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Commentary

MV Chronicle: Fixing Open Offers, Nifty Technicals and More

The latest MarketVision Chronicle is about Fixing Open Offers with a small piece on Nifty Technicals, followed by all at MarketVision and Choices articles from the Internet.

(Read the full piece)

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Excerpt:

This week it will be four months since we started the MarketVision Newsletter and we’re very encouraged with the response. A big thanks goes out to all of you! We’d love to hear what you have thought of the last four months, and of the videos and content on offer.

We are working on a commercial offering available that includes interactive live videos and chats, and more structured knowledge on technical analysis and stock and derivative trading. This newsletter will, as always, be free. Please let us know what you’d like us to elaborate on. I know I’ve missed loans and insurance for a while, and I’ll work to bring those back.

This letter dwells on open offers in a conversational format.

Fixing Open Offers

Recently many companies have chosen to sell entire units to other companies rather than have those companies acquire them.

  • Indo Asian Fusegear sold switchgear business (50% of revenues)  to Legrand for 600 cr. (See longer post)
  • Smartlink sold its Digilink business (>80% of revenues) to Schneider for 503 cr. (longer post)
  • Piramal Healthcare sold its domestic forumulations business  to Abbott for 17,000 crore.

The question that seems to be on many people’s mind is: If these companies are selling most of their business, why not sell the whole business? Then at least the current shareholders can see value?

Let me run through the answers as a businessperson, not as a shareholder. So what the good folks at TV channels, and other famous analysts suggest, is that the entire business be sold. I don’t think I agree in all cases – and especially not when the business they sell is just a part. Let’s assume for a minute that the acquirer is happy to buy it all (in many cases, he is not, but we’ll come to that) and take the questions. And in the process, understand how open offers work.

A Quick Nifty Technical Post

At 5750, the Nifty’s fallen quietly from the 5900 levels and is currently at the 200 DMA.
Nifty Technicals
….

By the Good Folks at MarketVision


Videos on Real Estate Prices

Ajit Dayal speaks of an interesting video in RE prices, one year back:

  • He meets Sam Zell, a big RE investor worldwide, who said, There is no shortage of land in India, there is a shortage of zoned land. Politicians create an artificial scarcity by making land "commercial", "agricultural" or stuff like that. Licensing = corruption = artificially created bubbles.
  • After Lehman, investors took money out of RE. There was a crash, but they’ve gone up right back up.
  • Bank lending to RE companies has gone through the roof.
  • RE prices going up anyhow because of political links
  • Emotional attitude of "owning" properties is weird; it’s really tax incentives and rental laws that creates demand.
  • Rental yields are like 3%.

(Read More)

Editor’s Picks


A set of links chosen just for you

10 Reasons You Should Never Own Stocks Again (Altucher Confidential)

I’m really bullish on stocks and the economy but I don’t think you should waste your money investing in stocks. You might as well flush it down the toilet. Or throw a big party. Don’t give it to charity either. We already went over that. And please don’t buy a home. Just relax a little bit if you have some extra money

The Dollar, Gold and Silver: A 20-Year Perspective

Over the weekend I posted a brief item entitled The Dollar and Gold triggered by a couple of articles at the WSJ (Gold and Dollar). Here is the chart I created to illustrate the highly inverse Dollar-Gold correlation.

EM central banks are doing Fed’s dirty work (FT.com)

India, for example, has one of the world’s flattest yield curves, with the spread between one- and 10-year interest rates now only about 35 basis points. A year ago, that spread was over 250bp. By our estimates, India’s curve might invert over the next several months. Historically, inverted yield curves have consistently signalled significant economic slowdown, if not outright recession

Videos


Tech Talk: Chart Patterns of Interesting Stocks

MV Chronicle: Fixing Open Offers, Nifty Technicals and More

We go through the five stocks we discussed last week and Deepak introduces four new stocks in a quick technical take. None of these are large caps, and this video is for education only, not advice.

(See Video, 7 Min)

Past Short Takes:

We’d love your feedback! Tell us at chronicle@marketvision.in.]

Open Offeringly,

Deepak and Shyam

The MarketVision Team
http://www.marketvision.in