Fast track
High on pref offers, pvt placements
FAVOURABLE stock market conditions have prompted a host of companies to raise fresh funds through the private placement and preferential allotment route. In many cases, expectations of the infusion of substantial fresh funds from such offers appears to h
ave helped buoy the stock prices of the companies in question.
Impact
Parke-Davis: Mixed flow of news
THE likelihood of Parke Davis getting a sizable one-time cash inflow may not lead to any significant improvement in the valuation of the stock. The company has decided to sell property in Mumbai and is likely to receive Rs. 49.3 crores. The
re is no prospect of any significant dividend flow out of this cash inflow. This could lead to some near-term price weakness before the stock consolidates. But there are other factors that could lead to the price consolidating around the current
price level. From a medium to long-term perspective, the company's decision to use funds for the business to augment the top-line may help improve earnings growth. This factor and the possibility of a Warner Lambert-Pfizer merger at the glob
al level could influence the direction of price trends after the initial weakness (that have been built in expectation of a one-time dividend) is flushed out.
Liberty Shoes: Brand ownership changes
THE possibility of Liberty Shoes restructuring the operations to vest ownership of brands with the company could help underpin the firm price trends in the stock in the near term. The company had proposed the acquisition of three brands namely Force-10,
Senorita and Gliders from the group firms and also the acquisition of land from the promoters of the company where existing manufacturing facilities are based. While the latter may not be much significance, the vesting of brand rights may be viewed favou
rably. The company has stated that the board of directors have considered the alternatives suggested by KPMG, which had been entrusted the job of carrying out the brand valuation and for restructuring of operations. Till the specifics are out, the stock
price may be on firm ground. The price to be paid could be a factor that could determine the direction of trends. The stock trades at Rs. 194.
Indian Shaving: Developments likely
THE prospect of some arrangements between the Indian Shaving Products could put another spin on the company-specific factors that have been behind the sharp uptrend and subsequent firmness in its stock price. The board of directors are to meet on Februar
y 9 to consider contract manufacturing arrangements with Wilkinson Sword India Ltd, an unlisted company owned by Indian Shaving's parent, Gillette Inc, US. This proposal comes at a time when the company has appointed a four-member com
mittee of directors to look into restructuring of the operations. If the proposed contract manufacturing arrangements with Wilkinson is viewed as being against the expected consolidation of Gillette companies' operation under Indian Shaving Products, the
re could be flat trends in the near-term. But the long-term price trend may get determined only when the final restructuring plans are decided by the company. The Indian Shaving Products' stock trades at Rs. 2040.
Stocks
IT scrips ride the Nasdaq wave
AFTER remaining in the positive territory for most of the day, the BSE Sensitive Index shed around 26.60 points on Friday and closed at 5,313.59 points. The index opened at 5,394 points and touched a high of 5,402.70 points. It then slipped to close at t
he day's low of 5,313.59 points. The business volume at Rs. 4,721.12 crores was considerably higher when compared to Thursday's Rs. 3,820.84 crores. The advances to declines ratio stood at 1.20, with 1,252 companies advancing and 1,044 declining.
Technical Analysis
Gains nullified
THE index opened with a marginal bull gap on Friday. In the initial hours of the day, the bulls took the index up by about 23 points from the day's open and marked the day's high. Subsequently, the bears brought the index down by about 25 points from the
intra-day high to mark the low of the day.
