has to buy raw material at unreasonably high price and the ultimate sufferer will be the farmer  if there are no buyers for soyabean. The industry is in crisis and closure of futures trading is the only way out to make the soya processing industry survive in these critical times, the association said.

At the AGM of the association held last week members were of the unanimous view that if the industry has to survive, there should be no futures trading in a commodity which is already in short supply.

There are currently about 117 soy processing plants in the country with a combined crushing capacity of 250 lakh tonne per annum. The industry produces goods worth R35,000 crore and exports products worth R15,000 crore per annum, mainly soybean meal.

There are about 8 million farmers engaged in soyabean cultivation who are dependent on the soybean industry for disposal of their produce.

SOPA has said that the body has repeatedly expressed serious concern at the highest level with FMC and Futures Exchanges since April-May 2015, regarding unrestrained and ubridled business speculation in soybean seed futures contracts.

Soybean production in the country is expected to fall by 3.97% for the season of 2015. SOPA says production estimates of soyabean during kharif 2015 is 86.426 lakh tonne, which is 3.574 lakh tonne  lower by 3.97 % as compared to previous years revised estimates of 90 lakh tonne.

The carryover of soyabean from last year is estimated at 9 lakh tonne.

The current annual production of soyabean  in the country is around 100 lakh tonne from cultivation in 110.656 lakh hectares.  India has been tradtionally exporting approximately 60-70% of total soymeal output.

The value of exports in 2013-14 was Rs 15,000 crore.

Source: Financial Express

Soyabean futures up on global cues

Photo: Geewinexim

NEW DELHI, 14 Oct, 2015: Soyabean prices spurted by Rs 74 to Rs 3,947 per quintal in future trading today as speculators enlarged positions, supported by rising demand at the physical markets. 

At the National Commodity and Derivatives Exchange, soyabean for delivery in October flared up by Rs 74, or 1.91 per cent, to Rs 3,947 per quintal, in an open interest of 5,040 lots. 

Also, soyabean for most-active November delivery spurted Rs 73, or 1.88 per cent, to Rs 3,950 per quintal and an open interest stood of 81,650 lots. 

Marketmen attributed rise in soyabean futures to strong demand at the domestic spot market. 

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The face value of the shares of the Gems and Jewelry company, Rajesh Exports Ltd is Re.1 (one) and the share is being traded at a whooping price of Rs.636.85, which means for Rs.10, FV, the share should trade at Rs.6368.5. 

In comparison Gitanjali Gems Ltd has a face value of Rs.10 and is now trading at Rs.39. Moreover, the P/E of Gitanjali Gems Ltd (Rs.39) is only 14.26 as compared to 60.38 of Rajesh Exports Ltd. The industry P/E is meanwhile is placed at 35.84. 

This means that, even if Gitanjali Gems Ltd gets a decent P/E of 20, then the share price should cross Rs.50, in the short term. Therefore, investing in Gitanjali Gems Ltd even at the current price of Rs.39, looks more appropriate and risk free than investing in the shares of Rajesh Exports Ltd. 

However, on the flip side, Rajesh Exports Limited (REL) is a ZERO DEBT COMPANY company which over the years, has grown to be the largest gold jewellery manufacturing company in the world. The company has set up the world’s largest gold jewellery manufacturing facility at White Field, Bangalore, with a capacity to process 250 tons of gold into world’s finest Jewellery. 

Totally REL has a capacity to manufacture 350 tons of gold products. The facility is spread over 12 acres of land with a built up area of 500000 sqft. REL is also the lowest cost gold Jewellery manufacturing company in the world. 

The company has recently acquired 100% stake in Valcambi, the world’s largest gold refinery with headquarters at Switzerland. With this acquisition the company has emerged as the single largest constituent of the global gold business. REL is the only company in the world with a presence across the complete value chain of gold from Refining, Manufacturing, Wholesale, Export and Retail of gold products. 

Gold ornaments a craze this festive season

If the trend in the city is any thing to by, the sale of light gold ornaments will take over that of bullion this festive season. 

Photo: www.lalithathangamaaligai.com

Oct 14, 2015: Steep fluctuations in gold prices over the past six months--gold has seen a high of Rs 28,000 and a low of Rs 25,400 per 10 gm have made consumers extremely jittery about investment.

Light jewellery for ornamental purpose is more in demand than long term investment in gold.

Ravindra Nath Rastogi, president of Lucknow Saraffa Association, said, "People are only buying required amounts of gold for weddings and festivals but are hesitant in making big investments in the yellow metal mainly because of the uncertainty over gold prices." He explained that people were in the `wait and watch' mode hoping for prices to fall further for hoarding bullion. India imports gold mainly from Israel, South Africa and Switzerland. Gold traders say China has announced to export gold to other countries soon. Hence, India may soon be over supplied with gold, resulting in steep fall in prices."This could happen anytime. Be sides, the rupee is gradually attaining stronger value in the global market hence most investors are waiting for prices to fall further," said Rastogi.

The buying patterns, however, show more inclination towards lighter ornaments like earrings, rings, bangles and chains apart from the must-buy traditional jewellery for wedding. Silver, too, has very few takers this season because of the constant decline in prices over the past few years. The rate of silver is Rs 35,800 kg this year, a steep fall from last year's price of Rs 42,000-45,000kg. Four years ago, silver prices had shot up to Rs 70,000kg, after which it has been constantly falling now. This has led to a major loss for silver buyers.

Courtesy: The Times of India

Q2 gold imports at 3-quarter high

October 10, 2015: In the quarter ended September this year, gold imports jumped to a three-quarter high of an estimated 262.2 tonnes, owing to lower prices and higher import of dore gold, or unrefined gold, by refineries. Observers say the trend suggests "import is returning to the normal prevailing three years ago".

In the quarter ended December last year, imports stood at 292 tonnes, while the previous high was in the June 2013 quarter (333.6 tonnes).

In the September quarter this year, demand was high, as prices started falling since July-end, before being quoted at $1,072 an ounce at a global level and Rs 25,000/10g in Mumbai. Currently, gold is quoted at a discount of $6 an ounce to the cost of import.

An analyst tracking gold imports said, "Several gold refineries are jacking up capacities to benefit from the two per cent lower import duty on dore gold." Dore attracts eight per cent import duty and value addition is done in India, which saves on import costs. Dore imports in the past two months are estimated at about 60 tonnes on a gross purity basis; on a net purity basis, these are estimated at about 40 tonnes.

Q2 gold imports at 3-quarter high For the first nine months of this year, overall dore imports are estimated at about 220 tonnes on a gross purity basis.

In September, the demand was lower because high imports in August (113.6 tonnes) had left jewellers with inventories. Going forward, "if gold prices fall a bit, the demand will pick up", said the analyst quoted earlier.

"Indian demand for gold is positively correlated to higher GDP (gross domestic product), spending power and the monsoon," said a Natixis Commodity Research report released on Friday. It is expected imports will be high in the coming months because growth in India's GDP has been higher compared to its peers and the festive season in India is approaching.

During 2012-2014, average annual gold imports stood at 858 tonnes, according World Gold Council (WCG) data. So far this year, imports stand at 661 tonnes; the WGC estimates for the entire year, imports will touch 900 tonnes.

Courtesy: Business Standard

Gitanjali Gems Ltd: Buy

CMP: Rs.36.30

Gitanjali Gems Ltd has shown stellar performance in Q1FY16. The company's consolidated Q1 net for the quarter ended June 2015 nearly tripled to Rs.28.05 Cr when compared with Rs.10.15 crore in the corresponding quarter a year ago. Total income also surged by nearly 42% to Rs.2,952 Cr in Q1FY16 from Rs.2,082 Cr in Q1FY15.

Moreover, there was a recent report PwC which mentioned that, Indo-US tie-up in the gems and jewellery sector can be a win-win situation for both the countries; as on one hand the jewelry hubs can serve as captive production units for US retailers and on the other hand Indian manufacturers can benefit from the global expertise of their US counterparts.

Few months back, Gitanjali Gems Ltd announced a major restructuring of its business to create better synergy within group companies, bring down costs and improve cash flows for "unlocking value in future". 

The company at present is consolidating its various subsidiaries which are into jewelry retail under different brands like Gili and Asmi besides exports.

Gitanjali Gems Ltd's board had already approved the merger of its arm Gitanjali Exports Corporation Limited (GECL) with itself. As part of the consolidation exercise, the board approved the schemes of amalgamation of various group companies.

Accordingly, Asmi Jewellery India Ltd and Spectrum Jewellery Ltd will be merged with Nakshatra Brands Ltd. All the three entities are step down subsidiaries of the company. Gitanjali Jewellery Retail Ltd and Gitanjali Lifestyle will be merged with GILI India Ltd. Gitanjali Jewellery Retail and Gitanjali Lifestyle are the wholly-owned subsidiaries of the company, whereas Gili India is the step down subsidiary of the company.

The amalgamation is subject to the approval of High Courts and all other statutory approvals as may be required under the Companies Act, 1956.

Though presently there are demand woes - higher prices, a weak monsoon and oversupply of bullion following robust imports earlier in 2015; demand could improve soon as the festival season kicks off. The nine-day Hindu festival of Navratri started on Tuesday, to be followed by Dussehra, Dhanteras and Diwali in the next few weeks - all considered auspicious periods to buy gold.

The stock seems to have bottomed out in the Daily Candle Stick Chart. Buy the scrip at the CMP of Rs.36.30, for a short term target of Rs.45.

Hope you enjoyed my recent calls on Tata Steel Ltd, Jindal Saw, Hindalco Ltd, etc. 

Hindalco Industries Ltd: Buy

CMP: Rs.83.65

The stock  is showing strong  bullish trends after crossing Rs.79 on the upside. Today the scrip tried to cross the resistance zone of Rs.84.50-84.60.......

Moreover, when Vedanta Ltd, a peer group company,  closed at Rs.103.60, up more than 10%, then Hindalco Industries Ltd (Rs.83.65) shouldn't (or cannot) be far behind. 

A weak rupee will benefit the company. Also, any hike in import duty (from 5-10 per cent) as demanded by the industry should help. 

Long-term positives

Hindalco’s long-term prospects, however, remain strong. Its copper segment, which contributes about 15% of operating profits, faced revenue pressure from falling metal prices. However, thanks to better smelting margins, profits improved Y-o-Y in the June quarter by 8%.

This segment should see consistent growth as refining margins are expected to be robust.

Its Utkal alumina refinery plant — among the low-cost plants globally — is operating at nearly full capacity utilisation.

The Aditya smelter’s utilisation is expected to improve from about 55% levels currently to full capacity by the end of the financial year.

Also, margins should improve in the long term as captive coal output ramps up.

Uptick in aluminium demand from the automotive segment to meet stricter global emission standards should boost revenue and profits for Novelis. The company has debt of about Rs.60,000 crore and it may remain at these levels with the capex cycle nearing an end. The company's net debt to equity is about 1.7 times. 

Therefore, Fresh Positions can be taken in the counter at the CMP of Rs.83.65 (BSE), for short term targets of Rs.93-97. Moreover, those who are already holding the scrip, can remain invested as the near-term negatives seem to be priced in and the company’s long-term prospects remain strong. The book value of the shares of the company is Rs.182.36, which is much lower than the CMP of Rs.83.65.

Rising consumption likely to keep soyabean oil prices, exports steady

Oct 04 2015: The Union cabinet last week extended the period of the “control order” for pulses, edible oils and oilseeds by a year more.

“The government has now decided to extend it (control order) till September 30, 2016. This would enable the state governments to take appropriate steps to ensure supply of these essential food items without any problem,” Union communications and information technology minister Ravi Shankar Prasad told mediapersons after the cabinet meeting.

Soyabean production in the country is expected to be nortmal this year at 10.7 million tonne after it touched a record high of 11.9 million tonne in 2013-14.

The monsoon has been favo­urable for the crop in Madhya Pradesh, Rajasthan and Gujarat, major producers of the commodity. On average, Madhya Pradesh produces 74 per cent of India’s total soya bean crop and Rajasthan, 10 per cent.

The stock levels too are high because of lower crushing in the previous year. As for consumption, Chinese imports have been influencing prices. A sluggish economy and lower imports by China have affected most commodity counters.

Meanwhile, Union agriculture minister Radha Mohan Singh last week said the end-season revival of the monsoon across north, east, west and central regions would help rabi crops planting and production to register an increase over the last year.

The agriculture department last Monday had indicated that import duty on edible oil needs to be hiked further. The government has raised the import duty on crude edible oils to 12.5 per cent from 7.5 per cent and refined edible oils to 20 per cent from 15 per cent, leaving a gap between the two intact at 7.5 per cent.

India’s soyabean oil consumption on an average is 3 million tonne, with domestic supply meeting half the demand. Consumption is expected to grow 3-4 per cent on average every year. Commodity analysts felt that rising consumption, at a time when production is not able to keep pace with demand, will lead to higher imports in the coming year.

According to the latest report by Emkay Commodity Research, the October refined soyabean oil futures at the National Commodity & Derivatives Exchange (NCDEX) traded strongly positive on concerns of crop damage, festival-led demand, prospect of more hike in import duty of edible oils and tracking bullish signals from the Chicago Board of Trade (CBOT). CBOT prices had jumped amid improved demand. Positivity in palm oil has also supported soyabean oil prices. Also, the ongoing festive season has provided firm undertone to the market. “Prices look to trade upside on expectation of a further hike in the import duty of edible oils, festive season-led demand and tracking bullish signals from global counterpart while the extent of upside may be restricted on record high imports,” the report said.

Soyabean oil prices in India are influenced by global edible oil prices as well. Rabobank Agri Commodities report said, “Our price forecast for soyabean oil remains bearish from current levels, but is slightly higher for soya-bean meal. The factors influencing soyabean oil prices at this point, are:

*US soybean oil stocks are rebuilding faster than anticipated,

*Basis values for soya bean oil and canola are not reflecting tight supplies, and

*Global demand for soymeal remains strong, but the US market share will decline, partially due to changes in currency values.”

“The USDA’s (US department of agriculture) higher than expected soyabean yields and production estimates for the US in 2015-16 pressured soya products following the August crop report. However, we see upside for soyameal futures on robust demand. Our soyabean oil price forecast for the third quarter has been lowered by USc 1.50/lb to USc 30/lb, while Q4 and Q1 prices were shaved just USc 0.50/lb to USc 30/lb. We are looking for relatively steady soyabean oil futures prices over the next 12-month period,” the Rabobank report said.

Courtesy: Mydigitalfc.com