Chakraborty : 5800 by December
Diwali may still
be a couple of months away, but that didn't stop the fireworks from
going off on Dalal Street last fortnight. Even as lay investors
were still wrestling with the bogeys of spiralling commodity prices
and rising inflation, the recent surge in momentum has taken many
by surprise. After all, till only four months back, share prices
looked distinctly weak, the bull run of 2003-04 appeared a distant
memory, and 6,000 levels for the Sensex an absolute pipedream. Now
consider this: From a bottom of 4,228 (on May 17), the benchmark
Sensex has rallied to 5,546, a fantastic gain of 1,318 points, or
31.17 per cent (as on September 20). Foreign investors have re-entered
Indian markets with a vengeance, and have pumped in more than a
billion dollars since May.
"As oil and metal prices have peaked,
inflation numbers are expected to ease further in the coming weeks,"
says Devesh Kumar, Senior VP and Head of Equities at ICICI Securities.
At the same time, investors are licking at their chops in expectation
of attractive earnings for the second quarter. That's why Kumar
of ICICI Securities is upbeat that "the Sensex will cross 6,000
by December''. Adds Amitabh Chakraborty, VP & Head of Research,
Private Client Group, Kotak Securities: "We maintain our earlier
Sensex target of 5,800 levels by December."
As the rally gains more steam, analysts
expect the action to shift from mid-cap stocks to large caps. "The
price/earnings ratio of the NSE Mid Cap index (based on forward
earnings for 2005) is around 14.6, way above the corresponding NSE
Nifty figure of 12," explains Chakraborty. Therefore, he advises
investors to park 70 per cent of their money into large cap stocks
in the medium term and be choosy with mid caps. The markets may
be bullish, but that doesn't mean every cat and dog on Dalal Street
Capital market players are slowly realising that a small
increase in interest rates is not that bad for banking stocks. This
is because the opportunities thrown open for banks by the corporate
credit pick-up (which is the reason for the rate increase in the
first place) are enormous. Further, banks with little treasury profits
(like HDFC Bank) don't have to fear about taking a hit.
With the large players getting their pricing power back, it is becoming
hot once again. Post-elections in the US, the pressure on outsourcing
is expected to reduce further. And, remember, this is one sector
that will benefit immensely from the possible depreciation of rupee.
Though oil companies now are placed between high international oil
prices and Mani Shankar Iyer (which is resulting in a strain on
their margins), things can only improve for this sector. This is
because either the international oil prices will stabilise (with
the renewed OPEC effort) or the Central government will be forced
to sanction price increases for their products.
It Up, Price It Low
An overpriced, tacky CityRover isn't selling
in the UK. Can the Tatas do a V2 with it?
|City Rover: Will Tata be
able to repeat history?
"There was also something
hanging down underneath the car, dunno what it was. One of the bicycle
"Isn't it lucky that other manufacturers
don't build cars in cheap labour areas..."
are just two of the innumerable unpleasant reactions in the British
media to the MG CityRover- the Tata Indica's British avatar-since
its launch in the UK in November 2003. Priced between £6,495
and £8,895 for its four versions in Old Bightly, the CityRover
faced bitter media reviews from the very start. Firstly, it was
perceived as overpriced by at least £1,000. Secondly, its
fit and finish was considered inferior in quality, especially the
interiors and the paint. One UK-based customer even spotted rusty
parts. And when compared to other models in the "super-mini"
class like the Toyota Yaris and Fiat Panda (which is, in fact, cheaper
than the CityRover), Rover found few takers for the souped-up Tata
According to a Tata Motors official, around
7,000 CityRovers have been dispatched already and MG Rover is selling
about 600 units a month. Reports in the British media peg the CityRover
sales at 4,606. The Tata-MG Rover deal was to sell 1 lakh units
over the next five years (till 2008). And the target for the first
six months was 10,000 units.
Now, it is learnt that the Tatas and the ailing
MG Rover are talking about shouldering a price cut of up to £1,000
a car to try and stimulate sales. The two sides also want to revise
their business plan and put more extras on the CityRover or bring
down its price.
According to a Tata Motors spokesperson: ''MG
Rover Group and Tata Motors are in discussions to fine-tune and
finalise a business plan in view of the market dynamics in the UK."
The Tatas for their part have been on this road before: the Indica
had faced similar criticism in India back in 1999, after its launch.
And Tata Motors sprung back with the Indica V2. Can it repeat that
story in the UK?
Flat Screen Truths
than 6,000 men and women across 13 countries (including India) between
the age of 20 and 55 participated in The Philips' Home Entertainment
Survey. The findings are pretty fascinating: Almost three fourths
of Indian consumers prefer to entertain than be entertained. The
Chinese are more comfortable watching TV at home with their immediate
family. As for the Indian respondents, 27 per cent prefer inviting
friends over to watch television more than once a week. Is that
another lesson we need to learn from the Chinese?
By 7 x 1 Billion
Reliance's WebWorlds will cater to pretty much
everybody round the clock.
A whole new world is coming up, courtesy Reliance Infocomm
day it could be the venue for your child's birthday. The next day
you could be video-conferencing with your overseas business partner
from exactly the same spot. Some time in between those two contrasting
events, you could get your business cards, and even greeting cards,
printed. And if you're up to it, you could get your beaming face
printed on coffee mugs and T-shirts.
Welcome to Reliance WebWorld.
"Our WebWorlds cater to very diverse groups
of customers," explains Sarup Chowdhary, CEO, Reliance WebWorld.
So in the morning the WebWorlds have corporate executives walking
in for videoconferencing, besides customers who enter for buying
or servicing their Reliance India Mobiles (RIMs). Afternoon time
is for "Little Genius" classes held for young children
where they learn all about the internet and computers. Similar classes-christened
"Cybermoms"-are held for their mothers. And soon, these
WebWorlds will have e-learning initiatives for all and sundry, where
you can learn everything about information technology.
In the evening, gamers trickle into the WebWorlds
for some online multiple gaming sessions. "And between 8pm
and 11pm, serious surfers walk into the WebWorlds for downloading
and uploading files and information," adds Chowdhary. The WebWorlds
have approvals to be open all 24 hours. But right now, most of them
shut by 11pm.
Out of the existing 240 WebWorlds, 140 of them
are into the broadband mode and offer the services mentioned above.
By end-September, Reliance Infocomm will add another 60, taking
the number of WebWorlds offering broadband services to 200. Soon,
you could also burn CDs with your favourite music albums at these
"Our projection is that over a period
of time, the revenues from broadband services should be three times
those from RIM sales and services and twice as much as the Java
Green cafés," adds Chowdhary. RIM sales and service
counters occupy 30 per cent of the space at a typical WebWorld,
the Java Green cafés another 20 per cent and the broadband
services occupy 50 per cent.
All these broadband initiatives, according
to Chowdhary, are linked to Reliance Infocomm's larger gameplan
of offering broadband to homes and offices. And then the WebWorlds
would serve as sales and service points for the home broadband service
Besides these retail initiatives, Reliance
Infocomm is also launching around 1,000 WebWorld Express (WWE) outlets
in 600 towns; 500 of which will be up and running by end-September.
These serve as pure sales and service points. "These WWEs would
work on retaining existing customers and giving them standardised
sales and service experience," says Ajay Baijal, group head
for channels and wireless business, Reliance Infocomm.
There's more, much more. The Java Green cafés
are into an expansion mode of their own. They may open up as independent
stores in the future, leaving the Baristas and Café Coffee
Days far behind in numbers. There are plans to have around 2,000
Java Green cafés across the country. Wake up and smell the