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Heard in the Studio

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A flurry of conversations took place in the studio on the markets. Here is a slice.

Prayag: We have finally hit the ground running on the Commonwealth Games, after all the controversies and negativities surrounding the event.

Ayush: Yeah, that's true; the glitz accompanying the opening ceremony was spellbinding. Speaking of glitz, it was amusing to read that Shah Rukh Khan claims himself to be a poor businessman!

Kaustubh: For a man minting millions from brand endorsements, it seems strange. Perhaps, he is talking about running new businesses — his KKR Team or Red Chillies.

Ayush: But the market seems to have given a thumbs-up to two of the five debutants at the exchanges.

Prayag: Man, what a rousing reception Career Point Infosystems got – 112 per cent gains on opening day! No company in recent memory seems to have captured the imagination of investors as this one has, even at the cost of valuations reaching boiling points!

Kaustubh: Eros International too had a decent listing, not by any means spectacular. But Orient Green Power and Ramky Infra, turned out to be a damp squib going by deep cuts they had at the bourses on listing day. The renewable energy and the infrastructure stories, it seems, would be bought only at a cheaper price.

Ayush: But did you guys notice that FIIs are pumping in money like there is no tomorrow, $20 billion at last count for the year.

Kaustubh: Yeah, they are the most bankable when it comes to driving markets or bubbles! This is pushing the rupee higher against the dollar to Rs 44 levels. Now that does not seem to worry the RBI, though IT companies would be having sleepless nights.

Prayag: Speaking of the RBI, industrial houses have made a strong pitch for starting banks to the reserve bank. But just a dialogue is taking place now, no serious action expected.

Ayush: The news on the inflation front is still far from encouraging. At 16.24 per cent, it has fallen very little. It remains to be seen if the RBI will raise rates once again.

Prayag: SBI, Bank of Baroda and several other banks have started increasing their deposit rates, albeit on select tenures. That should hopefully bring relief to customers hoping for safety and better yields on their investments.

Kaustubh: Tata Motors is once again on a fund-raising spree. The company is looking to raise $750 million through a QIP.

Ayush: What is interesting about the issue is that, $200 million is going to be raised by ordinary shares, while $550 million would be raked in through DVRs. The DVR is trading at Rs 795 is at a 30 per cent discount to the ordinary shares of Tata Motors. Now that should get the investors interested.

Prayag: The earnings season is around the corner and would be very keenly followed and could determine the continuance of the current bull-run, in light of concerns on higher valuations.

Kaustubh: Brokerages and FIIs are giving targets of anything in the 21000-25000 range for the Sensex over the next 3-6 months . If these levels are indeed breached, it has to be backed by strong earnings growth. But hey, with the festive season around, let us hope companies are able to give plenty of goodies to investors in the form of robust earnings numbers.

K. VENKATASUBRAMANIAN

(This article was published in the Business Line print edition dated October 10, 2010)
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