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The stock of Khaitan Chemicals & Fertilisers Limited (Khaitan) was languishing at around Rs7 in May 2020. From June, the scrip shot up vertically to almost Rs30, a 300% rally in a few months. What’s the reason and is it sustainable? Khaitan manufactures single super phosphate (SSP), sulphuric acid (SA) and a small amount of edible soya oil which makes losses. Its power division uses steam.
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After the onslaught of COVID-19 earlier this year when everyone was expecting the stock market to fall further, it not only rallied but have also touched new highs. The market rally against the backdrop of a gloomy business outlook, however, has raised concerns of extremely high valuations of Nifty stocks. Nifty price-to-earning (P/E) ratio has hit an unprecedented 30+.
According to a recent report by ICICI Direct Research, the Nifty P/E is at 32.8 (based on FY19-20 earnings per share EPS) and trailing-12-month (TTM) P/E is at 38.5. Usually, Nifty trading above a P/E of 25 is a sign of concern and is considered an expensive market or the market is said to have run ahead of fundamentals. So, what does the current market valuation tell us?
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While Franklin Templeton Mutual Fund (FTMF) has been rejoicing with unit-holders voting in favour of winding-up of the six debt schemes, the observer appointed to oversee the e-voting process has expressed several concerns about the entire process. The observer, Taruvai Subayya (TS) Krishnamurthy, former chief election commissioner, points to the grey areas he spotted during the e-voting process, pertaining to voting rights, voting period, and voting rules. The report also mentions that 115,000 of the total unitholders, or about 38%, have participated on an overall basis in the e-voting. .there were many grey areas in the procedure adopted, which raised doubts and apprehensions in the minds of investors. Even FTMF did not seem to have had a clear idea about the procedure to be followed. This seems to be mainly because an exercise of this type was done for the first time and there were no clear-cut guidelines in certain areas to be followed, the report says.