Heard on the Street

Heard on the Street


Hedge fund stocking up on Hawkins Cookers

Shares of pressure cooker manufacturer Hawkins Cookers are gradually being accumulated by hedge fund ‘Fortunate’, say dealers. This hedge fund and another local mutual fund, are on the lookout for a sizeable stake in the company, they say.

The company’s topline has been growing at a compounded annual rate of 20% over the past five years and has paid dividends consistently. Available at a price-earnings multiple of 11 times last year’s earnings, dealers say low liquidity is what has been keeping institutional investors at bay. The stock closed at Rs 690, down 3% over the previous close on low volumes.

Dealers may gain from exchange war

It is turf war at its very best. A leading stock exchange which recently advertised about its ‘powerful real time trading terminal’ on its website has fired a salvo at its competitors on the ground that it is more cost-effective. The buzz on D-Street is that the advert, which has drawn comparisons between its ‘free of cost trading terminal’ with that of a leading terminal in the market based on an instance of ‘100 user’ licences for 12 months,” alludes to a bourse that is waiting in the wings.

Even as there are rumblings of ‘unfair’ trade practices by the latter, the end users of this product (in this case the dealer community), are of the view that this kind of price competitiveness will serve to bring down costs across the marketplace.

Bulls raring to go on Bharti Airtel

Despite a market-wide ‘sell’ call, shares of Bharti Airtel is witnessing genuine buying interest from seasoned players. Apart from a couple of top-notch mutual funds, Rar(e)ing Bull’ along with his old friend Old Fox and a ‘gifted’ merchant banker are said to accumulating shares of the telecom firm. The trio is of the view that pessimism over Bharti’s proposed acquisition of Zain’s African assets has been overdone.

Funds make a beeline for Bajaj Holdings

The sharp fall in shares of Bajaj Holdings seems to have prompted funds to take a positive view on the stock. Reliance Capital picked up 11.6 lakh shares at Rs 550 apiece on Monday. Market sources attributed the fund buying to a possible reshuffling of portfolio in favour of stocks that look attractively valued after the recent correction.

Contributed by Apurv Gupta, Shailesh Menon, Vijay Gurav & Deeptha Rajkum ar

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Src:ET

Heard on the Street

Heard on the Street


Tata Steel back on bears’ radar

Bears are learnt to be having another go at the Tata Steel stock, despite having been caught on the wrong foot by better-than-expected quarterly numbers. Many of the traders, who had covered up their short positions last Wednesday, are said to have built up fresh ones on Friday, betting on a near-term downtrend in the stock. While the latest set of quarterly numbers came as a pleasant surprise, leading brokerage firms are divided on the outlook for the stock.

Those bullish on the company are expecting a decent recovery in demand for steel in the European market, while those bearish on the stock feel an improvement in the European operations will be much slower, because of sluggish demand. Tata Steel shares ended the day at Rs 572, up 1.7% over the previous close.

Party may be over for auto cos

Apprehension over an imminent hike in excise duty has resulted in most fund houses reducing their investments in stocks of automobile companies recently. According to analysts tracking the sector, the party for auto companies is drawing to a close over growing apprehensions of a roll-back in stimulus package, a spike in raw material costs and rise in consumer loan rates.

There is talk that with demand being robust, the government will increase excise duty on passenger vehicles between 2% and 4%, which will shave-off profit margins by a good measure. The government had reduced excise duty from 12% to 8% in December 2008. Rising costs of input materials like aluminium, steel and rubber will upset the pricing flexibility of auto manufacturers, say analysts.

Punters take a shot at Renuka Sugars

Traders, with long positions in shares of Shree Renuka Sugars had some anxious moments on Monday. Many brokers had recommended a trading buy on the stock soon after the company’s announcement to buy a majority stake in a Brazilian sugar firm for Rs 1,530 crore. But, the stock opened lower and stayed there for some time, forcing the traders to unwind their long positions.

According to brokers, a few operators managed to spark some panic among these traders by selling aggressively to create a perception that the deal would impact the company’s finances. They relied on the recent trend in large overseas acquisitions, where the event followed a sell-off in the stock of the buyer company. Within an hour into the trading session, these operators started covering their short positions, thereby leading to a sharp rebound in the stock.

Contributed by Nishanth Vasudevan, Santosh Nair & Shailesh Menon


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Src: ET, Dp Blog