GauravBlog Logo

A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

Gaurav's Blog

Categories

March 2, 2009

General Elections Dates Just Announced…Polls in Five Phases from April 16,2009 to May 13,2009

It’s going to be a Hot and Sweaty but Entertaining Summer in April and May 2009

General Lok Sabha Elections Dates have just been announced

Voting will be in Five Phases and Begin on April 16,2009 and end on May 13,2009 with counting to begin on May 16…17 States will have a Single Phase Poll while Two States,UP and J & K ,will go to the polls in all Five phases

FIVE PHASED POLLING DATES OF GENERAL ELECTIONS 2009

Phase

Date

No of Constituencies

 

First

April 16

124

Second

April 22 (1) & 23 (140)

141

Third

April 16

107

Fourth

May 7

85

Fifth

May 13

86

 

Counting Starts

 

May 16

 

543

So now IPL has two Variants…Indian Premier League T20 Cricket and the Indian Political League General Elections….both will entertain you in April and May…and results for both will go down right to the wire !

So who’s going to win the Polls ?….Will Incumbent UPA,led by Congress rule again ? or will the NDA,led by the BJP regain Power ?…or will a Third Front that’s just been announced,steal their Thunder ?…or will there be a Hung Parliament and new post poll alliances be stitched together to form a government ?…Whoever or Whatever…Coalition Era continues !

Pre-Poll Alliances are seen to be forming more to do with political expediency rather than sharing of similar idealogies… Expect Blatant Money and Muscle Power to the Fore !

In ‘amchi’ Maharashtra,we have Sharad Pawar of the NCP flirting with Bal Thackeray’s Shiv Sena…causing consternation in both camps…. that of the Congress,an ally of NCP…. and that of the BJP,an ally of Shiv Sena…48 Lok Sabha Seats come from Maharashtra and Allies are battling for Seat Sharing Arrangements…NCP wants a better than the 21/27 ratio from Congress…For Prime Minister candidature,If push comes to shove,Shiv Sena clearly will prefer the ‘Maratha Manoos’ Sharad Pawar and will side with the NCP at the time

In West Bengal the Congress is allying with the Trinamool Congress,an arch foe of the Communist parties that had provided outside support to the UPA in forming the Government at the Centre…Communist parties have vowed to battle to create a Non Congress and Non BJP Alliance the Centre

Phew ! Why am I not Shocked !…you too shouldn’t be !

Do Exercise your Franchise…. and Honestly too….we,voters are the deciders here….and we will get the government we deserve in this Democracy of ours !

United Breweries at Rs 86…Indiabulls recommends to sell…Reliance Capital Mutual Fund buys into it !

It’s not that Reliance Capital Mutual Fund always does exactly the opposite of what Indiabulls recommends !

United Breweries (UB) was recommended to sell at Rs 90 by Indiabulls with a target price of Rs 70,citing high Leverage and margin pressures

Reliance Capital Mutual Fund and another Fund,Indea Absolute Return Fund ,actually went ahead and purchased 1.5 million shares and 1.3 million shares respectively of UB on February 27,2009,last week for Rs 75 in Bulk Deals of Rs 11.25 crs and Rs 9.75 crs respectively 

It’s just that the Beauty of Equity and Diverse Views in it come into Focus…with such mixed view,who do you follow !?…..Follow what you have conviction in and what appeals to you rationally and logically…Some basic sense of Earnings and Assets Valuation is warranted as Share Price is often skewed around this….. this will also help you to do some of your own basic homework and basic research to build up a well informed view with better conviction.

 

Padma Shri,T N Shanbag of Strand Book Stall passes away

Padma Shri,T N Shanbag of Strand Book Stall passed away last week….I’m truly sad although I did not really know him…but know well what he too held close to his heart….Books…..Strand’s Premier Store is on P M Road,in Mumbai’s Business District of South Mumbai and a hop skip and jump from my Office

Many Books in My Library have been sourced from Strand…..reasons have been largely three….Strand always offers a standard discount of 20% on every book….old or new,popular or not…the second reason is that they always would try to ,often succesfully,source a Book for me that they did not have with them…. and last they accepted Cheques from me for my purchases…a great sign of trust and goes to build goodwill and long term relationships 

Shanbag’s health ebbed significantly these past few years…He was on the Library Sub committee of My Club,but ill health forced him to resign some years ago…Thus I lost the chance to interact with him when I helped the Club develop a customised Library software  

May your soul rest in peace,Mr Shanbag…Book Lovers will miss you…On Earth you always guided us to some Heavenly Books…Now you are better positioned  and elevated to a higher level and plain to continue doing so !

Reliance announces RPL Amalgamation into RIL Ratio at 16:1…What should RPL and RIL Shareholders do?

On Friday,after Markets closing,RPL and RIL announced that their Boards would meet this morning to consider and recommend the Amalgamation of RPL into RIL

I had blogged that the ratio could be 20:1 and the Amalgamation would add incremental EPS to RIL and help RIL Share Price to be maintained or enhanced

The Amalgamation Ratio has just been announced this morning at a better 16:1 and it’s already in the share prices…RIL is marginally lower at Rs 1235 and RPL is virtually unchanged at Rs 76 

RIL has been justifying this amalgamation largely for operational efficiencies and enhancement of shareholder value…They say it will be tax neutral…My blog had emphasised that clearly the Amalgamation was an effort to maintain/enhance RIL Share Price in these tough times as there would be incremental EPS accretion and a very marginal dilution of Equity

Times are tough for Global Refiners and Gross Refining Margins are abysmal…In the near term 2009/10 I don’t see any recovery

Projected EPS for FY 10 is Rs 140 for RIL post amalagamation as KG Gas and RPL is expected to l add the incremental EPS…Otherwise the EPS would have struggled to top even Rs 90 in FY 10……I have reservations on this Projections of an EPS of Rs 140

I also see a deepening Global Crisis and the Dow sinking to more Lows…In this scenario I see RIL moving below Rs 1000

So what should RIL and RPL Shareholders do Now….All depends on your View of Markets and Reliance in the Near and Long Term…A few strategies are advised below for those who hold both RPL and RIL in their Equity Portfolio

A BULLISH VIEW IN THE NEAR TERM ( 2009) AND LONG TERM (2011)

  • Retain your holdings in RPL and RIL

A BEARISH NEAR TERM VIEW BUT A BULLISH LONG TERM VIEW

  • If you are a Long Term Investor and are not going to be unnerved by short term share price volatility,you could remain a passive spectator and retain your holdings
  • Alternatively you can retain your Holdings but protect yourself from any downside by buying  RPL (Lot is 3350 shares…contract size is therefore over Rs 2.5 lakhs) and RIL Puts (Lot is 300 shares…contract size is therefore nearly Rs 3.8 lakhs)…Obviously this strategy is not suitable for marginal holdings significantly below derivative contract values
  • However if ,assuming You hold an intensely bearish view for the near term like I do you can adopt the following strategy…Sell off both RPL and RIL Holdings and either remain in cash for some time or sell RPL Holdings and actively use the proceeds to pay the margins by shorting RIL Futures or selling RIL Call Options
  • read more

    Scroll to Top