Thursday, January 19, 2017

Today's Calls
1. But LT Foods Ltd at Rs.367, T: Rs.377-381, SL: Rs.362. Exit out of LT Foods at Rs.371, the stock is not performing according to expectations.

2. Buy Torrent Power in intra-day dips at Rs.191, T: Rs.197-201, SL: Rs.187.

3. Buy State Bank of India at Rs.259, T: Rs.270, SL: Rs.252.

Tuesday, January 17, 2017

Today's Calls: BTST
1. Buy Reliance Capital at Rs.461,T: Rs491, SL: Rs.455.

2. Buy IRB Infrastructure above Rs.220.50,T: Rs.235, SL: Rs.215

3. Intra day buy Axis  Bank at Rs 486, T: Rs.491,SL: Rs.476.

Monday, January 16, 2017

Today's Calls
1. Buy KEC International Ltd at Rs.151, T : Rs.159 - 167, SL - Rs.139.

2.  Buy Dewan Housing Finance Corporation Ltd at Rs.273.40, T: Rs.285, Rs.265.

Sunday, January 15, 2017

Advantage: Anil Ambani..? Or Jio Buy - out..?
The Financial Express writes on 13 January, 2017: Right now, incumbents are using 4G spectrum to offer data services to subscribers and continue to offer voice calls using older GSM networks. If there is a surge in voice traffic after free voice becomes the norm, these telcos will then have to invest more in capacity to augment their ability to carry voeice traffic on their GSM networks. Their best bet, in such a situation, is to accelerate their migration to VOLTE networks of the type RJio has—some of them have, in any case, been carrying out trials on this in select areas. 

The problem, however, is that while lower frequency bands are better suited for this, none of the incumbents have a pan-India network of, say, 900 MHz spectrum where VOLTE networks can be deployed. The best bet in such a situation is 700 MHz, but thanks to the regulator putting an arbitrarily high reserve price for this spectrum, and pegging it at four times that of the 1800 MHz band, there were no bidders for this band in the last auction.

The result of this was that telcos which already have spectrum in the 800/900 MHz bands continue to enjoy an unfair advantage—the 800 MHz spectrum RJio is using was ‘liberalised’ by RCom at a cost of around Rs 5,300 per MHz as compared to the Rs 11,485 crore reserve price for 700 MHz. 

In the past, when the regulator had come up with irrational reserve prices, the government had reduced it—in 2012, while Trai recommended 800 MHz be priced at twice the 1800 MHz price, the Cabinet lowered this to 1.3 times and when the auction still failed, the reserve price was further cut by half in 2013. 

For reasons best known to it, the government chose not to do the same this time. Were the government to continue to price 700 MHz spectrum very high, this will result in a big advantage to RJio.

Earlier, the Junior Ambani has shown the white flag to Mukhesh, by announcing that RCom has virtually merged with RJio.

However, on the flip side off late there are strong rumours in th market that Mukhesh Ambani wants to lap up RCom at dirt cheap price, through an open offer by hammering its shares.

It is to be noted that, Anil and Mukesh Ambani, despite being brothers, have had a tumultuous relationship in the past.

The Telegraph writes on 14 January, 2017: It is a saga worthy of a Bollywood melodrama. The story of the Ambani brothers is one of vast fortunes and billionaire glamour, a bitter feud and a vicious business rivalry.

Now one of Britain’s biggest companies is caught in the crossfire of the 15-year battle between Mukesh Ambani and his younger brother Anil. Vodafone is suffering in India, to the tune of at least £4.4bn in write-downs so far, as the elder Ambani, India’s richest man, mounts a £20bn onslaught on the mobile market, hitherto Anil’s territory.

RCom had already signed a 17-circle airwaves sharing pact in the 800 Mhz band with Jio. It has also agreed to sell its 800 Mhz airwaves in nine service areas to Jio where the latter does not have spectrum in that band. But still it gives RCom an edge over RJio in the 800 MHz space.

Anyway, under the partnership announced earlier, RCom brings in most of the spectrum while Jio provides the network and much of the cash for conversion of the spectrum. The regulators should look into this aspect too; as the minority shareholders continue to suffer.

Wednesday, January 11, 2017

Today's Calls
1. Buy VEDL at Rs.236, T -  Rs.242 - 248, SL- Rs.231.

2. Buy IPCA Laboratories Ltd at Rs.566,  T - Rs.580-600, SL - Rs.548.

3. Buy Gujarat Ambuja Cements at Rs.215 , T -  Rs.221-227, SL -  Rs.206.
Aircel - Maxis (Deal) Fiasco: The Apex Court and Some Thoughts..
In the Aircel-Maxis deal case lodged by CBI and the Enforcement Directorate (ED) it was alleged that South Asia FM Ltd (SAFL) and Sun Direct TV Pvt Ltd (SDTPL) had received Rs.742.58 crore as "proceeds of crime" from Mauritius-based firms.

Later ED alleged before the court that Dayanidhi had generated funds worth Rs.742.58 crore through illegal means and there was sufficient prima facie material to proceed against him and other accused in the case. And thus the narrative changed..

Now, DNA India, a BJP sympathetic web portal writes: 

The Supreme Court order preventing Aircel from disposing of its spectrum and licences through a proposed merger with Reliance Communications is a befitting response to the its promoters disregarding Indian laws. Aircel is owned by Malaysian company Maxis, whose Indian origin promoter Ananda Krishnan has been chargesheeted by the Central Bureau of Investigation, in one of the 2G spectrum scam cases. Though the court is slated to frame charges, it will not be able to proceed with the trial against Krishnan unless he appears in person to defend himself.

The Supreme Court stayed the sale and trading of the licences and spectrum noting that spectrum was a “very valuable resource” on which a lot of money could be made. The court noted that if that money was earned on account of fraud and Krishnan was not facing the legal process, “then we cannot allow that money to be earned by anyone”. The loudest criticism against the Supreme Court during the UPA-II years were that courts were hurting investment through judicial activism.

If judges have to look beyond the constitutionality and legality of cases and also factor in the fallout of their decisions, it is impossible for justice to be delivered. The Supreme Court judgment ruling that scarce natural resources must be auctioned raised a hue and cry from telecom operators and the power sector complaining that business would turn unprofitable and costs would increase for consumers". 

Now the point is when the deal involves only Rs.742.58 crore, what is logic of blocking a Rs.65, 000 crore deal, especially on the ground of possible personal and political vendetta..? Judicial and too much political activism, accompanied by over regulations has hereto destroyed the once vibrant telecom sector.

Now if the Judges, start to frame policies by their whims and caprices, then it is a very bad news for India. Any justice should have a human touch instead of hard and rock solid bookish judgements. In this context let me quote from Law Live:

The necessity of a judiciary which is in tune with the social philosophy of the Constitution has nowhere been better emphasised than in the words of Justice Krishna Iyer which we quote: “

Appointment of Judges is a serious process where judicial expertise, legal learning, life’s experience and high integrity are components, but above all are two indispensables — social philosophy in active unison with the socialistic articles of the Constitution, and second, but equally important, built-in resistance to pushes and pressures by class interests, private prejudices, government threats and blandishments, party loyalties and contrary economic and political ideologies projecting into pronouncements. (Mainstream, November 22, 1980)” Justice Krishna Iyer goes on to say in his inimitable style: “Justice Cardozo approvingly quoted President Theodore Roosevelt’s stress on the social philosophy of the Judges, which shakes and shapes the course of a nation and, therefore, the choice of Judges for the higher Courts which makes and declares the law of the land, must be in tune with...tune with the social philosophy of the Constitution. Not mastery of the law alone, but social vision and creative craftsmanship are important inputs in successful justicing. (Mainstream, November 22, 1980)”...

Therefore, we can conclude that any judgement which does not take into account a broader social perspective, is artificial and is not likely to help in true nation building.

In Aircel - Maxis case too the apex court should act in such a way that it creates minimum pain for the innocent minority shareholders, while identifying the true miscreants and punishing them, according to the laws of the land. The question is why should the shareholders suffer and their wealth damaged because one of the promoter's of that merged entity is failing to appear in the court....😰😰😰😰. The court instead of penalizing the retail Investors should have gone all out for bringing Ananda Krishnan to India, isn't it

This is like an old Bengali Joke: "Because I could not get hold of you, I will take action against your shit wherever I get them...!! Sardonic, are some of the Apex Court directions/actions and judgements. Really what to say!!

However, it seems on the short term there is relief on the anvil for the shareholders, as a news on the ET of 11 January, 2017, almost echoes my view:

"The telecom company may seek an opportunity to present its side of the issue and is likely to stress that any decision on its spectrum holding would have implications for stakeholders such as lenders, vendors and employees, apart from shareholders besides Maxis. Senior lawyer Harish Salve said he has been consulted on the matter, but did not comment further".

Wednesday, December 28, 2016

Reliance Communications Ltd: Where it is heading?
CMP: Rs.33.30
It has been a harrowing tale for all those who invested in the shares of Reliance Communications Ltd. The stock had been falling since the last few months even though the much expected tower sell deal, a mega merger, a number of investor friendly steps, etc has been effected. However, it seems with the near termination of the free offer of RJio, this bas phase looks to be over. The sun is again likely to shine over the telecom horizons.

Moreover, telecom sector being from the essential service space should be least affected by the demonetisation fiasco; as we are approaching the deadline of 30th December 2016. The stupid and mindless demonetisation move of  Narendra Modi -- Urjit Patel has already failed, as expected and as predicted by eminent economists like Prof.Amartya Send and Dr.Kaushij Basu. Besides, no RBI governor, I have seen has spoiled the reputation (so badly and cheaply) of the RBI like Dr.Urjit Patel has done. After the failed demonetisation drive it remains to be seen whether he is being impeached by the Parliament or not. He seems to have got inuenced by the Narendra Modi - Amit Shah disease (BLUFFS and Jumlas).

Anyway, yesterday, a buy call was initiated in the counter at Rs.33 with a short term targets of Rs.35-37. Today the scrip has already touched Rs.33.85 in the NSE, with strong volumes. What I feel is that the investors can increase their holdings in RCom or average keeping a stop loss of Rs.31.

But one rumour which is gaining momentum is that of price rigging of the sharez of RCom by Mukhesh Ambani group to bring down the price of open offer. There is media speculation that RJio is likeky to by out Rcom in a cash+equity deal. The authorities (SEBI) should look into this matter on urgent basis and if necessary take appropriate actions.

Monday, December 05, 2016

Cashless India: Advantage Telecom Companies
PhotoThe Indian Express
The NDA government at the centre is taking lot of measures to make a 86% cash economy into cashless. But the things should have been done slowly, due to India's structural problems.

Anyway, it is important to mention here that, India has among the highest usage of cash across global economies. According to a 2015 report from PwC, 98% of all transactions by volume happen in cash. 68% of the total value of transactions are conducted in cash.

Admittedly, high cash usage often comes with a cost. In 2013, research firm McKinsey found a strong correlation between high cash usage and the size of a country’s shadow economy. 

The size of India’s own shadow economy — which includes black market transactions and undeclared work—is roughly a quarter the size of gross domestic product (GDP).

Indeed, India suffers from a serious rash of corruption, which hurts honest, hardworking families. According to Transparency International, the South Asian country ranks 76 out of 168 countries in its 2015 Corruption Perceptions Index. 

In May, Indian government data showed that a scant 1% of Indians pay income taxes. Cashless India is an answer to most of these kinds of problems.

Now, in one of his speeches, the PM, Narendra Modi, has spoken of using the mobile phones as banks and as a device which will promote the cause of cashless India. He gave a clarion call to use the smart phones, as a part of everyday transactions and plus the loop holes, which gives more muscles to a parallel economy.

This gives some legs to the Indian telecom companies to increase their businesses, as more and more people use smart phones and internet, to do their necessary transaction; without any physical transfer of Cash, lowering the cost of printing of new currency.

Already, I am  told that Airtel has come up, with a Bank whose services can be used for a number of purposes, apart from making an user a permanent customer.

Now, more use of telecom services means more number of towers and fibre cables needed for the installation and execution of the same. This is therefore, a very good news for both the tower and wireless telecom companies.

In such a scenario, I would suggest you to slowly accumulate the shares of telecom companies which are now trading near their 52 - week low prices. Top picks:

1. Bharti Airtel Ltd: Rs.324.90.
2. Bharti Infratel Ltd: Rs.393.65
3. Reliance Communications Ltd: Rs.35.90
4. Idea Cellular Ltd: Rs.73.35.

Friday, December 02, 2016

Narendra Modi's demonetisation: A Monument of Chaos & Confusion....
According to some media reports, though lndia's GDP grew at the fastest pace for a large economy in the September quarter, the nation could experience some amount of uncertainty in the third quarter of fiscal 2016-17 due to the government of India's (led by the BJP -- Bluffers' Party of India..?) decision to demonetize Rs.500 and Rs.1000 currency notes. Also, the Contraction in capital investment deepened further.

India's Gross domestic product (GDP) clocked an annual 7.3% growth between July and September, faster than 7.1% in the previous quarter and higher than China's 6.7%.

It is pertinent to mention here that, Reserve Bank of India posted this notice on November 8:

Government of India, vide their Notification number 2652 dated November 8, 2016 have withdrawn the Legal Tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016.

This is necessitated to tackle counterfeiting Indian banknotes, to effectively nullify black money hoarded in cash, and curb funding of terrorism with fake notes.

Let us now observe what Patrick W. Watson, wrote in  Forbes, 1 December, 2016:

This whole idea of a “cashless society” used to be a kooky fringe belief. Conspiracy promoters said jackbooted government thugs would kick in your door any minute and confiscate all your vegetables.

Guess what: the kooks had a point. People in high places really do want to take away your cash, or at least most of it.

I , for one, will oppose this (if they bother to ask my opinion). People with criminal intent will find other ways to keep their businesses hidden. Eliminating cash would create hassles for everyone, for no real benefit.

Modi’s “demonetization” turned into a mess. The government’s sudden decision to withdraw large-denomination currency from circulation, has caused enormous hardship to millions of people in the country’s predominantly cash-based economy.

Lines formed at banks, with people waiting for days, only to find the bank ran out of smaller bills. Those without bank accounts had no way to make routine transactions. Already impoverished people had to spend their work time waiting to exchange their money. New bills intended to replace the old ones were scarce.

The results spread through the economy like wildfire. Merchants lost sales because customers couldn’t pay. Some resorted to barter. Media reports suggest restoring normal commerce could take months.

A few people reportedly died, most of them elderly citizens waiting outside banks for days, but also some overworked bank employees.

Analysts are already saying the sudden contraction will hurt economic growth. Economists at Ambit Capital cut their 2017 GDP growth estimate almost in half, from 6.8% to 3.5%. They think the effects will last into 2018, too.

With consequences ranging from disruptive to fatal, why would any government do something like this?