Brent crude fell as low as $36.33 a barrel on Monday, its weakest since December 2008. A fall below $36.20 would take oil down to levels not seen since 2004. (Photo: Reuters)

Crude oil prices are close to 11-year lows on account of excessive supply. A forecast from the International Energy Agency (IEA) that the global supply glut is likely to deepen next year dragging down the prices further. US crude was down 0.2 per cent at $36.24 after falling as low as $34.53 on Monday before ending nearly 2 per cent higher. Brent crude fell as low as $36.33 a barrel on Monday, its weakest since December 2008. A fall below $36.20 would take oil down to levels not seen since 2004.

Crude prices are on a downward spiral since OPEC on December 4 abandoned its output ceiling. In the past six sessions till December 11, crude oil prices shed more than 13 per cent in the inernational markets. On the domestic front, it slid nearly 11 per cent in the past five days. Prices of crude oil in the domestic markets fell from Rs 2,742 per barrel on December 4 to Rs 2,455 per barrel on December 11.

According to markets experts, OPEC is gripped by a deep divide between two factions, one led by the top oil producing nation Saudi Arabia and its rich allies in the Gulf that can stomach cheap oil and another led by Nigeria, Venezuela and other countries that need higher prices to boost their economies. America’s shale gas boom has also had a significant impact on the tapering demand for crude. The overall slowdown sentiment is also hurting crude prices negatively.

In a larger perspective, falling crude oil prices are positive for various sectors. G Chokkalingam, founder, Equinomics Research and Advisory said, “Sectors which would benefit from falling crude oil are oil marketing companies (OMCs), tyre industry, synthetic fiber producers, several range of businesses, which use oil derivatives as core inputs like the producers of lubricants, transformer oils, plastic products, soaps and detergents, etc.”

Nikhil Kamath, director, trading and risk, ZERODHA said, “Some of the sectors positively impacted by lower crude prices are aviation, auto and FMCG companies, with all of these directly or indirectly benefitting from lower crude prices.”

Below are five stocks which could benefit from sliding crude oil prices:

Supreme Industries
Recommended By: Geojit BNP Paribas Financial Services
Why Buy: Supreme Industries (SIL) is a major player in plastic industry. SIL’s product segment includes, plastic piping, packaging products, industrial and consumer segment. The company is a major beneficiary from steep fall in crude prices, as major raw materials used by SIL are directly derived from crude oil.

Anil R, research analyst, Geojit BNP Paribas, said, “The prices of key raw-materials used by SIL during the first quarter of the ongoing fianancial year (Q1FY16) (July–September), PVC – dropped by 15 per cent year-on-year (YoY) to Rs 65 per kg and polypropylene dropped by 28 per cent YoY to Rs78 per kg. Consequently, SIL’s Q1FY16 gross margin improved by 340 basis points YoY to 36.1 per cent vs 32.7 per cent. In addition, overall finance cost came down to 1.3 per cent of sales in Q1FY16 vs to 1.8 per cent YoY. We expect SIL’s revenue to grow at 11 per cent CAGR and PAT at 12 per cent CAGR during FY15-17E. Currently, we have an “Accumulate” rating for the stock with a target price of Rs 704.”

Asian Paints
Recommended By: Geojit BNP Paribas Financial Services
Why Buy: Asian paint is one of the beneficiaries out of this free fall of crude prices. Its key raw materials are derived from crude oil this includes Titanium dioxide (TiO2), additives, pigments, resins, solvents etc. Asian Paints is the market leader in the decorative paint segment with a 54 per cent market share. During the first half of FY2016 (H1FY16), the costs of raw material to sales come down by 641 basis points to 50.1 per cent YoY.

Antu Eapen Thomas, research analyst, Geojit BNP Paribas, said, “We have seen a rise in gross margin by 313 basis points YoY to 46.3 per cent and profit grew by 25 per cent YoY to 854 crore in H1FY16. We feel that the company may not pass all the benefit on the softening of oil prices. This will directly benefit Asian Paint’s margins and will add colours to their profitability even with the same volume. Consequently, it can use this additional funding for their marketing and promotional activities. Going forward, we expect Asian Paints can generate a sales and profitability growth of 12 per cent and 20 per cent CAGR respectively over FY15-18E. Hence, we recommend accumulating the stock with a price target of Rs 901.”

Hindustan Petroleum Corporation
Recommended By: Equinomics Research
Why Buy: Oil marketing firms would be the major beneficiaries of lower crude oil prices – this would reduce their subsidy burden and improve their balance sheets. Cheap fuel prices would also promote their consumption from the retail outlets. Chokkalingam, said, “Hindustan Petroleum Corp (HPCL), the country’s third biggest oil refiner, is negotiating with its partners in the Mozambique gas field, operated by Anadarko Petroleum Corp., to bring natural gas to India for its upcoming liquefied natural gas (LNG) terminal in Gujarat. The deal will not only give HPCL access to gas, which is logistically cheaper to source, it will also give the company a cost advantage in its natural gas trading business, which it started last financial year. We believe the share price of HPCL can touch Rs 1,000 in the next few quarters.”

Sutlej Textile
Recommended By: Equinomics Research
Why Buy: According to the brokerage house, Sutlej Textiles uses both natural fibre and synthetic fibre for manufacturing cotton and synthetic textiles, would be the major beneficiary of the crash in input prices with some time lag. Sutlej has a consistent track record of paying dividend since incorporation. A very few companies in this country have such track record. The dividend has grown from 10 per cent in FY2009 to 80 per cent in FY2014. The textile industry would change its prospects significantly in the next 2 to 3 years and hence, Sutlej Industries, with sound fundamentals, would be one of the major beneficiaries of changes in the valuation multiples visualised in next 1 to 3 years. The share price of the company can touch Rs 650.

InterGlobe Aviation
Recommended By: ZERODHA
Why Buy: Fuel Expenses form over 30 per cent of total expenses borne by airline companies. Kamath of ZERODHA, said, “Reduced fuel prices will have a significant positive impact on the bottom lines. We recommend a buy on InterGlobe Aviation shares with a stop loss at the Rs 900.”

(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online).

Tata Motors stocks will be in focus the company said it will hike price of its entire passenger vehicle model range by up to Rs 20,000 from January due to the impact of various macro-economic factors. (Photo: Reuters)

The BSE Sensex and NSE Nifty opened on a cautious note on Tuesday tracking mixed global cues as US Federal Reserve is widely expected to go for a rate hike of 25 bps in its meet slated to begin later in the day. At 9.28 am, Sensex was trading 22.38 points down at 25,127.97. NSE Nifty was trading 1.50 points down at 7,648.55.
Track live market updates 

Below are the top 12 stocks that are in focus today:

Jain Irrigation: Share price of the company climbed over 3 per cent in the morning trade after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state.

Yes Bank: Shares of the private lender were trading 0.88 per cent up at Rs 688.20 after it on Tuesday said that its advance tax payment increased 38.11 per cent in December 2015 to Rs 424 crore from Rs 307 crore in December 2014.

Sun Pharma: Stocks of the drug major were trading 1.48 per cent up at Rs 780 (9.31 am) as the company has sold its manufacturing unit in Ohio to Nostrum Laboratories Inc for an undisclosed sum as part of the company’s consolidation of manufacturing business in the US.

Mahindra and Mahindra and Tech Mahindra: Stocks of both the companies were trading 0.25 per cent and 0.14 per cent at Rs 1283.80 and 541.95, respectively after it was announced that they will buy 76.06 pct of Pininfarina for 25.3 mln euros ($28 million).

Hotel Leelaventure: Shares of the hospitality chain was trading 3.46 per cent up at Rs 20.95 (at 11.15 am) after it completed the Rs 725-crore sale of its Goa property to Ceres Hotels.

Tata Motors: Stocks of the auto major will be in focus after the company said it will hike price of its entire passenger vehicle model range by up to Rs 20,000 from January due to the impact of various macro-economic factors..

Airtel, HDFC: Advertising industry watchdog ASCI has upheld complaints against 54 campaigns for misleading advertisements during September, including those of Bharti Airtel and HDFC. Customer Complaints Council (CCC) of Advertising Standard Council of India (ASCI) upheld 13 complaints of misleading advertisements from personal and healthcare category, seven in telecom and broadband category and six in ecommerce category during the month.

Reliance Industries: Download speed on 4G network of Reliance Jio during its beta-test phase peaked at 70 megabit per second but remained in 15-30 mbps range on most occasions, as per field trial report by brokerage firm Credit Suisse. The report said download speed of Reliance Jio 4G service was impressive but “it is still an empty network”. It also found urban coverage of RJio network at par with incumbents but remarked rural coverage as “poor”.

Suzlon Energy: Wind turbine maker Suzlon Energy Ltd  said it will allot over 3.58 lakh shares to bondholders upon conversion of some bonds due in July 2019.

Reliance Communications: Reliance Communications (RCom) impending deal for tower asset sale would lower its consolidated debt by 60 per cent, a report by CLSA said . RCom recently announced the signing of a term sheet with Tillman and TPG for the sale and leaseback of its 43,400 towers held by its subsidiary Reliance Infratel.

Cairn India: Delhi High Court  sought the government’s response on whether it would buy the excess “sweet” crude, containing higher levels of sulphur, produced by Cairn India’s Rajasthan oil field and if not, can the company export it.

NHPC: Hydro power major NHPC  said it will temporary shut down 520 MW Parbati project in Himachal Pradesh till February next year for carrying out repair and maintenance work. The Parbati-III Power Station (4X130 MW) in Himachal Pradesh “shall be complete shutdown w.e.f. December 15, 2015 to February 15, 2016 to carry out repair of pressure shaft, sealing of surge shaft gate & MIV seals and annual maintenance of units”, NHPC said in a filing to the BSE.

Reliance Communications’ (RCom) impending deal for tower asset sale would lower its consol. debt by a significant ~60%. Added upside will be the potential sale of its fibre assets. Moreover, RCom’s growing number of deals with Reliance Jio is unlocking the value of embedded assets while reciprocal benefits in infrastructure and spectrum sharing will fuel a data business ramp-up. Our revised TP of R90 (from R75) implies a R22,700 crore EV for the tower assets. With the imminent long-awaited deleveraging and potential for added upsides, we upgrade the stock to O-PF from U-PF.

Reliance Communications recently announced the signing of a term sheet with Tillman and TPG for the sale and leaseback of its ~43,400 towers held by its 95% subsidiary, Reliance Infratel. While this is non-binding, the deal appears inevitable given RCom’s compulsions to deleverage and the quality of the assets. We value RCom’s tower assets at 9.5x Sep-17CL EV/Ebitda implying an EV of R22,700 crore  and EV/tower of R5.2 million, a ~35% discount to Bharti Infratel, which partly reflects RCom’s 22% lower Ebitda/tower. If the deal valuation for towers is higher, besides the planned sale of inter-city and intra-city fibre assets, the aggregate deleveraging for RCom in the base and upside case will be significant at 60-80% and gearing will fall sharply to 1.4x to 2.5x net debt to Ebitda.
Given RCom’s deleveraging efforts, led by tower asset sale and potential benefits of reciprocal infrastructure and spectrum-sharing deals with Reliance Jio, it looks set to see multiple improvements.

Steel stocks clocked double-digit gains on Monday, with the Street positively reacting to the government’s anti-dumping levy on low-cost stainless steel imports to protect domestic players.

Jindal Stainless surged 12%, Maharashtra Seamless rose nearly 1% and ISMT rose 1.5%, as the government levied anti-dumping duty on imports of cold-rolled flat steel products.

Analysts opined that steel stocks were in limelight after the government on Friday imposed import duties for five years on some stainless steel imports from China, the European Union and the US.

JSW Steel jumped 5.5% to a nine-month high. Jindal Steel, Tata Steel and Steel Authority of India (SAIL) advanced 1.5-4.7% with huge trading volume on hopes that the import duty could be imposed on other categories of steel products.

Low-cost steel products imported from China will attract an additional duty of 57.39%. An anti-dumping duty of 52.6% has been levied on imports of steel products from the European Union, 13.4% on imports from South Korea and almost 37% on imports from South Africa, according to the notification from Central Board of Excise and Customs (CBEC).

The anti dumping duty on imports from US and Thailand is in the range of 5-9%.

The CBEC observed there is continued dumping of subject goods from the subject countries though the volume of imports has declined after imposition of duties. “The performance of the domestic industry has deteriorated in the current injury period due to the impact of dumped imports from the subject country and diversion of imports to product ranges outside the scope of the product under consideration.

The dumping is likely to continue and the performance of the domestic industry is likely to deteriorate, should the present anti-dumping duty is revoked,” CBEC noted.

PACL had raised Rs 49,100 crore from nearly 5 crore investors that it needs to refund along with promised returns, interest payout and other charges, which take the total amount due to more than Rs 55,000 crore, Sebi said today. (AP)

In a major crackdown on PACL Ltd, capital markets regulator Sebi has attached all assets of the company and its nine promoters and directors for their failure to refund more than Rs 60,000 crore due to investors – the biggest illegal mobilisation of funds.

PACL had raised Rs 49,100 crore from nearly 5 crore investors that it needs to refund along with promised returns, interest payout and other charges, which take the total amount due to more than Rs 55,000 crore, Sebi said today.

Besides, PACL has another group firm PGFL which has “illegally mobilised more than Rs 5,000 crore and failed to refund the same in spite of directions of Sebi and SAT”, the regulator said while initiating the recovery proceedings.

The proceedings have been initiated against PACL Ltd, as also its promoters and directors — Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Nirmal Singh Bhangoo, Tyger Joginder, Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar.

Sebi said the recovery proceedings have been launched “for their failure to refund an amount of Rs 49,100 crores with return due to investors, along with further interest and all costs, charges and expenses incurred in the recovery proceedings”.

Sebi had asked them to refund the money in an order dated August 22, 2014. The defaulters were directed to wind up the schemes, and refund money to the investors within a period of three months from the date of the order.

Sebi said it has attached all bank and demat accounts and mutual funds folios of these defaulters with immediate effect and that has been communicated to all the banks, depositories and mutual fund houses.

The recovery notices were also sent to the defaulters, while all banks, financial institutions, depositories or any other persons holding assets of the defaulters have been advised not to part with the same and report the same to the Recovery Officer at Sebi office in the national capital.

The mobilisation of funds by PACL Ltd traces back to 1990s. Upon receipt of a complaint, Sebi had first issued letters in November-December 1999 to PACL, advising it to comply with the provisions of the Sebi’s CIS Regulations dealing with Collective Investment Schemes.

PACL challenged the letters before the High Court of Rajasthan, claiming that its scheme does not fall under the definition of CIS. PACL had also challenged the constitutional validity of the CIS Regulations.

The Court in its order dated November 28, 2003, held that PACL’s schemes were not CIS as defined under Sebi rules and quashed Sebi’s directive to PACL.

However, Sebi appealed before the Supreme Court, which in an order dated February 26, 2013 upheld the constitutional validity of CIS Regulations, and directed Sebi to investigate the matter and take appropriate actions.

After conducting further inquiry, Sebi passed the order dated August 22, 2014, wherein, inter-alia, PACL Limited, its promoters and directors were directed to wind up all the existing CIS of PACL Limited and refund the monies returns which are due to its investors.

PACL had again approached the Securities Appellate Tribunal (SAT) against Sebi’s order of August last year. The Tribunal however dismissed the appeal on August 12 this year and directed the defaulters to refund the money within a period of three months.

PACL has filed an appeal against the SAT order as well before the Supreme Court, but the apex court has “not granted any stay either on SAT or Sebi’s order”, the regulator said.

“Since the defaulters failed to refund the money to the investors as per the directions of Sebi and SAT, Sebi has initiated the recovery proceedings,” the regulator added.

Sebi said PACL has illegally mobilised huge money from crores of investors across the country without obtaining registration.

“In spite of the directions, PACL has not taken any steps to refund money to the investors. Therefore, the defaulters are likely to conceal, remove or dispose of the whole or any part of movable assets namely money in the banks, securities in demat accounts, mutual fund investments and etc, which are liable to be attached in the proceedings.

“Consequently recovery proceedings may be delayed or obstructed by the defaulters,” Sebi said in its order.

The regulator also said there are a number of news reports that the investors across the country are raising voice against the defaulters for their failure to refund money, while “lot of complaints were received from general public regarding non-payment/non-refund by PACL”.

“There is a lot of hue and cry as number of investors are around 5 crores,” Sebi said while adding that “in order to protect the assets from any sort of alienation, it is necessary to attach the bank, demat and mutual fund accounts to prevent the defaulters from removing/concealing the same”.

The attachment includes lockers of the defaulters in single or joint names, Sebi said in its communication to the banks and other institutions, while adding that no debit would be allowed in their accounts although “credits, if any, into the account may be allowed”.