It’s interesting to note that while de-merging of R&D is the most hyped thing in pharma right now, we are observing that institutional investors are actually pulling out or reducing their stake in these de-merged R&D companies. Let’s look at the most recent listing of Spark, which is Sun Pharma’s de-merged R&D division. It’s been three quarters since it has been listed and if we look at the June shareholding pattern of this company, institutional holding which was 21% in June, is now down to just about 14%. FII holding which was 16% has now come down to just 11%. There has been a gradual decrease in their holdings over all the three quarters. It is also reported that ICICI Ventures and CitiGroup Ventures are looking at pulling out of Dr Reddy’s de-merged arm Pelican. More details are not available as it’s not a listed company, but yes, these venture capitalists are also looking at pulling out of Dr. Reddy’s. Spark did have a very good listing, in fact, its base price was about Rs 77 and it listed at about Rs 87 and reached a high of Rs 172 in December. All this has happened while the institutions were reducing their stake. It came back to Rs 90 levels in the fall and today again, it’s locked in circuit. It is a good company with good management, good R&D pipeline, but the fact remains that institutions are pulling out.

Sentiment is not coming back into the primary market due to Rural Electrification Corporation, REC IPO, not for retail investors. For QIBs yes because that part of the book has got subscribed quite a bit 3-4 times. But if you look at retail, HNI, it’s extremely lackluster, so confidence hasn’t come back and people are very shy of buying IPOs now. REC is a reasonably priced issue, it is one of the best priced IPO’s that I have seen in the recent months perhaps because it has come from the government’s table, it’s very well priced even at Rs 105 which is the top end of the band. It has come in at about 7 P/E, price to book is no where close to any of the other power stocks, 1.3-1.25 that’s good value. It’s difficult to see how you can loss a lot of money from those kind of levels.
You will at least trade at the book value, so at the lower end of the band, you are virtually trading next year’s book value for REC and that’s a lot of cushion of safety which they have given to the shareholders. There are some issues about availability of capital and chief capital at that and how they are going to circumvent those problems but coming from the government’s own fold, I think the government will ensure that this will ride over the capital problems, may be ECBs (External Commercial Borrowing) will be allowed or something else on 54EC will be allowed. So the government will take care of the capital issues.
My sense is that even if retail investors get in, they will probably won’t loss too much money. And also we are in tricky market conditions, so it is entirely possible that REC chooses to do the issue because they debated whether they want to do it at all or not at this point. So I wouldn’t put it passed them to do the issue at Rs 90-95 rather than Rs 105, which makes it even more attractive for shareholders coming as it does from the government. So it’s a reasonable issue, should go through and I don’t think retail should shy away because their experience with some of the other recent issues has not been good.

Reliance Mutual Fund Declares dividend in teo of its schemes. Dividend of 70% declared in Reliance Vision Fund and record date is March 14, 2008. Dividend of 15% declared in Reliance NRI fund and record date is March 14, 2008.

Rupee has opened at 40.21/dollar versus 40.19/dollar on Wednesday, reports CNBC-TV18

Crude prices rose to a record USD 101.32 per barrel yesterday, in line with new highs in gold, platinum and soybeans this week. Prices have climbed 16 percent since reaching their lowest level this year on February 7, shrugging off concerns of a potential US economic slowdown.
Speculation that demand for fuel remained high pushed prices up. Geopolitical tensions in Venezuela and Nigeria threatening supplies also supported prices. Fadel Gheit of Oppenheimer & Co, said, "Well I still look at my old fashioned crystal ball and I see that the demand is not strong , they could be afraid that there could be a glut in the oil market and we want to cut production, so most of the companies are cutting supplies because demand is slowing down. So if we have an economic slowdown then we will have oil coming down."
Walter Zimmermann of ICAP United, said, "This is a part of the normal seasonal rally and the USD 107 by March is our minimum upside target. We have a more agressive target of USD 120 area by April-May, that is the target to which the dollar breaks to new lows against last year."

From today, i.e. effective February 1, 2008, mutual fund investing would not be that simple for those who wish to invest Rs 50,000 and above. This is subsequent to the guidelines issued by the Securities and Exchange Board of India (SEBI) and Association of Mutual Funds in India (AMFI) relating to the requirements of the Prevention of Money Laundering Act, 2002. As per the new rule all mutual funds are now required to verify the identity and maintain records of all their investors through the mandated Know Your Customer (KYC) process effective today.

Birla Mutual Fund has announced a 200% dividend under the dividend plan of Birla Tax Relief 96 Fund. The record date for the dividend has been fixed as March 20, 2008. This is the second dividend payout from the fund since its launch. Last year in March, the fund had announced a 1000% dividend.