Street signs: Call date with RIL, Pair strategy for Axis, ICICI Bank & more

Call date with Reliance Industries

Holders of Reliance Industries’ (RIL’s) partly paid shares will have to make their first call payment of Rs 314.25 by May 31. Broking officials said many investors had bought partly paid shares with an intention to trade and could miss the payment. Non-payment of first call will attract interest or the shares will get forfeited, they add. Last year, investors had bought rights entitlement of RIL worth crores but never subscribed to the shares. Given the sharp spike in RIL’s share price on Friday, the new partly paid shares of face value of Rs 5 — to be listed after two weeks — may list at a good premium, said analysts.

Input costs rise may help Bajaj, Havells

White goods and durables manufacturers Havells India and Bajaj Electricals are likely to gain from customers migrating from unorganised to organised players, said analysts. Prices of key raw materials, such as copper, steel and aluminium, are up between 20 and 40 per cent in one year. Analysts said while organised players are better placed to absorb the cost increases, smaller firms in the unorganised space will be impacted more due to the pressure on margins. White goods and durable firms in the organised sector have raised prices by 5-18 per cent across products, considering that demand is rebounding. And the remaining increase in costs is expected to be passed on to end consumers via pricing actions in multiple tranches over the next 3-4 quarters.    
 

Pair strategy for Axis Bank, ICICI Bank

Analysts are recommending traders to execute a ‘pair strategy’ by going long on Axis Bank and shorting ICICI Bank simultaneously. In the past two weeks, shares of ICICI Bank have gained 8 per cent, while Axis Bank has gained just 2 per cent. The underperformance, analysts say, is due to one-off events, such as government disinvestment, and Axis Bank may soon play catch up. “We recommend initiating a statistical pair strategy of long Axis Bank and short ICICI Bank in anticipation of the former outperforming in the short term. We target 7 per cent from the pair and suggest keeping a stop loss of 3.5 per cent,” said Sriram Velayudhan, vice-president, IIFL Securities.