MC Inside Edge: Unknown callers dial Vodafone, the case for PSU banks, Mugul’s Biocon shot, HNIs’ love for SAIL

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Mystery buyers

Massive delivery-based purchases in the Vodafone stock continues. Interestingly, despite heavy buying, the names are not showing up in disclosures on the stock exchange websites. One explanation is that there are too many buyers picking up the stock in quantities that do not trigger the disclosure clause. The other theory is that there is one player with a deep interest in the stock and is splitting the purchases in a way that they do not trigger the disclosure clause. Meanwhile, the stock is a big hit with some of the old hands on Dalal Street. A suave market observer who also happens to be on the board of a major retail chain is said to have picked up a sizeable quantity. And so has a ‘beautiful’ South-based broker, though it is not sure if the firm is loading up in its own books or on behalf of its clients.

Booster shot

With reasonably priced stocks hard to come by, the Midcap Mugul is looking for some unloved stories which the market may recognize at a later date. And Biocon seems to fit the bill. Mugul is said to have been a big buyer of the stock over the last week. There is chatter of a change of guard at the senior level. But Mugul is not the only one who has taken a fancy for the stock. Talk is that the Calculator PMS too appears to be convinced about the long term story and has been nibbling at the stock.

Banking on JP Morgan

Punters have been piling on to shares of state-owned banks over the last few days. What is also driving this trend is the periodic action by RBI against some of the private sector banks and NBFCs. Which seems to make a safe haven case for PSU banks. Proponents of this theory, however, seem to forget that RBI was unsparing in its treatment of Bank of Baroda as well. But the bigger narrative that cheerleaders of PSU banks are peddling is that the inclusion of Indian government bonds in the JP Morgan Bond Index will trigger a rally in G-Secs which should work to the advantage of PSU banks. Why? Because PSU banks hold the maximum quantity of G-Secs. This sounds logical, but a hole in this theory is that falling bond prices when interest rates were rising over the last year did not hurt PSU banks, despite their significant exposure to G-Secs.

Smooth SAILing

Metal stocks are having their day in the sun, though aluminium appears to be the better bet among the two going by the demand-supply picture. With steel, domestic demand is not a problem, but global steel prices have a lot to do with how the Chinese economy fares. Fund managers have been slow to buy the SAIL story, but that has not stopped a group of enterprising HNIs from loading up on the stock. Derivatives data show that around half a dozen players are holding over 30 percent of the market wide position limit (MWPL) in SAIL. They seem to be convinced that at some point fund managers will turn to steel, given the shortage of other credible stories at reasonable valuations.