Monday, May 7, 2012

Sintex Industries Sold by Morgan Stanley, Closes Up by 1%

Dinesh B Patel, Chairman, Sintex Industries Ltd
By Special Correspondent:

Sintex Industries Ltd (BSE: 502742, NSE: SINTEX) counter in NSE on Monday, 7th May 2012, witnessed a significant sell of 15.62 lakh shares by a Morgan Stanley arm.

The sell disclosed by National Stock Exchange after trading hours on Monday, was done at Rs. 62.71 a share, thus amounting to Rs. 9.79 crore in total value.

While Morgan Stanley Asia Singapore Pte sold off on Monday, there were no identifiable institutional buyers, buying above 0.50% stake in Sintex. The FII’s sell amounted to 0.57% of the total equity base of the company.

StockExplain had earlier reported on two identified buys by this noted investor into Sintex Industries in 2012, on March 8th and earlier on February 3rd. On both occasions, the stock had rallied for the short-term, from Rs. 92.49 to Rs. 104.60 in February, and from Rs. 80.39 to Rs. 91.20 in March.

However, the rallies soon lost steam, and a better decision on this stock seems to have been Macquarie Bank’s which sold significant shares on February 23rd at Rs. 89.81 a share, which was also reported by StockExplain.

Post Macquarie’s sell, the scrip had failed to move up meaningfully, and was range-bound for the whole of March and till the last week of April. Then the stock had dived seriously, largely on the weakness that emerged in rupee, and continued with the fall into May. Sintex is sensitive to a falling rupee, due to its large foreign loans.

On Monday, Sintex marked a new weekly and monthly low of Rs. 60.45, barely escaping the 52-Week Low of Rs. 58.70 recorded on 19th December.

Evidently, Morgan Stanley has tried to cut the risk in the counter on Monday, in case the plastics-to-concrete-to-textile manufacturer’s stock gave away the year-to-date support.

On the fundamental side, Sintex is all set to announce its annual results for FY’12 on Thursday, May 10th 2012. The director board meeting scheduled for that date would also consider if any dividend is to be paid.

The results for the first 3 quarters of FY’12 haven’t been very strong with consolidated net profit for those 9 months falling by almost 27%, even while revenue rose by only a modest 12.6%.

The risk from a possible bad set of numbers in Q4 seems to have been another sell cue for Morgan Stanley. As of Q4 end, this FII held 2.04% stake in Sintex.

Other institutional investors in the stock include Reliance Capital Trustee Company, Merrill Lynch Capital Markets, ICICI Prudential Life Insurance Company, Reliance Life Insurance Company, LIC of India, Fidelity, India Capital Fund, BNY Mellon Emerging Markets Fund, Government of Singapore, Citigroup Global Markets Mauritius, and Bajaj Holdings & Investment.

The annual results on May 10th will be closely watched by all investors in the counter, as a good set of numbers is enough to make the scrip soar substantially, as it is already well corrected. Any recovery in rupee will also aid a rebound in the scrip.

Meanwhile, the positive turnaround seen in the overall market on Monday due to the deferment of a proposed tax rule is also likely to benefit Sintex. Despite the FII sell, Sintex closed Monday’s trade at Rs. 64.10 in NSE, up by 1.02%, which shows reasonable buying interest.

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