Heard on the street

Heard on the street

Speculation over Welspun Gujarat-MSK Projects buy

TALK of Welspun Gujarat Stahl Rohren looking to buy MSK Projects refuses to die despite the latter denying it. Grapevine has it that discussion between Welspun and MSK for the deal is in the final stage and will be announced soon. It is also speculated that MSK promoters are likely to offload their stake at Rs 140 a piece, followed by an open offer to buy another 20% from minority shareholders.

On Thursday, MSK shares fell 3% to Rs 120.65. Welspun shares fell 1% to Rs 279.50. Promoters hold 21.68% in MSK, while Subhkam Venture holds 23.66%, as on September 30. MSK officials were not available to comment on the matter.

Mid-cap cement stocks back in demand

INVESTORS took a fancy to midcap cement stocks on Thursday on talk that cement prices were likely to firm up soon. Stocks like Binani Cement, Andhra Cement, Saurashtra Cement, Dalmia Cement, Shree Cement and Prism Cement were among the prominent gainers, rising between 3-6 %.

Analysts tracking the sector say fund houses have been steadily buying cement shares in anticipation of further growth in the construction sector. According to them, many cement companies are set to increase prices further, sensing good demand in the residential property segment. Indian cement industry is witnessing a growth rate of about 8%, the fastest growing market next to China.

Satyam Computer basks in IT glory

SHARES of Satyam Computer are seeing a renewed burst of activity. Probably, strong quarterly numbers from Infosys Technologies could have raised expectations from other leading IT services companies as well. On Thursday, a US-based investor is said to have bought close to 30 lakh shares. Some of the bull operators too are said to be steadily building up long positions at the counter.

Dealers tracking the counter say the rise in the stock price from hereon may be a bit gradual, since many players who are tired of holding on to the stock may decide to cash in. The stock had touched a high of Rs 128 in September last year, but has been moving in a narrow band ever since. On Thursday, the stock closed at Rs 120.85, up 1.2% from the previous close. On the BSE, 1.23 crore shares changed hands, with roughly a fourth of it resulting in delivery.


Contributed by Nishanth Vasudevan & Apurv Gupta

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Top 5 picks

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Src: ET

Heard on the street

Heard on the street 14 Jan 2010, 0356 hrs IST, ET Bureau

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Scooters India seen riding the divestment wave A group of punters appear to have taken control of the Scooters India stock. Shares of the loss-making public sector undertaking (PSU) hit a 52-week high of Rs 45.45, amid a sudden surge in volumes, and ended the day at Rs 44, up 14% over the previous close. Around 13.6 lakh shares changed hands on Wednesday, compared to an average daily volume of around 8,000 shares on most trading sessions in the past three months. The stock has risen nearly 60% this month alone. Cornering the stock does not need too much capital, considering that the non-promoter holding in the company is barely 20 lakh shares. With divestment being the flavour of the season, PSU shares are suddenly in demand. It is not too difficult for an operator to whip up volumes in an illiquid stock and then unload the shares to the unsuspecting public by spreading the divestment story. There were more than a dozen bulk deals in the stock on Wednesday, with all of them being squared off before close of trading. The sudden interest in the stock by arbitrageurs does raise eyebrows, considering the illiquid nature of the stock. Of the 13 players who took up positions at the counter, 8 squared off their positions for a small loss, two barely managed to break even, and four made a small profit. Scooters India made a net loss of Rs 2.27 crore for FY09, and a net loss of Rs 1.2 crore for the half year ended September 2009. Alarm bells ringing for second-rung stocks IS THE rally in second-line stocks close to peaking out? Yes, say some dealers, pointing out to the fact that money-making is becoming a bit too easy. “We get at least half-a-dozen tips daily with likely price targets over the next few days,” says a dealer at an institutional brokerage. “But, of late, the target prices are being attained before the specified period. That is too fast for comfort,” he says. NTPC follow-on offer may open on Feb 3 THE FOLLOW-ON public offering of NTPC is likely to start from February 3-5, according to people involved with the process. The company along with government officials and bankers has started meeting domestic institutional investors including insurance companies and mutual funds to gauge investor appetite for the Rs-11,000 crore share sale. The company filed its offer document with Sebi on Tuesday and is likely to be flexible in the new auction process by not placing any cap either in terms of the number of shares or percentage to issued capital. Investment bankers say that the success of the NTPC issue will play a crucial role in the government’s future disinvestment plan. Contributed by Santosh Nair & Reena Zachariah Src:ET

Is China the next Enron?

Is China the next Enron?



TAIWAN: Reading The Herald Tribune over breakfast in Hong Kong harbor last week, my eye went to the front-page story about how James Chanos — reportedly one of America's most successful short-sellers, the man who bet that Enron was a fraud and made a fortune when that proved true and its stock collapsed — is now warning that China is "Dubai times 1,000 or worse" and looking for ways to short that country's economy before its bubbles burst.

China's markets may be full of bubbles ripe for a short-seller, and if Chanos can find a way to make money shorting them, God bless him. But after visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I'd offer Chanos two notes of caution.

First, a simple rule of investing that has always served me well: Never short a country with $2 trillion in foreign currency reserves.

Second, it is easy to look at China today and see its enormous problems and things that it is not getting right. For instance, low interest rates, easy credit, an undervalued currency and hot money flowing in from abroad have led to what the Chinese government Sunday called "excessively rising house prices" in major cities, or what some might call a speculative bubble ripe for the shorting.

In the last few days, though, China's central bank has started edging up interest rates and raising the proportion of deposits that banks must set aside as reserves - precisely to head off inflation and take some air out of any asset bubbles.

And that's the point. I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades - and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).

And here is the other thing to keep in mind. Think about all the hype, all the words, that have been written about China's economic development since 1979. It's a lot, right? What if I told you this: "It may be that we haven't seen anything yet."

Why do I say that? All the long-term investments that China has made over the last two decades are just blossoming and could really propel the Chinese economy into the 21st-century knowledge age, starting with its massive investment in infrastructure. Ten years ago, China had a lot bridges and roads to nowhere.

Well, many of them are now connected. It is also on a crash program of building subways in major cities and high-speed trains to interconnect them. China also now has 400 million Internet users, and 200 million of them have broadband. Check into a motel in any major city and you'll have broadband access. America has about 80 million broadband users.

Now take all this infrastructure and mix it together with 27 million students in technical colleges and universities - the most in the world. With just the normal distribution of brains, that's going to bring a lot of brainpower to the market, or, as Bill Gates once said to me: "In China, when you're one-in-a-million, there are 1,300 other people just like you."

Equally important, more and more Chinese students educated abroad are returning home to work and start new businesses. I had lunch with a group of professors at the Hong Kong University of Science and Technology, or HKUST, who told me that this year they will be offering some 50 full scholarships for graduate students in science and technology. Major US universities are sharply cutting back.

Tony Chan, a Hong Kong-born mathematician, recently returned from America after 20 years to become the new president of HKUST. What was his last job in America? Assistant director of the U.S. National Science Foundation in charge of the mathematical and physical sciences. He's one of many coming home.

One of the biggest problems for China's manufacturing and financial sectors has been finding capable middle managers. The reverse-brain drain is eliminating that problem as well.

Finally, as Liu Chao-shiuan, Taiwan's former prime minister, pointed out to me: When Taiwan moved up the value chain from low-end, labor-intensive manufacturing to higher, value-added work, its factories moved to China or Vietnam. It lost them. In China, low-end manufacturing moves from coastal China to the less developed Western part of the country and becomes an engine for development there. In Taiwan, factories go up and out. In China, they go East to West.

"China knows it has problems," said Liu. "But this is the first time it has a chance to actually solve them." Taiwanese entrepreneurs now have more than 70,000 factories in China. They know the place. So I asked several Taiwanese businessmen whether they would "short" China. They vigorously shook their heads no as if I'd asked if they'd go one on one with LeBron James.

But, hey, some people said the same about Enron. Still, I'd rather bet against the euro. Shorting China today? Well, good luck with that, Mr Chanos. Let us know how it works out for you.


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Markets Review: Sensex closes above 17500; IT, metals lead

China CRR hike sends rate sensitives in a tizzy

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Src: Economictimes.com