Market looks beyond fourth quarter for leg up

 Market looks beyond fourth quarter for leg up

Analysts and market watchers are already looking beyond corporate results for the fourth quarter even though it has a full week to go.

Any hint of earnings for the next fiscal, through management guidance or otherwise, would help them decide if the benchmark indices have the strength to pull higher. “The market has started looking at FY11 earnings, which are expected to be better than the current year,” says Dhiraj Sachdev, vice-president and fund manager at HSBC Global Asset Management. “The earnings for the current quarter have already been partially discounted in the current index levels. The markets are likely to look beyond these figures to FY11 for cues,” says Mallinath Madineni, CEO, Fa Capital Advisors. Expectations on earnings are running high, with market participants seeing growth in excess of 20% next fiscal. “We may see FY11 earnings at around Rs 1,045 (per share for the Sensex), which is around 23% growth over this year,” says Naresh Kothari, president, Edelweiss Capital. Sandip Sabharwal, CEO - portfolio management services, Prabhudas Lilladher is looking at a 25-30% growth. However, worries remain on the effect interest rate hikes would have on the bottomlines of companies. “The latest rate hike by the Reserve Bank of India (RBI) was unexpected. One might see a further 50 basis points increase soon. This increases the borrowing cost for corporates and could affect profitability,” says Madineni. RBI had on March 19 raised its repo rate, the interest charged by it when lending money to banks, by 0.25% to 5%, on March 19. It also raised the reverse repo rate, the interest banks get on money parked with the central bank, by 0.25% to 3.50%. A major factor for the interest rate hike is inflation. Wholesale price index based inflation had weighed in at 9.89% for February. But market watchers feel the trend of rising inflation is nearly over. “Inflation has almost peaked out this month and we may see it returning to 4-5% levels going ahead,” says Sabharwal. According to him, the RBI move was part of a normalisation process as interest rates have been low for some time. Foreign Institutional investors have been net buyers by more than Rs 15,500 crore in March, which has seen the Sensex gain 1129.30 points to 17558.85 as of Thursday. “Fund flows have been strong. We may see markets moving up 8-10% in next 3-4 months,” says Sabharwal.

 

Union Bank of India, Belgian KBC in MF venture

Union Bank of India has tied up with Belgium's KBC group for a mutual fund joint venture and is in the process of receiving regulatory approval, the companies said in a joint statement on Friday.

Union Bank will own 51 per cent of the JV, while KBC will own the rest, the statement said.

IPO GREY MARKET PREMIUM HEARD ON THE STREET

Company Name	Offer Price (Rs.)	Premium (Rs.)
DQ Entertainment (Inter.)	80	48 to 50
PradipOverseas	100 to 110	15 to 16
ILFS Transportation	242 to 258	32 to 34
Persistent Sys.	290 to 310	132 to 135 (Buyer)
Shree GaneshJewellery	260 to 270	10 to 12
InfrasoftTechnology	137 to 145	58 to 60
GoenkaDiamond & Jewellery	135 to 145	8 to 9 (Seller)

IPL: Of serious money and awesome valuations

Indian Premier League's commissioner Lalit Modi [ Images ] is right to be exultant after the results of the

auctions for the two additional teams for the 2011 season.
At Rs 3,235 crore (Rs 32.35 billion) for the Pune and Kochi franchises, the total haul almost equals the Rs 3,330 crore (Rs 33.30 billion) that the IPL netted from selling eight teams in its first season in 2008.
These are awesome valuations for a tournament that is just three years old and for auctions that have taken place at the tail-end of an economic slowdown.
By international standards, though, IPL valuations lag those of other popular sports -- like soccer, basketball and American football -- by leagues.
For comparison, consider that the 10 IPL teams together could be worth roughly $3.5 billion -- a tad less than the world's two most valuable sports teams on the Forbes rankings, Manchester United [ Images ] and Dallas Cowboys of the US National Football League (NFL), put together.
Note, however, that Manchester United is a 132-year-old club and it plays in tournaments that have been around for decades -- the most recent of them is 18 years old. The Dallas Cowboys is nearly 50 years old and the NFL is heading for its 90th year.
The IPL, then, may be a whippersnapper in the global scheme of things, but it has certainly proved more recession-proof than its elderly global counterparts.
The Pune franchise is worth more than half the value of the New York Knicks, which is the most valuable team in America's iconic National Basketball Association (NBA) league.
The NBA, it should be noted, is 64 years old and the US recession has taken its toll -- 2008 valuations (the latest for which figures are available) were either stagnant or had fallen marginally over the previous year.
In contrast, the Pune franchise marks a 64 per cent premium over the price that Mukesh Ambani [ Images ] paid to acquire the Mumbai Indians [ Images ] in 2008.
It is also worth noting that all the prominent sports tournaments are facing problems of huge debts and burgeoning expenses.
In the English Premier League, the world's most-watched tournament after the World Cup, the combined debt of 18 out of its 20 clubs exceeds their revenues (two clubs are bankrupt).
Complaints that player costs have been spiralling out of control are growing louder on both sides of the Atlantic -- invoking parallels with the global investment banking crisis (unchecked executive pay).
In contrast, IPL has altered the dynamics of cricket in a more fundamental way than Kerry Packer's 'pyjama cricket', and seems to be facing no such problems.
No wonder, every IPL team owner is salivating at the higher valuations that they believe are inevitable, going forward. That's something few sports team owners elsewhere can boast of right now.

Shinsei sayonara to MF venture

Japanese financial conglomerate Shinsei Bank, which promoted the Shinsei Mutual Fund with a couple of local partners has decided to exit the business by selling it to another Japanese financial firm Daiwa Securities. Investment banking sources have estimated the Shinsei-Daiwa deal size at around Rs 55 crore.

The board of Shinsei Mutual Fund will meet this week to finalise the deal. Shinsei Bank holds a 75% stake in Shinsei asset management company (AMC), with investor Rakesh Jhunjhunwala and country manager, Shinsei India, Sanjay Sachdeva's Freedom Financial Services Private Limited holding 15% and 10%, respectively. The business, which was set up in June 2009 had Rs 459-crore assets under management (AUMs) as at the end of February this year.
On the face of it, the valuation looks expensive, since it amounts to nearly 12% of overall AUMs. Recently, deals have been completed at much lower valuations (though some deals have been concluded at 10% levels in the past). For instance, L&T Finance's acquisition of DBS Chola in September 2009 was done at 1.7% of assets. Around the same time, T Rowe Price bought stake into UTI, giving it a valuation of 3.4% of assets. Interestingly, Shinsei MF has only Rs 19 crore worth of equity assets, which amounts to 4% of its overall assets. The rest comprises debt-based assets, which typically fetch far lower fees.
The Japanese major, which had a asset base of $121 billion on a consolidated basis as on March 31, 2009 and is among the most respected financial brands in Japan had decided to exit the Indian market as it is currently restructuring its domestic operations. Shinsei AMC had started operations in July 2009 with initial assets of Rs 203 crore and ever since it has not managed to improve its equity assets.

DIN - Document Identification Number

After introducing unique account numbers for taxpayers and those for tax deductors, the government will this fiscal introduce a unique Document Identification Number to be quoted on 'every' income tax-related communication.
The department will soon put in place a tech-based mechanism to generate 'DIN' which will not only be allotted to taxpayers but also the officials of the department from October this year, which will become essential while filing the annual income tax return of the financial year (2010-11).
According to a Central Board of Direct Taxes, the 'insertion of new Section 282B' in the Income Tax Act, DIN will be mandatory 'in respect of every notice, order, letter or any correspondence' with the department.
"The number will be generated by the department and will be useful essentially for error-free filing of tax returns, claiming refunds and other communication with the department by the assesses," a senior finance ministry official said.
Taxpayers and tax deductors currently are required to quote Permanent Account Number (PAN) and Tax Deduction and Collection Account Number, among others, for filing returns with the department. Assesses will not be put to any trouble as the numbers will be generated and allotted by the department itself.
Once allotted, the assessee will have to quote it thereon. Income tax officials will also be allotted the numbers as the effort is to streamline the process, the official said. According to section 282B of the Income Tax Act which deals with DIN - "in respect of every notice, order, letter or any correspondence issued by him (I-T authority) to any other income tax authority or assessee or any other person and such number shall be quoted thereon.
 "It is further provided that where the notice, order, letter or any correspondence issued by any income-tax authority does not bear a Document Identification Number, such notice, order, letter or any correspondence shall be treated as invalid and shall be deemed never to have been issued." DIN is aimed at bringing more transparency in tax administration as the whole exercise involves a number of documents and proformas.
Apart from the regular filing of taxes, a taxpayer deals with the department for various other financial services which DIN will help streamline, the official said. According to the I-T department, "it is also provided that every document, letter or any correspondence, received by an income-tax authority or on behalf of such authority, shall be accepted only after allotting and quoting of a computer generated Document Identification Number.
Further, it is provided where the document, letter or any correspondence received by any income-tax authority or on behalf of such authority does not bear Document Identification Number, such document, letter or any correspondence shall be treated as invalid and shall be deemed never to have been received."

SBI Mutual introduces online payment option

SBI Funds Management yesterday introduced a new payment option (for investment), that offering online investment in SBI Mutual Fund schemes through SBI's ATM-cum-debit-cards. The payment facility through SBI MF website, www.sbimf.com, is available for all equity and most of the debt schemes, says a release. SBI Mutual Fund currently provides an online purchase facility to the investors, through its website.

Edelweiss Super Select Equity Fund files offer document with Sebi

Edelweiss Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch an open ended equity scheme - Edelweiss Super Select Equity Fund. The scheme's new fund offer (NFO) price will be Rs 10 per unit. The primary scheme's investment objective is to generate long term capital appreciation from a relatively concentrated portfolio of predominantly equity and equity related securities including derivatives. Moreover, the scheme may also invest in debt and money market instruments for managing liquidity or when the fund manager has a defensive view on the market. The Scheme will have a single plan with dividend and growth Option. Further, the dividend option shall have reinvestment, payout & sweep facility. The scheme would allocate 65% to 100% of assets in equity, equity related instruments & derivatives with medium to high risk profile. Moreover, it would also allocate upto 35% of assets in debt and money market instruments that includes securitized debts with low to medium risk profile.

Mirae Asset Indo China Consumption Fund files offer document with Sebi

Mirae Asset Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch an open ended equity oriented scheme - Mirae Asset Indo China Consumption Fund. The scheme's new fund offer (NFO) price will be Rs 10 per unit.

The scheme's investment objective is to generate long term capital appreciation through an actively managed portfolio investing in equity and equity related securities of the companies that are likely to benefit either directly or indirectly from the consumption led demand and should be domiciled or having their area of primary activity in India/China. The securities of these companies could be listed anywhere in the world.

The scheme will have a regular plan with dividend and growth option. Further, the dividend option shall have reinvestment, payout & transfer facility.

The scheme would allocate 65% to 100% of assets in Indian Equities and Equity Related Securities of companies that are likely to benefit either directly or indirectly from the consumption led demand with high risk profile. Meanwhile, upto 35% of assets would be invested in Chinese Equities and Equity Related Securities of companies that are likely to benefit either directly or indirectly from consumption led demand with high risk profile.

Moreover, it would also allocate upto 35% of assets in money market instruments (including CBLO) / debt securities and or units of debt / liquid schemes of domestic mutual funds with low to medium risk profile.

Canara Robeco InDiGo Fund files offer document with Sebi

Canara Robeco Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch an open ended debt scheme -Canara Robeco InDiGo (Income from Debt Instruments & Gold) Fund. The scheme's new fund offer (NFO) price will be Rs 10 per unit. The scheme's investment objective is to generate income from a portfolio constituted of debt and money market securities along with investments in Gold ETFs. The scheme offers growth and quarterly dividend (payout or reinvestment) option. The scheme would allocate 65% to 90% of assets in Indian debt and money market instruments with low to medium risk profile. Further, it would allocate 10% to 35% of assets in Gold ETFs with low to medium risk profile. The exposure by the scheme in securitised debt shall not exceed 25% of the net assets of the scheme at the time of investment. Moreover, the Gross Notional Exposure by the Scheme in fixed income derivative instruments for the purpose of hedging and portfolio rebalancing shall not exceed 30% of the Net Assets of the Scheme at the time of investment. The total of investments in debt securities (including securitized debt) as well as money market instruments, Gold ETFs and gross notional exposure in derivatives shall not exceed 100% of the net assets of the Scheme.