Mahanagar Gas IPO to unlock value for GAIL

The counter of GAIL, the country's largest state-owned natural gas processing and distribution company, is likely to see good action in the coming weeks. The reason: The Mahanagar Gas issue, expected in the week starting June 20, will unlock significant value for GAIL. According to sources, both British Gas Asia and GAIL will bring down their stakes from 49.75 per cent each to 37.25 per cent each in the initial public offering (IPO). The Maharashtra government holds the remaining 0.5 per cent. Also, the Petroleum and Natural Gas Regulatory Board's decision to raise the final rate for GAIL's Cauvery basin network by 2.3-5.4 times will give the stock additional boost, as it will raise transmission revenue by 1.5 per cent and GAIL's overall FY17 earnings per share by about one per cent, estimates Nomura. Expect some action in the Indraprastha Gas - Mahanagar Gas' peer - as well.

Sharp rise in banking stocks worrisome?

The BSE Bankex, which rose sharply from 17,200 levels to 20,426 in the past three months, is worrying a number of investment experts. Most don't see any reason for these stocks to rise so sharply when significant pain is expected in the next two-three quarters. "Even if the monsoons are good and the economy starts doing better, the impact on banks will only be seen during October-November. Traders, I feel, are luring investors by giving them the usual 'good time to enter' formula before they dump these stocks," says an investment expert.

Bear Ambit turns bullish

Brokerage firm Ambit Capital, which has been pessimistic on the Indian stock market, has finally decided to turn bullish. On Friday, it revised its target for the Sensex to 29,500 by March 2017, an increase of around 10 per cent from the current levels. Earlier, it had predicted that a base case scenario for the Sensex at 22,000. Interestingly, other brokerages and fund managers who were already predicting good times, seem a little relieved with Ambit's change in stand. "When more and more brokerages turn bullish in these tough global scenario, it gives confidence to fund managers as well," admits the chief investment officer of a fund house.