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Buffett buzz sends market in a tizzy

Mumbai, March 5: Market mavens were in a tizzy over the report that legendary investor Warren Buffett — the second richest man in the world after Bill Gates — had pumped $1 billion (or a little over Rs 4,500 crore) into the ONGC public issue.

Everyone was immediately speculating about what this might mean for the Indian stock markets as a whole.

“If Warren Buffett has really invested in India, it has a tremendous upside not only for ONGC but also for the Indian capital market,” said Ajit Sanghvi of MSS Securities, a premier institutional brokerage.

“The markets will open with a vote of confidence on Monday,” said Ramesh Damani, who predicted that the markets will open with a gap.

The 30-share BSE index finished higher by 64 points today on heavy purchases by institutional investors. While the rally was led by PSU shares, ONGC was one of the top gainers at BSE and the share finished at Rs 802.25, up 5.55 per cent.

The sensex opened firm at 5834.37 and gradually moved upwards to an intra-day high of 5892.78 before ending at 5880.35 against yesterday's close of 5815.87, a net rise of 64.48 points or 1.11 per cent.

There was no immediate confirmation of Warren Buffett’s investment. “We had an inkling in the past few days (of Buffett’s interest),” said Nimesh Kampani, chairman of J M Morgan Stanley, one of the three lead managers to the issue.

It was reported that Buffett’s blue-eyed boy, Anil Jain, president of Berkshire Hathaway Reinsurance Group, the flagship company, had visited India last year and had met stock market intermediaries, government and top company officials.

The Indian markets need investors like Warren Buffett as they are known for their long-term investment strategy. They also attract other bulge-bracket investors in their wake.

ONGC is the oil security of the country. For investors like Buffett, the ONGC issue spelt a great opportunity to enter state-owned oil company shares which otherwise have a very low floating stock on the bourses as the government holds a large stake.

“It’s a great opportunity to buy a large chunk of shares without affecting the price,” said S. Ramesh, head of Kotak Investment Banking.

Last year, Buffett had expressed interest in the Indian petroleum sector. While he has taken an exposure in Chinese petroleum companies, he was unable to mop up huge quantities in Indian companies without affecting the market price.

The legendary US-based stock investor, with a personal wealth estimated by Forbes magazine at $42.9 billion, is known for his panache in spotting winners in the markets and as a long-term investor.

Of late, he has been sitting on a cash pile in excess of $25 billion, waiting for an opportunity to present itself. The $1-billion bid today would, therefore, appear to be small beer in his overall investment portfolio.

His investments in silver has made huge gains for him while he has regretted that he did not use the opportunity to exit Coca-Cola and Gillette when the stocks were at all-time highs in the bull rally of 2000.

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