Thursday, June 3, 2010

BOR: Market Outlook: Nifty will have positive opening today

Market Outlook: Nifty will have positive opening today on the back of strong global cues. Nifty has supports at 4900-4950 and resistances are at 5100-5150.

Global Events to watch for today:

  • Monster Employment Index
  • Productivity and Costs
  • Factory Orders
  • Jobless Claims

Global indices Update @ 8:

Dow Jones : 10249 (+225.5)

NASDAQ : 2281 (+58.74)

Nikkei 225 : 9855 (+252.1)

Hang seng : 19802 (+330.6)

SGX CNX Nifty : 5069 (+55.00)

INR / 1 USD : 47.19

Stocks in action for the day : NTPC, RCom, JSW Steel, Renuka Sugars...

Sasol-Tata JV to invest USD 10 bn in India Sasol, the largest producer of motor fuel made from coal, plans to spend USD 10 billion in India in partnership with the Tata Group on a block awarded last year, following similar investments in Indonesia and China. The South African company plans to produce 80,000 barrels a day of motor fuel by 2018 from a coal block in Orissa, Mark Schnell, president of the company`s Indian unit, said in an interview in Mumbai. Sasol and Tata Group own equal stakes in the venture, he said. ``It`s going to be a mega project of the magnitude of USD 10 billion by the joint venture,`` Schnell said. ``At this stage, the focus is on understanding the resource and making sure of the economics of building a plant here.``

Cash-strapped Reliance Communications set to give up strategic stake The Anil Dhirubhai Ambani Group (ADAG) is ready to sell a strategic stake in Reliance Communications (RCom) as the company seeks to infuse fresh equity to fund its foray into third-generation telephony and wireless broadband access. The company is considering two options: a merger with South Africa`s MTN or infusion of fresh equity from a strategic foreign investor, according to a person familiar with the group`s plans. At an MTN meeting held on Tuesday, the board of the South Africa-based telecom major decided it would examine the RCom proposal after analyzing what has transpired in the Indian telecom market since its last talks with Bharti Airtel in 2009, the person quoted earlier said.

JSW Steel to issue Rs 21 bn warrants to promoters India`s third-largest steel maker, JSW Steel, will raise about Rs 21 billion through an issue of warrants to promoters on a preferential basis to help cut debt, a top official said on Wednesday. The firm will issue 175 lakh convertible warrants to promoters on a preferential basis at Rs 1,210 each, MVS Seshagiri Rao, joint managing director, told shareholders at its general meeting. This is nearly a 15% premium to Tuesday`s closing price. ``We have very high debt leverage but we wanted to maintain our growth momentum. So we wanted to raise capital as early as possible,`` Rao told shareholders after they approved the fund-raising.

Renuka Sugars in talks for 28% cut in Equipav buyout price Shree Renuka Sugars (SRS) is negotiating a 25-28% reduction in the acquisition price for its proposed Equipav buyout. SRS will now pay anywhere between Rs 11 billion and Rs 11.5 billion against the earlier price of Rs 15.3 billion for Brazil`s seventh-largest sugar refiner. The SRS management, however, was not available for a confirmation about the re-negotiation. The Indian firm had announcedplans to acquire Equipav in February last. The buyout would have seen SRS pay Rs 15.3 billion besides assuming Equipav`s debt of nearly USD 700 million. However, the fall in global sugar prices, on the back of news of higher production in India and Brazil, forced SRS to re-negotiate the price.

GMR Energy raises Rs 3.5 bn from IDFC GMR Energy, the flagship power venture of GMR group, has raised Rs 3.5 billion from IDFC Group for a significant minority stake. The transaction is part of the GMR Energy`s plan to raise Rs 16 billion through the equity route to meet its immediate requirement. This is the second round of equity fund-raising as it had raised USD 200 million from Singapore-based private equity (PE) firm Temasek and Rs 3 billion from ICICI Bank through preference share allotment in April this year. ``The company has achieved the financial closure for 1,950-mw power plant and is now raising funds through the equity route to meet debt-equity ratio,`` said a person familiar with the deal. The debt-equity ratio for the proposed project is 80:20.

NTPC to buy Australian coal mine India`s largest power producer, NTPC, is set to acquire controlling interest in a 720-million-tonne coal field in Australia in a deal valued at USD 1-1.5 billion, which will enable it to fire about 3,500 mw of power capacity. The coal mines, located near Perth in western Australia, will allow NTPC to bring home up to 10 million tonnes of coal annually for its plants.

Hinduja Group plans USD 30 bn India play The biggest chunk of the investments is expected to flow into the power sector. The diversified Hinduja Group is planning to use its Indian units for overseas acquisitions, besides lining up investments of around USD 30 billion (Rs 1,350 billion) in the country over the next five years. Ashok P Hinduja, chairman of Hinduja Group India, said the investments would be across 10 verticals - oil and gas, power, realty, banking, healthcare, automotive, education, infrastructure, IT and media - which had been identified as the growth drivers.

Leyland, Nissan to jointly make LCVs Ashok Leyland and Nissan, who have joined hands for manufacturing light commercial vehicles (LCV), are planning to roll out their first product by mid-2011. The two partners will produce 150,000 vehicles as part of Phase-I at their existing facilities and said a greenfield facility was very much on the cards. Andy Palmer, senior vice-president,Nissan Motor Company and chairman, Ashok Leyland Nissan Vehicles (ANLV), said the two partners would use their existing facilities and networks to manufacture and sell vehicles and that there would not be any cross distribution of products. ``It will be different brands,`` he said.

Promoters hike stake in Unitech The country`s second largest realty firm, Unitech, on Wednesday said its promoters have increased their stake in the company by 1.3% points to 46.30% by converting warrants worth Rs 2,247.8 million. ``Unitech promoters today converted another 5,90,56,781 warrants into equity shares ahead of schedule. The promoters paid Rs 2,247.8 million for the said conversion,`` the company said in a statement. Following this conversion, the promoters` stake in the com pany has gone up to 46.30% from 45% earlier. The company said each warrant has been converted into an equity share of Rs 2 each at a premium of Rs 48.75 per share. ``The fresh infusion of funds by promoters in the company will help in further reducing the debt, which as of March 31, 2010, stood at R s 52.81 billion. Consequently, the debt equity ratio will also fall below 0.50,` it added.

Sun rejects USD 215 mn offer to sell Taro stake Mumbai-based drug maker Sun Pharmaceuticals Industries has rejected a USD 215 million offer from US-based banker and financial advisor Guggenheim Securities Llc to buy its 36% stake in Israel`s Taro Pharmaceuticals Industries. On behalf of chairman Dilip Shanghvi, Sun Pharma`s director Sailesh Desai on 29 May wrote to Guggenheim executive chairman Alan D. Schwartz that his firm`s goal was to acquire control of Taro and would therefore decline Guggenheim`s offer. The offer valued Taro`s shares at USD 15 each, a 93% premium over what Sun Pharma paid to acquire 14.4 million shares in 2007. An Indian analyst suggested that the Guggenheim offer was acceptable.

RIL may revive chemical plant plan Billionaire Mukesh Ambani`s Reliance Industries may start work on a multibillion-dollar chemical plant this year, reviving a project to meet India`s surging demand for the raw materials for plastics, drugs and textiles. Reliance is close to deciding the final configuration of the plant, which will be capable of producing as much as 1.6 million tonnes a year of chemicals such as ethylene and propylene, said a person familiar with the project, who declined to be identified because the information isn`t public.

Stake buy buzz fuels rally in United Phosphorus Trading volumes in shares of United Phosphorus have shot up over the past few sessions, fuelled by talk that it may shortly acquire a Mumbai-based chemical company. A senior United Phosphorus official, when contacted on the matter, said, “We don’t comment on market speculation.” The stock closed at Rs 179.30 on Wednesday on BSE, up over 2% after reaching an intra-day high of Rs 181.90, supported by above average volumes. But the stock has surged by more than 10% in the past one week. The buzz is also that a domestic mutual fund known for its aggressive bets has been a buyer in the stock. Analysts say that a sharp decline in the net profit of the company has been due to a slowdown in its agri-chemical business globally, but expect the bottomline to improve in the days to come.

A domestic insurer seen buying Sterlite shares A domestic insurance company is learnt to have picked up a sizeable chunk of Sterlite Industries shares on Wednesday. The stock closed 0.8% higher at Rs 634.55 supported by good volumes. The stock has been an underperformer recently, having lost more than 20% in the past one month on account of fall in metal prices globally. The company saw a big jump in its net profit for the fourth quarter driven by a better operating performance and increase in other income. Analysts expect the company’s margins to improve through the development of Balco coal block and also expansion of its zinc capacity. But much will depend on the timely execution of the projects, they say.

R-Comm, MTN exchange informal talks: (R-Comm) and South African telecom company MTN exchanged an informal conversation three weeks back, say sources to CNBC-TV18’s Nayantara Rai.It is learnt that the ‘feelers’ exchanged between the principals of both the companies are not at company level. Sources say that MTN is very keen on reviving it interest in India.

Indian ADRs: Tata Comm, Sterlite up 6%, Tata Motors up 5%

SA trade & industry ministry says: -Bharti-MTN deal did not succeed on number of issues -Issue of listing was specific to Bharti-MTN deal -No reason why there cannot be telecom deals in the future -Real possibility we may see large deals taking place -Other deals not ruled out because one failed

ONGC says -Highly 'concerned' over BP's Gulf Of Mexico oil spill -Gulf Of Mexico oil spill may impact exploration globally

Unitech -Promoters convert 5.9 crore warrants at Rs 50.75/share -Unitech says promoter stake rises to 46.3% post warrant conversion from 45%

Taro says: -Transaction would enable Sun Pharma to monetize its illiquid minority position in the Company -Profit of over USD 140 million, or more than 2 times its initial investment -Purchase would be subject to settlement of all outstanding litigation -Not be conditioned upon receipt of audited financial statements or relisting
-Guggenheim to review alternatives including possible purchase by third party of Sun’s stake -Sun’s offer at USD 7.75 is inadequate -Company is working towards completing audits of financial statements

Punjab & Sind Bank to file DRHP next week, looking to raise Rs 500 crore through IPO

Goodyear reverse book building closes today

Suzlon fixes June 9 as ex-date for rights issue

RIL to offer 3G, Wimax devices in telecom splash - FE

Godrej Consumer acquires Argentinian hair care company Argencos ((2nd Latam acq in 2 weeks, relatively small))


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