India Morning Report: SEBI moves on Anchor investors, markets ready to close to 7800

SEBI moves on Anchor investors and Stock purchase for ESOPs

SEBI moves allowing Anchor investors to up to 60% of the Institutional allotment in an IPO will do wonders as India Inc readies for a barrage of public sector offerings and the season to borrow for Capital and investment considerations from Foreign investors looking to add both debt and equity in no small measure in this run in India.

Top 200 listed companies have been prima facie allowed to conduct offers for sale while ESOP companies hitherto constrained by having to issue new equity for each batch of new ESOPs will now be allowed to warehouse upto 10% of their issued shares from the Secondary market for such schemes; both ESOP and ESPS  schemes.

PSUs will issue INR 600 Bln this year if SEBI’s diktat for 25% float is followed through this fiscal and minimum IPO size at INR 4 Bln is validated by the increase in allotment for anchor investors.

The index shennanigans

UBL/USL and Private insurance(RCAP, MAX) seems to be on the ET Now survey in the call auction segment of the market while markets seeming subdued yesterday will make them start Friday smooth and low. Most likely however, is an uptick for the markets back to 7600 before the close as on Tuesday with markets well into buying at Banknifty levels of 15100 and Thursday following up with a rerated index allowing the IT indeices to ramp up on Q2 earnings season even as the Rupee repaired the Oil/Gold streak with more RBI buying also to come, ensuring yields come close to 8.50%

Our bet still is on 7500 puts and 7700 calls having lost their active premium and market index moving on to 7600 Pand 7700 Put writes in tune witht he adventurous form of the Indian markets this season. Most of the annual gains on the Nifty and the sensex are irreversible with fundamental earnings reratings coming at the first uptick of the new Economic cycle and markets wont really price option markets much better even if the markets movee to 7500 again before starting up.

Orchid Chem starts back on an anti insomnia pill for the US with Glenmark and Cadila likely to be strong and Stride Arcolabs back in the fray. Multi Retail FDI may be pulled down after a half hearted attempt in UPA and an ecommerce transformation for Walmart in India

The fundamentals

Index earnings have moved on to 375 (Nifty) and 1400 (Sensex) since 2004 when the index last reached 21000 highs on the sensex and the markets are well nigh fairly priced with earnings being updated with double digit growth every quarter at between 20-30PER for Emerging markets Infraco stocks are expected to see better traction with financing schemes and terms improving as project execution also moves ahead.

Power NBFCs like REC have remained unrewarded for their extra stable high NIM business and Housing NBFCs  like LIC Housing are also standing with IDFC and YES Banks on fairly ferocious growth leading providers of Indian capital with high paced expansion suppoorted by bigger playuers like ICICI Bank, HDFC Bank, BOB and SBI.









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