Contrarian story
Cement is not the hottest of sectors right now, given that cement prices have been under pressure for the last few months. But that is no deterrent for a group of HNIs who have been drumming up volumes in the Andhra Cements stock. Of the 7 lakh plus shares traded on the NSE on Friday, around 4.6 lakh shares resulted in delivery. The bulls have their task cut out though. Institutions did not participate in the recent offer for sale (OFS) by the promoters. The company has sizeable gross debt (Rs 643 crore as on September 30), and operating profits are nothing to write home about. More equity dilution is on the cards over the next couple of years as the promoters still own 90 percent. Is the latest flurry of activity an attempt by subscribers of the OFS to flip their purchases for a quick profit? Well….If anything, Andhra Cements will need to be seen as a long term story considering there are plenty of reasonably priced alternatives for those looking to bet on cement.
Checking out
Things appear to be getting better for the hospitality sector now that international tourist arrivals too are picking up. But it seems to be a case of too much of a good thing. And this time, domestic fund houses seem to be playing it smart in hotel stocks. Even as the Indian Hotels stock has been making new highs since the start of the year, domestic mutual funds have been steadily paring their positions. The popular argument for the sector is that demand for rooms will continue to exceed supply in the foreseeable future and that room rates can only go one way….higher. Domestic fund managers however are opting to play it safe for the time being having burnt their fingers in previous hotel upcycles. Also, even some of the most bullish fund managers on the hotel story feel that margins may have peaked out for the time being.
Wrong footed
Some of the big names of Dalal Street have been caught on the wrong foot in the BSE stock following SEBI’s directive to the exchange on Friday. BSE has been asked to pay the regulatory fee based on the notional value of its options contracts and not based on the premium value. BSE has to do that within a month, including for past periods with applicable interest of 15% per annum on the unpaid amount. The move has put a spoke in the rerating story which ran like this: BSE will continue to eat into NSE’s market share in F&O and make a lot of money on it. BSE’s options segment is not hugely profitable for the moment and the NSE has been fighting back by cutting its fee. With SEBI dealing a fresh blow, new takers for the BSE story may be in short supply. The big boys of Dalal Street now have to choose between digging in or making a strategic retreat for the time being.
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