The list of great investments is just about to shrink
In this issue:
» Manufacturing output loses momentum
» US stocks at a 2010 low
» June rainfall 16% below normal
» Continuing fiscal reforms key to a better sovereign rating
» ...and more!!
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As per latest data available, 265 companies listed on the BSE had promoter holdings of greater than 75%. These include companies like 3M India, Berger Paints, Sulzer India, Gillette India and Alfa Laval India. Though not all, many of these are highly profitable, cash flow generating companies. They will also not need to access capital markets anytime soon. Further, many of these have large MNCs as their promoters, a group that has become extremely bullish on the prospects of the Indian economy in the recent past. Cutting down their stake in the companies will be the last thing they would want to do. So what's the next best option? Delist!
Yes, a lot of the MNCs will probably prefer delisting over offloading stake. Delisting will also rid them of the onerous burden of meeting listing requirements. As per reports, the last 15 days have already seen the MNC parents of 3 companies announce plans to delist their Indian units.
For now, we can just hope that this trend does not continue in the months to come. For if it does, your list of potentially great investments is just about to get smaller!
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The situation in the emerging markets of China and India is not very encouraging either. China's recovery remains solid but is certainly moderating from the pace set few months back. India too is stepping back a bit as factory output in June slows down after a record breaking May. Such developments do not post that much of a threat during ordinary times. But these are certainly not ordinary times. The world has just come out of a deadly financial crisis. And there is every chance that it could slip into recession if further measures are not forthcoming. However, a repeat of the measures taken by the Governments, especially of the developed world, seems highly unlikely. Somehow, they will have to find the middle path. One where not only does the world economy not falter, it should not stretch public finances as well. Quite a tricky situation indeed.
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That said, despite a tepid showing, the Met department is sticking to its forecast of a normal monsoon this year. Poor monsoons last year have had an adverse impact on the common man. High inflation for the past one year has stubbornly refused to budge. And government's efforts to curb food inflation have still not yielded the desired results. So, the pressure of a normal monsoon this year will be felt more than ever. Of course, adequate irrigation facilities will go a long way in reducing the dependence on agriculture in the future. But that is easier said than done. For the time being, the rain gods will continue to influence the agricultural production in India.
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04:50 | Today's investing mantra |
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3 Responses to "The list of great investments is just about to shrink"
kaushik pathak
Jul 3, 2010keep it up,A very intelligent short and readabel 5 minute wrap up thanks
M M CHANDAK
Jul 2, 2010pl provide the list of these 275 companies so that the readers can readily make use of it
v g karve
Jul 4, 2010Pl provide 275 co. list