Share Market: FII News

NEW DELHI: After being in the driver's seat of Indian bourses for the past 4-5 years, the foreign institutional investors may lose their dominance to the domestic counterparts this year in terms of capital inflows into the market.

FIIs made a net investment of about $17 billion in Indian stocks in 2007, which was nearly 10 times of domestic mutual funds' net investment at about $1.7 billion.

However with insurance companies emerging as a major investor in stocks, the total kitty of domestic institutions are set to overtake the overseas inventors by a wide margin.

The FII flows have been the cornerstone of the phenomenal rise of the Indian stock markets, but domestic institutions are likely to surpass them in 2008, brokerage firm Sharekhan said in a latest report.

Analysts at Sharekhan anticipate a huge corpus of $15-20 billion to be invested by the insurance companies in the next two years, while the mutual funds are also likely to put in $5-8 billion.

Taking into account both MFs and insurance companies, the domestic institutions would easily surpass the FII inflows going forward, Sharekhan report said.

With huge FII inflows being a key factor behind the rally in the past few years, even a short-term flight of overseas funds have caused jitters on the bourses, given their significant holding in the free-float market capitalisation.

Since 2000, FII ownership in Indian market has risen over three-fold to 20 per cent and is now nearly three times of the total holdings of domestic MFs and insurance companies, according to global financial services major Citigroup.

However, with insurers upping the ante and MFs sitting on a large pool of cash waiting to find its way to the market, analysts expect FIIs' dominance to come down soon.

The slowdown in the US is also likely to adversely impact the foreign capital flow into Indian stocks. "While economic implications for India from US slowdown may be relatively less severe, one cannot say the same about implications on flows," Citigroup's India research head Ratnesh Kumar said.

The trend over the past 2-3 years show that any change in the global risk appetite has affected FII inflows into India.

"If any slowdown in the US pans out in such a way as to dislocate risk appetite of global flows, it can have a significant negative impact on the Indian market," Kumar said.

Recent curbs on overseas inflows through participatory- note route may also moderate the FII inflows, thus making way for domestic institutions to shore up their holdings.

"The banning of P-Notes will have a major impact on the FII inflows and the foreign investments are likely to slowdown in 2008," PricewaterhouseCoopers' Financial Services Practice (tax and regulations) Head Punit Shah said.

The flows through P-notes could be substituted only partly through direct registrations and new FIIs and there could certainly be a slowdown in inflows, Shah added.

However, the analysts expect any negative impact of the reversal in trend of FII inflows to be offset by the large investments by domestic institutions.

According to Enam Securities, insurance companies have an investment pipeline of USD 56 billion with public and private sector shares of 70 and 30 per cent respectively.

While private sector insurers could invest about $8 billion dollar (50 per cent of their planned investment) in equities, the public sector could divert close to $10 billion (25 per cent of their total) pipeline into the market.

The net inflow into stocks could be worth $14 billion, after excluding 20 per cent in commissions from total $18 billion planned for equities.

-PTI

Share Market: FII Activities

Share Market: Change of Company Names

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Market News And Views

Vikas Bansal runs a brokerage firm at Ramnagar, near the Corbett National Park, in Uttaranchal. For him, the last few days were very hectic as his clients are selling lots of scrips to liquidate their positions in the secondary market.

The reason is to gather enough money to take exposure in the forthcoming IPO of Reliance Power, which is incidentally the country’s biggest one.

Not only this, thousands of people have inquired and quite a large number of them have opened up demat accounts in the last fortnight to invest in Reliance Power. For him, the times have never been so good since he started his firm a year ago. This increased activity in the secondary market has raised a few concerns amongst the analysts that the Reliance Power IPO will lead to huge selling in the exchange and tumbling stocks. When SundayET posed this question to SEBI chairman, M Damodaran, he remains unperturbed.

“It’s quite natural for the secondary market to see fluctuations on account of a big IPO being lined up in the primary market. Overall, I don’t see any reasons for panic and reverses in the flow of funds to the Indian market,” Mr Damodaran said.

However, analysts fear that with everyone wanting to participate in the upcoming IPO, it may trigger huge selling in the secondary market in the coming week. Ashish Kapur, CEO, Invest Shoppe, a Delhi-based brokerage firm, fears that there could be wide-ranging implications of the Reliance Power IPO on the stock exchange, when the issue opens up for subscription on Tuesday.

“The market can become very dangerous. FIIs and Mutual Funds are also likely to pull out huge money from the secondary market to invest in the issue, which can have immediate effect on the market tide. That’s why fresh money is very important for any growing market,” says Kapur.

A COO of a large brokerage firm cautions that it’s important for the market that Reliance Power lists with gains on the bourses. “A lot of money is at stake. Small investors are dreaming big from this IPO, making it all the more important for this IPO to sail through smoothly. Otherwise, small investors may get struck, if it lists at a discount. Market may well do a reverse in that situation. However, if it lists at premium, it is going to create good liquidity in the system,” he says.

However, Arvind Mahajan, executive director, KPMG India, believes that the company has been smart in pricing its offering at the higher level (Rs 405-450). “If the pricing is low, investors tend to sell stocks within a few days of the scrip getting listed as they try to book some quick profits.

For instance, there are more chances that an investor will sell a stock, whose offering price was Rs 100, if it lists at Rs 125. For him, it’s a 25% gain in no time. But with a high price band, there is more money on the table and considering that it’s a greenfield project, no company would like to be in a situation where investors put in their money for making a quick buck,” he explains.

source TET,

Stock News: Aries Agro closes at 94% premium on BSE

Aries Agro Limited (AAL) (BSE Scrip Code 532935), a micronutrient and other nutritional products manufacturing company for plants and animals, today listed on the BSE and NSE at Rs 150 and Rs 160 respectively, as against its offer price of Rs 130 per share. The scrip closed at Rs 251.60 on the BSE and at Rs 249.80 on the NSE.

At 4 pm, the trading volume on the BSE was 2,13,95,103 shares; while that on the NSE was 2,25,02,724 shares. It touched a high and low of Rs 261 and Rs 150, respectively, on the BSE.

The company entered capital market with an Initial Public Offering (IPO) of 45,00,000 equity shares of Rs 10 each for cash at a premium to be decided through the 100 per cent book building process. The price band of the issue was Rs 120 to Rs 130.

As a part of its expansion plan, AAL mainly proposed to set up new manufacturing units at Ahmedabad, Lucknow, Medak (Andhra Pradesh) and an additional unit in Maharashtra. AAL is embarking upon over a three-fold increase through this expansion, and would add 79,200 TPA to its existing manufacturing capacity of 21,600 TPA. To increase its global reach, AAL has also proposed to enhance its equity holding to 75 per cent in Golden Harvest Middle East (FZC), a company incorporated in UAE thereby making it a subsidiary company. The Company would also create mobile shops through mobile vans for its products in order to reach the places where there is demand.

The proposed issue is lead managed by SREI Capital Markets Ltd and the Registrar to the issue is Aarthi Consultants Pvt Ltd.

Sourced From: Prana Public Relations

M&M realigns mfg plans & defers investment in Chennai plant

Mahindra & Mahindra, Renault & Nissan announced their intent to set up a joint manufacturing facility at Oragadam, outside Chennai and signed an MOU with the Government of Tamil Nadu. M&M has since reviewed its plans, while Renault and Nissan continue to be fully committed to their industrial development plans:

* M&M will utilise capacity available at their new plant in Chakan and other existing plants to meet its medium term requirements and hence shall not participate in the joint plant at Oragadam.
* Mahindra shall continue its Mahindra Research Valley (MRV) at Chengelpet and MRV test track and tractor plant plans in Oragadam.
* It shall simultaneously evaluate a new automotive plant at Oragadam to further enhance its capacity. The Chakan plant owned by Mahindra will manufacture Mahindra as well as Mahindra international truck products.
* Renault and Nissan maintain their development plans for the creation of a new industrial plant in Chennai. They maintain their long term commitment to India, with local development including design, engineering, component outsourcing, manufacturing, etc.

Nevertheless, Mahindra and Renault appreciate their ongoing partnership and continue to have a strong relationship through their existing joint venture Mahindra Renault Pvt. Ltd. (MRPL) that has launched the Logan in India. As of Dec 31, the Logan has captured an 11% market share in the C segment since the launch in May, thus becoming third in the segment.

The new products that will be manufactured by Renault at its Chennai plant are planned to be marketed by MRPL under the Mahindra Renault brand to be sold through the M&M sales channel.

Sourced From: Adfactors Public Relations Pvt Ltd