Remember the 'price to eyeballs' valuation measure? Citing this practice of the pre-Dotcom bubble era that investment bankers on Wall Street had come up with to value fancy digital companies that had no profits, no sales and hardly any assets, a frontline Dalal Street manager warns that markets may be showing signs of similar excesses now (Read:
What P/E etc...). He cites the example of zero-revenue company Nikola Motors, which has just dethroned marquee stocks like Ford and Fiat Chrysler in terms of market-cap on Wall Street. Going by history, whenever stock prices have become excessively irrational, that has usually been a buildup to a major crash.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded 59 points down at 7 am (IST) signalling a weak start |
| On Friday, Nifty formed a long bullish candle on the daily chart with marginal upper wick. Analysts said the recovery following a gap-down opening was encouraging, but a 'Bearish Engulfing' candle on the weekly chart is not. Analysts see consolidation ahead. The index closed the day at 9,972, up 70.90 points or 0.72 per cent. |
| Asian markets started the week on the backfoot on Monday as fears of a second wave of coronavirus infections in China sent investors scurrying for safe havens. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.25% while Australian shares were off 0.4%. South Korea's 0.6% Japan's Nikkei 0.75%. |
| The Dow and the US stock market staged a rebound on Friday, following massive losses in the prior session. Stocks attempted to recover following the sharpest selloff in three months on Thursday. Though the rally lost some steam in the afternoon, major indices ended the day higher. The Dow closed up 477 points, or 1.9%, after having risen more than 800 points in the morning. The S&P500 ended up 1.3%, and the Nasdaq 1%. |
| The rupee settled 5 paise lower at 75.84 against the US dollar on Friday as volatile domestic equities and sustained foreign fund outflows weighed on investor sentiment. |
| The safe haven US dollar opened unchanged on Monday, and changed hands around the same level against the yen in early deals. The euro also opened at Friday's level. |
| Oil prices fell. Brent crude futures slipped 66 cents, or 1.7%, to $38.07 a barrel, while WTI crude futures fell 81 cents, or 2.2%, to $35.45 |
| Gold prices rose by Rs 100 per 10 gm, while silver went up marginally by Rs 10 this morning. The 22-carat gold quoted at Rs 46,270 in Delhi, Rs 45,540 in Chennai and at Rs 46,020 in Mumbai. |
| LOOK WHO'S |  |
RIL rights shares may list at 50% premium… Buoyed by the strong response to its rights issue, the partly paid-up shares of RIL will likely be listed at around Rs 650 apiece on Monday, a premium of at least 50% to its intrinsic value, analysts said. The intrinsic value of RIL's partly paid-up shares is Rs 397 apiece, based on Friday's closing price of Rs 1,589, and constitutes 25% of a fully paid-up RIL share. Analysts have calculated that the partly paid-up shares will be listed at around Rs 650, which is the difference between Friday's closing price and the rights issue price of Rs 1,257 plus the first instalment of Rs 314.
Read More RBI bank governance push spells opportunity for some… RBI's back-to-back moves on governance at Indian banks and a review of ownership guidelines and structures are likely to be stepping stones for letting industrial houses and foreign capital get a bigger slice of the banking sector amid stretched government finances and insufficient private capital. Industry watchers said simultaneous movement in both governance and a likely change in rules could address the long-pending grievances of capital-flush industrialists and buyout firms seeing an opportunity in the financial services sector.
Read More Falling bank FD rates shift focus on gold ETFs…. Falling bank FD rates and rising volatility in equities are prompting market experts to advise higher allocation of 15-20 per cent of investors' portfolio to gold ETFs from the usual 5-10%. FDs, which have long served as safer mode for retail investors to park money, are gradually losing sheen in a falling interest rate cycle. The short-tenure fixed deposit rates are similar to savings account rates now. Gold ETFs, on the other hand, have given returns in the 40-46% range. Since equities face a bleak outlook because of the uncertainty surrounding recovery in corporate earnings, the relative attractiveness of investments in gold rises and provides a strong basis to remain invested in gold, say experts.
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MF investors shunning midcap funds… Investors are turning cautious on mid-cap stocks. Amfi data shows net inflows into midcap funds dropped to a measly Rs 279 crore in May, the lowest in the last 14 months and also lower than the inflows into smallcap funds. The share of midcap inflows to the total equity inflows shrank to 5.3 per cent from an average of 20.5 per cent in last one year. These funds also reported redemption pressure during the month. Analysts said investors are steering clear of these funds as they expect more severe earnings downgrade for mid-cap companies and their working capital may stretch significantly.
Read More Sebi promoter policy faces opposition… Sebi's plan to replace existing concept of promoters with controlling shareholders is facing stiff opposition from promoter-driven companies. The proposal is aimed at creating more professionally managed companies and check excessive interference of promoters holding minority stake. Several companies are learnt to have given feedback urging the regulator not to go ahead with the move.
Read More Smaller startups run of of cash… Small Indian startups have run out of funds without a specific government bailout package, two months after their businesses took a hit because of the Covid-19 pandemic induced lockdown. About 38% of startups and small and medium enterprises have run dry from 27% in April, a survey by LocalCircles showed. Around 4% of startups have already reported shutdown. The number of businesses with 3-6 months of cash runway has come down to 16% from 23% one week into the lockdown in April.
Read More Meanwhile... Voda Idea pays up Templeton… Unitholders of Franklin Templeton Mutual Fund schemes that held securities of Vodafone Idea may have some reason to cheer. The fund house received interest payment of Rs 102. 71 crore from the telecom firm on June 12. In January 2020, the fund house had segregated Vodafone Idea securities after ratings firms cut the company's securities below investment grade. This amount shall be distributed to investors in proportion of their holdings in the segregated schemes.
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