Thursday, January 11, 2018

Market  Pulse
Key benchmark indices hovered near flat line in early trade. The Sensex is now trading at 34,418.04 up 15.03 points or 0.04% and Nifty at 10,621.70 up 10.50 points or 0.10%.

Among secondary indices, the S&P BSE Mid-Cap index dropped 0.05%, underperforming the Sensex. The S&P BSE Small-Cap index advanced 0.09%, outperforming the Sensex.

Overseas, Asian stocks edged lower after Wall Street slipped overnight on China bond report. US stocks fell yesterday, 10 January 2018 as investors fretted over the possibility of China halting its Treasury bond purchases and the US pulling out of North American Free Trade Agreement (NAFTA).

Back home, the breadth, indicating the overall health of the market, was positive. On the BSE, 930 shares rose and 602 shares declined. A total of 58 shares were unchanged. IndusInd Bank was up 0.19% at Rs 1,738 ahead of Q3 December 2017 earnings today, 11 January 2018.

TCS was down 0.06% at Rs 2,805.55. The company is scheduled to announce Q3 December 2017 results today, 11 January 2018.

Housing finance major HDFC was up 0.27% at Rs 1,730 after the company announced that a meeting of the committee of directors of the company will be held on Saturday, 13 January 2018, to consider the details of preferential issue and qualified institutions placement, subject to the approval of the shareholders of the company. The announcement was made after market hours yesterday, 10 January 2018.

Maruti Suzuki India was up 0.16% at Rs 9,398.85 after the company announced a price increase ranging from Rs 1,700 to Rs 17,000 (ex-showroom- Delhi) across models with effect from 10 January 2018, owing to increase in commodity and other administrative & distribution costs. The announcement was made after market hours yesterday, 10 January 2018.

On the macro front, according to the World Bank's Global Economic Prospects report released yesterday, 10 January 2018, India is likely to reclaim its position from China as the fastest growing major economy in 2018, with growth expected to accelerate to 7.3% in the year. The World Bank also revised India's growth estimate for 2017 to 6.7% from 7% projected in October, blaming short-term disruptions caused by the newly introduced goods and services tax (GST) and a softer-than-envisioned recovery in private investment. The report projected China's economic growth to slow to 6.4% in 2018 from 6.8% in 2017.

Meanwhile, the government is scheduled to announce industrial production data for November 2017 tomorrow, 12 January 2018. India's industrial production increased by 2.2% year-on-year in October, easing from an upwardly revised 4.1% gain in September.

The government will also announce tomorrow, 12 January 2018, inflation data based on consumer price index (CPI) for December 2017. Consumer prices increased 4.88% year-on-year in November, higher than 3.58% in October.

Today's calls:
#Buy NDTV Ltd at around Rs.49-50, for targets of around Rs.71, SL: Rs.42. You must have seen that the media sector is getting re-rated with TV Vision Ltd, Sri Adhikar Brothers Ltd, etc, hitting upper circuits. Moreover, the company is thinking to trim its workforce by around 25%. It has already started exiting from its non-core business verticals. In September, its shareholders approved the sale of its automobile e-commerce firm Fifth Gear Ventures, which owned and operated popular portal carandbike.com, to Autobyte Pvt Ltd. Three months before that, they approved the sale of its Indian wear e-commerce firm NDTV Ethnic Retail Ltd to Nameh Hotels & Resorts.

#Buy DHFL Ltd at around Rs.622, T: 635-643, SL: Rs.615. This is a pure chart based call valid for a couple of days.

#Today, we could get some news on the NCLT front, in case of MBL Infrastructure Ltd (Rs.29). Some of the stocks in this space, for example, Uttam Galva Steel Ltd (Rs.23) and Jai Balaji Industries Ltd (Rs.22.60) are all doing fine in the mornig, with latter hitting the Buyer Freeze in the opening trade. In this light, we can expect the share of MBL Infrastructure Ltd to start hitting upper circuits soon, as the company has a humongous order book of around Rs.7000 crore as compared to its debt of around Rs.1700. The promoters have already expressed their desire to bring in  Rs.120 crore, as per the plan of the lenders. 

#As  expected the stock of Housing Development & Infrastructure Ltd (HDIL) has started to do well, hitting Rs.65.65, intraday. The stock is looking excellent on three prime parameters: 
  • Chart, except that its short term oscillators are slightly overbought.
  • Fundamentals, including its massive land holding of more than 20 crore sq.ft
  • FPI or FII holdings...
Besides, there were earlier media reports that MMRDA has started the process of shifting of eligible slum dwellers from Mumbai International Airport slums (MIAL) to Kurla Premiere compound and have issued Allotment letters to the eligible slum dwellers for the 1st phase.  an arbitration proceeding. 
It is to be  noted that MIAL terminated its contract with HDIL in February 2013 alleging breach of contract. HDIL moved court seeking relief but its appeals were rejected by the Bombay High Court and Supreme Court. An arbitration tribunal was constituted that “urged both parties to seriously attempt a settlement”. The Maharashtra government is now exploring ways to change development control rules to allow speedier resettlement of 85,000 slum-dwellers on an area adjacent to the airport. Slum-dwellers will be provided free houses and the developer will be allowed to commercially develop some portion of the land. 
The shifting of the eligible slum dwellers is a part of the Phase I of the MIAL slum rehabilitation project was undertaken by HDIL. Also, HDIL and GVK Infra have settled the dispute over the cancellation of slum rehabilitation agreement at Mumbai airport. The settlement is a win-win for both the companies. 
Moreover, there were earlier news that the State government of Maharashtra is likely to give transferable development rights (TDR) to redevelopment projects of housing societies located on internal roads and those in need of right of way. TDR is issued to a landowner as compensation for space ceded to the government for amenities. Senior government officials said the decision by the Urban Development Department (UDD) would benefit over 500 housing societies. The decision was taken following a request from the local city corporation and the developer lobby. The UDD will soon announce the change in rules. Most housing societies that are up for redevelopment are located in Chembur, Ghatkopar, Santacruz, Khar and Juhu, where TDR is not given to redevelopment projects abutting internal roads and right of ways.
Actually, TDR is now available only in the Mumbai suburb or in other words one cannot use that TDR of Santacruz in Mumbai Central or in Tardeo. That means beyond Sion and beyond Bandra only, one can use that TDR.
According to a market analyst, Mumbai Municipal Corporation is contemplating this is just an inside expectation that they will allow the TDR of even Borivali can be used at Colaba. Obviously, it is based on the ready reckoner rate. Suppose just to give an example, if the ready reckoner rate of the land for Borivali is at Rs.5,000 per sq ft and if in Colaba it is Rs.25,000 per sq ft, then your Rs 5,000 sq ft of TDR will entitle you to construct 1,000 sq ft in Colaba. So, that is going to be a very big positive. And in fact, you are going to see a lot of this TDR being bought by the Mumbai city developer. That means from Colaba to Dadar or Matunga or Sion. That is going to be a big booster. And if you go by the two themes, that is HDIL an DB Realty, they are the largest TDR holder.
The proposed amendment to increase the FSI for redevelopment of buildings by 0.5 will help a lot of non-cessed buildings that get lesser FSI compared to the cessed ones. However, experts and architects, while predicting a boom in redevelopment, also caution that it may further congest the already congested South Mumbai. 
The notification, that came out on Monday from the Urban Development Department of the state, has proposed that the higher FSI of 0.5 be allowed to buildings with road width above 9 metres. The existing FSI in the area is 1.33 for all buildings, plus TDR up to 0.67 can be used depending on the road facing the building. The additional FSI of 0.5 would bring the minimum FSI in area to 2 and maximum to 2.5 for non-cessed buildings and other redevelopment projects, excluding cessed buildings. The FSI will be available at premium of 60 per cent of the Ready Reckoner rate. 
Implementation of Real Estate (Regulation & Development) Act (RERA) in letter and spirit, and the falling prices – a first since 2010 – have led to a 19 per cent increase in residential sales in Mumbai Metropolitan Region (MMR) between July and December 2017 compared to the same period in 2016 which witnessed demonetisation, revealed Knight Frank India’s half-yearly report, India Real Estate, released on Wednesday.
I am therefore looking at a target of Rs.350-plus in the share price of HDIL, in the next 12-18 months time frame, as the company monetizes its land assets and both its SRA programme and affodable housing venture pick up steam.

#The share of Videocon Industries Ltd (Rs.24) after long rise is going for some corrections. However, what I feel is that it should go to its natural price of around Rs.210-235, from where it started to fall. The company has huge OIL ASSETS and current buoyancy in the CRUDE OIL price in the international market, is likely to increase their valuations. Or its share price is also a proxy to the crude oil story. Hence, you should accumulate the scrip and hold for the long term. 

 ~~with inputs from Capital Market - Live News

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