26 November 2009

Heard on the street

Heard on the street

Bonus bonanza drives volumes on RIL

counter


A day before Reliance Industries (RIL) becomes ex-bonus (price being adjusted for 1:1 bonus), investors were seen flocking to the counter and, interestingly, many of them preferred to take delivery of shares than squaring off their positions intra-day.

According to brokers, the liberal bonus offers a good tax-planning opportunity for the shareholders. They can buy a certain number of shares cum-bonus (before being adjusted for bonus) and sell them ex-bonus, thus booking a loss that can be set off against short-term capital gains earned on any other transactions. By doing so, they would be entitled to bonus shares and would also save tax.

The RIL counter attracted delivery-based volume of 39.5% of the 13.2 lakh total traded shares on Wednesday, compared to 28.9% (7 lakh shares) and 22.8% (12.6 lakh shares) on the previous two days. The stock closed 0.8% higher at Rs 2,194 on the day.

FM to announce UTI stake sale after regulatory nod

The formal announcement of the 26% equity stake sale of UTI Mutual Fund to US-based investment firm T Rowe Price is expected to be made by finance minister Pranab Mukherjee next month. “There will be formal announcement on the stake sale after receiving all the regulatory approvals... it will be announced by a senior government official,” said an official familiar with the matter.

The NYSE-listed financial services firm would be paying $135 million for a 26% stake in the Mumbai-based fund house. The valuation works out to be 3.6% of assets managed by UTI AMC as on August 31, 2009.

L&T poised to make a grand exit from Satyam

Investors have been buying shares of engineering behemoth Larsen & Toubro (L&T) in large numbers on talks that the company will benefit immensely from a probable sell-off of Satyam Computer shares over the next few months. According to brokers, L&T had been accumulating shares of Satyam Computers since early-December last year.

L&T raised its stake by over 13% in Satyam Computers between December 2008 and February 2009. L&T, along with L&T Capital, holds a 6.9% stake in Satyam Computers as on September 2009. With L&T investment in Satyam nearing one year, the engineering company is expected to exit the stock.

Analysts are expecting Tech Mahindra (which acquired Satyam in April 2009) to buy the L&T stake in Satyam at a high price. This will further improve the cash position of L&T, say brokers. Shares of L&T ended 0.1% higher at Rs 1,650.45 on the BSE. Satyam Computers closed 11% lower at Rs 90.55 on Wednesday.

( Contributed by Vijay Gurav, Reena Zachariah & Shailesh Menon)

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Src: Economic Times

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