Performance of the BSE Sector Indices in 2011/12 and to date is quite Interesting

Performance of the BSE Sector Indices in 2011/12  and to date is quite Interesting ….What provoked this post is Sameer’s counter argument in my earlier post…he is bullish in the short term,citing the favourable upmoves in the Pharma,Cement and Auto Sectors…I’m looking at the Bigger Picture and I’m not so excited really as Macros are clearly playing up and this Government is unlikely to push big ticket reforms…we need to await 2014 General Elections,which I fear may yet again through up a fractured verdict…but I hope with a more reform friendly and decisive coalition !

Have a Look at the Performance of the BSE Sector Indices in 2011/12 and to date…Quite Interesting…The Reds & Greens signal fall or rise/holding up from over a year ago  

The Alltime High & Low Columns are quite revealing

  • FMCG,Healthcare and Auto Indices  have registered All time Highs this Month…with consistent Wealth Creation in the 21st century in FMCG and Healthcare while a huge surge in the last four years in the Auto Sector
  • Quick and huge  wealth destruction in the IT sector in 2000/2001,the Metals and Power Sector inside Ten months in 2008 between January and October and in the Realty Sector between Jan 2008 and March 2009  

PERFORMANCE OF BSE SECTOR INDICES AS ON APRIL 26,2012

Sector

Valuation

Current Close

April 26,2012

A Month Ago

A Year Ago

52 Week

All Time

%

Mkt Cap

PE

PBV

Index

%

Index

%

High

Low

High

Low

IT

9

19.4

6

5509

6011

(8.4)

6244

(11.8)

6361

4639

8678

Feb 2000

835

Sept 2001

Teck

12.6

23.4

3.5

3239

3516

(7.9)

3764

(13.9)

3799

2982

4188

Oct 2007

547

Sept 2001

FMCG

7

35

14

4806

4386

9.6

3739

28.5

4834

3562

4834

April 2012

706

April 2003

Consumer Durables

0.7

20

2.7

6509

6377

2.1

6491

7097

5063

7370

Nov 2010

414

Sept 2001

Metals

9.4

14

2.4

10981

10978

16723

(34.3)

16723

9191

20495

Jan 2008

3807

Oct 2008

Oil & Gas

11.7

16.9

1.8

7896

7910

10093

(21.8)

10102

7495

14269

Jan 2008

2529

Aug 2004

Capital Goods

3.8

15.9

3.1

9424

9933

(5.1)

13710

(31.3)

14108

7807

21021

Nov 2007

481

Sept 2001

HealthCare

4.4

57

4.4

6747

6391

5.6

6191

9

6879

5757

6879

April 2012

985

April 2001

Bankex

9.8

13.3

2.1

11666

11571

13520

(13.7)

13501

8947

15108

Nov 2010

1614

June 2003

PSU

25.7

13.8

2

7160

7235

9169

(21.9)

9254

6204

11205

Jan 2008

734

Sept 2001

Auto

4.9

22

4.8

10745

9861

0.1

9678

11

10829

7814

10829

April 2012

2128

Dec 2008

Realty

1.2

20.9

1.4

1677

1726

(2.8)

2346

(28.5)

2311

1348

13848

Jan 2008

1298

March 2009

Power

7.2

15.3

2

1991

2082

(4.4)

2724

(26.9)

2714

1725

4929

Jan 2008

1275

Oct 2008

  • IT  shows a Drop,but TCS has outperformed Infosys ,which has slumped and the latter holds 48% weightage in the Index ! against just 29% by TCS !…this needs to be rectified by BSE rightaway…more so as the Market Cap of TCS is Rs 233301 crs against just Rs 135415 crs of Infosys !….The Index tracks the share price of  10 Companies with 88% weightage of just three …Infosys,TCS and Wipro …Other interesting constituents are Oracle Finance and Financial Technologies 
  •   Techk comprises of 30 IT,Telecom,Media and Communication Companies and has mirrored IT fall
  • FMCG has been the years Darling with ITC (55% weightage) and HUL (18% weightage) outperforming to allow the Index to hit Alltime Highs…11 Companies constitute this Index…Interesting ones are the two Kingfisher Group Companies,United Spirits and United Breweries…. and Tata Global (spotted this at Rs 80 late in 2011) and the huge 2010/2011 winner Jubilant Foods (Dominoes Pizza)
  •  Consumer Durables has heavyweight Titan with 51% weightage in the Index…It’s been a flat year
  • Metals has seen a bad year…In fact this Index has slumped the highest @ 35% over last year…75% Index weightage is in Five scrips led by Tata Steel with 22% followed by Coal India,Jindal Steel,Sterlite and Hindalco
  • Oil & Gas too has seen a bad year…Reliance with a 54% weightage and ONGC with a 22% weightage aggregate a skewed weightage of 76% in the Index
  • Capital Good Giants,India Proxy Larsen and Toubro and BHEL have a weightage of  54% and 16% respectively in the Index that monitors the share price of  17 companies,that also include Siemens,Suzlon,Havells,Thermax,ABB and Punj Lloyd…it’s been a shocking year for both,Larsen and BHEL on the bourses and the steep fall has unnerved even the aggressive Investors
  • Healthcare has held up well in 2011/12…19 Healthcare and Pharma Companies comprise the Index with Sun Pharma (18%),Dr Reddys (17%) and Cipla (12%) leading the weightages
  • 14 Banks comprise the Bankex with the top three weightages given to HDFC Bank (26%),ICICI Bank (25%) and State Bank of India (16%)…it’s been a very challenging year for the Banks given the slowdown in the Economy and high interest rates affecting credit offtake…the rising level of NPAs remains a threat
  •  PSU ~ The Index has 60 PSU Companies in it ! with Coal India and ONGC leading at 14% each in weightages followed by State Bank of India with 9% and NTPC with 8%…Interestingly these 60 Comnpanies have an aggregate  Market Cap of Rs 1561821 crs currently….and this smartly and significantly  constitute nearly 26%,that’s over one fourth of the Total Current Market Cap of BSE of Rs 6108734 crs 
  • The Auto Index covers 10 Companies across the sector spectrum of leading four HMV and LMV wheelers & Two Wheelers,Battery (Exide) & Engine (Cummins) Manufacturers and Tyres (Apollo)…Aggregate 86% weightage is given to top Five Vehicle Players led by Tata Motors with a 31% weightage .Interestingly and encouragingly too,this Index has held up well,largely due to outperformance by Tata Motors…However Index aggregate Market Cap is below 5% of total market cap 
  • Realty Index tracks the share price of 12 realty companies…DLF lead weightages with 33% followed by Unitech (17%),Oberoi (10%) and HDIL (10%)…Shobha,Godrej Properties,Phoenix,D B Realty are some others in this Index…it’s continued to be a sliding year for this sector that’s been saddled with huge crippling debt,huge inventories and delayed projects….but how much more lower can it go !…search for contrarion winners in this sector over the long term…had spotted Orbit at Rs 20 + late last year and early this year…Price has doubled to @ Rs 48 currently…and even Indiabulls Real Estate at Rs 45 + levels after demerger of Indiabulls Power….it surged to Rs 80 levels before reacting now to Rs 62 …But Both do not form part of this Index 
  • Power Sector is battling  Source Feed Supplies of Coal and Gas that’s crippling Operations and resulting in lower output and capacity underutilisation….Implementation of both,Public and Private Mega Projects too has been delayed for a host of reasons …This Index tracks 19 companies in the Sector that cover Generators,Transmitters and Distributors as also others that supply Equipment like BHEL which has the second largest weightage of 15% …NTPC with a 20%  leads the weightages….Incidentally Private Power Players like Reliance Power  and Adani Power have a weightage of 4% and 3%  respectively….Given the Challenges faced,the Year has been quite unkind to this Sector…the Index has slumped @ 27% in the past year…anyone for a Contrarion Bull Play here !? 
  • read more

    Lloyds Steel Fireworks…from Rs 16 to Rs 19 on Friday…now approaching Rs 20

    Lloyds Steel Fireworks…from Rs 16 to Rs 19 on Friday…now approaching Rs 20

    Look at Friday Volumes on BSE

    Company : LLOYDS STEEL INDUSTRIES LTD. ( 500254 )    on BSE
    Period   ( 01-Jun-2011  to  03-Jun-2011 )  

    Date

    Open
    Price

    High
    Price

    Low
    Price

    Close
    Price

    WAP

    No. of
    Shares

    No. of
    Trades

    Total Turnover
    (Rs.)

     
     
    1/06/11

    16.00

    16.45

    15.80

    15.95

    16.04

    8,45,993

    1,211

    1,35,73,553

     
    2/06/11

    15.80

    16.40

    15.70

    16.25

    16.09

    8,27,234

    1,150

    1,33,14,055

     
    3/06/11

    16.25

    19.50

    16.25

    19.25

    18.46

    69,01,124

    10,662

    12,74,18,768

     

     So what’s triggering yet again in Lloyds Steel….Insiders seem to know and are buying heavily….have zoomed the scrip up in a day from a low of Rs 15.70 on Thursday to a High of Rs 19.50 on Friday…that’s 24% surge

    And today on Monday June 6,2011 the price is approaching Rs 20 with volumes on BSE already at 32 lakh shares by 10.30 am

    Lloyds Steel had replied to a BSE Query in April 2011 on a Business Standard article that spoke of a possible takeover by Uttam Galva…. http://www.bseindia.com/stockinfo/anndet.aspx?newsid=97fb936e-2ab5-4df9-a9dd-b6f64d25fb9a ….they had denied their Wardha plant was up for sale

    Lloyds Steel has also declared their FY 11 Results…small loss again of Rs 59 crs…Equity is now Rs 392 .66 crs while Reserves are negative at Rs 847.34 crs…huge accumulated loss……Debt in the Books disclosed by the company in the above clarification was Rs 741 crs at December 31,2010 

    http://www.bseindia.com/stockinfo/anndet.aspx?newsid=6ec5af97-a663-49c1-909f-6dbf08710ed4

    Their Engineering Division is making health Profits…Rs 66 crs on Sales of Rs 326 crs (this is under 11% of Total Net Sales of Company at Rs 2978 crs) with Capital Deployed of just Rs 64 crs…methinks this will be spun off this year as planned…me also thinks an imminent sale of the steel unit is looming ahead for Institutions to recover their funds 

    Methinks Guptas who have jumped their holdings from 17.44 % to 53.09 % by conversion of warrants allotted to themselves earlier will not settle for sale at any price below Rs 30

    So watch out for Lloyds Steel Fireworks….it’s crossed Rs 20 on BSE as I end this Blog at 10.50 am

     

    Blog Viewer Queries and my responses…..Birla Power Solutions at Rs 1….Tulsyan NEC at Rs 46…..Marg at Rs 90+,Sanghvi Movers at Rs 110+,NIIT Tech at Rs 180+….Sabero Organics at Rs 97 +……Deccan Gold at Rs 20+…Garnet Constructions at Rs 12

    Blog Viewer Queries

    • Birla Power at Rs 1
    • Tulsyan NEC at Rs 46
    • Marg at Rs 90+
    • Sanghvi Movers at Rs 110+
    • NIIT Tech at Rs 180+ 
    • Sabero Organics at Rs 97 +
    • Added later…..Deccan Gold at Rs 20+
    • Added later…Garnet Constructions at Rs 12

    Thought I would give my brief observations on all of the above queries from blog viewers…..am reproducing both viewers queries and my brief responses  as this seperate blog post for wider and easy viewing

    BIRLA POWER SOLUTIONS AT RS 1

    BSReddy Says:

    May 29th, 2011 at 7:34 pm 

    Dear Sir ,
    What about Birla Power Solution Ltd ,which is near Rs 1 /

     Gaurav Parikh Says:
    May 29th, 2011 at 9:55 pm

    Hi B R Reddy…thanks for your response…this specific blog post listed ten scrips between 20 and 30 and what you think they would be in 2012 if sensex is between 20k and 30k….A few years ago I had cautioned on Birla Power Solutions….I had a quick relook at it at par Rs 1 as this is the FV too …..Volumes are currently 15 lakh shares though average six month daily volumes are 75000 shares…. 52 week high/low is Rs 2/Rs 1…but margins and profits are very low…profits are in a few crs though sales crossed Rs 230 crs last year and will have crossed Rs 250 crs for FY 2011…amusingly it declared a 1:5 Bonus last year as well as a dividend of 7.5%…it carries debt of over Rs 100 crs while funds tied up in Debtors and Inventories last year aggregated over Rs 175 crs..Sales were Rs 238 crs….currently manufacturing portable gensets and engines for gensets it now plans to enter the field of power generation through two subs Birla Energy Infra Ltd and Birla Urja Ltd…it needs funds…has constantly….has raised Authorised Capital to Rs 425 crs….With Profitability in single digit Rs crs and Equity at Rs 215 crs,don’t expect any dividend for FY 11 that just passed….if they do foolishly declare one,they will have to dive into GDR proceeds of earlier years to distribute,if any are yet available….while I feel the downside is 75 paise,any uptick from here will be more on momentum,hype,sentiment and anticipation and blind faith in a Birla Company rather than on fundamentals…Yash Birla Group companies do not command much respect or premium on the bourses or in business…another of his group companies is Birla Shloka ….it is just Rs 15…it has a 52 week high of Rs 94 and the FPO in Jan 2010 was at Rs 50 for a FV Rs 10 share….if you wish to make monies in Birla Power, don’t depend on fundamentals to support upmoves from Rs 1….more likely on collective hype and hope…Cheers !

    TULSYAN NEC AT RS 46-RS 49

    AMIT GUPTA Says:
    May 30th, 2011 at 3:50 pm  

    whats your view on tulsyan NEC

    Gaurav Parikh Says:
    May 31st, 2011 at 12:05 pm 

    Amit……Tulsyan NEC suffered from a very high Debt…over Rs 220 crs last year from a Total Capital Employed of Rs @Rs 285 crs…recent 2:1 Rights Issue at Rs 49.50 will triple Equity to Rs 15 crs and move Networth to Rs 120 crs…this will reduce Debt Equity towards 2:1…..Consolidated Turnover is Rs 876 crs for FY 11 but bottomline is a mere Rs 9 crs because of the high Interest outflow of over Rs 32 crs…they also faced huge Power cuts…40% in FY 10…affected capacity utilisation…they also faced some price hurdle to source sponge iron….they have since bought out a 35000 MT Sponge Iron Manufacturer Chitrakoot and are setting up a 35KV Thermal Power Station…Steel sales account for near Rs 700 crs of the turnover…rest is poly packaging synthetic division sales…it is a dividend paying company…65% + equity is held by the Promoters….I see little downside from here….Trading Volumes are low….would keep it as a ScripWatch rather than ScripSelect right now…Interestingly Market Cap is only @ Rs 70 crs on enhanced capital with share price in the mid Rs 40s levels…it remains a small company in this sense…sold 1.5 lakh ton of Steel and @ 12000 t on Packaging…has over 1500 employees …..will get re-rated only when Debt levels drop significantly to Rs 100-Rs 150 crs range and therefore Debt/Equity to 1:1….Keep a watch …..Cheers read more

    Saturday…..time out is time in !…..IFEN address,parrots,squirrels and sparrows,Reliance and Insider Trading,Oil Subsidies,RBI Warning on Fiscal Deficit,Iron Ore Bubble, High Frequency Algorithimic Trading,Morgan Stanley an a Sensex of 30000 in 18 months……enough to ponder over this weekend

    Been an interesting week that finished off last evening with my address on ‘ Equity Research & Portfolio Management’ for IFEN (ICFAI Univ) at Indian Merchants Chambers…well received and have already received some interesting feedback from participants…one of which is from the promoter of www.attainix.com …..he is into advising on Intellectual Capital (IC) and has created,based on algorithims, an IC tracker that signals if scrips are under or overvalued  

    …and now it’s a Saturday…and am taking some time out by time in at home……warmed by an interesting tussle between parrots,squirrels and sparrows for a share of the peanuts in their shell and rice grains on their feeding platform among my plants….finally agreeing to Q up and live in harmony….soothing sight

    ….read the past few days papers leisurely…some coverage that triggered my interest i’ve bulleted below with links….. and my comments in blue italics

    • Reliance Industries to approach SEBI for the third time to settle Insider Trading Investigation through a Consent Order….in the first two approaches,RIL had offered merely token amounts to SEBI…one paper feels this time around the figure could be a record Rs 500 crs…… want to refresh what actually happened then click below on two earlier blogs by me on this in August 2008…am wondering if I should make this a TAP GAP Equity Poser as to what you think is the way RIL should be penalised for this….they earned over Rs 1000 crs in RPL insider deals in November 2007   

    Mukesh Ambani coterie accused by Samajwadi Party for Insider Trading in RPL and Jai Corp

    Tuesday, August 5th, 2008

    Proof Of Insider Trading in RPL…Yet Blind Eye Turned by SEBI

    Wednesday, August 6th, 2008

     

     

    • A Bloomberg article quoting Baosteel,China’s second largest Steel Mill,on the possibility of an Iron Ore Price Bubble developing…..may happen after a few years though and current FOB Prices of US $ 175/T may drop to US $ 80/T so my thoughts revolved around the impact on Sesa Goa….it is already facing an Investigation from the Serious Frauds Investigation Office (SFIO) for under invoicing exports by Rs 1002 crs between 2001 and 2007 and paying higher agent commissions of Rs 50 crs when it was under Mitsui control….plus the draining out of all Cash by it’s new Owners,Anil Agarwal’s Vedanta Group for acquiring a 20% stake in Cairns India+ Higher Royalties and tax now payable to the Government….should one therefore exit Sesa Goa at Rs 290/Rs 300 ?

    http://www.financialexpress.com/news/iron-ore-bubble-looms-may-lead-to-lower-prices/793669/0

    • The Oil Under recoveries and the additional subsidy burden on upstream majors ONGC,Oil India and GAIL ….when I debated in my workshops in BSE and elsewhere in 2005/6 that Oil will cross US $ 100/barrel in a few years…it was at US $ 30 -40 levels at the time,people felt I was stretching it…It crossed US $140 in 2008 !…before receding in 2009 to under US $ 50…and has again enetered three digits…..am wondering what will happen if Oil moves towards US $ 200 in the next year or two !…..India will have a refining capacity of 230 million tonnes by 2012….but domestic crude from ONGC,Oil India revolves around 30 million with Cairns adding a few million more….and our demand is at 150 Million and climbing as GDP grows at 7%-8% +….so our Oil Imports will be over 110 million tonnes annually and we can get into a very tight situation like we did in 2008….it will reflect in a higher fiscal deficit and therefore higher government borrowings to fund this deficit…..Look for Higher Indirect and Direct Tax Rates and Higher Petroleum Prices in such scenarios …..As long as High Fuel Subsidies are borne by and Oil under recoveries dominate the operations of the PSUs, is there any merit in investing in upstream PSU Oil Companies like ONGC,Oil India and Gail or even in the PSU Refining and Marketing Giants Indian Oil,BPCL or HPCL ? 

    http://www.business-standard.com/india/news/govt-shifts-rs-4299-cr-burden-to-oil-firms-/436329/

    SUBSIDY PAIN
     

    2009-10

    2010-11

    2011-12*

    Average price of crude
    (Indian basket) per barrel ($)

    69.76

    85.09

    112.32#

    Total underrecoveries
    of OMCs (Rs crore)

    46,051

    78,159

    174,835

    Government’s
    contribution (Rs crore)

    26,000

    40,912

    89,900

    Upstream companies’
    contribution (Rs crore)

    14,430

    30,296

    67,766

    Upstream firms’ share
    (%)

    31.33

    38.76

    38.76

    Absorbed by OMCs
    (Rs crore)

    5,621

    6,951

    17,169

    #for May 1-15, 2011;  
    *Assuming no further price hike at the retail level and current crude oil prices
    Source: Ministry of Petroleum. OMCs: Oil marketing companies
    • RBI Governor D Subbarao warning that the government will have a hard time meeting it’s fiscal deficit target….I highlighted this situation in my presentation at my IFEN address yesterday and showed how the fiscal deficit is being funded by high government borrowings…the Governor fears spark off the possibility that these may be even higher than projected

    http://www.business-standard.com/india/news/rbi-difficult-to-deliver46-fiscal-deficit-target/436213/

    • NSE changes algorithim approval process

    http://www.business-standard.com/india/news/nse-changes-algorithm-approval-process/436299/

    My thoughts turned to the rapid growth of High Frequency Trading (HFT) in recent years….HFT is one way of  algorithmic trading…in USA,over 50% of trading is now high frequency trading….Data shows that a HFT trader on an average does not hold any position longer than 22 seconds !…..HFT Trader throws in a number of high speed trades for round trip execution in micro seconds….it has been found that over 80% of such orders return cancelled….such orders,though small in size,but through a high recurrence rate, try to capture price imbalances available for just milliseconds to generate huge profits…the trade is decided automatically by algorithimic computer models that analyse real time data to capture these price inefficiencies and imbalances…..HFT has sparked off the need for a strong regulatory and supervisory and monitoring system in place,especially after the flash crash in US markets on May 6,2010 read more

    Market’s Gyrating Up and Down but Lloyds Steel’s on Fire…crossed Rs 22 today….up 14% …..Enjoy

    Blog Regulars and those who acted out on earlier Blogs on Lloyds Steel should be a happy lot…..especially those who picked it up below Rs 10 a year ago…..The Scrips crossed Rs 22 today…up by 14% +…The Volumes too are hitting the roof on both the NSE and BSE…Enjoy

    Check out the earlier Blogs…the picture envisaged by me and and the gameplan of promoters is playing out quite to script 

    Lloyds Steel @ Rs 14….. Promoters Stake now 57.75% from 17.61% on Conversion of Warrants at Rs 10

    Tuesday, November 2nd, 2010

    LLoyds Steel closes strong at Rs 12.91 despite going into Trade-to-Trade from tomorrow

    Thursday, January 7th, 2010

    Lloyds Steel @ Rs 9/10…Turnaround from Treachery !?

    Thursday, December 24th, 2009

    Cheers !

    Lloyds Steel @ Rs 14….. Promoters Stake now 57.75% from 17.61% on Conversion of Warrants at Rs 10

    On December 24,2009 and then soon after on January 7,2010 I had blogged on Lloyds Steel and asked you to watch out for it in 2010…it was Rs 9 in December 2009 then flared up in January to Rs 13+ going all the way to Rs 20 before reacting back to Rs 12…past few days it’s been lively and gone up past Rs 15 to settle at Rs 14 today…..I had stated that a Turnaround was in the offing and the Promoters were awarding Convertible Warrants to themselves to up their stake from just below 18% to past 54% on conversion 

    Check out these earlier Blogs

    LLoyds Steel closes strong at Rs 12.91 despite going into Trade-to-Trade from tomorrow

    Thursday, January 7th, 2010

    Lloyds Steel @ Rs 9/10…Turnaround from Treachery !?

    Thursday, December 24th, 2009

    Lloyds Steel has just allotted, on October 29,2010, 1,68,500,000 shares on conversion of the Warrants issued to the Promoters two companies,Shree Global Tradefin Ltd and Trump Investments Ltd…Thus these two companies which held 9.09% of the Equity of Rs 224.16 crs will now hold 48.23 % of the new Equity of Rs 392.66 crs,up by 39.14 %

    The promoters who held 17.61% of the Equity,which included the 9.09% held by the above two promoter companies, will now hold a controlling stake of 57.75% with this conversion at par value of Rs 10

    The conversion has been done within 2010 itself when it could have been done by mid 2011 too….this is a positive sign as promoters have infused the committed fresh funds into the company,albeit at par through this conversion  

    Now await the next step…demerging the Engineering Division into a company to unlock it’s potential…..Shareholders will get free shares of this demerged company

    Looks Like 2011 will be an interesting and rewarding year for Shareholders of Lloyds Steel as it’s restructuring of debt and infusion of fresh equity to bring down the leverage and it’s return to profitability sparks of it’s revival

    Cheers !