Global markets are in a turmoil on growth concerns in many parts of the world. Crude oil prices are at around $84, levels last seen 4-5 years ago. While this augurs well for the world it’s put huge dampeners on oil producing states like Oman and Venezuela amongst others for whom this is the major source of revenue. Even countries like Saudi Arabia get affected and that is the reason why they have decided to produce more so that the development expenditure and the budget does not get affected.
For an oil importing country like India its excellent news and promptly on Diwali eve the government has deregulated diesel. The effect of falling crude oil prices will see a reduction of Rs 3.72 in diesel price in Mumbai and Rs 3.37 in Delhi. This is the first cut in diesel prices in five years. The government raised gas prices as well from the $4.2 mark to $5.61 per mmbtu against the $8.4 proposed by the UPA government. There is a further catch to this as Reliance would get the earlier price for oil from its KG-D6 oil field and the differential would be deposited in an escrow account till otherwise decided. The message being sent to industry is that do not tangle with the powers that be as they know what they are doing.
The reduction in prices of diesel will help in lowering inflation and now put pressure on RBI governor for cutting rates. The rise in prices of natural gas and therefore PNG/LNG will take away some of the benefits of reduction in inflation but will overall be positive. More importantly India’s OMC’s (BPCL HPCL and IOC) will regain their pristine glory and become desired companies in ones’ portfolio.
SEBI has debarred DLF, its promoters and some key officials from accessing the capital markets. This punishment is on account of improper disclosures or disclosures not made by the company at the time of its IPO. Two things come to mid at this point that DLF at that time had paid the highest fine by any corporate of Rs one crore in various cases. Second when IPO related punishment is given, the merchant banker is supposed to sign off every RHP with a due diligence certificate. Certainly no certificate could have been given without the battery of merchant bankers involved in this issue being aware of the wrongdoings.
What is therefore shocking is that when SEBI chose to reprimand the company, its promoters and key officials, why not even a single word for the merchant bankers? Surely in an IPO the relation of merchant bankers on the one side and the company and its promoters and key officials on the other side are like two sides of the same coin. In other words we could also say that they are a husband and wife team where they are partners in good and bad times. This selective action by SEBI is unjustified and needs to be relooked. Hopefully the appeal before SAT made by DLF and its promoters will bring about this discrepancy and justice would be done.
Haryana has seen a change in government and the erstwhile Congress which was ruling the state is now relegated to third place. The state will now be run by BJP which has wrested power for the first time and won 47/90 seats against a mere 4 held earlier in 2009. The centre of controversy in the DLF case is various land deals done in Haryana and one can be quite sure that they would be reopened and brought to a logical conclusion. One would also remember that the upright and forthright IAS office Mr Khemka was a part of the Haryana cadre and has been now made a part of the PM’s office where he would now be given the cases pertaining to DLF and the son-in-law of the erstwhile chairperson of the UPA. Investors would be well advised to refrain from bargain hunting in this share which lost a staggering 27.34% in the week.
The Maharashtra elections saw the BJP emerge as the largest party but fall short of forming the government on their own. The estranged ally of BJP was second in the seats won followed by Congress and NCP. The MNS has been decimated and very clearly shows that there is no role for the kind of disruptive politics played and practiced by them. The NCP being opportunistic has played their cards very well and promptly thrown their hat into the ring and pre-empted the Shiv Sena by offering unconditional support from outside to the BJP to form the government.
One hopes that the BJP does not fall for the trap of the NCP who have done so for saving their own skin and at the same time would also hope that wisdom dawns on the SS and they fall in line and support their 25 ally. One must remember that the PM is one who does not forget things easily and leads from the front.
The competing open offer from Deepak Fertilisers and Zuari Agro for Mangalore Chemicals was supposed to originally close on Friday has been extended for one day as the offer was to remain open for ten days and Wednesday was declared a holiday for voting. The market price is the same as per the open offer price and remains a mystery. Considering the fact that the price of Mangalore Chemicals seem unjustified when compared with its peers, it makes sense to offer shares to the company or sell in the market. It may also be mentioned that there can be no revision in prices and neither of the competing parties are allowed to buy from the market or any bulk/block deal for a period of six months from the closure of the offer at a higher price than the open offer price. In case they do so offer a higher price such higher price would have to be paid to all those who had tendered in the offer price. My advice sell Mangalore and buy Deepak Fertilisers or Chambal fertilisers which are available at cheaper valuations then Mangalore Chemicals.
The markets would see trading for a mere three days and this would be followed by “MUHURAT Trading on Thursday before we close for the week. With so much of news to digest and react to the markets would be extremely choppy. Trade cautiously but we are in for good times. Ride the rally but don’t expect fireworks every day.
Wishing all HAPPY DIWALI AND A PROSPEROUS NEW YEAR.
