MC Inside Edge: Voda(fone) is Yoda for Indus, punters flock to Glenmark and Camlin, retail investors revel in amnesia

Know what stocks veteran bulls are eyeing.

Collateral benefit

Vodafone Idea is yet to firm up its fund-raising plans, but D-Street bulls already appear to be betting that Indus Towers will be a bigger beneficiary than Vodafone itself. The stock was a hot favourite of mutual funds in February, especially with Director’s SPecial. Among ultra HNIs, Silent Investor and the Sheikh from the late Big Bull’s inner circle have a sizeable exposure to the stock. The narrative around the stock is that Vodafone will repay its dues to Indus once it raises funds. Bulls tracking the stock closely say the money will not come to Indus at one go but will be staggered over many quarters. That is the only way Vodafone too can remain in the game. Arbitrage funds have increased their exposure to Indus considerably in February. That can be a double-edged sword, because purchases in the cash market are balanced by the sale of an equivalent quantum of stock futures. The positions will keep getting rolled over as long as the spreads between the futures and spot are juicy. Should the spreads turn less lucrative, the funds will as easily reverse their positions.

Hoping for a turnaround?

Massive volumes changed hands in the Camlin Fine Sciences stock on Friday, the bulk deal of 2.3 million shares, however, was one promoter entity buying from another. Interestingly, delivery volumes were higher than usual with 4.4 million shares actually changing hands. The stock had seen heavy delivery-based trades the week before as well. Last month, promoter Ashish Dandekar had pledged around a million shares as “additional margin pledge for covering shortfall in security cover w.r.t financial assistance obtained for acquiring the shares of the company”. Things are not looking too good for the chemical sector at this point, and Camlin is no exception to the trend. The continued closure of its Italy plant and slower-than-expected ramp up of its Vanillin plant commissioned last year are key negatives. The stock has jumped 20 percent from its 52-week low in less than two weeks, but bulls may need to be patient for a rerating.

Booster shot

Glenmark appears to be another stock where traders are betting on a turnaround. Operating numbers have been erratic over the last four quarters, with the latest December quarter numbers turning out to be a disaster. Derivatives data shows a build-up of concentrated positions. Seven entities are holding around 26 percent of the market wide position limit in the stock. A similar trend was observed in the previous settlement cycle as well.

Old wine in new bottle

There are two indicators to suggest that retail investors may have forgotten some of the hard lessons learnt last month. One is that Tata Investment Corporation shares are up 34 percent from their recent low. This is despite the market price being higher than the net asset value of the company. Ideally, holding companies make good investments when the stock price is at a steep discount to the market price. Two, most stocks with ties to the Dubai-based Godfather are once again seeing heavy volumes.