India Sugar cycle getting sweeter – Merrill

The sugar price in India could jump 20% in next six months and remain strong for next three years, in our opinion. Key drivers for such a strong up-cycle are – very low production in current season and forth coming season compared to consumption and lack of scope for further reduction in dealer stock level. Increased cost of production as well as cost of imports. (more…)

Reliance Communications – Justifications for the strong outperformance?

Some investors have wondered about RCOM’s strong outperformance recently. RCOM is currently trading at a 10-15% premium to Bharti on FY10E EV/EBITDA. In the past, this premium has reached 25% also but only when the Towerco IPO looked imminent (Jan-08) and when the market was at its peak in terms of bullish sentiment. Such premium may not be repeated again in our view.

Most of the reasons for the sharp up-move have been macro & technical rather than company specific – increased risk appetite for high leverage B/S, esp. in the underweight index names which had been beaten down. Besides, a new rule on allowing non-compliance to AS-11 comes as a relief for companies with high forex debt (which are incurring huge translation losses). However, this does not benefit RCOM’s P&L as it anyway was not reporting as per AS-11 in FY09. In any case, relaxation in accounting rules does not mean there is no impact.

FIIs pull out Rs 50K cr in FY09: SEBI

According to the latest data compiled by Securities and Exchange Board of India (SEBI), foreign institutional investors (FIIs) have pulled out nearly Rs 50,000 crore from the domestic stock market in 2008-09.

FIIs’ net outflows stood at Rs 47,706.2 crore till March 30 in the current fiscal, as compared to huge inflows of Rs 53,000 crore in the previous fiscal.

However, analysts believe that FIIs are likely to resume investments in Indian equities in the later FY10 owing to higher returns as an attractive investment destination with sound fundamentals.

ICICI Prudential Target Returns Fund

ICICI Mutual Fund announced launch of ICICI Prudential Target Returns Fund – an open ended diversified equity fund scheme. The new fund offer (NFO) is open for subscription from April 15, 2009 to May 14, 2009.

This fund offers two plans namely regular and institutional. Under Retail Option, it will have sub options such as growth and dividend and dividend will further have sub options namely dividend payout and dividend reinvestment. Similarly under Institutional option I, one will have only growth sub-option.

The scheme is benchmarked against BSE 100 Index. The investment objective of the scheme seeks to generate capital appreciation by investing in equity or equity related securities of large market capitalization companies and providing investors with options to withdraw their investment automatically based on triggers for preset levels of return as and when they are achieved.

The New Fund Offer (NFO) price for the fund is Rs 10 per unit. The minimum application amount for retail option is Rs.5000 and Rs.1000 for additional subscription amount.Under Institutional Option I the minimum application amount is Rs. 100,000 and Rs.1,000 for additional subscription amount.

Hindalco + Sterlite + Sesa Goa – Revival Not Yet Visible

The aluminum and zinc prices may not be far off from their bottoms, but a pick up may be some time away. Medium-term earnings trajectories for stocks like Hindalco (UW), Nalco (EW), Sesa (EW), and Sterlite (EW) do not look that encouraging even though valuations look interesting, and balance sheets at Sterlite, Sesa, and Nalco are strong. Sterlite remains top pick in the space due to its multi dimensional growth story and strong balance sheet even though concerns about its restructuring plan and near-term earnings slump may cap the stock near term. On Hindalco, our concerns hover around Novelis profitability and its balance sheet. (more…)

SBI floats Gold Exchange Traded Scheme

SBI Mutual Fund has announced the launch of SBI Gold Exchange Traded Scheme.

The new fund offer (NFO) has opened on March 30, 2009 and is scheduled to close on April 28, 2009.

The scheme offers only growth option. As a result, no dividend would be declared under the scheme. Minimum Amount for Application in the NFO is Rs 5000 and in multiples of Re 1 thereafter for Authorized Participants and Investors.

The price of the gold is the benchmark for the scheme. The price here refers to, the morning fixing (AM) of Gold by London Bullion Market association (LBMA).

The investment objective of the fund is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold. However, the performance of the scheme may differ from that of the underlying asset due to tracking error.