Eventful Year - 2010

Be it the Biggest ever IPO, Biggest ever scams - 2G, CWG or Adrash, Bribes for loan scandal, Mega Takeovers, Price decontrol, Booming Auto's, Sky High Food Inflation, Hardening interest rates or the visit of all VIP Presidents across the globe to India, 2010 was no doubt an event packed year for both right and wrong reasons.

Though we are hovering around 20000+ in the sensex, it was not-so-exciting an year for the stock market. In 2010 calender year, the sensex returned 14%, against the sparking 81% in CY 2009. Many investors who dived into the market expecting 2009 would be a bit disappointed. But as a country we have done better when compared to many global powers, but for the Scam's.

Interesting happenings on the stock market front has been :

(1) Coal India IPO: revealed the quantum of fund that market can generate : Rs.2.36 lakh crores (US$ 52 Billion) for the issue size of Rs.15,500 Crores.

(2) 2010 belongs to IPO's of PSU companies. Public Sector Undertakings like Punjab & Sind Bank, MOIL, SJVN, United Bank of India plus follow on public issue (FPO) from Shipping corp, Power grid, Engineers India, NMDC, REC and NTPC kept the primary market buzzing throughout the year.

(3) Bribe seems to be a well accepted fact in India. Bribe for Loan scam busted by CBI involving LIC Housing Finance Ltd. Though the magnitude of crime may be small when compared to other Scam's, Crime is Crime.

(4) Government is toying with the idea of putting curbs on Merger and acquisition in domestic Pharma market, after US drug maker paid Rs.17000 Crores (US$ 3.7 billion) for Piramal Healthcare's formulation business. In June 2008, Jap company Daiichi Sankyo acquired Ranbaxy lab's for US$4.6 Billion.

(5) One of India's long standing Joint Venture : Hero-Honda got split in Dec 2010, much ahead of original agreement date in 2014. The structure and terms of deal may not be in the best interest of minority share hodlers. First, the transaction lacks tranparency and clarity with deal price not being disclosed but is supposed to be at a discount to market price. Second, Hero group would pay much higher royalty in future, eroding profitability of the company. This deal could dent image of Hero Group.

(6) India is world's second biggest two wheeler market. With Hero-Honda split and M&M acquiring Kinetic motors in 2008, competition could intensify.

(7) Petro Prices were deregulated in June 2010. Since then the price of petrol has gone up by 8%. But the loss due to subsidy in diesel, LPG and kerosene is likely to cost about 65000 crores to Oil Marketing companies like BPCL, IOC and HPCL.

(8) RCom: is one of the worst affected stock in the Indian stock market. Various litigations related to 2G Scam, deflated trounover figure to avoid licent fees and supreme court upholding the imposition of maximum enalty on Rcom for routing international calls as local ones through BSNL Network, Rcom is facing terrific head inthe middle of Rs.25000 crores debt to be served. Further its futile attempt to sell off equity and falied merger of Rel Infratel (tower business) with GTL infra for Rs.50000 crores has put Rcom in a pittiable condition.

(9) 2G Scam: Much talked about aspect in 2010, rocking the Parliment and Media for quit long has been the 2G Scam. The scam involves (1) 85 Ineligible companies (like uninor) getting licence (2) Hoarding of spectrum (6.2 MHz) by nine companies including Aircel, Bharti, BPL, BSNL, Idea, MTNL, Rcom, Spice and Vodafone), (3) issuance of licences at throaay prices (122 new licences and 35 dual technology licences. All these facts plus competion at unsustainable levels like number portability could lead to lots of Merger and acquisitions in 2011.

(10) Reliance Industries : Mukesh lost a battel but won THE war. With truce between Ambani brothers and the noncompetent clause being scrapped off, RIL entered the domestic wireless internet market in June 2010 by acquiring Infotel Broadband services for US$ 1 Billion. Infotel was the ONLY company to win licence in all 22 regiions inthe auction of Wireless broadband internet services in June 2010.

(11) Sun Pharma : has emerged as India's most valuable Pharma company by market cap. With its victory over Taro Pharma of Israel. This could result in superior operating market and launch of new products in US.

(12) Bharti Airtel : after acquiring Zain Telecom in Africa has spread its wings over 18 countries in Asia and 15 countries in Africa. It has become World's 5th Biggest mobile operator.

(13) Coramendal Fertilzers: Central Govt's took initiative to implement nutrient based subsidy (NBS) from 1st april 2010 for Phosphatic and Potassic fertilizers. From now on a fixed quantum of subsidy will be determined on the basis of quantity of nutirents. Coramendal Fertilizers has emerged as one of biggest winner with 96% jump in profit ona 31% rise in total turnover.

(14) Last but not the least : Worst affected sector : Real Estate: With Rising interest rate, tightening norms Real estate firms are finding it difficult to service their debt obligations. Companies like Ansal, Parsvnath, Puravankara and sobha developers are reported to have defaulted in certain obligations.