INDIAN STOCK MARKET

Sure Shot Delivery Calls

2008-05-30T20:47:00.000-07:00

Gujarat Alkalies Buy
Target 220
stop 185

Hindalco
Buy around 191 for the short term target 208
stop 181

TechMahindra
Buy for a target 1000
No stop loss

Relaince Power Crashes

2008-05-30T20:35:00.000-07:00

Reliance Power Crashed 8% before the record date on June 2nd.High Volatility was witnessed in the stock thru out the trading day.There was utter confusion over the price adjustment and the stock slided to 231.
Had the price not moved up before the record date, the share would have plunged even more after the bonus. If the price goes up before bonus, it will be adjusted after the bonus," said a broker
For the retail inavestors who bought at the IPO price of Rs 430, the average price after bonus would have been around Rs 270 a share.

However, the stock is down around 8 per cent from its IPO price. The retail investors who could not exit above Rs 270 have ended up losing over 20 per cent. A mere 10,000 shares were traded above Rs 300 during the day

Minor Gains in the Market

2008-05-30T20:25:00.000-07:00

Sensex closed with a gain of just 99 points.Market breadth continues to be negative.Sustained selling was seen in the midcap segment.The market breadth was negative - out of 2,767 stocks traded, 1,008 advanced, 1,701 declined and 58 were unchanged today.The NSE Nifty finished with a gain of 35 points at 4,870.
What to Expect Next Week
The Nse Nifty is expected to find strong support at 4825 and resistance at 4920.Exit longs below 4825.Fresh buying is not happening in the market and we expect volumes to be thin.

New Calls From Foreign Institutional Investors

2008-05-28T06:49:00.000-07:00

CLSA sets an outperform on Nalco, Target Rs 560.
CLSA sets a Buy on Hindalco, Target Rs 235.
Citi Investment Research sets a Buy on Everest Kanto Cylinders, Target Rs 404

Buy Calls from FIIS(Dont MIss)

2008-05-26T07:27:00.000-07:00

ABN Amro sets buy on Ashok Leyland, price target Rs 44.6.
CLSA sets buy on HDFC, price target Rs 2688.
Morgan Stanley sets buy on Tata Steel, price target Rs 1080.
Merrill Lynch maintains sell on Max India, price target Rs 172
Macquarie Research sets sell on Bank of Baroda, price target Rs 244

How To Approach The Weak Market Next Week

2008-05-24T21:40:00.000-07:00

We expect the Nifty future to witness significant volatility in the forthcoming week. As we have always maintained, the Nifty future faces a strong resistance at 5350, a level it failed to breach last week also. It is now loitering precariously close to its support at 4950. Failure to sustain at this level will take Nifty future to its next crucial support at 4400. However, any reversal from the current level holds the potential to take Nifty future first to 5150 and then to 5350 levels. However, for the overall negative bias to lift, Nifty future has to make a decisive move above 5850, failing which the probability to revisit its January lows looms large.
Since we are now approaching the settlement week for the current month derivatives contracts, volatility is sure to make its presence felt. The risk-return payoff during such volatile times, more often than not, favours the use of straddles. Traders can consider setting a straddle for Nifty. You can do this by buying Nifty 5000-June strikes for both call and put options. Note that this is a good strategy when you feel that there will be a large price movement in Nifty in the near future but are unsure of which way that price movement will be. The premium paid for setting this option spread is the maximum loss you can suffer while the gains can be unlimited should the price move sharply in one direction. Nifty 5000 call on Friday closed at Rs 150.70 and the put ended at Rs 214.65. Traders can consider holding this strategy beyond this week

Stocks to buy now

2008-05-24T04:32:00.000-07:00

Redington India Target 445
According to the brokerage estimates, Redington is “setting up four automated distribution centres in India and one abroad”.
The move into high-end repair activities should sustain the growth of high margin service segment, it adds. Meanwhile, enhanced infrastructure base, feels the brokerage, would help the company “capitalise on ro-bust domestic market and increase its market share”.

VOLTAMP TRANSFORMERS Target 1650
Voltamp’s order book stands at Rs 4.48 billion,” says a report, adding that “its order book was flat at Rs 4.07 billion” for the quarter ended March 31. According to the brokerage, the company will undertake capital expenditure of Rs 350 million for a greenfield project, wherein oil type and dry type transformers will be manufactured.

PUNJAB NATIONAL BANK TARGET 700
Merrill Lynch has cut its price target for Punjab National Bank (PNB) to Rs 700 from Rs 825 to factor in earnings moderation led by pressure on margins and higher provisions from wage revisions. However, the investment bank has raised its earnings estimates by 1-4% for 2009-10. “We believe the stock could trade at 1.4-1.5 times by FY10 (2009-10) given its forecast ROE(return on equity) of 17-18%, earnings growth of 18% through FY10E (estimated), improved quality of earnings arising from lower trading profits and lower risk from interest rate changes,” Merrill said in a recent client note. “On a PE (price to earnings) basis we believe the bank can continue to trade at least at 7.5-8.0x FY10E (estimated) earnings, as banks’ net NPLs (non-performing loans) shrink,” the investment bank said

Is Crude Killing The Market

2008-05-22T08:38:00.000-07:00

Stocks in India ended in negative territory Thursday on weak cues from Asian and European markets and pressured mainly by record high crude oil prices.Of the 50 shares comprising the Nifty, only five--Dr Reddy’s, Sterlite Industries, Hero Honda, GAIL, and Hindalco--held their ground.

The biggest losers were Suzlon, Tata Motors, Reliance Infrastructure, Idea Cellular, and Punjab National Bank.

Nifty May futures contract price slipped 2 per cent and giving up its 10 points premium from Wednesday. Nifty June ended at 5023, a discount of 4 points to the spot.

Huge build up of positions was witnessed in Nifty 5000 call. Call of 5100 May and 5200 June also added positions in open interest. Nifty puts of strikes 4900 and 5100 shed positions, while 4800 put saw significant build up of positions. This indicates a broad Nifty zone of 4800-5200.
if global cues remain weak, Nifty may touch 4950 levels. On the upside, 5150 will be a strong resistance for the Nifty.

Try this stocks for Intraday

2008-05-19T18:52:00.000-07:00

Sail, Sun Pharma, South Indian Bank, IVRCL Infra and Petronet LNG are looking very strong. Sail has to break above 192 to 200 levels due to short covering. IVRCL has strong support at 432 and last resistance is at 444; above this it will move up towards 456 levels. South Indian Bank is the dark horse with a target of 168 in the short run.

A Big Breakout On the Cards?

2008-05-19T07:48:00.000-07:00

Both bear and bull spreads offer decent returns.

It was a low volatility week when trading patterns ran contrary to macro-economic trends. Although inflation continued to soar, stock prices also rose and the action in the derivatives market reflected some of the (possibly misplaced) optimism.

Index strategies
Volumes remained average in the F&O market but there was healthy carryover and OI build up. There was some evidence that Indian operators were in the market, given that the level of FII exposure stayed at around 40 per cent of total outstandings.

Range-bound markets have certain characteristics. Typically, cash volumes are low, daily volatility drops and this is reflected in lower implied volatility in derivatives. The lower IV in turn creates a trap because a breakout changes all the variables. As volatility jumps, the unwary get clobbered.

The VIX suggests that aggregate market expectation is that range-trading will continue. At Nifty 5300-levels two weeks ago, the VIX was trading at about 21 – an all-time low. At the current Nifty 5150-odd, it is 23, which one would still consider overbought. A low VIX implies that the market does not expect a breakout, at least on the downside.

This could be very dangerous. There's still two weeks for settlement and expectations of continued range-trading are reflected in option chains and high carryover volumes.

In the option chain, there is zero liquidity above 5500 and calls are being extinguished above 5400. On the downside, puts have been extinguished at a loss in the 4700-4900 range.

This is unusual and even irrational. The Nifty frequently swings 2.5-3 per cent per session if you look at average long-term volatility. That's 150-175 points – and losses are being booked in positions 250 points from money with 10 sessions to go.

Overall OI has risen and it's heavily concentrated in the 5000-5300 range. What is more, approximately 32 per cent of all option OI is in the June-July series. This is high carryover – two weeks from settlement, the mid+far contracts would normally generate about 15 per cent OI. The mid+far OI is also concentrated in the 4900-5400 range, implying few bets on a breakout.

Usually the market breaks out of range-trading within 3-4 weeks or so, and daily volatility is guaranteed to rise when it does. As and when there is a breakout, a lot of traders are going to play a frantic game of catch-up. It will be especially entertaining if this happens in settlement week.

In such a situation, the option trader can adopt two strategies. One is to go with the herd and add an element of safety through covered spreads close to money. As it happens, both bullspreads and bearspreads CTM are offering reasonable return:risk ratios.

The other possibility is more daring. The trader can look for wide straddles and strangles that don't cost much and offer big gains in case of a breakout. Here the lack of liquidity and the expiry factor makes that more expensive. It isn't possible to build short strangles very far from money. But the positions are still worth considering.

Of course, the vast majority of traders are actually in naked index futures rather than options. The technical situation in the index futures market is difficult to read. Only the Nifty and MiniNifty have decent liquidity in the mid and far contracts. There are no calendar arbitrages available and there is a reasonable carryover trend. The low VIX makes me inclined to suggest short positions.

In the other indices, the Junior's May futures was settled at 9046.5 while the spot closed at 9014.9. The BankNifty was settled at 7606.7while the spot closed at 7644.6. The CNXIT was settled at 4543.5 while the spot closed at 4552.65. The Midcap-50 was settled at 2754.65 while the spot closed at 2746.85.

The BankNifty has seen short-covering late on Friday and if this pattern continues, it's worth being long. The CNXIT has responded positively to a weak rupee. A rupee rise is now on the cards because the RBI may intervene to reduce the impact of high crude prices. So a short CNXIT seems slightly more likely to work.

In the Nifty options market, a long 5200c (60) versus short 5300c (26.95) costs 33 and offers a maximum return of 67. A bearspread with long 5100p (63.35) versus short 5000c (38.15) costs about 25 and offers a maximum return of 75. Both are very decent risk:return ratios.

A long strangle of long 5300c and long 5000p costs 65. This can be laid off with a short 4800p (14) and a short 5500c (6.35). That reduces the cost to 44 and the potential return on either breakout is 156. That's a pretty good return:risk ratio though there is an expiry risk. The position would be fully realised if the market moves 350 points in either direction. That requires two big trending sessions within the next 10.

STOCK FUTURES/OPTIONS

There are several stocks that are generating high futures volumes and therefore worth a careful look. Cairn is one of these, SAIL is another and a third is HDIL.

SAIL is also generating a lot of volume in the 180c and that is very unusual. RCom (about 602 in both futures and spot) is also generating high futures volume which is usual. It is also generating high volume in 600c (14.8).

SAIL is at about 186 in both cash and futures and the 180c last traded at 10 while the 190c was at 5. A long SAIL futures will probably generate more profit than a long call but a bullspread is also possible. It's in the money at current prices (which means that both 180c and 190c will rise).

Market Set for New highs?

2008-05-17T21:05:00.000-07:00

The Nifty closed in the green with a gain of 3.5 %, on a weekly basis, after some zigzag trades in the first three days. The next week contains four trading days only. The Nifty opened at 4,981 and made a low of 4,913.80. The Nifty attained a high of 5,167.40 and closed almost near to the high, at 4,157.70. The stock specific action was also part and parcel of the week. Volumes improved gradually in all segments. The concern is that the Nifty May Futures traded continuously with discount and widened to double digit, which is indication of continuous built up of short positions.
We mentioned in the last week`s write up 4,916 is likely to be a good support. The Nifty touched 4,913.80 and reversed its direction. The Nifty is expected to make once again an attempt to breach the long-term averages like 100 and 200 day SMA. The success of the attempt will make the Nifty to move in northward direction further. The Nifty crossed 5, 10 and 20 day SMA comfortably and closed well above these averages. The 5-day SMA turned upwards, which is a positive sign. The 10-day SMA is testing the support at 20 day SMA. The Nifty closed above the crucial 13,34 and 89 EMA. Both the stochastic are in the buy mode. However, the 5,3,3 stochastic is nearing to the overbought level. The RSI once again generated a fresh buy signal. The swing trade turns to positive side from the negative side. The ADX is in buy mode. All these indicate there is no major threat to the prevailing short-term bull trend. The higher bottom formation also supports this view. The PSAR in the daily charts is placed at 5,167.40.The MACD is converging to generate a fresh buy signal. Further up move, if any and the cross over happened in the above both cases, will add strength to the ensuing rally.

So far, the Nifty is forming a lower top and higher bottom formation since the January, 08 fall. The break out on either side will be more powerful. As mentioned, the Nifty had a good support at 4,916 (with 1% variation) on many fronts. (The 50-day SMA, the trend line support drawn from the March 2008 low, 0.382 retracement support (from 4,468 and 5,299) Interestingly, the pattern is same as in October 2004, on many fronts. The previous pattern formation is also supporting the above statement.

In the weekly charts, still we are in amidst of mixed signals. The 5,3,3 stochastic is in sell mode and breached the 80 mark also. The swing trade became neutral now. The ADX is in sell mode. The RSI is in buy mode. The MACD is converging to generate a fresh buy signal (Kindly note that the same scenario on daily charts also). If both things happen, the rally should be more powerful and the medium term outlook too becomes bullish. The medium term trend is neutral, with a slighter probability of becoming bullish.

In the monthly charts, the MACD is in a sell mode. However, the bottom of 4,448 is becoming a strong support. Any decisive breach, will initiate a fresh down movement. The 20-month SMA is giving a good support since May 30, 2003 on a closing basis, which is currently placed at 4,662.59.In the quarterly charts, since October 2003, the Nifty is trading above PSAR. For this quarter it is placed at 4,448.50.

Outlook for the week

Short term bullish trend to continue with intermediate resistance around 5,400 level. Based on the above rationale, the Nifty is expected to see some more upside in the short term. On many fronts, the Nifty is near to the multiple resistance levels near to 5,400 levels. For this week, the Nifty has support at 5,126, 5,072-5,099 (strong for the short term), 4,952 and 4,901 (multiple support level). The Nifty has resistances at 5,167.40 (PSAR and may be a break out point), 5,195-5,228 (minor resistance), 5,247 (trend line), 5,298, 5,368 and 5,395-5,415 (intermediate resistance).

Strategy
Hold your long positions and create fresh longs above 5,167.40. Consider profit booking 5,395-5,415 levels. Rotate stocks.

Sure Shot Buy calls

2008-05-17T20:49:00.000-07:00

TATA Metaliks
Buy for a target of 225 stop 166
Tata Metaliks Ltd has informed that the Company has been actively pursuing to tie-up with various State Governments for raw material linkages. Further to these efforts of the Company, Tata Metaliks is keen to acquire iron ore mining lease in Karnataka and also to put up an end use plant.
AXIS BANK
STRONG BUY CALL TARGET 1215.

Markets End firm

2008-05-16T09:45:00.000-07:00

Rally in Asian and European markets, and firm US stock futures indicating higher opening of US stocks today helped Indian market shrug off a surge in inflation to highest level in more than three years. Shares from banking and metal advanced on renewed buying.

The Dow Jones Industrial Average futures were up 19 points while Nasdaq 100 futures were up 2.5 points to 2038.25.

The 30-share BSE Sensex was up 59.61 points or 0.34% at 17,413.15, as per provisional closing. The barometer index opened with an upward gap of 122.87 points at 17,476.41. It struck a high of 17,497.36 in early trade. At the day’s high, Sensex gained 143.82 points. Sensex lost 38.02 points at day’s low of 17,315.52 touched in early afternoon trade.

The broader based S&P CNX Nifty advanced 37 points or 0.72% at 5,152.25 as per provisional closing

The wholesale price index rose 7.83% in 12 months to 3 May 2008, higher than previous week's annual rise of 7.61%, government data released today, 16 May 2008, showed. It was the highest since an annual reading of 7.93% n 6 November 2004. Meanwhile, the government also revised inflation for the week ended 8 March 2008 sharply upwards to 7.78% as compared to 5.92% reported earlier.

The market breadth was positive on BSE with 1521 shares advancing as compared to 1160 that declined. 86 remained unchanged.

The BSE Mid-Cap index was up 0.70% to 7,129.70 while the BSE Small-Cap index gained 0.86% to 8,620.26. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 6085 crore as compared to Rs 4313 crore by 14:30 IST

Among the 30-member Sensex pack, 16 gained while the rest slipped

India’s largest bulk drug maker in terms of sales, Ranbaxy Laboratories advanced 3.04% to Rs 509.50 on 7.61 lakh shares. It was the top gainer from Sensex pack.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) was up 0.72% to Rs 2641.45 on 6.52 lakh shares. The stock moved in a range of Rs 2601 and Rs 2646 so far during the day.

Metal shares rose on fresh buying. Sterlite Industries (up 2.08% to Rs 891.10), Tata Steel (up 0.98% to Rs 890.50), Steel Authority of India (up 7.97% to Rs 187) and Sesa Goa (up 0.55% to Rs 4280) gained.

India’s largest cellular services provider in terms of market capitalisation Reliance Communications gained 2.73% to Rs 605.10 after its 95% infrastructure subsidiary Reliance Infratel reportedly secured the Securities and Exchange Board of India (Sebi)’s nod for public issue. The Anil Ambani group company may offload a 10.05% stake in Reliance Infratel to raise Rs 5,000-6,000 crore through the IPO.

India’s largest cellular services provider in terms of market capitalisation Bharti Airtel shed 1.13% to Rs 846.50. The company’s plan for taking over South African telecom major MTN has reportedly entered into a crucial negotiation phase. While Bharti Airtel is ready to acquire 51% stake, MTN’s management wants it to buyout the entire company.

Banking shares shrugged off data showing a surge in inflation. HDFC Bank (up 1.61% to Rs 1500), and State Bank of India (up 1.31% to Rs 1701) advanced

ICICI Bank, the country's largest private sector bank in terms of net profit was up 1.22% to Rs 940. As per reports, the bank’s the private equity arm ICICI Venture Fund Management, will raise as much as $3 billion for an infrastructure and a real estate fund.

IT pivotals slipped after firm start. Infosys (down 1.28% to Rs 1867.10, off day’s high of Rs 1918.40), Wipro (down 0.66% to Rs 505.50, off day’s high of Rs 515), and TCS (down 1.05% to Rs 975.10, off day’s high of Rs 1000.15), declined.

However India’s fourth largest software services exporter Satyam Computer Services rose 0.64% to Rs 487.

The Indian rupee fell to a 13-month low against the dollar today, 16 May 2008. A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US.

Hindustan Unilever (up 1.47% to Rs 242.10) and Jaiprakash Associates (up 1.67% to Rs 270.05), edged higher from Sensex pack.

India’s largest dedicated housing finance company in terms of total income Housing Development Finance Corporation fell 1.55% to Rs 2750 on 63,625 shares. It was the top loser from Sensex pack.

Ambuja Cements (down 1.07% to Rs 110.90), and Cipla (down 1.12% to Rs 211.30) edged lower from Sensex pack.

Aishwarya Telecom was the top traded counter on BSE with turnover of Rs 357.30 crore followed by Housing Development Infrastructure (Rs 177.66 crore), Steel Authority of India (Rs 171.22 crore), Reliance Industries (Rs 171.20 crore), and Reliance Communications (Rs 169.78 crore), in that order.

In a development that can boost the stock market, the government is reportedly set to review the restrictions imposed on participatory notes (P-notes), as foreign institutional investor (FII) have pressed substantial sales from Indian markets in calendar year 2008. In October 2007, FIIs were barred from issuing P-notes in the derivatives market. The finance ministry has asked the Securities & Exchange Board of India (Sebi) to examine whether those restrictions have hindered investments by FIIs.

Meanwhile, polling began for the second phase from today, 16 May 2008, in 66 Assembly constituencies in ten districts of Karnataka. Third and final phase of election will be held on 22 May 2008 in 69 constituencies spread across eight districts. Counting of votes for all the 224 segments will be held on 25 May 2008.

European markets which opened after Indian markets, extended early gains. Key benchmark indices in United Kingdom (up 1.47% to 6,342.80), Germany (up 1.32% to 7,174.62), and France (up 0.81% to 5,098.53), edged higher.

Asian markets were trading mixed today, 16 May 2008. Hang Seng (up 0.47% at 25,633.31), Straits Times (up 0.91% at 3,236.56), Seoul Composite (up 0.14% at 1,888.43) and Taiwan Weighted (up 0.44% at 9,197.41) edged higher.

However China’s Shanghai Composite (down 0.36% at 3,624.33) and Nikkei 225 Average (down 0.23% at 14,219.48), declined.

US markets rallied yesterday, 15 May 2008, after a better-than-expected economic data and pullback in oil prices eased some of the market`s concerns about inflation.

The Dow Jones industrial average rose 94.28 points, or 0.73%, to 12,992.66. The Nasdaq Composite index rose 37.03 points, or 1.48%, to 2,533.73 while the S&P 500 index gained 15 points at 1,424.

Back home, the 30-share BSE Sensex surged 375.19 points or 2.21% at 17,353.54 and the broader based S&P CNX Nifty gained 103.50 points or 2.07% at 5,115.25, yesterday 16 May 2008.

As per provisional data, foreign funds purchased shares worth a net Rs 706.88 crore yesterday, 15 May 2008. Domestic funds bought shares worth a net Rs 363.11 crore on that day.

Foreign institutional investors (FIIs) were net buyers of Rs 524.05 crore in the futures & options segment yesterday, 15 May 2008. They were net buyers of index futures to the tune of Rs 173.50 crore and bought index options worth Rs 186 crore. They were net buyers of stock futures to the tune of Rs 150 crore and bought stock options worth Rs 14.55 crore.

US crude for June delivery rose 67 cents to $124.79 a barrel today, led by the bullish heating oil market as China and Europe scramble for barrels, thinning global supply.

The Indian stock market remains closed on Monday, 19 May 2008, on account of Buddha Pournima.

Hot Scrips

2008-05-15T07:07:00.000-07:00

Reliance Petroluem Buy stop loss 180 Target 210.
IFLEX Solutions Buy around 1350 Trget 1550 Stop 1275

IT Capital Goods Shine

2008-05-15T06:58:00.000-07:00

The market extended gains in late trade on buying frenzy in index pivotals. Shares from real estate, software and capital goods were at the forefront of the rally. A cooling off of crude oil prices, which had soared to record high near $127 a barrel earlier in the week, and firm Asian markets, supported the market sentiment. European markets, which opened after Indian markets, recovered after shaky start and were trading flat.

The 30-share BSE Sensex surged 381.36 points or 2.25% at 17,359.71, as per provisional closing. It opened 137.84 points higher at 17,116.19. The barometer index hit a high of 17,366.19 in late trade. At the day’s high, Sensex gained 387.84 points. Sensex rose 121.03 points at day’s low of 17,099.38 touched in early trade.

Stocks Which Will Not Miss Any Rally

2008-05-12T07:53:00.000-07:00

Chamapgane Indage Bse 522059
Target 1000
stop 450

Rural Electrification
Target 175
stop 100

TECH MAHINDRA
TARGET 1210
STOP 810

Markets Move up after 5 day downside

2008-05-12T07:37:00.000-07:00

Markets today moved up after being down more than 5 days.The Sensex had plunged 863.05 points or 4.9% in five straight trading sessions to 16,737.07 on 9 May 2008 from 17,600.12 on 2 May 2008 as the bears kept hammering stocks cutting across sectors.Firm European and Asian markets triggered the rebound. The S&P CNX Nifty galloped past the 5,000 mark.IT stocks had a good show.Despite the rally in key benchmark indices, the market breadth was weak today. On BSE, 1746 shares declined as compared to 951 that advanced. 51 remained unchanged.
IT stocks advanced on fresh buying as the rupee fell below 42 level against the dollar, at its lowest in almost 13 months. Satyam Computer Services (up 3.72% to Rs 491), TCS (up 1.08% to Rs 927.40), Wipro (up 1.60% to Rs 509.20), and Infosys Technologies (up 1% to Rs 1768), advanced.

A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US.

Markets What Next?

2008-05-10T08:55:00.000-07:00

Earning seasons are almost over and investors are glad that they were not subject to heavy shocks.It started with the usual infosys results which were in line with street expectations.So far this month, stocks have managed to hang on to the gains made during the April recovery as the first-quarter earnings season passed without many shocking disappointments, despite the credit crisis and slackening economy.But this week saw inflation at 7.61% and crude surging to $125.This is going to guide us next week.Is Inflation and crude and the worst global cues inching the market back to 16000?.Monday is going to be the decisive day.Investors may be more inclined to book tidy profits earned by them if the market goes down.What people are realizing is that we've had a great run and they'll get out of positions they're not comfortable with. There's been a fair amount of skepticism about the rally, The volume on the upside wasn't the greatest, which tells you a lot of people never bought into the fact that things are appreciably better.

Hot Stock For Next week

2008-05-09T07:29:00.000-07:00

Target 85 No stop loss. Target will be hit Soon.
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FIIS IN SELLING MODE

2008-05-09T07:24:00.000-07:00

Foreign institutional investors (FIIs) sold shares worth net Rs 402.50 crore on Thursday, 8 May 2008, compared to their buying of Rs 325.10 crore on Wednesday, 7 May 2008.

FII outflow of Rs 402.50 crore on 8 May 2008 was a result of gross purchases Rs 2663.30 crore and gross sales Rs 3065.80 crore. Sensex fell 258.66 points or 1.49% at 17,080.65 on that day.

FII outflow in calendar year 2008 totaled Rs 10,835.70 crore (till 8 May 2008).

There are a total of 1,347 FIIs registered with the Securities & Exchange Board of India (Sebi)

New Stock Ideas

2008-05-07T07:53:00.000-07:00

USHA MArtin investment idea Buy for short term target 125.Long term 250.Stop loss 96.
BUY ICSA TARGET 650 STOP 470(lONG TERM)

Alex Mathew, head research centre, Geojit Financial Services, said we were witnessing a range bound market with crude riding high and rupee at multi month low. Crude oil prices were lifting the oil exploration companies. Cairn India, Reliance industries, Aban Offshore, Dolphine offshore, Shiv Vani oil, Hindoil Exploration and Solar Exploration were in good demand. Normally higher crude prices may help oil exploration companies to get new contracts.

Sugar stocks and futures were in good demand on short covering seen in Shree Renuka sugar and Balrampur Chini which were moving up.

IT stocks like Infosys, TCS and Mastek moved up on firm dollar, rupee has fallen to a low of 41.41 and likely to test further and will have a positive impact on exporting companies.

General outlook for the market remains subdued and likely to get strong support at 5085. If market remains in a range, fresh buying can be seen after tomorrow. On the other hand a fall below 5085 is a concern for the market. Resistance for Nifty will be at 5220 in the short run.

Buying interest will resume in Reliance Industries HDFC, M&M, Cairn India etc. On the other hand oil refining companies and steel stock may face some sell off at higher levels.

Nifty PC ratio is raising and Nifty volatility has been steady declining, which can give strong support to Nifty in the short run

Anmol Sekhri, fund manager, Bonanza Portfolio, said the fact that the market starts recovering after going down shows presence of value buying and those funds are waiting on the sidelines. One can expect this will go on for a while till there are fresh triggers and of course result linked and fundamentals based action will continue

Stocks Ready to take off

2008-05-06T16:37:00.000-07:00

The Sensex opened 49 points lower at 17,441. Some buying in opening trades saw the index spurt to a high of 17,502. The index, however, could not hold gains and soon slipped back into the negative zone.Unabated selling in the market saw the index tumble to a low of 17,238 - down 264 points from the day's high. The Sensex recovered partially and finally ended with a loss of 118 points at 17,373.
The market breadth was fairly negative - out of 2,753 stocks traded, 1,711 declined, 975 advanced and 67 were unchanged today.
The NSE Nifty shed 48 points to end at 5,145.
STOCKS READY FOR A TAKE OFF: BUY BAJAJ HOLDINGS& INVESTMENTS TARGET 852 STOP 721.The following Mutual funds have invested in bajaj holdings.
Fidelity India Special Situations Fund - Growth 2.12%
Fidelity India Special Situations Fund - Dividend 2.12 %
JM Auto Sector Fund - Growth 2.11 %
JM Auto Sector Fund - Dividend 2.11%
Tata Index Fund - Sensex Plan (A) - Growth 2.03%

New Stock Calls

2008-05-05T07:58:00.000-07:00

VIDEOCON INDUSTRIES DELIVERY BUY TARGET 620
Syndicate Bank Target 86

SUPER TITAGARH WAGONS UP 67 RUPEES TODAY.

Market Commentary

2008-05-05T07:57:00.000-07:00

The Sensex opened with a positive gap of 87 points at 17,687. Fresh buying in late morning deals saw the index move up to a high of 17,736 - up 136 points from the previous close.

The index, however, could not hold gains and slipped into the negative zone. The index dropped to a low of 17,457 - down 279 points from the day's high in late noon deals. The Sensex finally ended with a loss of 109 points at 17,491.

The market breadth was fairly positive - out of 2,776 stocks traded, 1,634 advanced, 1,104 declined and 38 were unchanged today.

The NSE Nifty slipped 36 points and settled at 5,192.

Short Term Delivery Calls

2008-05-03T19:57:00.000-07:00

Finolex Cables Target 76 Stop loss 65
Alstom Power Target 680 stop 585
GIPCL 112 Target stop 97

Stocks to Watch out for 5th May

2008-05-02T20:08:00.000-07:00

The coming session is likely to witness a range of 5165 on declines and 5290 on advances. Note the rising range which points towards an optimistic scenario as long as the bulls maintain the Nifty above 5250 for a major part of the trading session.

The outlook for the markets on Monday is that of guarded optimism as neutral/positive overseas cues will add fuel to the upmove in the absolute short term. Desist from selling short unless compelling evidence emerges to support such a move.

STOCKS TO WATCH INDUS IND BANK BUY ABOVE 104 STOP LOSS 100 TARGET 120
TITAGARH WAGON AROUND 700 FOR INVESTMENT TARGET 1000

STOCKS FOR INVESTMENT

2008-05-02T01:16:00.000-07:00

DLF Buy above 710 stop 690 target 810
GTL INFRA Buy above 53 stoploss 49 target 75

Nifty heading towards 5500 levels(KOTAK VIEW)

2008-04-29T19:16:00.000-07:00

Major indices posted weekly gains for the third time in a row. For the latest week, the Sensex and Nifty closed above the crucial levels of 17,000 and 5,100 respectively, up 3% over the previous week’s close.

The rally was backed mainly by momentum stocks like Reliance Capital, RNRL, Reliance Communications, Reliance Power, HDIL, Lanco Infratech, India Infoline and Adlabs Films. Traders have taken an active interest in mid-size stocks like Chambal Fertilisers, Tata Teleservices Maharashtra, JP Hydro, Arvind Mills and MRPL. Volumes were above average. This indicates that traders are slowly regaining their confidence.

Technical Aspect: Last Monday, the market opened higher on the back of strong positive global cues. The opening was gap up. The most interesting part was that it held throughout the week. This must have set the tone for the strong rally on Friday. It was the first gap up opening on a weekly and daily basis between 4,985 and 4,991 for the Nifty (16,570 and 16,589 for the Sensex). It shows that bulls are impatient and moving in for the kill, while the bears are suddenly finding themselves on the backfoot as the move was against their expectations.

The coming week would be more event-based. The trend of the market may depend mainly on the outcome of the US Federal Reserve meeting on May 1). Both events are crucial, and will set the tone for the near-term trend. We feel that even in case of any adverse development, there is no likelihood of a steep downtrend. Technically, the market appears poised for an uptrend in the short term, medium term as well as long term.
There is a fair chance the market may reach 18,300 and 5,500 in the coming few weeks, as the trend is strongly placed on the positive side. However, the short-term trend seems to be over-retraced (not overbought as open outstanding positions are still at their lowest levels of the year). It is approaching the major hurdle of 17,300/5,200. This is the 38% retracement level of the entire fall between 21,206 and 14,677 (6,357 and 4,449 for the Nifty).

Even the levels of the 200-day simple moving averages are pretty close to it (17,380 for the Sensex and 5,150 for the Nifty). One must be cautious around these levels and avoid buying those stocks which are far away from their recent support levels.

On the lower side, the levels of 16,500/4,900 may act as major supports for the market. One can search for buying opportunities in oil and gas, metals, power and, especially private sector bank stocks, as these sectors show a greater potential to ride the bull run. This may happen between 16,000 and 18,000 for the Sensex (4,800 and 5,400 for the Nifty).

Participatory Notes Spoil the Show

2008-04-29T19:12:00.000-07:00

It has been a comatose start to the much awaited stock lending and borrowing (SLB) mechanism flagged off by the Securities and Exchange Board of India last week. In seven trading sessions since its inception, only a measly 15 shares have been transacted in the SLB segment. Market watchers say participation by foreign institutional investors holds the key to the success of this mechanism. But these investors are unlikely to come rushing, at least not while they have a far more efficient route to short sell Indian equities, they feel.

Even before the introduction of SLB, many foreign institutional investors — especially hedge funds — that were not registered with SEBI, had recourse to short selling shares which they felt were over valued. These players did so through foreign institutional investors who were authorised to issue a derivative instrument known as participatory notes (PNs), with equity shares as the underlying.
FIIs registered with SEBI set up PN accounts in which they buy and sell shares on behalf of overseas investors who are not listed with the Indian regulator, either out of choice or because of their inability to fulfil certain criteria. The underlying shares are held by the registered FIIs in their own names, and they issue participatory notes to their clients.

Since the PN-issuing foreign fund transacts on behalf of a number of overseas clients, and retains ownership of those shares, it has an assorted inventory of shares at its disposal. It can then lend these shares to those overseas funds which are looking to go short on the market, for a fee. What is more, even those FIIs registered with SEBI, and which have presence in international markets, can borrow shares from a PN-issuing competitor through this offshore route.
It works like this.

FII A has bought 1,000 shares of ACC in its PN account on behalf of client B. Another foreign client C, based in say, Singapore, wants to go short on thousand shares of ACC. FII A has an arm in Singapore, which will enter into an agreement with C specifying the interest charges and the duration for the short sale, and issue the PN stating that C is short 1,000 shares of ACC. FII A will then sell the 1,000 ACC shares in India. When C wants to reverse its transaction at a later date, FII A will buy 1,000 shares of ACC from the market.

“It is hard to see SLB in the current format gaining popularity with foreign funds when they have a route that offers them better liquidity, flexibility in contract tenure, as well as anonymity,” said an official at a foreign brokerage house.

In SLB, the tenure of the contract is for seven days, ie the borrowed shares have to be returned on the eighth day. In the PN route, the duration of the contract can be six months or even more.

Then there is the issue of anonymity. In SLB, the market can get to know of the short position in a particular stock. Since participatory notes change hands outside India, it is impossible for the market or for even the regulator to know if some foreign fund is actually going short on a particular stock.

Sources at foreign brokerage houses say hedge fund activity has declined significantly since the market crash in January this year, and that has also led to a drop in lending and borrowing transactions through PNs. However, they add that it will continue to be a preferred route when the market regains buoyancy, unless some radical changes are made to current SLB format.

Markets to take further cues from fed

2008-04-29T08:30:00.000-07:00

Stepping up its fight against inflation, the Reserve Bank of India on Tuesday tightened money supply further by raising the cash reserve ratio by 25 basis points, the second time in less than a month.

Even as it left its key repo and reverse repo rates unchanged, the central bank signaled readiness to act again if price pressures built up.

The 25 bps hike in CRR to 8.25 per cent would suck out over Rs 9,000 crore excess funds from the banking system, in addition to the Rs 18,500 crore already garnered by the 0.5 per cent increase in CRR announced on April 17.

The move is aimed at fighting inflation which is ruling at an intolerable 7.33 per cent. The high rate has prompted RBI to revise its inflation comfort band from the earlier 5.00 per cent to 5.50 per cent.

The CRR hike took everyone by surprise, but since the market had expected some revision in reverse repo rates, which did not happen, the CRR hike was discounted.
The credit policy has come in line with our expectations, except the CRR hike of 25 basis points. Leaving the repo rate unchanged was well called for an economy which has been witnessing signs of slowing down. It seems that RBI wants to contain inflationary expectations through liquidity management. The central bank has agreed that inflation has been driven by supply side factors and wants to wait to see the impact of fiscal and monetary measures taken so far. However, RBI has been hawkish in its stance on inflation and ready to take more measures if needed in future,” said Krupesh Thakkar, research analyst (economy), India Capital Markets.

Said Ajay Parmar, head of research at Emkay Shares & Stock Brokers, “RBI's move has come in as a surprise... We were expecting a revision in terms of repo rate, but the second CRR hike has led to a steep rise in the ratio. The policy stance clearly indicates that RBI is more concerned of inflation and should provide good indication for growth. Market seems to be cheering the fact that key rates have been left unchanged; this was widely expected to be raised. It has discounted the hike in CRR; the effects will probably be seen tomorrow or in the coming days.”

Although measures to tackle inflation are widely expected to trip economic expansion, the RBI projected India's GDP to grow by a healthy 8-8.5 per cent for 2008-09 assuming that global financial and commodity markets and economy will be broadly aligned with the central scenario and normal monsoon conditions prevail.

Reacting to the same, Subramanyam Pisupathi, research head, Ventura Securities, said, “It’s a firm balance struck between managing growth and inflation. It indicates that growth has not taken a back seat as the RBI governor expects GDP growth of over 8 in 2008-09. The rally is a ‘thank-you’ rally from the market.”

ICICI Bank’s Joint Managing Director & CFO, Chanda Kochhar, said, “The policy is a clear indication that the focus of RBI will be on liquidity management while leaving the decision to adjust interest rates to the banking system. On the whole, this policy reinforces our belief that the year ahead will bring in robust growth with a sound financial system while our efforts to manage inflationary pressures will continue.”
The market will now take cues from corporate earnings and US Federal Reserve's move on interest rates on Wednesday.

Small Stocks on fire

2008-04-29T04:13:00.000-07:00

The bulls might still be wary of indulging in the bluechips, but they have been chasing some smaller stocks all right. So, while you stayed away thinking it’s a bear market or had no money to put in, a number of stocks in the mid- and small-cap space have been on fire.

A DNA Money analysis shows that during the 15% recovery of the Sensex in the last one month, a whopping 562 stocks in the mid- and small-cap space outperformed the benchmark. Of these, 385 were constituents of the 493-stock BSE Small cap, while the remaining 177 belonged to the 277-share BSE Midcap index.

Further number crunching reveals that a whopping 86 stocks - 20 mid-caps and 66 small-caps have delivered returns of 50% or more. This means, an investment of Rs 10,000 on March 24 in any of these stocks would be worth at least Rs 15,000 today.

And there’s more. Five stocks in the small-cap space would have actually doubled your money in this period. Premier Ltd, Selan Exploration Tech, Balasore Alloys, Gemini Communications and Sasken Communication Tech have all risen 100% or more since March 24.

Two stocks in the midcap index, Orchid Chemicals and BF Utilities, managed this feat. Somewhat predictably, fired by their high-flying constituents, the lesser tracked indices have beaten the Sensex hands down on the way back up.

Defunct exchanges, Idle Brokers Play Market

2008-04-28T07:51:00.000-07:00

The time has come’, as Lewis Carroll spoke of ‘Kings and cabbages’ to speak of men and material, lazy, sleeping and sloth littering and the few vibrant ones adorning the market landscape. The time has come for a clean-up call for the health of the healthy few and thereby for a healthy market!

At the end of March 2007, there were 21 recognised stock exchanges and 9,443 registered brokers in India. Of these, two exchanges, namely, NSE and BSE, which had 1017 and 925 brokers respectively, reported 99.99% of turnover during 2006-07.

Top 100 brokers of each of these two exchanges account for about three fourth of turnover on cash segments. Thus, the raison d’être of 19 exchanges and associated 7,500 brokers has disappeared. A vast majority of brokers on NSE and BSE have marginal, also-inthe-business existence.

Other participants and intermediaries in the securities market have similar excess capacity . In biological terms, some of the participants have grown enormously in size strangling others like huge banyan trees: natural growth in a situation of natural monopoly.

The exchange business presents one of the clear examples of natural monopoly, where greater productive efficiency is achieved with higher scale of operation. With intensive use of technology in trading, clearing and settlement, setting up an exchange requires substantial initial cost, while the marginal cost of operation is negligible.

Further, network externality is inherent in exchange business, if the volumes on an exchange reaches or goes beyond the threshold level of liquidity, the liquidity begets liquidity. If it falls below that level, the liquidity dries up.

As a result, the big becomes bigger trampling the small players unknowingly; like Gulliver in the land of the Lilliputians. These operational features provide strong incentive for an exchange to operate at a higher scale and become a monopolist.

Since all exchanges initially set up systems, but business concentrates in a few in course of time, most of them end up having excess capacity. This is not desirable from an economic, efficiency angle.

The cost of setting up systems and ensuring compliance of heightening rules and regulations have become too heavy for small brokers to shoulder. This trend would continue, big brokers will continue to invest in technology and human resources and expand, while small brokers would fail to do so and consequently fail to provide quality service to clients and gradually be forced to withdraw from the market.

This is exactly parallel to the business of stock exchanges, most of the brokers have excess capacity. As one or two stock exchanges can now cater to the needs of the entire market (which may be true for the global market in the medium future), a few brokers, with financial muscle and superior technology, can also cater to the needs of the whole market.

There was a time when we needed a large number of exchanges spread across the length and breadth of the country through a widespread network of brokers. The circumstances have changed making most of them redundant. The market simply does not have space for many exchanges and thousands of brokers.

We are in a catch 22 situation: there is neither enough justification for their continued existence nor do we like to hasten their exit. We seem to be waiting for their natural death, which is not happening for a long time. As a result, clinically dead exchanges and brokers have blocked sizable resources, a part of which can be released for some other use without affecting the quality or quantity of output.
This is akin to disguised unemployment, which was supposed to be a feature of the primary sector affected by seasonality. Who ever thought a vibrant service sector such as financial services would be a victim of the poor primary sector disease! In any case, the standard remedy for such syndrome, a la Arthur Lewis, is to withdraw or transfer the underutilised resources to other uses, which would improve overall productivity.

An economic agent carries on business as long as it earns normal profits: it pulls down shutters when failing on this target. Despite their non-performance, the redundant exchanges and brokers are not voluntarily exiting from the market.

This soft market resembles a typical soft state where economic agents do not receive or fail to receive the signals emanating from the economic environment and respond to them appropriately. Consequently, the market has failed to reach desirable outcomes in resource use.

This is striking because these are the organisations which profess to ensure the best allocation of resources. If market is efficient and yielding desirable outcomes, the state is not expected to interfere in their functioning in normal circumstances.

The state is, however, expected to interfere if the market malfunctions. Where the economic agents, for whatever reason, do not receive the right signals or make use of opportunities available in the environment, the state needs to guide them.

Unfortunately, when the exchanges and brokers are having huge excess capacity, the state is not guiding them properly. Supporting their continued existence is not helping allocative efficiency either: it is like swimming against the powerful currents unleashed by technology and market forces with very little chance of success.

The continued existence of the defunct exchanges and businessless brokers presents a classic case of market failure and state failure. It is market failure because the economic agents have failed to receive the signal emanating from the changing environment.

It is state failure because it has not incentivised the optimum utilisation of resources. This continuity-at-whatevercost approach is not only increasing the moral hazard problem but also keeping cost of regulation high. Hastening the exit of the defunct entities assumes importance both for the sake of better resource use as well for reducing the regulatory cost by cleaning up the system.

Indian billionaire club to be world's biggest

2008-04-27T06:57:00.000-07:00

Ten years from now, India will have more billionaires than any other country in the world, says a poll by American business publication Forbes.

According to the Internet poll being conducted by the magazine, which lists the world's richest billionaires every year, more than half of respondents believe that India will have the maximum number of billionaires in 2017.

As per the latest Forbes list of world's billionaires, published last month, India is the fourth largest in the world in terms of billionaires population, while US continues to top the rankings

However, according to the online poll on Forbes' website, where over 11,800 votes were cast at the last count, only 17 per cent of respondents believe that the US would have the most billionaires in 2017.

In comparison, the maximum -- 53 per cent -- believe it would be India at the top in terms of number of billionaires. The second highest number of votes has gone in favour of China at 20 per cent, while the US comes at the third position, according to the latest poll data.

None of the other countries has so far managed to garner a vote of more than 10 per cent. Russia comes at fourth position with three per cent, while Brazil, Canada, Germany, Japan and the United Kingdom have one per cent each. So far, virtually no vote has been cast for France having the maximum billionaires in 2017.

The Americans now account for 42 per cent of total 1,125 billionaires in the world, down from 44 per cent last year. Their dominance seems to be diminishing, Forbes had noted last month, saying that half of world's 20 richest were from the US two years ago, but there are only four now.

In comparison, there are four Indians -- Lakshmi Mittal, Mukesh Ambani, Anil Ambani and KP Singh -- among the world's 10 richest. No other country has as many number.

As per the latest list, there are 53 billionaires from India, as against 469 in US and 87 from Russia, the second biggest home of billionaires in the world. The Americans and Russians are followed by billionaires from Germany, which slipped to the third slot this year with 59 billionaires after holding onto the second position for six years.

In Asia, India is already biggest home to maximum number of billionaires, followed by China (42), Hong Kong (26), Japan (24) and Australia (14).

In this year's list of billionaires, there were 226 newcomers, which included 77 from the US. Besides, there were 35 newcomers from Russia, 28 from China and 19 from India.

This represents an annual growth of more than 50 per cent in the number of Indian billionaires from India. Going by this growth rate, the number could increase by 53 currently to close to 3,000 in 10 years from now.

Even if the average annual growth rate is of just about half of this at about 25 per cent, there could still be nearly a ten-fold increase to 500 by 2017.

Merrill Lynch and Capgemini had said in their latest annual wealth report that the millionaire population in India grew by 20.5 per cent last year to about 100,000. This was more than twice the rate of increase in number of the US millionaires and the world's second highest after 21.2 per cent for Singapore.

Tata Largest Global Brand

2008-04-27T06:50:00.000-07:00

LONDON: Tata, one of India's biggest group of companies on an acquisition spree has emerged as one of the largest global brands, according to a UK-based independent consultancy firm.

Valued at USD 11.4 billion, Tata is ranked 57th among top 100 brands listed by Brand Finance, an independent company focused on the management and valuation of brands.

Coca-Cola heads the list followed by fellow American companies Microsoft, Google, Wal-Mart, IBM and GE while UK's HSBC is placed 7th.

Expressing his happiness, R Gopalakrishnan, Executive Director of Tata Sons, and member of the Group Corporate Centre said it was a first for an Indian brand to be listed among the world's largest.

"For the first time, an Indian brand has got into the list of the largest global brands, although it is number 57 and they have valued it at USD 11.4 billion," he said.

Referring to recent acquisitions, Gopalakrishnan said "each of them have a strategic significance for the company.

"If you see the three biggest acquisitions in value, the Anglo-Dutch steel company Corus is the biggest. When completed and approved, Ford's Jaguar and Land Rover will be second and the third will be Tata chemicals' purchase of General Chemicals."

He said the total amount of acquisitions done by Tata is probably around USD 25 billion in the last 4 to 5 years and "apart from the apparent glamour, it is hard work."

"A lot of Tata companies are focussed on extracting value from these acquisitions by setting up integration committees, by cutting costs, by enhancing values, market access, so on and so forth," Gopalakrishnan said.

Markets Sustain Important Levels this Week

2008-04-26T08:44:00.000-07:00

hrugging off concerns over rising inflation and a hike in the Cash Reserve Ratio, the Bombay Stock Exchange benchmark Sensex gained 4.0 per cent to recapture the psychologically important 17K peak in the week, largely driven by robust earnings by frontline stocks.

In the week to April 26, the BSE barometer advanced by another 644.78 points or 3.91 per cent to end the week at 17,125.98 from its last weekend's close of 16,481.20.

The broader 50-share S&P CNX Nifty of the National Stock Exchange also spurted by 153.30 points or 3.09 per cent to close the week at 5,111.70 from its last weekend's close.

Investors looked optimistic over the prospect of capital inflows into Indian equity markets after key corporates came out with encouraging fourth quarter financial results and global markets showed signs of recovery, providing bourses a major trigger.

The marketwide rollover of nearly 82 per cent to May series is also seen as a bullish factor by marketmen.

Global stocks are expected to move upwards as world's largest economy showed signs of resilence after an ecnouraging US jobs and manufacturing data this week.

Analysts said the outlook for the market is good as some some frontline companies such as Reliance Communications, Hindustan Unilever, Reliance Energy and ICICI Bank will unveil financial results next week.

The Reserve Bank of India's annual monetary policy review on April 29 and the US Federal Reserve meeting at month-end also is expected to play a crucial role in determining the market direction, they added.

Analysts foresee a possibility of a rate hike at home, while they do not rule out a rate cut by the Federal Reserve.

ICICI Bank Beats Forecast

2008-04-26T08:38:00.000-07:00

ICICI Bank, India's second-largest bank, on Saturday reported an above-forecast 39 per cent rise in quarterly net profit, helped by a strong demand for loans.

The country's leading private-sector bank, which is also listed in New York said net profit in January-March, its fiscal fourth quarter, was Rs 11.5 billion, up from Rs 8.25 billion a year ago.

A Reuters poll of analysts had forecast a 10 per cent rise in net profit to Rs 9.07 billion.

The bank said its total income in the March quarter rose to Rs 103.91 billion from Rs 84.95 billion a year ago.

Shares in ICICI Bank, which had fallen 38 per cent in the March quarter, rose 4.5 per cent on Friday to Rs 916.15 on expectations of the results topping forecasts.

RBI TO HIKE RATES

2008-04-26T06:20:00.001-07:00

The banking industry is sitting on a huge pile of funds ahead of the next week’s credit policy review. As against an outgo of Rs 18,500 crore towards the cash reserve ratio (CRR) over the next two fortnights, banks are parking surplus funds, in the range of Rs 20,000-25 ,000 crore, with the Reserve Bank of India (RBI) on a daily basis.

Taken together — funds floating in the call money market, the market for collateralised borrowing and lending obligations (CBLO) and funds parked by banks with the central bank under the reverse repo window — surplus cash flows in the market could be closer to Rs 1,00,000 crore.

Treasury officials say that such surplus cash conditions may surely prompt RBI to announce further rate actions. These could include selling more bonds under the market stabilisation route or worse still, a hike in key rates — repo and reverse repo rates.

Are You being Cheated by Brokerages

2008-04-24T04:00:00.000-07:00

top-ranked analyst at Salomon Brothers and Merrill Lynch (MER), McClellan was one of the first to cover the booming computer industry. In addition to being well-respected, he was one of the longest-serving equity analysts on Wall Street, with a career stretching from 1971 to 2003.

Now, the retired 65-year-old number cruncher is saying what he really thinks about Wall Street. In his new book, Full of Bull: Do What Wall Street Does, Not What It Says, to Make Money in the Market, McClellan, admits that price targets are "fiction," and buy/sell/hold ratings aren't taken seriously by professional investors. Analysts spend perhaps only 20% of their time on research and the rest on marketing and other tasks, he says. They create sophisticated computer programs to track a company's earnings, revenue, and cash flow in close detail. But the results are "not accurate at all," he says. In fact, analysts often miss big trends and have a terrible record as stockpickers.

Stiff penalties

Research isn't written for retail investors, but for institutions. Those institutions, including mutual funds and hedge funds, have far too much influence over an analyst's research, McClellan says. Companies and executives are also too good at manipulating analysts.

Even more blatant biases were exposed as part of the 2002-03 investigation by the New York State Attorney General and securities regulators, which led to the Global Settlement of Conflicts of Interest Between Research & Investment Banking that required 10 of the nation's top investment banks to pay $1.4 billion in penalties and restitution to harmed investors, including money for investor education and independent research.

The research settlement may have pushed apart investment banking and research, but it left in place lots of other conflicts of interests, McClellan says. Plus, the settlement's money for research-money that is slated to run out in 2009-hasn't improved its usefulness for investors. By giving research away, Wall Street has diluted its quality, he argues.

Exposing the code

McClellan says that when he retired, he began to realize how naive individual investors "take Wall Street literally." When analysts rate a stock as a buy and expect it to rise 20% in the next six months, many individual investors actually believe them.

"All of us insiders know the code," McClellan said in an interview with BusinessWeek. "But all the outsiders don't."

The book is designed to "expose the puzzling, deceptive, conflicted behavior of Wall Street that so disadvantages individual investors," he writes. It's not that Wall Street intentionally tries to cheat and deceive individual investors, he says. Rather, investors are at a disadvantage because so many other interests-those of companies, institutional investors, and the brokerage houses themselves-come before their own.

Markets Not Affected By CRR Hike

2008-04-21T05:25:00.000-07:00

Across-the-board buying helped the market extend further gains Monday. Metal shares gained momentum, followed by technology shares and capital goods. Second rung stocks also attracted investors.

Banking stocks, which were expected to take a hit on account of the CRR hike, were back in action. An extended weekend and strong global cues helped eclipse the surprise move by RBI.

After market hours on Thursday, the RBI said it would raise the cash reserve ratio, the amount that banks have to park with it, to 8 percent, its highest in almost 7 years to cool inflation from three-year peaks.

"Time would have healed the sting of the CRR move. Investors had a lot of time over the weekend to digest the news, and with overseas markets in a cheerful mood, the market latched onto the positive news," said an analyst with a local brokerage.

At 11:45 am, Bombay Stock Exchange's Sensex was up 1.42 per cent or 234 points at 16,715.22. The index touched a high of 16,778.59 in trade so far.

National Stock Exchange's Nifty advanced 1.47 per cent or 73 points to 5031.10 after rising to a high of 5053.40 so far.

Investors fancied Tier II and III stocks driving the BSE Midcap and Smallcap indices up 1.99 per cent and 2.27 per cent respectively.

Jaiprakash Associates, up 4.28 per cent, topped the list of Sensex gainers. Tata Steel (3.89%), Wipro (2.81%), HDFC Bank (2.76%), Grasim Industries (2.63%), Bharti Airtel (2.58%) and Hindalco Industries (2.31%) were the other gainers.

There were no losers in the 30-share index.

Elswhere in Asia, stocks rose sending the region's benchmark indices to a seven-week high, on speculation credit-market losses in banks may be winding down. Japan's Nikkei climbed 2 per cent, Hong Kong's Hang Seng added 2.49 per cent and Singapore's Straits Times gained 1.94 per cent.

Maruti Cars to Cost More

2008-04-20T07:48:00.000-07:00

intense pressure from rising input costs, especially that of steel, the country's largest carmaker Maruti Suzuki has decided to hike prices from the first week of next month.
According to sources, the company's sales department has written to dealers to be prepared for the imminent price hike and exhaust existing stocks before the new prices come in.

"There has been a continuous increase in the steel and commodity prices in the past few months. As a result our input costs have increased substantially. We have been trying to absorb this increase in the input costs, but now we are forced to pass on a part of this increase to the customers," the company's letter to dealers said.

The company, however, is still in the process of finalising the the quantum of the proposed hike on different models. "The amount of increase is likely to be substantial and will increase the ex-showroom price by the first week of May," the letter added.

When contacted, MSI officials confirmed that the cost pressures were mounting due to increase in input costs, but refused to elaborate further on the issue.

The company had last increased the prices of its cars in February 2008 ranging between Rs 1,000 and Rs 11,000 (ex-Showroom, Delhi) across most of its models.

It, however, reduced prices in its six models following the excise duty reduction announced in the Budget on small cars from 16 per cent to 12 per cent. Maruti 800, Omni, Zen, Wagon R, Swift Diesel and Alto that qualify for the lower excise benefit, saw the price reduction ranging between from Rs 6,500 and Rs 18,030

Will RBI Tighten Its Noose??

2008-04-20T07:44:00.000-07:00

Worried over the unabated inflation now at over 7 per cent, Reserve Bank is expected to take more monetary measures including a hike in key short-term rates in its credit policy on April 29, top bankers said.

A possible 0.25-0.5 per cent hike in the repo rate could be on the cards to supplement the 0.5 per cent cash reserve ratio (CRR) hike effected last week by the apex bank, they said.

Repo rate is the rate at which the RBI borrows from the banks while CRR is the amount of funds that the banks have to keep with the RBI.

"The first priority of the Reserve Bank would be to rein in inflation. A 0.25-0.5 per cent hike in repo rates is quite possible," Uco Bank's Chairman & Managing Director, S K Goel, said.

RBI had hiked CRR by 0.5 per cent to 8 per cent on Thursday to suck out Rs 18,500-crore liqidity from the banking system as a measure to combat ballooning inflation.

"The impound on Uco Bank with this CRR hike would be around Rs 400 crore while the loss of income would be around Rs 24 crore. This would have an impact on the lending surplus of the bank," Goel said.

The bank's Asset Liability Committee (ALCO) will meet on May 5 to take a decision on lending rates, Goel said.

Even a 0.25 per cent hike in short-term rates could force banks to pass on the burden to their customers through a hike in lending rates.

Merrill Lynch Posts Biggest Loss Ever

2008-04-17T05:22:00.000-07:00

Merrill Lynch & Co on Thursday posted a nearly $2 billion first-quarter loss, and said it plans to cut 4,000 jobs after suffering several billion dollars of write-downs for subprime mortgages and other risky assets.

The job cuts cover about 10 percent of staff at the world's largest brokerage, excluding financial advisers and investment associates. Merrill Lynch said the job cuts will be targeted in markets and investment banking operations and in support areas. The company said it ended March with 63,100 employees overall.

Merrill Lynch's quarterly net loss was $1.96 billion, and compared with a profit of $2.16 billion a year earlier.

Including preferred stock dividends, the loss was $2.14 billion, or $2.19 per share, and compared with a profit of $2.11 billion, or $2.26, a year earlier.

The loss from continuing operations was $2.20 per share. On that basis, analysts on average expected a loss of $1.96 per share, according to Reuters Estimates.

Net revenue declined 69 percent to $2.93 billion. Analysts expected revenue of $3.35 billion.

Chief Executive John Thain said that despite the loss, Merrill Lynch remains "well-capitalized."

Merrill Lynch had already recorded more than $24 billion of write-downs in prior quarters. These spurred it to raise more than $12 billion of new capital. Thain said this month he did not expect to raise more capital in the foreseeable future.

Results reflected a $1.5 billion write-down related to collateralized debt obligations tied to asset-backed securities, and a $3 billion write-down linked mainly to so-called "super-senior" CDOs tied to asset.

IT Stocks lead the Show

2008-04-17T05:12:00.000-07:00

Export-driven technology stocks continued to march northward for the third straight day Thursday. Infosys' FY09 guidance has revived investor interest in this sector.

In the last three days alone, the BSE IT Index has gained as much as 13 per cent with Sensex constituents Infosys, Tata Consultancy Services, Wipro, Satyam Computer Services and HCL Technologies gaining 6-10 per cent.

This is because, even now this sector continues to hold consistent growth prospects, analysts said.

“It is quite heartening that Infosys has managed to deliver decent results and guide 19-21 per cent revenue growth for the forthcoming year, even with the fear of a crisis looming in the US. This offers some comfort to smaller mid-sized companies,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.

The weak global economic outlook, particularly for the US which is the largest market for IT players, and the strengthening of the rupee against the dollar have had an adverse impact on IT stocks for over a year now with the BSE IT Index losing 17.2 per cent.

Gandhi added that mutual funds' exposure to the IT sector is expected to build up as fund managers are finding greater value in these stocks.

“After IT stocks lost their charm, people flocked to capital goods, driving their prices ahead of valuations. As of now, most IT stocks are available at prices that are one-third that of capital goods stocks,” she said.

Interest in small and mid-sized companies in this sector also revived today on reports that the prime minister is willing to consider extending the concession on Software Technology Parks of India.

Hexaware Technologies, Rolta, i-flex Solutions and Sonata Software today rose 4-8 per cent on the news.

11 Digit Mobile Number Soon

2008-04-15T08:14:00.001-07:00

By the middle of next year, one will have to dial 11 digits, instead of the current 10, to connect to mobile phone users across the country. And, `99’ will be the first two digits in every mobile number, in the 11-digit regime.

There won’t be any change in fixed line phone numbers. The Telecom Engineering Centre (TEC), which is the technical arm of the Department of Telecommunications (DoT), has finalised the report on national numbering plan, sources in the government told DNA Money. It is learnt that TEC submitted the national numbering plan report to DoT last week.

TEC has recommended a timeframe of six to nine months, for converting the existing 10-digit mobile numbers to the 11-digit format. The shift to 11-digit number will apply to all mobile users-GSM (global systems for mobile communications) and CDMA (code division multiple access), old and new subscribers.

According to the latest recommendation of TEC, the new telecom operators will be allotted the spare levels of 90 and 91 in the 10-digit series. But, they too will have to migrate to 11 digits, by prefixing `9’, in the same timeframe as the existing telcos.

The TEC recommendation adds that the numbering plan for fixed line phones will remain the same.

In 2003, DoT had come out with a 30-year numbering plan, but five years down the line there’s a need for review. This time, DoT wants to ensure that the solution is for a much longer term, it is learnt. Mobile telephony has been witnessing tremendous growth and new telcos have also queued up to offer wireless services.

US Slow down hits Infosys

2008-04-15T08:12:00.000-07:00

Infosys Technologies on Tuesday posted a lower-than-expected fourth-quarter net profit as the US economic slowdown led clients in its biggest market to pare spending.

The Bangalore-based company's net profit rose 9.2 percent to Rs 1249 crore ($312.44 million) in the three months ended March 31, from Rs 1145 crore a year earlier, Infosys said in a statement.

Infosys, whose profit fell short of analyst estimates of Rs 1260 crore, and its peers have been bracing for a cut in the technology budgets of US clients beleaguered by the credit crunch in the world's biggest economy.

An Infosys survey showed that as many as 76 percent of customers in the US, which provides two-thirds of the revenue earned by Indian software makers, planned either to cut budgets or leave them unchanged.

"US companies are passing through a corridor of uncertainty as they come to terms with the slowdown, or recession, in the US economy," said Tejas Doshi, an analyst at Mumbai-based Sushil Finance.

"They have not been able to decide on their budgets," Doshi said. "New project starts and business starts have been delayed because of the uncertainty, which has definitely impacted Indian software firms."

The slowdown offset higher revenue that may have been contributed by the 40 clients that Infosys added during the quarter. Revenue rose by a fifth to $1.136 billion.

"There could be short-term challenges due to global economic uncertainties," chief executive officer Kris Gopalakarishnan conceded.

But he added: "We as a company see significant growth opportunities in the medium-to-long term."

Companies such as Infosys and bigger rival Tata Consultancy have benefitted in the past decade from work farmed out by companies in the US and Europe that sought to cut costs by tapping India's low-cost engineering talent pool.

They are hoping that clients, once they weigh the US economic situation, would send more work to low-cost locations such as India. Simultaneously, Indian companies are trying to win more non-US business.

"The pricing environment remained stable during the quarter," Infosys chief operating officer S D Shibulal said. "We continue to see greater growth opportunities in Europe."

For the year to March 31, 2009, Infosys forecast revenue to increase by as much as 21.1 per cent, and earnings per share to rise by up to 18.3 per cent, within the range of analysts' expectations.

The company also said it would increase its dividend payout ratio to as much as 30 percent of net profit, from 20 percent, starting this fiscal year.

For the year ended March 31, Infosys will pay a final dividend of 7.25 rupees per share amounting to 4.15 billion rupees and a special dividend of 20 rupees per share, adding up to 11.44 billion rupees.

The special dividend was to celebrate Infosys achieving one billion dollars in net profit during the year, said chief financial officer V Balakrishnan.

That helped Infosys shares rise Rs 54.55, or 3.83 percent, to Rs 1,477 in early trade on the Bombay Stock Exchange.

Shares of Infosys and other software firms plunged last year amid the Indian rupee's 12.3 percent jump against the dollar that dented export revenue, rising costs and the looming US slowdown.

Is the Party Over For Indian Economy

2008-04-14T09:03:00.000-07:00

The going has been good in India in the last three years.
GDP growth has averaged more than 9%, creating millions of jobs and billions of dollars in investments.

However, the rise in inflation together with high interest rates and a potential global recession threaten to halt the Indian party this year.

Already economists are predicting a slowdown in GDP growth in 2008-09, as higher inflation is likely to force the Reserve Bank of India to hike interest rates, which will impact borrowing both for consumers and companies.

Wholesale prices shot up to 7.41% in the week ended March 28 from just 3.80% on January 12. It is also beyond RBI’s self-imposed target of 5-5.50%.

The higher inflation has dashed all hopes of lower interest rates. Growth is also likely to be relatively lower than the previous years.

Dharmakirti Joshi, principal economist at rating agency Crisil, sees inflation dominating all macroeconomic calculations in 2008-09.

“Inflation is now out of the comfort zone and is beginning to hurt. There is no way interest rates are going to come down soon unless inflation declines and stays below 5% for some time,” Joshi said.

Higher inflation is likely to force the RBI to hike the cash reserve ratio (CRR) — or the portion of deposits that the banks have to compulsorily park with the RBI as a safety measure — when its holds its annual monetary policy meeting on April 29. The CRR is currently at 7.75%.

Economists such as Sonal Varma and Rob Subbaraman of Lehman Brothers, who had previously expected the RBI to cut rates in by the end of 2008, are now not expecting any rate cut this year because inflation has risen faster than they had forecast.
HDFC Bank chief economist Abheek Barua expects higher interest rates in the short term

Only 3 days for the Market this week

2008-04-14T08:56:00.000-07:00

With just three trading days this week (truncated by the birthdays of Babasaheb Ambedkar and Lord Mahavir on either end), the prognosis is one of weakness.

Piled-up pessimism after the Dow Jones plunge on Friday and a minefield of a results season could trigger a gapdown on Tuesday morning, analysts said.

Of course, if the Dow rebounds on Monday night, things will be better on Tuesday.
The index plunged over 2% on Friday following disappointing results by that paragon of stability, General Electric.

Ketan Karani, vice-president-research, Kotak Securities, believes this is symptomatic of what happened in the capital goods sector in India — “it’s happening around the world”.

With two big results lined up —- that of Infosys and Wipro — Karani said the trend will be weak.

Asking investors to remain underweight, Credit Suisse analysts Nilesh Jasani and Arya Sen said earnings confessions are inevitable this season. So guidances from corporates will be the key.

“We wish corporates would realise the strength of the cyclical forces at play and provide conservative estimates. Such a scenario might be negative for stocks in the near-term but would create medium-term upside for the market by creating the room for positive surprises,” Jasani and Sen said in a note to clients last week.

“If Indian companies help investors form more realistic expectations and remove the fear of shocks —- of the kind that we recently saw from capital goods companies —- the market could form a bottom and recover later. Our conversations with corporates and expectations from guidance, however, do not suggest that this is going to be the case. Investors should prepare for an atrophying market as a result,” they said.

Markets Waiting For A Breakout

2008-04-12T19:58:00.000-07:00

Last week, the Sensex consolidated in a narrow range of 636 points while finishing with a gain of 465 points at 15,808.

The Infosys results, to be announced on Tuesday, could be the trigger for a breakout on either side. The broader range of the index remains unchanged at 14,670 to 17,200.

This week, the Sensex may face resistance around 16,050-16,125-16,200, while on the downside the index is likely to find support around 15,560-15,490-15,415.

The NSE Nifty moved in a range of 189 points. From a low of 4,629, the index touched a high of 4,817 and finally ended with a gain of 131 points at 4,778.

The Nifty bollinger bands have narrowed a bit to 4,505 to 4,940. On a positive front, the index managed to close above the 20-DMA (Daily Moving Average) on Friday. The 20-DMA at 4,722 could be a near support.

The 50-DMA is currently at 4,960 and the 200-DMA is at 5,125. These levels could pose significant resistance for the index in coming days.

The Nifty may form a support line at 4,630, with multiple intra-day lows at this level. The 4,660 to 4,570 levels should act as strong support in case of a significant downmove this week.

This week, the index may find support around 4,705-4,685-4,660 and resistance on the upside around 4,850-4,870-4,895.

From June ’09, your mobile number is yours

2008-04-11T19:49:00.000-07:00

By June 2009 your mobile number will become yours to keep, as long as you are paying your bills. You can change your operator, but your number will remain the same.

The Telecom Regulatory Authority of India (Trai) has suggested this deadline in a letter to department of telecommunications (DoT) secretary Siddhartha Behura.

Last November, DoT had indicated that number portability would be implemented by December 2008 in the metros. The new time-table covers the whole country.

The deadline is more realistic since implementation of number portability needs additional investments and an enabling mechanism, including the creation of a Mobile Number Portability Clearing House Administrator.

Trai chairman Nripendra Misra said the government should come out with a road-map for implementing number portability. Covering the whole country could “facilitate planning at the telecom service providers’ level,” Misra has added.

The regulator, in a recommendation on Friday, has also requested DoT to grant a licence to neutral or third parties to set up a clearing house administrator through competitive bidding. This administrator would have to follow the norms applicable to any telecom service provider, including foreign investment limits.

Elaborating on the norms for number portability, Trai has said no credit transfer will be allowed to the new account, in case a pre-paid mobile user shifts over to a new service provider.

Also, there would be a ‘break before make’ arrangement for completion of the porting process. That is, the connection of the donor network has to be snapped before the recipient network is made. The regulator has stressed that the break period (disconnected period) should not be more than two hours, but initially the total time taken to port a number may be up to three days.

Microsoft &HCL Launches Smallest Laptop

2008-04-11T19:44:00.000-07:00

MUMBAI: Microsoft Corporation and HCL Infosystems on Friday announced a series of joint initiatives, including launch of world's cheapest ultra portable laptop and setting up of centre of excellence, which will employ over 500 professionals.

Priced at Rs 16,990, MiLeap brand of HCL laptops with Microsoft Windows XP Home operating system is the lowest priced among the MS operating system powered laptops, the company officials said.

"There is a huge potential in the PC market as India is selling about seven million PCs as compared to 32 million in China. Through this laptop we mean to increase the IT penetration," HCL Infosystems Chairman & CEO Ajai Chowdhary told reporters.

Microsoft Chief Operating Officer Kevin Turner said that by altering its operating system for HCL's ultra portable laptop, the company has reinforced its commitment to offer the best and the latest technology to Indian consumers.

The companies also announced the setting up of a new Centre of Excellence, which will employ over 500 software professionals to create, design and deploy Microsoft technologies based solution frameworks across various industry verticals.

Indian IT Industry Set For Slow Down

2008-04-11T19:42:00.000-07:00

The Indian IT-BPO industry is headed for a slowdown in growth this year but is on track to achieve its target of exports worth $60-billion by 2010, industry association Nasscom said on Friday.

“There will be some slowdown but growth will happen. The $60-billion target will be maintained and achieved,” said Nasscom president Som Mittal. Mr Mittal said that the Indian IT-BPO industry needs to grow at 22-23% in future to achieve the $60-billion export target, a rate which could be achieved and exceeded easily.

“There will be 4-6 months of sluggish growth but we don’t think there is any long, deep recession setting in,” said the association’s new chairman Ganesh Natarajan. The Zensar Technologies CEO added that in some cases, slowdown has already led to more outsourcing.

Nasscom vice-chairman and Genpact CEO Pramod Bhasin said there was still lack of clarity over the impact of the slowdown in the US. “The impact will be clearer in the next 3-6 months,” he said.

Sell Infosys On Rallies

2008-04-11T09:32:00.000-07:00

Shahina Mukadam, IDBI Capital Market is of the view that one can book profits in Infosys Technologies on rallies

This quarter numbers of Infosys Technologies should be reasonably good. We are expecting a 22% growth YoY and I think on a sequential base is about 5%, which is not bad. If one see normally in the past the company has been giving a very conservative guidance and then outperforming. I think this time around it could be very much the opposite."

She further added, "The company is likely to come out with a reasonable guidance of maybe about 20%, which of course will be lower than what we have seen in the past but then going forward there are many critical issues like exchange rate, the slowdown in the US economy and especially the impact on the financial sector and increasing cost. So I think we have to really see how numbers will evolve over a period of time, valuations are 15 times at current price levels, it is not too expensive but I think there is limited upside going forward from here. So any rally should be used to book profits rather than continue to hold

Infosys Technologies is to announce its Q4 and FY08 numbers. According to CNBC-TV18 estimates, the company is expected to post net profit of Rs 1253.8 crore for the quarter ended March 2008 as against Rs 1231 crore in previous quarter.

Revenues are seen going up 6.1% to Rs 4527.4 crore versus Rs 4271 crore. EBIDTA is likely to go up at Rs 1483.4 crore versus Rs 1392 crore. Margins are seen at 32.8% versus 32.6%. EPS works out to be Rs 21.95.

Infosys Q4 Guidance was (Re terms)

Revenues at Rs 4477 – 4501 cr
Growth of 4.8% - 5.4% (expectations of 4-6%)
EPS at Rs 21.38; growth of 5.3%
Factors at play

1% depn in Re/$ to boost margins but would be negated by higher S&M expenses
Forex losses likely in the quarter; may partly offset gains from re depn
Margins to gain from Absence of one-time items reported in 3Q (overseas insurance provision of +170bps and California wage settlement of -240bps)
For FY08, the company is expected to post 20% growth in its revenues at Rs 16677.4 crore versus Rs 13893 crore. Net profit is seen up by 21.1% to Rs 4663.8 crore versus Rs 3850 crore. EPS works out to Rs 81.6.

FY08 Guidance was

Revenues at Rs 16627- 16651 cr
Growth of 19.7% -19.9%
EPS: 81.07; growth of 17.12%
Street expectations

Expectations of 18-20% dollar guidance for FY09 (15-16% rupee guidance)
FY09 EPS guidance likely in the Rs 90.5-91.5 range (but street still has Fy09 EPS targets at around Rs 95)
Q1 guidance expected around 0.5%- 1.5% QoQ in dollar terms (seasonally weak qtr)
Thumbs Up: Better margin assumptions in guidance
Thumbs Down: Jun08 volumes even worse than our assumptions (20-22% expected)

Markets to Remain Choppy on Wednesday

2008-04-09T06:21:00.000-07:00

Alex Mathew Head of Research, Geojit Financial Services said, equities closed marginally lower on weak global cues and amid fear of high inflation due to strong crude oil. Crude was strong above USD 108 and is looking at a target of USD 112 hence was supporting the bears. Cement, steel, capital goods stocks were facing sell off whereas banking and financial sector stocks got much attention.

Overall trend will remain range bound for tomorrow and a breakout above or below 4735 - 4635 levels is very crucial and will give a direction to the market. Volumes in the F&O segment were lower and the PC ratio is also falling suggesting choppiness in tomorrow`s trade.

It is advisable to create long positions on, Nifty if Nifty futures trades above 4735; in that case strong short covering can be seen, and Nifty futures may test 4785 and 4831 levels. Volumes in the F&O segment were lower and the PC ratio is also falling suggesting choppiness in tomorrow`s trade.

Bhupendra Sharma, vice president, Hornic Investments said that markets closed down following the weak global markets and concerns over high inflation figures. Sensex closed down 169 points at 15557 while Nifty ended at 4709 down by 51points.

According to him, if Sensex crosses 15,800 level then markets may once again touch 16000 to 17000 in the short run, though any CRR hike by RBI may again pull markets down. He expects markets to remain positive on Wednesday. Stocks to be watched out are Yes bank, L&T, Welspun Gujarat, GIPCL, Torrent power, Sunil Hi-Tech and mid cap pharma stocks like JB Chemical and Glenmark Pharma.

Worst Performing Quarter for Mutual funds

2008-04-08T19:05:00.000-07:00

MUMBAI: It could probably be the worst-performing quarter for mutual funds in India over a decade. A glance at the return profile of mutual funds for the January-March quarter shows that almost the entire gamut of equity, sectoral, thematic and offshore investment funds have yielded negative returns.

Amid turbulent market conditions since late January, net asset values of individual equity funds have fallen 20-55%. Sector funds investing in IT, pharma and infrastructure are down in the range of 18-45%.

Even contrarian calls have gone wrong with most contra funds logging losses in the range of 30 to 36%. Only 35 out of 280-odd equity funds managed to outperform their benchmark indices. The only bright spot, solely by virtue of lower losses, have been those funds investing overseas economies (international/offshore funds), which have fallen 8-18%.

In an email response to ET, Value Research CEO Dhirendra Kumar said, “Of the small number of funds that beat the benchmarks handsomely, a majority are those that also invest abroad. Though some international funds lost investors’ money, they lost lot less than domestically-focused funds. This demonstrates the value of true diversification in bad times.”

According to Mr Kumar, among sector-specific fund categories, the small FMCG and pharma categories did less worse than mainstream funds, losing an average 16.7% and 18.9% respectively. The DSPML World Gold Fund, which invests not in gold but in stocks of companies that are part of the global gold mining and refining industry, did fairly well during the considered period.

According to market sources, fund managers adopted short-term trading techniques to maintain their portfolio values. In normal corrective phases, fund managers steer their portfolios away from taking big hits by investing in a mix of shares of diverse sectors.

This helps them to compensate any loss of value with appreciation in the other shares. But this time round, the correction has been so all pervasive that fund managers are not left with many choices, but to time the market in order to improve their returns. If one goes by net industry assets under management, volatile markets have shaved 6% off assets under management

Insurance Companies Can lend Shares

2008-04-03T19:10:00.000-07:00

India’s insurance sector regulator has decided to allow insurance companies to lend shares to foreign and domestic institutions, a move that will create a new stream of revenues for these firms, and increase overall trading activity in the stock market.
Indian laws currently allow institutions to short sell in the futures segment of the market. From 21 April, they will also be allowed to sell short in the so-called cash segment of the market. A company that sells short, sells the stock without actually owning it in the hope that the price will fall in the coming days. It hopes to be able to buy the stock at a lower price when this happens—well in time to deliver it or settle the transaction.
In the cash segment, traders buy and sell shares and this transaction is necessarily completed by a delivery. In the futures segment there is no delivery. Investors just buy a futures contract by paying up to one-fifth of the value of the underlying shares. They then make (or lose) money depending on which way the underlying shares move. The differential is added or subtracted from the investors’ accounts. This process continues till the contract is sold or expires.
To sell short in the cash segment, sellers will need to have possession of the stock. However, they do not need to buy stock for this—they can just borrow it. This is where the insurance companies enter.
Most insurance companies have large, varied and valuable stock portfolios and are usually long-term investors. “We do see scope for life insurers to unlock value of their holdings through lending their shares because they have long term liabilities. We will, however, not be permitting short selling by the insurance companies (themselves),” said C.R. Muralidharan, finance member of Insurance Regulatory and Development Authority, or Irda, the regulator. “Compared to private insurers, Life Insurance Corp. of India can benefit more from lending their shares given the size of their investments,” he added.
According to Bloomberg, Life Insurance Corp. (LIC), which has almost two-thirds share of the life insurance market in India, has investments in 23 of the 30 Sensex stocks with a total market value of 2,232 crore. Collectively, the company has invested in around 410 listed firms. According to a Mint analysis on 11 December, the market value of the state-owned insurer was at least Rs1.97 trillion in late 2007.
Executives at LIC did not respond to queries.
Muralidharan said because the proposal “has got the approval from the Government of India, it doesn’t need Parliament’s approval.” Irda usually requires the government to move amendments through Parliament, effecting changes in insurance laws. In this case, a notification would suffice, Muralidharan clarified.
Under the so-called securities lending and borrowing scheme, or SL&B, stock markets regulator Securities and Exchange Board of India has allowed short sales by institutional investors as long as they have borrowed shares to cover the transaction.
All so-called clearing members of National Securities Clearing Corp. Ltd, including banks and custodians, can participate in the scheme. These members provide banking services to traders and facilitate electronic settlement of deliveries. Any entity whose shares are held by them can participate in the SL&B scheme. Sebi will initially allow borrowing and lending only on stocks that are already available for trading in the derivatives segment.
Irda’s move allows insurance firms to participate in the process.
The firms will earn money the same way other lenders do—when institutions that have borrowed stock return them, they will do so with a fee that is yet to be decided but will likely depend on the price of the underlying shares.
Existing laws allow individuals or retail investors to sell short in the cash market.
Irda is yet to make an announcement on this and insurers are waiting for some clarity from the regulator. “There is no clarification yet about the interest rates. But a go-ahead will be given only after going through all the accounting, investment and other prudential norms,” said Muralidharan.
“If IRDA were to agree and allow us to move in this direction insurers can play a significant role on the lending side of the business, said Sunil Kakar, director finance and CFO of Max New York Life Insurance Co. Ltd.
“It will give a platform to earn interest income on the stocks lying idle with the insurance companies,” added Sashi Krishnan, chief investment officer of Bajaj Allianz Life Insurance Co Ltd

48 Indian Companies In Forbes 2000 list

2008-04-03T19:04:00.000-07:00

With India emerging as a hot spot for wealth creation, 48 Indian firms, led by Mukesh Ambani's Reliance Industries, have made it to this year's list of 2,000 biggest global companies, compiled by Forbes magazine.

The state-run Oil and Natural Gas Corp (ONGC) ranks second among Indian firms on the list with 198th position overall, just behind the 193rd rank for Reliance Industries, India's largest private sector conglomerate.

Two out of the three firms that rank among the top five companies from India are state-run enterprises - State Bank of India (219th) and Indian Oil (303rd), while private financial sector power house ICICI Bank follows next at 374th.

The companies on the list include as many as three from the stable of Mukesh Ambani's younger brother, Anil - Reliance Communications (846), Reliance Power (1,597) and Reliance Capital (1,919).

"In total, the global 2,000 companies now account for $30 trillion in revenues, $2.4 trillion in profits, $119 trillion in assets and $39 trillion in market value," said the magazine, which had HSBC on the top of the charts.

"Around the world, 72 million people work for these companies," the magazine added. "This year, 60 countries have global 2,000 entries versus 51 in our inaugural list in 2004."

The magazine said the US still dominated the list of global giants but with 61 fewer entries than last year and 153 fewer than in 2004, as many US companies failed to keep pace with global competitors.

"In contrast, China, India and Brazil are rapidly adding companies to the list. India, for example, has 48 companies this year versus 27 in 2004," it added.

Sensex up 1023 points from recent low

2008-04-03T06:53:00.000-07:00

The key benchmark indices ended higher extending yesterday’s gains. Market had surged in early afternoon trade when the BSE Sensex surpassed 16,000 mark. It immediately fell below that level.

IT stocks rose. Capital goods, power stocks declined. Reliance Industries gained. Wipro and Satyam Computer Services were major gainers from the Sensex pack. Bharat Heavy Electricals (Bhel) declined after announcing provisional results for the year ended March 2008. Reliance Energy and Mahindra & Mahindra were other major losers from Sensex pack. The market breadth was negative compared to strong breadth at the onset of the trading session. BSE Mid-Cap and Small-Cap indices declined.

European markets which opened after Indian market, were subdued. France's CAC, Germany's DAX and UK's FTSE 100 were down by between 0.43% to 0.76%. Asian markets which opened before Indian market edged higher after a US jobs indicator raised hopes of a milder recession than previously feared in the world's biggest economy.

The 30-share BSE Sensex gained 82.15 points or 0.52% at 15,832.55. At the day’s high of 16002.73, the Sensex rose 252.33 points in early afternoon trade. At the day’s low of 15,699.21 Sensex lost 51.19 points in early trade.

The broader based S&P CNX Nifty gained 17.4 points or 0.37% at 4,771.60.

From recent low of 14,809.49 on 17 March 2008 Sensex has recovered 1023.06 points or 6.9% at current 15,832.55. From the recent high of 16,371.29 on 28 March 2008, Sensex is off 538.74 points or 3.29%

BSE clocked a turnover of Rs 4789 crore today 3 April 2008 compared to a turnover of Rs 4,955.40 on 2 April 2008.

As per the provisional figure on NSE, foreign institutional investors were net sellers of Rs 393.21 crore in Indian equities while domestic funds were net buyers of shares worth Rs 265.39 crore.

The market breadth was negative: On BSE 1215 shares advanced as compared to 1409 that declined. 63 shares remained unchanged.

The BSE Mid-Cap index down 0.4% to Rs 6,387.23 and BSE Small-Cap index down 0.91% to 7,840.29.

Nifty April 2008 futures were at 4785, at a premium of 13.40 points as compared to spot closing of 4771.60.

The NSE's futures & options (F&O) segment turnover was Rs 32,513.16 crore, which was lower than Rs 34,170.35 crore on Wednesday, 2 April 2008.

BSE IT index (up 3.31% to 3,764.91), BSE Oil & Gas index (up 1.97% to 10,531.88), BSE FMCG index (up 1.12% to 2,344.68), BSE HealthCare index (up 0.64% to 3,887.73), BSE Metal index (up 0.53% to 13,588.76) outperformed Sensex.

BSE Realty index (up 0.3% to 7,523.32) , BSE Bankex (down 0.02% to 7,820.62), BSE PSU index (down 0.54% to 7,347.78), BSE Auto index (down 1.07% to 4,490.94), BSE Consumer Durables index (down 1.53% to 3,857.74), BSE Capital Goods index (down 2.1% to 13,214.73) and BSE Power index (down 2.6% to 3,055.57) underperformed Sensex.

American Tower close to Tata Tele unit stake

2008-04-03T00:22:00.003-07:00

American Tower Company (ATC) is believed to be the frontrunner among the bidders for investing in the tower firm of Tata Teleservices. Boston-headquartered ATC is a publicly-held company owning and operating over 23,000 sites in the US, Mexico and Brazil.

According to industry sources, Tata Teleservices and ATC are in talks over the valuation of the tower entity of the telco. Sources said that Tata Teleservices has pegged the valuation of its tower company at around $2 billion.

American Tower Company did not respond to an e-mail questionnaire sent by this newspaper early this week, on whether it was in the final stages of negotiations with Tata Teleservices for investing in its hived-off tower unit, or if it agreed with the estimated valuation of $2 billion for the same.

Recently, Tata Teleservices managing director Anil Sardana had said that the task of divesting stake in its tower company would be concluded by the end of May. Tata Tele wants to divest anything between 26% and 49%. According to the company, around 15 strategic investors were shortlisted for picking up a stake in the hived-off tower entity of Tata Tele. At present, Tata Teleservices Ltd (TTSL) has 10,000 towers, and Tata Teleservices Maharashtra Ltd (TTML) 3,500 towers.

Meanwhile, industry buzz is that Indus Towers, the joint venture tower company between Bharti, Vodafone and Idea, may also look at divesting some of its stake to strategic investors. Bharti Airtel, Vodafone-Essar and Idea merged their tower assets in 16 circles to form an independent tower company Indus Towers. Bharti and Vodafone have 42% stake each in the company while Idea Cellular holds 16% in it.

India Inc mobilses 32000 Crore over rights Issue

2008-04-03T00:13:00.000-07:00

India Inc has mobilised a record over Rs 32,000 crore through issue of shares on rights basis in fiscal 2007-08, driven by the mega issues from State Bank of India and Tata Steel, a latest report says.

However, the picture may not be that rosy in the current fiscal due to the subdued secondary market conditions, according to primary market database provider Prime.

Corporate India has raised Rs 32,518 crore through right issue in the last fiscal, a jump of over eight-fold as compared to Rs 3,703 crore that was raised in FY 2006-07.

Rights route refers to issuing rights to a company's existing shareholders to buy a proportional number of additional shares at a given price, usually at a discount, within a fixed period.

The mobilisation of funds in the last fiscal have made history as it was more than even the combined mobilisation of the preceding 12 years.

More than half of the year's mobilisation came courtesy the country's largest lender SBI's rights issue, while another 28 per cent was taken up by Tata Steel.

"These issues, in a sense, were exceptional issues and are not indicative of any trend," Prime founder and managing director Prithvi Haldea said.

The largest issue from State Bank of India mobilised Rs 16,736 crore and other Rs 1000 crore-plus issues were from Tata Steel (Rs 9,135 crore), Federal Bank (Rs 2,141 crore) and Indian Hotels (Rs 1,447 crore).

Response to all issues of the year was good. Rights offers are made at a discount to the ruling market price and hence are able to draw in shareholders' response specially when the secondary market is doing well, Haldea added.

Meanwhile, there were only 30 companies which used the rights issue route for raising funds last year. This was lower by 21 per cent over the previous year that had seen 38 issues and nowhere near the 488 companies that had made rights issues in 1992-93, the report said. Haldea said that the new fiscal (2008-09) has not started well, courtesy the subdued secondary market conditions. Around 20 companies have already applied for or have obtained SEBI approval for raising Rs 1,855 crore.

Some of the major ones include Dhandapani Finance (Rs 50 crore), Entegra (Rs 100 crore), GE Capital Transportation Financial Services ( Rs 250 crore), Impex Ferro Tech (Rs 40 crore), JK Tyres, Lotte India (Rs 175 crore), Oudh Sugar (Rs 50 crore), Shopper's Stop (Rs 500 crore) and United Breweries (Rs 425 crore).

In addition, there are at least 35 companies who have in the last six months announced their plans to tap the rights market and may firm up their plans in the near future. These include Anil Products (Rs 10 crore), Bhushan Steel, Dunlop India, GMR Industries (Rs 250 crore), Ispat Industries (Rs 1000 crore), Jet Airways ( Rs 1600 crore), Tata Power and Thomas Cook (India) (Rs 225 crore), the Prime report said.

The floatation plans of all these companies are, of course, subject to a stable, if not a buoyant, market, Haldea added

Developing Asia to Post Solid Growth in 2008 Even as Major Industrial Economies Slow Down, Says ADB

2008-04-02T22:43:00.000-07:00

HONG KONG, CHINA - Developing Asian economies will register solid growth in 2008 despite a coincident slowdown in major industrial economies, surging food and fuel prices and a simmering credit crisis in the United States, the Asian Development Bank (ADB) says in a new major report. ADB’s flagship annual publication, Asian Development Outlook 2008 (ADO) released today, forecasts developing Asian economies to expand at 7.6% in 2008 and 7.8% in 2009. The region posted its highest growth in almost two decades in 2007 – averaging 8.7%. “Asia will not be immune to the global slowdown, neither will it be hostage to it. It remains tied to global activity through traditional trade channels, and increasingly, through its closer integration in international financial markets,” says ADB Chief Economist Ifzal Ali. Mr. Ali says favorable policy conditions and impressive productivity growth associated with Asia’s economic modernization and structural transformation will continue to keep the region on a strong growth path. ADO warns that the risk of an inflation spiral in Asia is palpable and urges policymakers to keep a close watch on it. Despite a slew of administrative measures and subsidies that are reining in price rises, inflation is expected to spike in 2008 and could hit a decade-long regional high, the report says. Inflation is expected to rise to 5.1% in 2008 and gradually slide to 4.6% in 2009. Price increases will be highest in Central Asia where it will remain in double digits. Inflation is running at an 11-year high in the People’s Republic of China’s (PRC), and is a threat to other countries, like Viet Nam. ADO urges policymakers to tackle the problem at its root. For some economies, this may mean a more flexible exchange rate, while in others it may need a scrutiny of fiscal spending and priorities and, in some cases, targeted measures may be warranted to ease supply pressures that are piling on to cost pressures. Growth in the region’s main economic powerhouses, PRC and India, is expected to moderate as authorities tighten policies to rein in blistering demand and ease inflationary pressures. PRC is expected to grow by a solid 10% in 2008 and the Indian economy is forecast to expand by 8%. The slowdown in the economies of the US, European Union and Japan will have a more pronounced impact on PRC, which is more open to trade than India. Growth in East Asia is expected to decelerate in 2008 to 8.1% from 9.3% in 2007. Southeast Asia will slow to 5.7% in 2008, from 6.5% in 2007, as its export prospects are likely to be pinched by a slowdown in the global economy. In Southeast Asia, only Thailand is expected to post higher growth after a return to normalcy in politics. Viet Nam’s economic expansion will moderate as it grapples to keep a lid on inflation. South Asia is also expected to lose some steam in 2008 mainly on moderation of growth in India. Pakistan, Bangladesh and Sri Lanka will also be affected by economic deceleration in major markets as garment exports are expected to suffer. Growth in Central Asia is expected to decelerate sharply to 7.5% in 2008 from double digit levels in recent years on the back of weaker expansion in the region’s largest economy, Kazakhstan. A sudden halt of capital flows to Kazakh banks has triggered a reduction in lending and downturn in non-oil economy. Economic expansion in the Pacific Islands is expected to pick up in 2008 with the region’s biggest economy Papua New Guinea benefiting from high global commodity prices and Fiji Islands forecast to grow after contracting in 2007. “Looking beyond the immediate bumps in the road, Asia’s long-term growth prospects will depend on how successfully countries tackle a range of structural constraints facing them,” says Mr. Ali. These include maintaining macroeconomic stability, integrating into the global economy, getting prices to send the right signals, creating a conducive business and investment climate and above all, ensuring that the benefits of growth are shared by all.

US Economy Slipping into Recession?

2008-04-02T22:26:00.000-07:00

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke on Wednesday conceded for the first time the U.S. economy may slip into recession, but said growth should pick up later this year as the impact of interest rate cuts and other emergency steps take root.

Bernanke told a congressional panel that the economy appeared to be growing, but warned it could shrink in the first half of 2008. It was Bernanke's first testimony on Capitol Hill since the U.S. central bank helped rescue investment bank Bear Stearns in mid-March, an action he defended as averting a collapse that would have been calamitous.

"Recession is possible," Bernanke told the Joint Economic Committee. "Our estimates are that we are slightly growing at the moment, but we think that there's a chance that for the first half as a whole, there might be a slight contraction."

The Fed has lowered benchmark interest rates by three percentage points to 2.25 percent since mid-September to help put a floor under an economy hit hard by a housing slump and credit market turmoil.

Bernanke said those rate cuts and other emergency measures to thaw frozen credit markets should promote growth over time -- remarks traders in financial markets saw as a signal that the Fed's sharp rate-cutting action may be drawing to an end.

Some analysts said the absence of a specific pledge by Bernanke to act as needed to help the economy, a standard feature of recent Fed statements, buttressed that view. "There is a conspicuous absence of policy commitment in this statement," said Jan Hatzius, chief economist at Goldman Sachs.

U.S. stock prices slipped, with the blue chip Dow Jones industrial average closing down 48.53 points at 12,605.83. Prices for U.S. government bonds also fell, as did the value of the dollar.

Brokers May be forced to raise Capital

2008-03-29T07:15:00.000-07:00

e Securities and Exchange Board of India (Sebi) says its move to margin institutional trades in the cash market on a T+1 basis from April 21 is to create a level playing field.

Subsequently, with effect from June 16, 2008, the collection of margins would move to an upfront basis.

“But upfront margin will also spawn front-running because it is a de facto disclosure of buy or sell orders. Foreign institutional investors will not be comfortable about this, and it can increase volatility,” said Gaurav Dua, head, research of broking house Sharekhan.

The move is altruistic in principle as it is aimed at creating safeguards to avoid a payment crisis such as the one seen in January.

And institutions anyway keep the money with their custodian. “Earlier the custodian would enjoy the float. Now they will have to make the early pay-in,” points out a fund manager who does not wish to be named.

Manish Sonthalia, equity strategist at Motilal Oswal, sees it as an attempt by Sebi to ensure a level playing field.

“Earlier, only retail investors needed to pay the margins. Now with the institutional short-selling being introduced, the regulator wants a level-playing field. There could be some procedural difficulties, but the principle is good for the market in the long run,” Sonthalia said.

Mobile tariff Set to fall

2008-03-27T08:19:00.000-07:00

Local and domestic long distance mobile call tariffs may drop further, thanks to telecom regulator TRAI on Thursday announcing that private telecom operators would be exempted from paying a fee called 'ADC' to state-run BSNL by April 1.

"We will be passing on the benefit to our customers wherever possible," a spokesperson of leading CDMA operator Tata Teleservices said.

GSM player Bharti Airtel also welcomed the move saying, "We are committed to passing on the benefits of ADC relief to the customers primarily in the rural areas as desired by TRAI."

Another major player Vodafone Essar also welcomed the move and said that it too would pass on the benefit to customers in an equitable manner and announce it shortly.

Access Deficit Charge (ADC) was paid by private telecom service providers to compensate BSNL for offering services in rural areas at subsidised rates.

Besides, TRAI has also announced the reduction of ADC on international calls to 50 paise from Rs 1 at present.

However, BSNL which has been advocating for continuation of this levy got some respite as TRAI has decided to recommend to the government to provide Rs 2,000 crore annually for a period of 3 years to compensate the loss of ADC account.

BSNL was getting Rs 5,000 crore annually through ADC till about two years ago from private players.

The ADC has two parts. First it is 0.75 per cent of Adjusted Gross Revenue (AGR) that service providers pay to BSNL and second, Re 1 per minute on international incoming calls paid to the PSU by international long distance service providers.

HDFC Bank plans NBFC

2008-03-27T08:16:00.000-07:00

After shaking up the banking industry with the merger of Centurion Bank of Punjab last month, private sector HDFC Bank is planning to start a non-banking finance company (NBFC). Sources said the bank could get into investment banking through this NBFC, the license for which was received around September last year.

The NBFC has been tentatively called HDB, but there could be a change in the name for the launch, sources said.

Though HDFC Bank officials could not be reached, sources said the bank “will try to fill the gaps in its current business through this NBFC.”

“We will see that there are no gaps in our products. There will be a clear cut direction to this business (NBFC) vis-a-vis the bank. Obviously an NBFC has a lot of advantages over a bank, which can be tapped,” an official said.

Banking analysts said an entry into investment banking would be a logical extension for HDFC Bank, particularly after the acquisition of Centurion Bank of Punjab last month.

Ananda Bhoumik, senior director, banking at Fitch Ratings, said an investment banking arm will complete the picture for HDFC Bank. “It will be an additional product. They already have access to clients, which will be an added advantage. They already are big in equities and the M&A market will always be big,” he said.

Also, the NBFC would relieve the bank of some norms of the Reserve Bank of India.

“NBFC’s don’t have statutory requirements like the mandatory 25% investments in SLR securities or keeping aside 7.5% of deposits as cash reserve ratio or even borrowing daily through the call money market,” said an analyst with a foreign brokerage.

S KUMARS NATIONWIDE TANKS

2008-03-24T08:38:00.000-07:00

S Kumars Nationwide tanked 25.80% to Rs 84.80 at 12:34 IST on BSE on sustained selling pressure

Meanwhile, BSE Sensex was up 180.74 points or 1.20% to 15,174.30 on positive cues from the global markets. On Thursday, 20 March 2008, US stocks closed their best week in nearly two months and are seen extending the solid rally this week, bolstered by the Federal Reserve's aggressive liquidity action.

On BSE, 38.93 lakh shares were traded in the counter. The scrip had an average daily volume of 31.98 lakh shares in the past one quarter.

The stock hit a high of Rs 118.80 and a low of Rs 79.10 so far during the day. The stock had a 52-week high of Rs 177.90 on 16 November 2007 and a 52-week low of Rs 65 on 20 March 2007.

The mid-cap scrip had underperformed the market over the past one month to 19 March 2008, declining 24.84% as against the Sensex's 17.04% decline. It also underperformed the market in the past three months, sliding 24.29% against the Sensex's fall of 21.75%.

The company’s current equity is Rs 202.16 crore. Face value per share is Rs 10. Promoters hold 44.51% stake in the company (as at end December 2007).

The current price of Rs 84.80 discounts its Q3 December 2007 annualized EPS of Rs 11.32, by a PE multiple of 7.49.

The S Kumars Nationwide stock plunged 24.46% in three trading sessions to Rs 114.25 on 19 March 2008 from Rs 151.25 on 14 March 2008 on selling pressure from foreign institutional investors. Foreign institutional investor, LB India Holdings Cayman II sold 46.05 lakh shares at Rs 145.60 each in a block deal on Bombay Stock Exchange on 17 March 2008. Another foreign institutional investor BSMA offloaded 26.37 lakh shares at Rs 147.10 per share of the company in a block deal on National Stock Exchange on 17 March 2008. Total foreign holding in the company is 34.06% (as at end December 2007). Morgan Stanley Dean Witter was the buyer in both these block deals.

S Kumars Nationwide had posted 72.70% rise in net profit to Rs 57.20 crore on 44.20% growth in net sales to Rs 453.07 crore in Q3 December 2007 over Q3 December 2006.

S Kumars Nationwide is manufactures and markets synthetic textiles. The company’s business segments include consumer textiles, home textiles, worsted suitings & ready to wear solutions

Monsoon Capital hit hard by slump in Indian stocks

2008-03-24T08:34:00.000-07:00

SAN FRANCISCO (MarketWatch) -- Monsoon Capital LLC, a $1.2 billion hedge fund firm run by Gautam Prakash, has been hit hard by a slump in Indian stocks this year as overseas investors pull back from emerging markets in the wake of trouble in the U.S.
The Monsoon India Inflection Fund LP has dropped 28.3% this month, through March 20. That leaves it down 45.9% so far in 2008, Prakash wrote in an update to investors. MarketWatch obtained a copy of the letter.
The Monsoon India Inflection Fund 2 LP is down 26.8% so far in March and is off 44.4% so far this year, Prakash reported.
India's Sensex Index has dropped more than 26% so far this year. More than half of that slump has come so far in March, with the benchmark off almost 15%. Shares of smaller Indian companies have done even worse, with the BSE Mid Cap Index down 23% this month and 41% so far in 2008. The BSE Small Cap Index has plunged 26% this month and 47% year-to-date.
The performance of Monsoon's hedge funds and the broader Indian market show how vulnerable developing markets are to the waxing and waning of risk appetite among investors in developed countries.
Surging economic growth in India, China and other large developing countries has raised hopes of "de-coupling," in which such nations keep on expanding despite problems in the U.S. While that may turn out to be true for economic growth, it hasn't helped the Indian stock market, or Monsoon Capital.
"The U.S. is mired in a housing collapse, a severe credit crunch and turmoil on Wall Street that threatens the survival of several financial institutions and has compelled the U.S. Federal Reserve to take actions that it has not taken since the Great Depression," Prakash explained in his letter to investors. "These series of events and the size of losses have severely undermined investors, who have reassessed the risk premium associated with equities."
"Raising this investment risk premium to a higher level has triggered a correction in equity markets across the world; both developed as well as emerging markets," he added.
Despite recent signs of slowing slightly, Indian economic growth will still be very strong in coming years and the country isn't as dependent on exports to the U.S. as other developing nations like China, Prakash said.
"Though India is not export-dependent... and therefore should be relatively less economically affected than its Asian neighbors, investors are not drawing this distinction at this point of the crisis," he noted.
De-leveraging
A broader de-leveraging by investors across the world may be partly to blame for the Indian stock market slump and Monsoon's losses.
De-leveraging happens when investors that use borrowed money to buy stocks and other assets are asked by their brokers to come up with more cash or collateral to support their positions. Some investors have to sell holdings to meet such margin calls, which causes more price declines and, in turn, more margin calls and forced selling. See story on the Great Unwind.
Prakash said Monsoon has continued to see distressed selling by retail investors and speculators who had bought Indian stocks with borrowed money. Total sales by this group are now over $15 billion in the past two months, he noted.
Foreign institutional investors have sold about $3.5 billion of Indian stocks so far this year, Prakash also noted. These types of investors are crucial to developing markets. They pumped roughly $55 billion into Indian markets during the previous seven years.
Some of these foreign investors may have also been using borrowed money to invest in Indian stocks. They may be having to de-lever and sell positions too.
Emerging-markets hedge funds have been among the top-performing and fastest-growing part of the $2 trillion industry. It's common for hedge funds to use leverage to try to enhance returns.
Managers focused on India and China returned more than 50% last year, according to HedgeFund.net, which tracks industry performance.
Hedge funds are supposed to generate steady positive returns, even if markets are falling, because they use short selling, a way of betting against stocks and other assets. But it's more difficult to sell short in emerging markets.
Hedge fund managers focused on India lost more than 15% on average during the first two months of 2008, while funds focused on China fell 7.3%, HedgeFund.net data show

Goldman, Lehman outlooks cut to "negative" by S&P

2008-03-22T04:36:00.000-07:00

NEW YORK (Reuters) - Goldman Sachs Group Inc's and Lehman Brothers Holdings Inc's credit rating outlooks were cut on Friday by Standard & Poor's, which said volatile markets could result in lower profit and revenue.

S&P revised its outlook to "negative" from "stable" on Goldman's "AA-minus" and Lehman's "A-plus" long-term credit ratings, suggesting a possible downgrade in one to two years.

The ratings are S&P's fourth- and fifth-highest investment grades, respectively. Lower credit ratings can result in higher borrowing costs.

Goldman is the largest Wall Street investment bank by market value, and Lehman is the fourth-largest. Goldman did not immediately return calls seeking comment. Lehman spokeswoman Kerrie Cohen declined to comment.

Banks have suffered from lower earnings and share prices as the housing crisis, a slowing economy and worries about credit quality led investors to stop buying a wide range of riskier securities. This has cut into revenue from trading, arranging debt offerings, and advising on mergers.

Several banks have also been cutting jobs, and Bear Stearns Cos agreed last Sunday to a $2-per-share buyout by JPMorgan Chase & Co after a cash crisis.

S&P still has a negative outlook on Merrill Lynch & Co's "A-plus" credit rating, and expects to decide within 30 days whether to downgrade Morgan Stanley's "AA-minus" rating. The credit rating agency said net revenue in the industry may decline 20 percent to 30 percent this year.The Federal Reserve this month announced several steps to make it easier for financial services firms to borrow. It also extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.

Actions by the central bank "alleviate much of the concerns that we have about near-term liquidity conditions," S&P analyst Scott Sprinzen said. "However, we still view the environment as rough near-term for the five broker-dealers."

S&P said Goldman has very strong liquidity, but that its emphasis on trading and "aggressive" risk appetite expose it to potential for "major missteps." It also said Lehman has a stable base of funding and strong fundamentals, but could suffer "severely" if the market turns against it.

Sprinzen said Goldman, Merrill and Morgan Stanley also have a "clear advantage" over Lehman, the largest U.S. mortgage underwriter, because they are more diversified.

On Tuesday, Goldman reported its fiscal first-quarter profit fell 53 percent to $1.51 billion, or $3.23 per share, while Lehman reported a 57 percent decline in its quarterly profit to $489 million, or 81 cents per share. Both results topped analyst forecasts. Morgan Stanley on Wednesday said its profit fell 42 percent, also topping forecasts.

Separately, Goldman is planning to cut up to 15 percent of the work force in its capital markets unit, the New York Post said on Friday, citing sources familiar with the matter.

Citigroup Inc, the largest U.S. bank by assets, is cutting 2,000 more trading and investment banking jobs than it had announced in January, a person briefed on the matter said.

On Thursday, Goldman shares closed at $179.63, while Lehman closed at $48.65. The shares have fallen a respective 16 percent and 26 percent this year, but in the last three days, Goldman jumped 19 percent and Lehman soared 53 percent

"Market volatility and the possibility of further weakening of economic activity may result in a more substantial fall in revenues," possibly resulting in one-notch downgrades, said Paul Coughlin, S&P's head of corporate and government ratings, on a conference call

Those who say market growth is irrelevant are enemies of poor

2008-03-22T04:25:00.000-07:00

Justifying UPA's economic reforms, Finance Minister P Chidambaram indirectly hit out at the Left parties, saying those who claim that the growth only helped the rich are the "worst enemies of the poor."

"Some 60 members of parliament" criticised everything being done by Prime Minister Manmohan Singh and him (Chidambaram) to improve the economy, he said, addressing students of Thiagarajar College of Engineering on its golden jubilee celebrations here yesterday.

"On the market growth, they say growth is irrelevant. They say this growth only percolates to very small group of people. What do they want us to do. (Do) They only want us to distribute poverty in this country," he asked.

"Those who say the market growth is irrelevant and those who say the growth only helps the rich are the worst enemies of the poor. It is because of the growth, the government is able to do many development programmes," Chidambaram said.

He said in the last four years, Indian economy was growing at 8.8 percent a year and close to nine percent and "if we continue to grow at nine percent, poverty can be wiped out in the next generation
Anyone who understands the power of compounding will know that India's per capita income will double in ten years," he said.

The Finance Minister said currently India's per capita income is about $1,000, whereas smaller countries like Malaysia have higher capita income.

India is already the fifth largest economy in the world. The size of Indian economy will become so large that it would be among the top three countries in the world.

"If we continue to grow at this rate, India would be among the most prosperous countries in the world" dominating in education, services and goods.

Chidambaram said his dream was to see Indian economy overtaking that of China's.

"If we continue to grow close to nine percent, by the year 2020 India's per capita income would become $2,000 and by 2030 it would become $4,000." It would become $8,000 by 2040 and $16,000 by 2050, he said.

"Imagine the per capita income of this country 16 times larger in what it would be today. Of course long before that happens, India would become the third largest economy in the world, only after China and United States of America," he said.

Outlining the government's development schemes, Chidambaram said in 2003-04, a sum of Rs 1,961 crore had been allocated for the Sarva Shiksa Abhiyan Scheme.

"Next year, thanks to growth, I will provide Rs 15,100 crore for this scheme. Similarly, in 2003-04 we had provided Rs 1,175 crore for the mid-day meal scheme.

Next year, we will provide Rs 8,000 crore for the scheme and we will have thirteen crore children of India having the mid-day meals, which is the largest school lunch programme in the world," he said.

Emirates first to Offer Inflight Calls

2008-03-20T22:01:00.000-07:00

Emirates Airlines announced yesterday that passengers will not only no longer have to switch off their phones but also be allowed to make calls and text people from the sky.

The airline announced that the first authorized mobile telephone call from a commercial flight was made yesterday at 30,000 feet from an Emirates Airbus A340-300 aircraft traveling from Dubai to Casablanca.

The aircraft is the first in the airline’s fleet to be fitted with the AeroMobile system, which ensures mobile telephones operate at minimum power during flights so as to not interfere with aircraft electronics.

“Our customers are already making more than 7,000 calls a month from our in-seat phones, so we will be making life easier for those for whom staying in touch has become an important part of their everyday lives,” said Sheikh Ahmed ibn Saeed Al-Maktoum, chairman and chief executive of Emirates Airline.

Passengers will be allowed to make five or six calls per flight. The service will only be activated when the aircraft is at cruising altitude and the cabin crew will have full control over the system, including the ability to prevent voice calls at certain times such as during night flights.

In addition to calls, the service will also allow passengers to send and receive text messages, with charges in line with premium international roaming rates. Users will be billed on their regular phone bills by their own service providers as with any other roaming call.

The airline announced that it would be investing some $27 million to fit its fleet with the new system. A second Emirates aircraft, a Boeing 777-300, has already been installed with the AeroMobile system and will be in operation very shortly.

Over the past 18 months, Emirates and AeroMobile have worked closely with regulators and telecommunications providers across the globe, fully completing rigorous testing and certification processes.

Now that the problem of using mobile phones in flight will become a thing of the past, what about the annoyance of ringtones going off constantly, interrupting your uncomfortable sleep?

Emirates cabin staff will encourage passengers to switch their phones to silent or vibrate mode when in use in the aircraft

Oil Market: Things Are Beyond OPEC’s Control

2008-03-20T21:56:00.000-07:00

What an exceptional week it has been!

With Bulls continuing to reign and crude for the first time in history crossing the $110 mark, this has been an unprecedented and turbulent week in many, many ways. Fears of a third oil shock are being expressed all around. Talks of stagflation, first heard in the 80s, are in currency once again. The worst economic recession since the Great Depression seems just round the corner.

Markets are setting new records. Having broken through the $100 psychological barrier, oil prices continue to soar and show little sign of slowing their upward march. Already at the beginning of the year, aggregate global oil inventories were at an all time low in terms of forward demand cover.

OPEC is rightly concerned, finding itself in a tight spot-under focus, yet feels it can’t do much. The London-based Center of Global Energy Studies in its March report underlines there are concerns within the producers’ group that any over-supply in a weakening market will undermine prices. However, there are others on the other side of the table who continue to argue that under-supply will continue to push prices to levels that will hasten the weakening of the market and erode demand.

OPEC thus has been arguing for some time that the supply side of the global crude balance cannot be blamed for the current woes of the market. Analysts agree that the size of oil supplies is just one factor, among others, that determine the crude market price. Other market driven factors seem to have overtaken and overpowered the fundamentals of the energy market. Definite question marks about the ability of the OPEC to control markets are thus being raised and debated all around. OPEC says the current Bull Run is much beyond its capacity and not every one disagrees.

Eminent London based scholar Dilip Hero underlining the issues the energy world is faced with today agrees with the OPEC and says, “an equally important factor (for the current market woes) is the capacity of refineries to transform crude oil into end-products.”

Mismatch between the available crude oil and the type of refinery leads to bottlenecks, not to mention the total capacity of refineries falling behind the aggregate amount of crude available worldwide. There is nothing that OPEC members can do about this, Hero said in a recent write up.

It is in this context that the issue of who controls the world energy markets comes into focus. There are no doubts that the OPEC definitely gained control of the oil markets in the aftermath of the 1973 Arab oil embargo. Indeed OPEC got into driving force then, as far as the global oil markets were concerned. However, the fact remains that the OPEC domination of the oil markets did not last long. And old newspaper files are enough to confirm that policy planners in major consuming nations maneuvered to ensure loss of OPEC control on the markets. And in fact forces much beyond the control and domination of OPEC today control crude markets.

Under the influence of Reaganomics, gradual deregulation of economies took place in the western economies. This resulted in the emergence of futures contracts for currencies and gold, with the New York Mercantile Exchange (Nymex) emerging as the leader. In 1981 it added petrol to its list of traded commodities. And this was a definite turning point in the world of energy as far as controlling the markets were concerned.

Enumerating the reasons of loss of OPEC’s control, Hero hence underlined that in March 1982, non-OPEC production for the first time outpaced the OPEC output. Interestingly much of the non-OPEC petroleum then came from the North Sea and was sold on Rotterdam’s spot market, where the price was determined by a variety of market factors — and indeed not OPEC.

And the impact of this was so deep that the oil cartel even failed to maintain its reference price of $34 a barrel it set earlier for its crude and in early March 1983, it had to yield to market forces to slash the price for the first time by 15 percent and reduce output.

However, the fatal blow to OPEC’s power to control and determine oil market prices was struck on March 30, 1983, when Nymex introduced petroleum futures. That meant the oil price being fixed daily, determined by the give-and-take of Nymex traders, with buyers and sellers monitoring their computer screens worldwide. OPEC was hunted out of the picture on this day. What an achievement in some senses, though the entire world is paying a price of this fallacy.

Given the current weakness in the equity markets, the falling value of the dollar, and the credit crunch caused by the subprime mortgage crisis in the US, speculators are putting their funds into such safe havens as gold and oil, spiking up their prices. Currency investors are plugging in more and more cash into commodities seeking refuge from tumbling world stock markets and US recession fears. Market participants are looking to US dollar denominated commodities to hedge against inflation and their forex exposure.

And it is in this perspective one could safely project that it is virtually impossible for the OPEC to tame the global crude markets. The current Bull Run now seems ready to continue for some time in future. A new fundamental needs to be added to the global energy equation — things are much beyond OPEC’s control today.

Financial Meltdown: Investor Anger Grows

2008-03-20T21:52:00.000-07:00

There is a palpable sense of foreboding, fear and anger by investors and the ordinary public at how matters have been allowed to be where they are today. Despite sweet talk and assurances from policy makers and politicians that things will sort out in the end, the lack of confidence in the financial markets is more acute today compared with the last great crash of October 1987. During that crash, investors took on board a sense of globalization, and that markets had become interlinked though computerized share trading which accentuated market falls. Today, both investors and the public are wondering where the current crises will end and if their economic future is now at risk.

However, it is the feeling that some players in the global financial markets have betted on risky financial products, dressed them up as risk-free, and sold them on to less sophisticated investors, and to have got away scott free in the process, that is enraging people. The sense of injustice is compounded by the feeling that no meaningful punishment is meted out to fit these new financial crimes, either at the individual or the institutional levels. Resignations and mealy mouthed apologies — even if they are made before congressional policy makers — are not enough. The public has seen generous payoffs and “golden goodbyes” running into millions of dollars for those that have led their financial ships onto rocks, probably to buy off their silence, while no accountability is made for the enormity of internal lapses in risk management and controls. The public is now baying for blood and an “iron boot” to the backside, rather than golden handshakes and goodbyes.

What is more galling is that those in the know at these financial institutions — and the list are a who’s who of the great and the good — have repeatedly assured us that everything is fine. It has taken the virtual liquidation of Bear Stearns and the unprecedented panic interest rate cuts by the Federal Reserve, as well as concentrated central bank liquidity injections, to suddenly make one aware that the financial system is in a serious state.

The size of the problem is simply too big now to be solved by individual financial institutions, as the amount of debt, subprimes and other fancy derivative products are being slowly released to avoid even further panic. Once again the ordinary taxpayer is asked to bear the burden, as happened with the rescue of Northern Rock in the UK and Bear Stearns in the US, when governments assumed the asset credit risk of these two institutions. No one asked the public whether they wanted to buy these two institutions, and any further losses by these, as well as others, will only pass back to ordinary citizens through higher taxation. Around the world, people have been encouraged to take out mortgages and become home owners and play by the rules. The current credit squeeze is making borrowing for such activities even harder, and the benefit of the recent rate cuts are not being passed down the line to the ordinary public. Suddenly, financial institutions are treating the ordinary borrower with suspicion and raising the barriers, as though they were the cause of the current mess of poor credit judgment and fancy financial packaging in the first place. It is now clear that there is no end in sight to the current turmoil which is sucking in other markets — even those in the Gulf — in a mood of uncertainty, for how else can one explain the sudden jitters of the GCC markets today?

Ultimately, political pressure on governments to intervene will be applied for more drastic action to be taken, to confront the fallout from what has in effect been a gigantic financial fraud perpetrated by the so-called investment banking elites of the world. There has been a catastrophic breakdown of trust and announcements by institutions that they are in good shape are now taken, rightly with a pinch of salt. The bubble has burst, and what we will witness now is a yearning for a more traditional banking regime — maybe less sophisticated and dull, but one that we can sleep well with at night

Gail to See Annua Shortfall of 2200 Crore

2008-03-20T21:47:00.000-07:00

State-run gas utility GAIL (India) Ltd could potentially see an annual shortfall of up to Rs2,200 crore in revenue and its operations at a key petrochemical complex could grind to a standstill with supplier Petronet LNG Ltd deciding to stop gas deliveries.
Instead, Petronet LNG has decided to divert the same 5 million tonnes per annum of liquefied natural gas (LNG) to another public sector undertaking, Oil and Natural Gas Corp. Ltd (ONGC). This will be utilized by ONGC at its proposed petrochemical complex at Dahej, Gujarat.
The competition amongthe two public sector firms, both of whom are equal stakeholders in Petronet LNG, also reflects the growing tussle for scarce resources of natural gas.
The stakes are high for both GAIL and ONGC as no supplier is willing to offer international long-term supply contracts and users have to tap into the spot markets where prices average $15-18, or Rs608-729, per million British thermal units (mBtu), compared with $4-5 per mBtu offered on existing long-term contracts.
GAIL, ONGC, Indian Oil Corp. Ltd and Bharat Petroleum Corp. Ltd each hold a 12.5% stake in Petronet LNG.
“GAIL has derived themaximum benefit from this terminal. It is high time that ONGC gets some returns in lieu of its equity stake,” said a Petronet LNG executive who didn’t want to be named.
Petronet LNG is India’s largest LNG-receiving and regasification firm and its terminal has a capacity of 6.5 million tonnes per annum (mtpa). “Till date, we received all the LNG landing at (Petronet LNG’s) Dahej terminal. With this now going to ONGC, we will have no replacement as there is not much gas available in India,” admitted a GAIL executive who didn’t want to be named. “Though being an equity stakeholder of PLL (Petronet LNG), we did not have any rights on the gas. We have been demanding so for a long time from the government. So, as a middle path that was worked out, we have been given the LNG for mthane-propane extraction,” said an ONGC executive who did not wish to be identified.
GAIL’s Pata petrochemical complex in Uttar Pradesh, built with an investment of Rs3,350 crore, requires around 8mtpa of gas. Failure to tie up an alternative source would imply that GAIL runs the risk of letting its capacity remain idle.
GAIL supplies methane-propane from its Pata gas processing plant as feedstock to oil marketing companies for making petrochemical products such as polyvinyl chloride, acrylic acid and polymers.
India has only two LNG regasification terminals and both are in Gujarat. One is owned by Petronet LNG and the other by Shell India Pvt. Ltd (capacity of 2.5mtpa). Other terminals planned include one attached to the Dabhol project (5mtpa), and one each in Kochi (5mtpa) and Mangalore (5mtpa).
GAIL registered a net profit of Rs2,387 crore in 2006-07 fiscal year on revenues of Rs16,047 crore. For the nine-month period ended 31 December 2007, GAIL registered a 7.4% increase in turnover to Rs13,073 crore from Rs12,164 crore in the corresponding period in 2006.
Analysts believe Petronet LNG’s decision to stop supplies and consequent loss in revenues will be a setback to the company’s expansion plans. GAIL has lined up capital expenditure of Rs25,000 crore by 2012. While Rs10,000 crore is expected to be funded through internal resources, the balance will come from borrowings. The company has a current debt to equity ratio of 0.12:1.
GAIL is hoping to access gas from the Panna-Mukta-Tapti (PMT) fields from the offshore Mumbai coast, to partially meet its needs for rich natural gas. But GAIL is required by the Union government to market the entire 4mtpa of gas. PMT fields are owned by ONGC, Reliance Industries Ltd and BG India, a unit of UK-based BG Group, and the gas is simply handed over to GAIL for marketing across the country.
“GAIL used to get around 6 million cu. m per day of this gas earlier so it was given an additional 4 million cu. m per day of natural gas. This means GAIL would be able to replace about 1mtpa of its LNG requirements at its Pata plant with PMT gas, compared with the total 8mtpa it had received earlier. This would not suffice in the long run,” said a Mumbai-based oil and gas analyst with a leading brokerage who did not wish to be identified.
Shares of GAIL last traded on the Bombay Stock Exchange on Wednesday at Rs417.20. Indian stock markets were closed on Thursday

20 GSM Operators Join hands against Virgin Mobile

2008-03-20T21:28:00.000-07:00

20 GSM operators have urged the Department of Telecom to reinvestigate the deal between Tata Teleservices and Virgin Mobile for a possible violation of the Foreign Direct Investment (FDI) norms.

In a communication to DoT, the Cellular Operators Association of India said that rules regarding Mobile Virtual Network Operators should be made clear and no operator should be allowed to take a back-door entry into the telecom sector. The DoT had earlier given a clean chit to the Tata-Virgin deal.

However, COAI wants the issue to be examined once again. “The arrangement between Virgin Mobile India and Tata Teleservices has implications from the perspective of the foreign direct investment policy of the Government of India. The FDI Policy limits foreign investment in the telecom services sector and completely bars it in the retail sector. It is important, therefore, to examine whether the mobile services being provided by Virgin Mobile India meet the restrictions imposed by the FDI Policy,” said the COAI letter.

COAI has also urged DoT to clarify the rules for providing MVNO and franchising. “Virgin Mobile India claims to be a franchisee of Tata Teleservices offering in India the “Virgin Mobile” brand of services of Tata Teleservices. It is well known that the brand “Virgin Mobile” belongs to the Virgin Group of companies based in UK. It is equally well known that the mobile services that have been launched in India by Virgin Mobile India are the same services that the Virgin Group already offers, as an MVNO, in other parts of the world under the same brand. It is counter-intuitive that a group with a well-known brand of mobile services would first transfer its brand and expertise to Tata Teleservices and then take the same brand and expertise back for use in India under a franchising arrangement, unless this double loop is deployed to overcome a regulation,” COAI said.

Public Sector banks to raise Auto loans

2008-03-20T21:20:00.000-07:00

In a bid to increase their auto loans portfolio, public sector banks are offering lower interest rates and organising special campaigns. This could help revive the demand for auto loans, which has been slowing down, said bank officials.

While the State Bank of India is organising a special car rally for its customers, the Bank of India and the Union Bank of India have reduced the rates on car loans.

Car and commercial vehicle asset segments comprise one-third of total retail loans for the entire banking industry, said a recent report from rating agency Crisil.

Most public sector officials admit that car loans form a minor part of their retail loan portfolio, as private banks and NBFCs hold a major chunk of the market share. The average rate of interest charged by public sector banks for auto loans is 11-12 per cent, depending on the amount and duration of loan.

SBI’s Mumbai zone is organising a special campaign to promote auto loans from March 1 to April 16. The highlight of the campaign is a car rally to be held tentatively on April 20, between Mumbai and Lonavala.

The first prize is an all expense paid week-long trip to Sydney.

All those customers who avail car loans from SBI’s branches in Mumbai and Thane, between March and April 20, would be eligible to participate in the rally, said an official from the bank.

“The share of auto loans in the retail loan portfolio is, as of now, very negligible. We are trying to create interest for our car loans through such campaigns,” he said.

A senior official from the Union Bank of India said that the bank is specially targeting high networth individuals for auto loans, as defaults are usually less in this segment of customers.

Also, this segment would typically change their cars after three years, as they buy new models. So, most of them would prefer to clear off their loans within three years.

“We can also cross-sell other retail to these clients by offering them these additional benefits,” he said.

Mr D. Krishnamurthy, General Manager (Retail), Bank of India, said, “We expect a lot of demand for two-wheelers and small cars.

The reduction in rates will also help to increase the general demand for auto loans. It was also something the Government had asked banks to look into

Anil Ambani’s DTH to beam this month via 100 channels

2008-03-20T21:09:00.000-07:00

Big TV Ltd, a fully owned subsidiary of Anil Ambani-led Reliance Communications (RCOM), will launch direct-to-home (DTH) services commercially by the end of this month.

It expects to offer DTH services to over 10 million subscribers across the country and feed to over 15 million households.

Big TV will offer set-top boxes (STBs) at Rs 1,000-Rs 1,500, along with a monthly subscription package of Rs 300, which will entitle them to watch the channels being aired; it will also provide subscribers Rs 100 worth pay-per view (PPV) movies. They will have access to 30 PPV channels showing Bollywood, Hollywood and regional films.

Sumit Chowdhury, CIO, Reliance Communications, said: “The DTH service will commercially launch before the end of March.”

He declined to give the number of channels and other details but sources said that Big TV will offer around 100 channels initially. Later, the company is expected to increase the number of channels to 300.

Industry sources said the launch is likely only in May 2008 as the hardware is not yet ready, and the company will prefer the launch after school vacation commences on May 2008 though it was not independently confirmed.

Meanwhile, Chowdhury said Wimax technology isn’t cost-effective at present due to spectrum shortage. Nationwide launch of Wimax services will depend on the availability of more spectrum, he said.

At present, the DTH market is dominated by two private players — Essel group’s Dish TV and TataSky, which is a joint venture between the Tatas and Rupert Murdoch’s Star Group.

Dish TV, the first DTH player in the country, has around 3 million subscribers, while TataSky has over 1.7 million. Apart from these, Bharti group and Sun TV will also launch DTH in by year-end. According to an estimate, the DTH reach in India is likely to expand from 2.5 million households now to 16 million by 2010. Unlike cable, DTH is a more organised and a less-regulated business. With heavyweights foraying into the space, the DTH segment is set to outpace digital cable in the near term and become a 14 million home market by fiscal 2010.

Inflation up at 11-month high; rising towards 6 pc

2008-03-20T06:50:00.000-07:00

NEW DELHI: Inflation rose by a whopping 0.81 per cent to touch 5.92 per cent during the week ended March 8, as metal prices soared and food items turned expensive in line with the global trend.

With inflation just short of six per cent mark, it may not allow the Reserve Bank to cut interest rates despite sluggish industrial growth, analysts said.

"It seems that RBI will maintain status quo as far as interest rates are concerned in the immediate future," Crisil Principal Economist D K Joshi said.

Wholesale prices-based inflation rate surged despite high base of 6.51 per cent a year-ago.

"Our inflation has got linked with the global price trend as commodity prices and food prices are contributing maximum to the domestic inflation data," Joshi said.

During the week, basic metal, alloys and metal products group rose by 6.7 per cent. Prices of blooms and billets and slabs went up by 30 per cent, wire of all kinds by 25 per cent, steel and tensile plates by 20 per cent and bars and rods by three per cent.

Among food products prices of arhar, gram and moong went up by three per cent. At the same time, fruits and vegetables, maize, and condiments and spices were expensive by one per cent.

Manufactured products like imported edible oil, coconut oil, mustard oil, also turned dearer. The Government had announced a ban on export of all edible oils with effect from March 17, for one year to curb their rising prices.

There has been spurt in global oil prices, as many countries are using them for bio-fuel.

With the rupee reversing its appreciating spree of late, imports of both petroleum and non-petro products are no longer cheaper. "In fact, we are importing inflation," Joshi said

Citi group Plans further Job cut

2008-03-20T06:47:00.000-07:00

NEW YORK (Reuters) - Citigroup Inc, the largest U.S. bank, plans further job cuts in its securities operations in a bid to cut costs after subprime mortgage and credit problems led to a record quarterly loss.

Any job losses would be on top of 4,200 cuts companywide announced in January by Chief Executive Vikram Pandit, and 17,000 announced last April by predecessor Charles Prince. Citigroup has said it ended 2007 with 375,000 employees.

"Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm," spokesman Adam Castellani said on Thursday. "This year, we will have a larger number of reductions as we continue to strengthen the business and lower our expense base."

The institutional clients group includes investment banking and trading operations, as well as alternative investments, which offers hedge fund and private equity services.

According to the New York Times, citing people close to the situation, Citigroup plans to lay off 2,000 investment bankers and traders before the end of March. Most cuts will be in New York and London, though other markets in Europe and Asia will be affected, the newspaper said. Traders are more at risk given market conditions, the newspaper said.

The bank declined to confirm the report. Published reports have said Citigroup might cut tens of thousands of jobs. Pandit has been reviewing the bank's businesses worldwide to explore ways to boost profitability and efficiency.

In the fourth quarter, New York-based Citigroup suffered a $9.83 billion loss, hurt by $18.1 billion of write-downs largely tied to subprime mortgages and related securities.

Speaking on a January 15 conference call discussing results, Chief Financial Officer Gary Crittenden called the 4,200 job cuts a "first installment" in what would likely be "a continual stream of efforts that we are making to reduce headcounts in nonproductive areas" and invest in stronger businesses.

Citigroup shares closed Wednesday at $20.41 on the New York Stock Exchange. They closed one year ago at $50.64.

United States moots new H-1B visa rules

2008-03-20T00:32:00.000-07:00

The United States has proposed a new rule probihiting the employers from filing multiple applications for H-1B visa, widely sought by Indians, for the same employee to ensure a fair and orderly distribution of available visas.

"To ensure a fair and orderly distribution of available H-1B visas, USCIS will deny or revoke multiple petitions filed by an employer for th same H-1B worker and will not refund the filing fees submitted with multiple or duplicative petitions," the US Citizenship and Immigration Services said in an announcement.

The USCIS has sent the interim final rule for publication in the Federal Register for it becoming effective.

These changes will ensure that companies filing H-1B petitions subject to congressionally mandated numerical limits have an equal chance to employ an H-1B worker, it said.

This rule does not preclude related employers (such as a parent company and its subsidiary) from filing petitions on behalf of the same alien for different positions, based on a legitimate business need.

According to the agency from April 1, 2008, employers can file petitions requesting H-1B workers for fiscal year 2009 employment starting on October 1, 2008.

The USCIS has said that in last August, President George W Bush announced that the Administration would be undertaking a series of immigration and border security reforms and changes to the H-1B filing process under this rule are an important part of that initiative.

The Congress has set a limit of 65,000 for most H-1B workers for the fiscal 2009

India may lose two million jobs as overseas shipments

2008-03-20T00:26:00.000-07:00

New Delhi: India may lose two million jobs as overseas shipments of products including clothes and shoes declined due to the strengthening of the rupee against the US dollar, Jairam Ramesh, minister of state for commerce, said.
Minister of state for commerce Jairam Ramesh says unless remedial steps are taken, job losses would mount“In certain sectors like textiles, leather, marine products and handicrafts, there is a net decline in exports which has led to job losses,” the minister said. “It was estimated that unless remedial measures are taken, the total job losses could be as high as two million,” the minister said in the Rajya Sabha on Wednesday.
The rupee gained 12% in 2007, the sharpest rally in more than three decades, eroding the value of manufactured exports that make up about 15% of the Indian economy. While the currency slumped to a six-month low this week, exports may still miss the government’s target this year. Overseas sales may reach $152-155 billion (Rs6.1-6.2 trillion) in the 12 months ending 31 March, short of the $160 billion forecast, he said, adding, “as per the preliminary estimates, during April to January, there was a negative growth in dollar terms in the export of a number of items including cotton, primary and semi-finished iron and steel, plastic, non-ferrous metals, sports goods and handicrafts.”

There’s a grand sale on Dalal St, go buy

2008-03-20T00:17:00.000-07:00

Normally, in any market, prices and demand share an inverse relationship — when prices are down, demand increases and vice versa. But, the equity market seems to be an exception. Here, customers behave in the opposite manner — they crowd the market place when it is expensive and desert it totally when the prices are down and bargains are available.

More specifically, there is today a sale on Dalal Street, but very few people seem interested — in spite of the fact that such sales do not come very often. The last big one, called the Dotcom Bust Sale, was way back in 2001.
This time it is the Subprime Sale.

What brought about this sale? Well, mortgage companies abroad fell over each other to extend housing loans to questionable borrowers. Not content with this one indiscretion, they went a step ahead and sliced these iffy outstanding loans into small parts to be sold to reckless investment banks, hedge funds, FIIs and a minority of unsuspecting but deep-pocket private investors. In course of time, the inevitable happened. The questionable borrowers lived up to their reputation by defaulting, thereby setting off a domino effect. The housing finance companies couldn’t recover their loans and in turn could not keep up their obligations to the hedge fund guys. Everyone lost and we were deep into what has come to be known as the subprime crisis. Even now, no one knows just how deep the problem is — as per current estimates, the default rates could be upwards of $300 billion. However, as we go along, these numbers may well change.

Yes, there will be collateral damage in terms of tighter fund flows, more expensive credit and a significantly lower participation by FIIs in our stock market.

Infrastructure drills hole in India growth story

2008-03-20T00:07:00.000-07:00

The performance of six core industries has decelerated sharply during January 2008, raising more questions about the India growth story. With crude production declining and other sectors showing sluggishness, growth of the core infrastructure sectors nearly halved to 4.2% in January 2008 as compared to 8.3% during January 2007.

Coupled with rising inflation and a slowdown in the capital goods sector as well as slackening demand for consumer durables, the core sector deceleration is bad news for the economy. The stock market indices have slipped sharply in the past weeks due to growing concerns about a slowdown in the economy and an impending recession in the US, which has started affecting exports from employment-intensive segments.

According to data released by the government here on Wednesday, growth in the core sector (comprising crude oil, petroleum refining, power, cement, steel and coal) has led to a drastic fall in six core infrastructure industries to 5.5% during the first 10 months of the current fiscal as compared to 8.9% during April-January the previous fiscal.

Crude oil production registered negative growth of 0.2% in January compared with 4.7% in the same month a year ago. Growth in coal production declined to 4.8% in January 2008 as against 9.9% during the corresponding month of 2007.

The electricity sector witnessed growth of 3.3 % in January as against 8.3% during January 2007. The cement sector posted growth of 5.2% during the month, down from 7.2% in January 2007.

Nokia N95 8GB has arrived on American shores

2008-03-19T09:37:00.000-07:00

The Nokia N95 8GB has arrived on American shores. Packed with portable entertainment features and high-speed HSDPA connectivity on 850/1900 MHz networks in the Americas, the Nokia N95 8GB is now shipping to select locations across the United States -- and with six months of free navigation service included with Nokia Maps.

The new Nokia N95 8GB brings the worlds of mobility and entertainment together with its stunning 2.8 inch QVGA screen with support for up to 16 million colors, eight gigabytes of built-in memory, Assisted GPS (A-GPS) for improved location access, and enhanced battery power. Nokia N95 8GB owners in the US can also enjoy the benefits of free turn-by-turn directions and voice guidance in Nokia Maps for six months.

"We're excited to now offer this all-in-one powerhouse of a multimedia computer in the United States," said Bill Plummer, vice president, Nokia Americas. "With the added ultra-fast connectivity of HSDPA, the Nokia N95 8GB delivers on the promise of a multimedia computer in one sleek and compact package."

This attractive package boasts one of the industry's strongest feature sets -- in addition to eight gigabytes of built-in memory, the Nokia N95 8GB includes a 5 megapixel camera with Carl Zeiss optics, built-in A-GPS, Wi-Fi, HSDPA and an innovative two-way slide for easy access to both telephony and multimedia functions. The sleek gloss black N95 8GB has a luminous 2.8" (240 x 320) QVGA display, so watching videos, browsing the Internet or viewing maps is a real pleasure. With its expanded memory, the N95 8GB offers up to 20 hours of video* or up to 6000 songs**.

Now with A-GPS, Nokia N95 8GB owners can quickly navigate to their locations using Nokia Maps faster and access maps for over 150 countries, including a selection of preloaded US state maps. The Nokia N95 8GB will also support Nokia Share Online 3.0, available via Nokia Download!, enabling users to upload photos and videos with just one click straight to Share on Ovi, Flickr or Vox.

At an estimated price of $749, the Nokia N95 8GB will be available through Nokia Nseries retailers across the United States, such as the Nokia Flagship stores in New York City and Chicago, as well as many online e-tailers.

* Capacity based on H.264 750-Kbps video at 320 x 249 resolution, combined with 128- Kbps audio. Capacity is half of this with H.264 1.5 Mbps video at 640 x 480 resolution, combined with 128-Kbps audio (near DVD quality). ** Capacity based on 3 minutes, 45 seconds per song with 48 Kbps eAAC+(M4A) encoding on the Nokia Music Man

Buffett says no to company car, salary hike

2008-03-19T09:29:00.000-07:00

NEW YORK: World's newly crowned richest person Warren Buffett may have some lessons for other billionaires and CEOs of the world.

Buffett, CEO and Chairman at Berkshire Hathaway, does not use office car, has neither taken a salary hike for 25 years nor desires any in future, pays back the company for minor items such as phone calls, postage and favour from office personnel that are personal in nature, does not fly in company jet for personal visits and gives over four-times bigger pay package to his Chief Financial Officer.

These disclosures are part of Buffett-run Berkshire Hathaway's compensation policy as mentioned in a notice being sent to its shareholders for their annual meeting on May 3.

Besides, Berkshire said it does not grant stock options to its executive officers, all the compensation would be deductible under tax laws and the company's profits or market value would never be a yardstick for any remuneration.

Stating that its compensation program is different from most of the public companies, Berkshire said that Buffett's annual salary has been at 100,000 dollars for over the last 25 years and he has conveyed that "he would not expect or desire it to increase in the future."

The amount of his compensation was recommended to the company's board of directors by Buffett himself.

Berkshire Vice Chairman Charles Munger has also been paid an annual salary of 100,000 dollars for last 25 years and Buffett does not anticipate any hike in Munger's package as well in the future.

Buffett's total compensation actually fell in 2007 to 175,000 dollars, from 214,250 dollars in the previous year.

Who should you trust your money with?

2008-03-19T09:23:00.000-07:00

ver the last couple of days, I heard some mutual fund heads talking on television about the current “compelling valuations” in the stock market and how investors should just buy and sit tight for a couple of months.

But when they were specifically asked what they themselves were buying, there was no clear answer forthcoming.

Which brings me to the question, what / who / when should you trust with your money?

My answer is simple —- yourself!

It is not that the people voicing their opinion in the public domain are dishonest.

They just have to be wrong to make you poorer.

They may also (more often than not ) omit to mention a few important facts (the valuations are compelling but I am not buying yet!).

When it comes to survival, it is usually to each his own.

History has recorded for posterity that humans have eaten their dead kith and kin in wars and other extenuating circumstances to survive.

Why should the markets be any different?

What are the markets anyway? Markets are a collection of all the emotions of the participants put together. Greed, fear, compassion and cruelty included.

When it comes to self preservation, even murder is allowed by the courts in certain circumstances.
Big-ticket players routinely lead retail players to slaughter houses. Cold bloodedly and calculatively.

Books have been written on the subject, talk shows conducted by the dozens but retail players have yet to learn that lesson.

Going further, I have found that Indian markets are a lot more volatile compared with their developed counterparts as the participation has a higher component of emotions in the combination of intelligence and emotions.

US stocks surge to five year high after Fed rate cut

2008-03-19T09:21:00.000-07:00

ASHINGTON: As the US central bank hoping to avert a recession, cut short-term interests by an additional three-quarters of a point, to 2.25 percent, American stocks rocketed to their biggest gains in almost five and a half years.

With the move on Tuesday, the Federal Reserve as the central bank is called, has lowered interest rates by a full three points since September, bringing it to the lowest point since late 2004.

Economists had been expecting a cut of one-half to one point, because the nation's economy has sagged so badly in response to the housing sector's meltdown, and the growing fallout being felt in other sectors.

Additional confidence boosters came Tuesday, when two investment banking giants, Goldman Sachs and Lehman Bros., posted better-than-expected earnings, easing fears that another big Wall Street firm would suffer a run on the bank and fail like Bear Stearns did.

A day after a feared market meltdown, the upbeat news fuelled a relief rally, the Dow Jones industrial average jumped 420.41 points, or 3.51 percent, to 12,392.66. It was the Dow's fourth-biggest point gain ever.

The Standard & Poor's 500 index enjoyed its biggest percentage gain since October 2002, soaring 54.14 points, or 4.24 percent, to 1330.74. The Nasdaq composite rallied 91.25 points, or 4.19 percent, to 2268.26. The rally helped the Dow and S&P 500 trim their losses from the October highs to 12.5 percent and 14.9 percent.

In an accompanying statement, the Fed noted the weakness throughout the economy and the disarray in the nation's financial markets in making it clear that the bigger threat to the economy is from weakness, rather than inflationary pressures.

SEBI Allows Short Selling From April 21st

2008-03-19T09:18:00.000-07:00

ecurities and Exchange Board of India (Sebi) today said short selling and securities lending & borrowing will be operationalised from April 21.

A circular issued by the regulator today asked stock exchanges and depositories to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the decision.

Exchanges and depositories have been asked to update Sebi the status of the implementation of the provisions in the monthly development report.

Sebi had come out with a circular, on December 20, 2007, specifying the broad framework for short selling by institutional investors and a full-fledged securities lending and borrowing scheme for all market participants. A key feature of the framework had included a ban on naked short selling. This means all short-sellers would be required to honour their obligation of delivering securities at the time of settlement. They can honour the trades by borrowing securities through the proposed Securities Lending and Borrowing (SLB) scheme.

The other key feature was that no institutional investor will be allowed to do day trading - virtually prohibitng squaring off of their transactions intra-day. All shares in the futures and options (F&O) segment will be eligible for short selling. There are currently 200-odd stocks available in F&O on the National Stock Exchange. Sebi has said it will review the list of stocks that are eligible for short selling from time to time.

The SLB scheme, initially, will be for a tenure of seven days. There will also be fixed standardised contracts for the securities under SLB. The settlement cycle on SLB will be on T+1 basis. This means, investors are required to settle their transactions a day after their trades.

Securities lending and borrowing, which is considered a necessary ingredient for short selling, will be introduced simultaneously with short selling.

The capital markets regulator had said that to begin with the scheme will be operated through clearing corporations and stock exchange clearing houses that have nationwide terminals. At present, only BSE and NSE have nationwide terminals. The clearing agents will be required to be registered as approved intermediaries (AI) under the Securities Lending Scheme.

Stock lending and borrowing will also be allowed only in F&O stocks.

Sebi said borrowers and lenders should access the platform for lending/borrowing set up by the AIs through the clearing members (which include banks and custodians) who are authorised by AIs for the process.

To follow the Know Your Client (KYC) norms, Sebi said AIs should allot a unique ID to each client, which would be mapped to the Permanent Account Number of the respective clients.

"AIs shall put in place appropriate systematic safeguards to ensure that a client is not able to obtain multiple client IDs," the regulator had said.

Orchid Chemicals Crashed

2008-03-18T05:32:00.000-07:00

Chennai-based Orchid Chemicals & Pharmaceuticals extended its losses on Tuesday snapping more than 10% after Monday`s rout where the stock almost nosedived 40% at the BSE.

The scrip closed today down Rs 13.10, or 10.31%, at Rs 113.95. Over 1.13 million shares were traded at the BSE. The scrip touched a high of Rs 137 and a low of Rs 109.15.

The stock plunged on Monday as the Orchid Chemicals` (Q, N,C,F)* founders offloaded 7% stake due to margin calls. Bear Stearns also sold about a million shares of the company.

Orchid Chemicals & Pharmaceuticals reported 91.07% rise in net profit to Rs 541.173 million for the quarter ended December 2007 as compared to Rs 283.235 million for the quarter ended December 2006.

Total Income increased 39.33% to Rs 3,329.905 million for the quarter ended December 2007 from Rs 2,389.969 million for the quarter ended December 2006.

The scrip has slumped 48.05% over the past one week and 55.21% over the past one month.

Weekly Technicals March 9

2008-03-08T19:58:00.000-08:00

The Sensex ended on a dismal note last week with a massive loss of over 9 per cent (1,603 points). The index, which started the week and the month with a negative gap of 351 points, could not recover and slipped below the 16,000-mark to 15,975.

A lack of buying support on weak global cues was the major reason for the downmove. Financial and power stocks bore the brunt of the selling last week.

Reliance Energy slumped 13 per cent, while ICICI Bank plunged 18 per cent and Bajaj Auto tumbled 17 per cent. DLF and Larsen & Toubro dropped over 15 per cent each.

Other major losers were SBI, HDFC Bank, BHEL, Bharti Airtel, Reliance and NTPC, each down by 8 to 13 per cent. Maruti, however, was the sole gainer (8 per cent) among index stocks.

The index violated the broader range of 16,000-19,000 on the downside and also closed below it. The markets are now looking extremely weak and the index may test its recent low of 15,300 soon.

A break of 15,200 would see the index sliding all the way to 12,100 in coming days with some support around the 13,900 level.

In case of a rally, the index will have to cross many hurdles. The index is likely to face significant resistance around 17,300, 17,900 and 18,200 levels. In order to arrest the current downmove, the index will have to sustain above 16,100.

The NSE Nifty tumbled to a low of 4,672, an intra-week loss of 551 points. The index finally ended with a huge loss of 8.7 per cent (452 points).

The Nifty, too, violated its major support of 4,760 on the downside, but somehow managed to close above it. The index is now likely to retest its recent low of 4,450 with some support around the 4,500 level.

A break of the recent low could see the index sliding to 4,100 or slipping to the 3,500 level.

Acute Dollar Shortage to continue

2008-03-08T19:52:00.000-08:00

While the Indian central bank’s foreign exchange reserves stand at a record $301.2 billion with at least $100 billion having been added during the current fiscal year, there is an acute dollar shortage in the market.
“There is hardly any dollars in the market. The banks have no dollars to lend to corporations,” says the India chief executive of a large foreign bank who didn’t want to be identified. Foreign exchange dealers estimate that Indian banks are facing a shortfall of about $200 million every day for the past month.
Meanwhile, the rupee fell 0.70% to close at 40.52/53 to a dollar on Friday, its lowest in six months, taking cues from the falling equity markets.
EQUITY IMPACT
The dealers are blaming the Reserve Bank of India (RBI) and the finance ministry’s policy of curbing dollar inflows for the systemic shortages. While the curb on external commercial borrowings (ECBs) considerably slowed the inflow of dollar funds, the sub-prime crisis that continues to rock the world’s financial system virtually shut the door for Indian firms for foreign currency convertible bonds (FCCBs).
“The shortage of dollars has persisted for almost a month, primarily owing to outsized capital outflows in the past six weeks. The situation will correct only when inflows recover sufficiently or the RBI supplies dollars ... To be sure, the worst of the dollar shortage is likely behind us but, it is still uncertain when onshore dollar liquidity fully normalizes,” said Vikas Agarwal, an analyst with JPMorgan Chase Bank.
However, there are others who say that the situation will worsen in the second half of March when the rupee liquidity will tighten on account of advance tax outflows. Indian firms pay advance corporate tax every quarter and analsysts say the quantum varies between Rs40,000 crore and Rs50,000 crore, depending on the profitability of companies. “With rupee liquidity tightening, RBI may not like to rollover its forward purchase of dollars as part of its sell-buy swaps in the market,” pointed out the dealer at the private bank.
Meanwhile, there are other factors that have also contributed to the dollar shortage.
One of them is a considerable slowdown in the flow of money from non-resident Indians, or NRIs. They are remitting less money to India as interest rates offered on so-called NRI deposits have come down sharply. For instance, until mid-April 2007, NRIs were offered 25 basis points less than the Libor (London Interbank Offered Rate) on their dollar deposits. Now, the rate is 75 basis points less than Libor.
To add to their woes, with the cut in US Fed rates, six-month Libor has come down from 5.30% a year ago to 2.88% now. This means, interest rate on six-month dollar deposits or FCNR(B) deposits has come down sharply from 5.05% to 2.13% in one year. The US Fed rate has come down from 5.25% to 3% since September 2007.
Between April and December, 2007, there was an outflow of $364 million from Indian banks’ FCNR(B) deposit portfolio. In the corresponding period of the previous year, there was an inflow of $1.6 billion. “The story is very similar in other NRI deposits too,” said a foreign exchange dealer with a new private bank who too didn’t want to be identified. There are two other NRI deposits—NRO and NR(E)RA—and banks have brought down interest rates on both in the past one year. Overall, there was an outflow of $816 million in the April-December period compared with an inflow of $3.7 billion in the corresponding period of the previous year.
Another factor in the dollar shortage is that foreign institutional investors (FIIs) areturning net sellers in the Indian equities.
Since the beginning of this year, FIIs have net sold $3.3 billion worth of equities. In 2007, they had bought a record $17.5 billon worth of Indian equities net of sales.
Meanwhile, RBI has been conducting sell-buy swaps in the foreign exchange market to drain liquidity. The sell-buy swaps postpone the creation of rupee liquidity immediately after RBI’s intervention in the foreign exchange market. The swap involves selling dollars with a simultaneous agreement to buy them back at a future date at a specified price. This is nothing but a forward contract.
When the time comes to buy back these dollars, RBI reviews the liquidity situation and either roll over such swaps or convert the dollars into local currency.
“If it rolls over the contract, dollars will remain in the system but since RBI may like to generate rupee liquidity to take care of the temporary tightness that will be created on account of advance tax outflows, it will buy back the dollars. This will worsen the dollar shortage,” the dealer said.
In August 2007, the finance ministry introduced stringent norms for Indian companies raising cheap dollar loans through the ECB route. Now ECBs of up to $20 million are permitted with a minimum average maturity of three years, and over $20 million and up to $500 million per borrower are permitted with a minimum average maturity of five years.
There were also restrictions in terms of use of ECBs. The government stipulated that the ECB proceeds can be used primarily for import of capital goods, new projects, modernization or expansion of existing projects in the realty sector and for the infrastructure industry.
ECBs accounted for $16 billion out of the $36 billion foreign exchange inflows in 2006-07. In the April-September 2007 period, loans raised via ECB were about $10 billion.
Harihar Krishnamurthy, head of treasury at Development Credit Bank, said the ECB routes should be opened up and NRI deposits be paid higher interest rates.

Sensex so far: what goes up must come down?

2008-03-08T19:47:00.000-08:00

Mumbai: Soaring returns from India’s bellwether equity index, the Sensex, made it the toast of global investors in recent years. These days, investors betting on the same Bombay Stock Exchange’s index are being toasted.
The Sensex has lost at least 21% so far in 2008 alone, the biggest loser among major Asian indices. This compares to gains of at least 45% in both 2006 and 2007.
However, even after a dismal start, the average price-earnings multiple of Sensex stocks is at a high 21.58, the second highest in Asia behind China. The P-E of China’s benchmark index, which is down 18.27%, is pegged at 36.03.
While this could portend more pain for investors, some analysts are starting to say current price levels are attractive.
“Indian stocks are more attractive after the fall, (given) their earnings potential,” says John Levack, the Hong Kong-based managing director of Electra Partners Asia Ltd, the Asian arm of a large UK-based private equity firm.

RBI may cut repo by 25%

2007-10-28T08:07:00.000-07:00

The Reserve Bank of India (RBI) may opt for a 25 per cent cut in the repo rate, to prop sagging demand in the interest rate-sensitive durables sector in the mid-term review of its 2007-08 monetary policy on October 30.
On the other hand, the central bank is not expected to raise the cash reserve ratio (CRR), the proportion of deposits banks have to keep with the central bank, though the continuing surge in foreign capital inflows warrants an increase.
The likely reduction in the repo rate would take place despite concerns about inflation, which suggest that interest rates can be left unchanged, banking sources said.
Though wholesale price inflation has dropped closer to 3 per cent against the RBI's target of up to 5 per cent, inflationary concerns persist because of high commodity prices, particularly with oil prices at above $80 per barrel, and high asset prices.
Also, lower inflation in the recent period has also been on account of the base effect -- that is, high prices a year ago.
The repo or the repurchase rate is the rate at which the central bank lends short-term money to banks against government securities. It is a tool for infusing liquidity in the system, which can potentially spur inflation. The reverse repo is the mechanism for absorbing surplus funds from the system.
The reverse repo rate has been maintained at 6 per cent since July 2006, but the repo rate has been raised three times by a cumulative 75 basis points to 7.75 per cent.
Any reduction in the repo rate leading to slightly higher growth in credit demand should not concern the central bank since the rise in credit offtake has slowed to 22 per cent in the first half of 2007-08 against its target of 25 per cent for the year.
On the issue of CRR, sources said, "It is a matter of time before the RBI uses CRR. At present, the situation seems to be manageable and RBI could wait for a while."
Foreign exchange inflows are expected to continue despite the measures taken by the Securities and Exchange Board of India to stem the flow of foreign investments in equities through participatory notes. This could continue to be a source of liquidity in the system

Baazar talk and Market Whispers 26/10/2007

2007-10-25T18:58:00.000-07:00

Sebi has put its foot down that has sent warning messages to all FIIS and operators.Now the Market all aet to reach 20000 before deepavali and 25000 by March 2008.You can concentrate on stocks like Alok industries which is going to rise on news of demerger and BEML for investment.Balarampur chini is accumulated by a section of punters led by KP.Hitachi home is another stock that will rise in the coming days.
Foreign institutional investors (FIIs) turned net buyers in equities worth Rs 7,770 million (USD 192.6 million) on October 24. They bought equity worth Rs 63,157 million and sold equity worth Rs 55,387 million. Till October 24, they have been net buyers in equities worth Rs 202,954 million (USD 4,983.9 million).

Market is on a roll and you also keep on rolling

Baazar talk and Market Whisper 25/10

2007-10-24T18:48:00.000-07:00

Market as expected zig zagged jig sawed and finally enterd the positive phase.Stock specific action was seen all over.Federal bank rights issue is going to be priced between 140-180 and going to be the best investment stock for all.Market is flooded with rumours of bonus from Reliance Capital& LT.Good results from LIC housing,Bank of Maharashtra,India Cements has boosted the midcap sentiment as well.
But Foreign institutional investors (FIIs) remained net sellers in equities worth Rs 12,103 million (USD 300 million) on October 23. They bought equity worth Rs 55,809 million and sold equity worth Rs 67,912 million. Till October 23, they have been net buyers in equities to the tune of Rs 195,184 million (USD 4,791.3 million).
Market will depend on the outcome of the Sebi meet on P-Notes tomorrow. Investors are eagerly looking forward to it. However, in a bull market all news is considered good news, which might pull the market up substantially in the next trading session.

Bazaar talk and Market Whispers 24/10/2007

2007-10-23T18:56:00.000-07:00

Marketes were on a zoom since yesterday.When Sebi decided to speak to FII the entire world started thinking that everything has turned Positive.But baazar log wait for the fine print to come on 25th.Meanwhile whats happening in the market?.FIIS sold Rs 32,155 mn on 22nd october.This is massive is it not?.As you all know only some stocks are being jacked up. So Choose and buy .Just Adlabs has become the market favorite.This stock is all set to cross 1000 soon.Buy and forget.Whispers are around that RJ after losing heavily on RNRL is now runnig behind arvind Mill.So go ahead and grab it before aqll broking houses start puting a buy accumulate ,hold etc on it..
So what will market do today.Open very strong so that u dont trade.Wobble a little and finally close +.
Bye for today but back with baazar talk tomorrow.
Yogi

Satyam Computers

2007-10-23T08:55:00.001-07:00

The company has reported a consolidated net profit of Rs4.09bn Vs. Rs3.78bn in the same quarter of the previous fiscal year.

Satyam Computer Services Ltd. has reported a consolidated net profit of Rs4.09bn for the fiscal second quarter versus Rs3.78bn in the same quarter of the previous fiscal year. This translates into a sequential growth of 8.14%. Net sales for the July-September 2007 quarter stood at Rs20.32bn as against Rs18.3bn in the year-ago quarter, reflecting a quarter on quarter (QoQ) growth of 11%.

On year-on-year (YoY) basis, growth in net profit was 27.9% and that in total income 31.4%. Earnings Per Share (EPS) for the reporting quarter was Rs6.12 compared to Rs5.67 in the preceding quarter. This represents a sequential increase of 8% and a YoY increase of 25.1 %.

At 19.82%, EBITDA Margin was better than 22.42% in the first quarter of the current fiscal year and 22.63% in the second quarter last year.

Satyam has managed to beat its own guidance for the quarter ended September 30, 2007. Income from software services was projected to come in at Rs19.17bn to Rs19.26bn and EPS was expected to be Rs5.36 to Rs5.41.

"The second quarter was exceptionally strong as we reported substantially better than expected revenue, broad based across key verticals, services and regions. We continue to win and ramp-up our engagements with strategic clients in our efforts to enable business transformation," Satyam Chairman Ramalinga Raju said.

"Strong volume growth and increased billing rates helped us post 12.7% revenue growth for the quarter. Margins for the quarter declined as salary hikes were finalised. Now that the increments are behind us, higher productivity and enhanced operational efficiencies will help us improve margins going forward," Satyam CFO V. Srinivas said.

"Our efforts to stem attrition and develop leaders are bearing fruit, and fulfilling an important market need," Satyam said. Attrition at 13.89% on a trailing 12-month basis for Q2 FY08 has been on the decline for the fifth consecutive quarter.

The parent company ended the quarter with 41,423 associates, an addition of 3,037 (including 1,889 trainees). The number of associates, including the subsidiaries and joint ventures stood at 45,767. Attrition on a trailing twelve months basis fell to 13.9% from 14.9% in Q1 FY08.

Satyam said that the company saw strong demand across all verticals, with TIMES and BFSI performing particularly well. TIMES continued its strong growth with a 20% increase sequentially while BFSI grew by 12.4% sequentially.

" The noteworthy growth rate of BFSI validates our belief that recent concerns in this market segment had little or no effect in our core business in this vertical," Satyam said. The demand for services in the consulting and enterprise business solutions space continues to be strong leading to a 14% sequential growth. it added.

Satyam is changing the name of our BPO subsidiary to Satyam BPO Ltd. from Nipuna Services Ltd. consequent to its decision to buyout external stakeholders. " Customers are today much more positively inclined about receiving the entire value chain of services from a single organization and in that context, this move would be in line with market demand," Satyam said.

The Board of Directors has approved an interim dividend of 50% for the fiscal year 2007-08.

LIC Housing Finance

2007-10-23T08:32:00.000-07:00

The Company has recorded a healthy growth in business during the second quarter ended September 2007. The Company sanctioned Rs. 2268 crores and disbursed Rs. 1599 crores of loans registering a growth of 69 % and
36 % respectively Net profit for the Q2 was Rs. 116.37 crores as compared to Rs.75.93 crores in the corresponding period last year, thus showing a growth of 53 %. The Company's total Income for the second quarter ended September 2007 was Rs. 527 crores as against Rs. 385 crores during the same period last year, a growth of 37 %.

For the six months ended September 2007 the Company sanctioned Rs. 3425 crores and disbursed Rs. 2821 crores, a growth of 48 % and 25 % respectively.

For the six months ended September 2007, the Company's total Income was Rs.990 crores as against Rs.725 crores during the same period last year. Net profit during this period was Rs 163.07 crores as compared to Rs. 113.39 crores in the corresponding period last year, a growth of 44 %.

The Outstanding Mortgage Portfolio as on September 30, 2007 was Rs. 19135 crores as against Rs. 15959 crores on September 2006, thus registering a growth of 20 %.

The Gross Non Performing Assets recorded a decline from 3.75 % as on September 2006 to 2.84 % as of September 2007. The Net NPAs of the Company stood at 1.65 % as of September 2007.

The Company recorded a Net Interest Margin of 3.20% for the second quarter of FY 2008 as against 2.68% for the same period in the previous year

Deepak Fertilisers net sales improved 15% to Rs4.36bn in H1 2007-08.

2007-10-23T08:28:00.000-07:00

Deepak Fertilisers net sales improved 15% to Rs4.36bn in H1 2007-08.

Deepak Fertilisers And Petrochemicals Corporation Ltd., (DFPCL), has announced strong growth in sales for H1 2007-08 over the corresponding half year in the previous financial year riding on strong sales in its Chemicals business.

Net Sales improved 15% to Rs4.36bn in H1 2007-08, against Rs3.79bn in H 1 2006-07 while PBT for the first half of the current year stood at Rs669mn against Rs567.2mn in the previous corresponding six months for 2006-07. PAT also improved to Rs444.6mn in H1 2007-08 as against Rs404.9mn for H1 2006-07. The Company registered higher profits on account of better average realizations per tons for its Chemicals business.

For the second quarter of financial year 2007-08, DFPCL has registered Net sales of Rs2.16bn from Rs2.12bn for the corresponding period in 2006-07 while PBT stood at Rs322.8mn (against Rs243.9mn for the previous comparable quarter). PAT improved 39% to Rs218.8mn in Q2 2007-08 against Rs157mn in Q2 2006-07.

The Company's Chemicals business grew to Rs3.07bn in H1 2007-08 as against Rs2.3bn in H1 2006-07. The Agri-services business registered sales of Rs1.39bn in H1 2007-08 from Rs1.65bn in Q1 2006-07. The drop in sales in fertilisers was on account of reduced availability of phos acid in the international market and the lower availability of material for trading.

The Company’s raw material costs increased during the period under review due to higher requirements of raw materials including outsourced ammonia and propylene. The retrofitting of the ammonia plant to augment its capacity to 390 metric tonnes per day (MTPD) from 272 MTPD was successfully completed during the period under review.

The sales of IPA and propane for the six months under review stood at Rs1.35bn. The IPA business is now on a firm growth path successfully driving the Company’s Chemical business higher. Global methanol prices bottomed out during the period and are currently on an upswing.

Work on the new 15,000 MT ammonia storage tank is well underway and the tank is expected to be ready in early 2008-09 placing the Company in an advantageous make or buy position for ammonia as the Natural Gas availability eases in the coming months. The Company is also well positioned to take on further capacity enhancements in the Nitric Acid segment. DFPCL’s leadership position in Ammonium Nitrate for the infrastructure and mining sector remained unchallenged.

DFPCL's Vice-Chairman & MD, S. C. Mehta, stated that Natural Gas supply to the Company’s Taloja plant could be expected to substantially improve from end-Q3 2007-08 with the last mile connectivity to the Taloja plant from GAIL’s Dahej-Uran pipeline nearing completion. Tie-ups for additional Natural Gas supplies are in the final stage of negotiation.

Ishanya’s first store, Croma, from the Tata Group, has already opened doors to customers and other large anchors at India’s first Design Centre and Speciality Mall are expected to open their stores during the festival season. Ishanya will house more than 100 outlets and 5,000 brands when fully open. Nearly 80 percent of Ishanya’s 5,50,000 square feet leasable area has already been leased out.

The Company’s Chemical Complex project at Paradip in Orissa is progressing well. The Company has completed the process of acquiring the Nitric Acid plant and placed orders for other long lead items in addition to progressing further on the detail engineering process for this plant.

Sensex Support 17000

2007-10-21T04:07:00.000-07:00

Volatility was the name of the game last week and is likely to continue for the week ahead. From euphoric highs, markets came crumbling down like a pack of cards. They recovered sharply, but eventually tumbled again.

The Sensex began the week with a bang (up 640 points) on Monday. Panic selling on Wednesday, owing to the Sebi’s discussion paper on participatory notes, saw the index hit the lower circuit for the third time in the last three years. Certain clarifications, thereafter, saw the index recover and, in fact, the Sensex scaled a fresh all-time, intra-day high of 19,199, up 780 points for the week.

However, aggressive selling on Friday saw the index tumble to a low of 17,226, down 1,972 points from the peak. The Sensex finally ended the week with a loss of 4.7 per cent (859 points) at 17,560. The index has gained a whopping 30.2 per cent (4,228 points) in the previous eight weeks.

Last week, we had mentioned that while upside targets were difficult to set, one needed to keep a close eye on key support levels. The Sensex tested the support level of 17,300, bounced back sharply, but eventually broke it. Going forward, the index is likely to test the support of 17,000, below which the index may drop to 15,780.

The bias seems negative for the moment and any upmove is likely to face stiff resistance around 18,070-18,550 levels. This week, the index may face resistance around 18,300-18,550-18,780, while on the downside, the index may find support around 16,800-16,570-16,350.

The NSE Nifty moved in a wide range of 635 points. From a peak of 5,737, the index plunged to a low of 5,102, before settling with a loss of 3.9 per cent (213 points) at 5,215. The key level to watch out for the Nifty is 5,020, below which the index could drop to 4,780-4,600.

This week, the index is likely to face resistance around 5,455-5,530-5,610, while on the downside, the index may find support around 4,970-4,900-4,820.

IDBI Q2 standalone net profit at Rs 155.5 cr

2007-10-20T09:41:00.000-07:00

IDBI has announced its second quarter numbers. It has posted standalone net profit of Rs 155.5 crore in the quarter ended September 2008 as against Rs 139.4 crore in same quarter of last year.
Standalone net interest income stood at Rs 144.7 crore versus Rs 134.9 crore.
The profit before tax was at Rs 378 crore. Other income increased to Rs 463 crore versus Rs 193 crore.
IDBI Q2 numbers are not comparable due to merger with United Western Bank.
According to CNBC-TV18 estimates, the bank was expected to post 4% growth in net profit of Rs 145 crore in Q2FY08 as against Rs 139.4 crore in same quarter of last year.
Net interest income (NII) was seen going down 36.6% at Rs 85.5 crore from Rs 134.9 crore and operating profit was likely to go up 60.45% at Rs 213.7 crore versus Rs 133.2 crore.

HDFC Bank Q2 net profit up at Rs 368.48 cr

2007-10-20T09:39:00.001-07:00

HDFC Bank has announced its second quarter results. The company's Q2 net profit was up at Rs 368.48 crore (Rs 3.68 billion) from Rs 262.94 crore (Rs 2.62 billion).
Its NII were up at Rs 1,162.7 crore (Rs 11.62 billion) from Rs 845.60 crore (Rs 8.45 billion).
The company's other income is up at Rs 482 crore (Rs 4.82 billion) as against Rs 398 crore (Rs 3.98 billion).
Its Q2 NIM was up at 4% versus 3.8%
The company's advances were up 33.4% at Rs 65,812 crore (Rs 658.12 billion). Its deposits were up 43.5% at Rs 91,069 crore (Rs 910.69. billion).