31 Mar 2009, 0600 hrs IST, Saibal Dasgupta, TNN
BEIJING: China is assuring the US it will do nothing to weaken the position of thedollar as the main international currency. But it is also using the financial crisis to urge foreign countries to settle payments in yuan instead of the US dollar.
The latest move involves a $10 billion currency swap deal with Argentina allowing importers in that country to make purchases from China in yuan instead of the dollar.
Argentina on Monday became the fifth country after South Korea, Malaysia, Belarus and Indonesia to sign such a currency swap agreements with China.
Chinese central-bank governor Zhou Xiaochuan recently threw the cat among the pigeons by calling for a new global reserve currency to replace the dollar because the US currency was extremely vulnerable to wide fluctuations during this period of financial crisis.
The statement has caused a furors across capitals of several western nations because China holds one of the biggest stock of foreign reserves.
Zhou’s views have been backed by Russian officials causing a lot of worries in Washington. In London, the Chinese ambassador in UK, Fu Ying, was singing a different tune ahead of the coming G-20 Summit in that city. He told the BBC on Sunday that China was not calling for replacement of the dollar as the world’s main currency. Zhou was merely contributing to an old debate when he made the statement about the US dollar, he said.
“It has been a long debate in the world. There’s nothing new,” she said. “And China is not calling for a replacement of dollar. It is an article written by the governor of centralbank on his bank’s website. I think he’s joining the debate.” Fu said.
Monday, March 30, 2009
Sensex nosedives 480 points
Banking, metal and realty stocks pull down the benchmark index
RIL, ONGC, Bharti Airtel recover
U.S. Govt rejects GM revamp plan
The stock indices fell sharply wiping out most of the gains these benchmark indices regained in the last few days. The benchmark Bombay Stock Exchange 30-share sensitive index Sensex) nosedived by 480.35 points at close on Monday.
The Sensex, which opened at 9902.35, touched a low of 9520.96 and finally closed at 9568.14, loosing 480.35 points from its previous close of 10048.49, a recent high. The S&P CNX Nifty fell below the psychological mark of 3000. The broader 50-share NSE Nifty lost 130.50 points to close at 2978.15 compared to the previous close of 3108.65.
The fall was led by banking, metal and realty stocks on weak global cues, which hit the investor sentiment. However, Reliance Industries, ONGC and Bharati Airtel recovered from their lower levels, which lifted the indices marginally at close On the last days of the financial year, banking stocks declined on concerns of mark-to-market (MTM) losses on their bond portfolio. The yield of the ten-year bonds fell for the seventh day in a row on Monday, the longest losing streak in almost two months. The yield on ten-year benchmark bonds (2019) climbed to the highest since November 2008.
Metal stocks lost as metal prices declined on the London Metal Exchange (LME). The rate-sensitive realty sector stocks declined on news that many bankers were still not ready for a major rate cuts as many expected. The European stock markets dropped as the U.S. Government rejected restructuring plans for General Motors and Chrysler, the cash crunch automakers. Moreover, Spain announced its first banking bail-out plan since the beginning of the crisis. Key benchmark indices of the U.K., France and Germany declined.
Asian markets declined for the first time in the last six days. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan were down between 0.69 per cent and 4.78 per cent. Japan’s Nikkei slipped by 4.53 per cent as investors booked profit after last week’s rally. U.S. Treasury Secretary Timothy Geithner said that some banks would need large amounts of Government aid and he has suggested a plan to shore up the nation’s banks with a public-private partnership to finance the purchase of illiquid real estate assets. Meanwhile, reports suggest that a coordinated agreement on a stimulus plan to revive the global economy by G-20 nations’ summit appears diminished ahead of the formal start of the meeting.
RIL, ONGC, Bharti Airtel recover
U.S. Govt rejects GM revamp plan
The stock indices fell sharply wiping out most of the gains these benchmark indices regained in the last few days. The benchmark Bombay Stock Exchange 30-share sensitive index Sensex) nosedived by 480.35 points at close on Monday.
The Sensex, which opened at 9902.35, touched a low of 9520.96 and finally closed at 9568.14, loosing 480.35 points from its previous close of 10048.49, a recent high. The S&P CNX Nifty fell below the psychological mark of 3000. The broader 50-share NSE Nifty lost 130.50 points to close at 2978.15 compared to the previous close of 3108.65.
The fall was led by banking, metal and realty stocks on weak global cues, which hit the investor sentiment. However, Reliance Industries, ONGC and Bharati Airtel recovered from their lower levels, which lifted the indices marginally at close On the last days of the financial year, banking stocks declined on concerns of mark-to-market (MTM) losses on their bond portfolio. The yield of the ten-year bonds fell for the seventh day in a row on Monday, the longest losing streak in almost two months. The yield on ten-year benchmark bonds (2019) climbed to the highest since November 2008.
Metal stocks lost as metal prices declined on the London Metal Exchange (LME). The rate-sensitive realty sector stocks declined on news that many bankers were still not ready for a major rate cuts as many expected. The European stock markets dropped as the U.S. Government rejected restructuring plans for General Motors and Chrysler, the cash crunch automakers. Moreover, Spain announced its first banking bail-out plan since the beginning of the crisis. Key benchmark indices of the U.K., France and Germany declined.
Asian markets declined for the first time in the last six days. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan were down between 0.69 per cent and 4.78 per cent. Japan’s Nikkei slipped by 4.53 per cent as investors booked profit after last week’s rally. U.S. Treasury Secretary Timothy Geithner said that some banks would need large amounts of Government aid and he has suggested a plan to shore up the nation’s banks with a public-private partnership to finance the purchase of illiquid real estate assets. Meanwhile, reports suggest that a coordinated agreement on a stimulus plan to revive the global economy by G-20 nations’ summit appears diminished ahead of the formal start of the meeting.
Saturday, March 28, 2009
Deadly PC virus to strike on April 1
26 Mar 2009, 0836 hrs IST, AGENCIES
LONDON: A security expert has cautioned that an Internet worm, called Conficker C, can strike at infected computers around the world on April 1.
Conficker C is a sophisticated piece of malicious computer software, or malware, that installs itself on a PC hard drive via specially written web pages and then conceals itself on a computer.
Graham Cluley, of the security specialist Sophos, has claimed that Conficker C is programmed "to hunt for new instructions on April 1".
However, "this does not mean that anything is going to happen, or that the worm is actually going to do anything. Simply, it is scheduled to hunt a wider range of websites for instructions on that date," The Times quoted him as saying.
And the biggest catch is that no one yet has any idea what exactly Conficker C is programmed to do.
In February, Cluley said, "It's as if someone is assembling an army of computers around the world, but hasn't yet decided where to point them."
Experts are fearing that on April 1 all the world's millions of infected computers may receive simultaneous instructions to attack, or to flood the Internet with spam email.
Ed Gibson, Microsoft's chief security adviser for the UK, was quite hesitant to make predictions about Conficker's behaviour.
"April 1 is a classic date for anything like this to go off. But I really would hate to say that April 1 is going to be unlike any other day," he said.
LONDON: A security expert has cautioned that an Internet worm, called Conficker C, can strike at infected computers around the world on April 1.
Conficker C is a sophisticated piece of malicious computer software, or malware, that installs itself on a PC hard drive via specially written web pages and then conceals itself on a computer.
Graham Cluley, of the security specialist Sophos, has claimed that Conficker C is programmed "to hunt for new instructions on April 1".
However, "this does not mean that anything is going to happen, or that the worm is actually going to do anything. Simply, it is scheduled to hunt a wider range of websites for instructions on that date," The Times quoted him as saying.
And the biggest catch is that no one yet has any idea what exactly Conficker C is programmed to do.
In February, Cluley said, "It's as if someone is assembling an army of computers around the world, but hasn't yet decided where to point them."
Experts are fearing that on April 1 all the world's millions of infected computers may receive simultaneous instructions to attack, or to flood the Internet with spam email.
Ed Gibson, Microsoft's chief security adviser for the UK, was quite hesitant to make predictions about Conficker's behaviour.
"April 1 is a classic date for anything like this to go off. But I really would hate to say that April 1 is going to be unlike any other day," he said.
Sensex soars 1,081.81 pts in the week
Source: IRIS (28 March 2009)
The BSE Sensex started the week with a positive gap and build on the gains as week progressed. The 30 share index, Sensex surged 1,081.81 points, or 12.06%, to 10,048.49 in the week ended Mar. 27, 2009. On the other hand, the broad based NSE Nifty jumped 301.6 points, or 10.74%, to 3,108.65 in the same period.
On Monday, the 30-share index, BSE Sensex opened with a gain of 73.62 points, at 9,040.30. As the day progressed, the markets marched further touching day`s high of 9,454.69. The Sensex wrapped the day on a cheerful note. It rallied further on intense buying seen in frontliners. Secondline stocks also supported the upmove. The sentiment was boosted by gains in Asian and Europen markets, following reports of US plans to help banks and financial institutions dispose of their toxic assets.
On Tuesday, the Sensex ended in positive led by banking stocks. Select buying and selling was seen in frontliners. It belled the day on a firm note, with a gain of 125.50 points, at 9,549.52 tracking global cues. It gained further strength touching a high of 9,699, as global markets found some relief in the US plan to get rid of the bad assets in the banking sector, which sparked hopes for stability in the financial system. Even Nifty hit the mark of 3,000 in intraday trades. However, the index failed to maintained its ground and fell into the negative terrain, touching a low of 9,402.64 to finally bounce back into positive at the close.
On Wednesday, the Sensex ended higher on persistent buying seen in realty, oil & gas and metal shares. It opened flat, with a loss of 28.74 points, at 9,442.30 on mixed global cues. Later, it turned choppy amid lackluster trade, touching a low of 9,430.45. However, the index gained strength on buying interest seen in frontliners, touching a high of 9,706.47 to close on a firm note.
For the fourth consecutive day, the Sensex on Thursday penned with a gain of 72.03 points, at 9,739.93 tracking positive global cues. As the day progressed, the index gained further strength on easing inflation and heavy buying witnessed in frontliners. Later at the fag end of the day, it touched the psychological mark of 10,000, touching a high of 10,061.36, the highest closing since Jan 6, 2009. The Sensex ended above 10,000 mark on account of better than expected inflation numbers and intense buying seen across board.
India`s benchmark wholesale price index (WPI), inflation fell sharply to 0.27% for the week ended Mar. 14, 2009 as compared to 0.44% a week ago. It stood at 8.02% during the corresponding week of the previous year.
Indian equities ended on a positive note on Friday. After opening firm, the 30-share BSE Sensex which opened firm slipped in to the negative terrain and witnessed a choppy trade thereon. Buying was witnessed in Metal and Health Care stocks throughout the day.
Mid-cap stocks surged 173.1 points, or 6.27%, to 2,934.16 in the week. While small-cap shares climbed 123.73 points, or 3.97%, to 3,238.11 during the week.
Major gainers over the week in the sectoral indices were Metal gained 16.15%, Oil & Gas 12.78%, Capital Goods rose 12.71%, Power climbed 9.68%, and Auto went up 8.31%.
Major gainers in 30-share index were Tata Steel (26.92%), ICICI Bank (19.29%), HDFC Bank (18.97%), Reliance Capital (18.80%), and Sterlite Industries (India) (18.47%) over the week.
Corporate News:
On March 23, Tata Motors launched its most awaited car of the year Tata Nano, the world`s cheapest car having an engine with 2-cylinder aluminium MPFI 624 cc petrol engine mated to a four-speed gear box. The car is expected to be on display across the country at Tata Motors Passenger Car dealerships and other select authorised outlets from April 1.
The Tata Nano is currently being manufactured at the company`s Pantnagar plant in Uttarakhand in limited numbers. The new dedicated plant, at Sanand in Gujarat, will be ready in 2010 with an annualised capacity of 350,000 cars
HDFC Bank, announced that it will reduce its retail prime lending rate by 50 basis points to 14% from March 25. The cut in the retail prime rate will accrue to all existing floating rate customers over the next three months, based on their respective reset dates.
Swiss pharma major, Novartis is all set to hike its stake in Indian subsidiary, Novartis India, to nearly 90% from the existing 51%.
The BSE Sensex started the week with a positive gap and build on the gains as week progressed. The 30 share index, Sensex surged 1,081.81 points, or 12.06%, to 10,048.49 in the week ended Mar. 27, 2009. On the other hand, the broad based NSE Nifty jumped 301.6 points, or 10.74%, to 3,108.65 in the same period.
On Monday, the 30-share index, BSE Sensex opened with a gain of 73.62 points, at 9,040.30. As the day progressed, the markets marched further touching day`s high of 9,454.69. The Sensex wrapped the day on a cheerful note. It rallied further on intense buying seen in frontliners. Secondline stocks also supported the upmove. The sentiment was boosted by gains in Asian and Europen markets, following reports of US plans to help banks and financial institutions dispose of their toxic assets.
On Tuesday, the Sensex ended in positive led by banking stocks. Select buying and selling was seen in frontliners. It belled the day on a firm note, with a gain of 125.50 points, at 9,549.52 tracking global cues. It gained further strength touching a high of 9,699, as global markets found some relief in the US plan to get rid of the bad assets in the banking sector, which sparked hopes for stability in the financial system. Even Nifty hit the mark of 3,000 in intraday trades. However, the index failed to maintained its ground and fell into the negative terrain, touching a low of 9,402.64 to finally bounce back into positive at the close.
On Wednesday, the Sensex ended higher on persistent buying seen in realty, oil & gas and metal shares. It opened flat, with a loss of 28.74 points, at 9,442.30 on mixed global cues. Later, it turned choppy amid lackluster trade, touching a low of 9,430.45. However, the index gained strength on buying interest seen in frontliners, touching a high of 9,706.47 to close on a firm note.
For the fourth consecutive day, the Sensex on Thursday penned with a gain of 72.03 points, at 9,739.93 tracking positive global cues. As the day progressed, the index gained further strength on easing inflation and heavy buying witnessed in frontliners. Later at the fag end of the day, it touched the psychological mark of 10,000, touching a high of 10,061.36, the highest closing since Jan 6, 2009. The Sensex ended above 10,000 mark on account of better than expected inflation numbers and intense buying seen across board.
India`s benchmark wholesale price index (WPI), inflation fell sharply to 0.27% for the week ended Mar. 14, 2009 as compared to 0.44% a week ago. It stood at 8.02% during the corresponding week of the previous year.
Indian equities ended on a positive note on Friday. After opening firm, the 30-share BSE Sensex which opened firm slipped in to the negative terrain and witnessed a choppy trade thereon. Buying was witnessed in Metal and Health Care stocks throughout the day.
Mid-cap stocks surged 173.1 points, or 6.27%, to 2,934.16 in the week. While small-cap shares climbed 123.73 points, or 3.97%, to 3,238.11 during the week.
Major gainers over the week in the sectoral indices were Metal gained 16.15%, Oil & Gas 12.78%, Capital Goods rose 12.71%, Power climbed 9.68%, and Auto went up 8.31%.
Major gainers in 30-share index were Tata Steel (26.92%), ICICI Bank (19.29%), HDFC Bank (18.97%), Reliance Capital (18.80%), and Sterlite Industries (India) (18.47%) over the week.
Corporate News:
On March 23, Tata Motors launched its most awaited car of the year Tata Nano, the world`s cheapest car having an engine with 2-cylinder aluminium MPFI 624 cc petrol engine mated to a four-speed gear box. The car is expected to be on display across the country at Tata Motors Passenger Car dealerships and other select authorised outlets from April 1.
The Tata Nano is currently being manufactured at the company`s Pantnagar plant in Uttarakhand in limited numbers. The new dedicated plant, at Sanand in Gujarat, will be ready in 2010 with an annualised capacity of 350,000 cars
HDFC Bank, announced that it will reduce its retail prime lending rate by 50 basis points to 14% from March 25. The cut in the retail prime rate will accrue to all existing floating rate customers over the next three months, based on their respective reset dates.
Swiss pharma major, Novartis is all set to hike its stake in Indian subsidiary, Novartis India, to nearly 90% from the existing 51%.
Tuesday, March 24, 2009
Realty may witness 30% correction: ASK
24 Mar 2009, 1952 hrs IST, PTI
MUMBAI: With investors shying away from real estate sector, Property Investment Advisors ASK expects there could be an up to 30 percent price correction across most realty markets in the country.
"We believe that there is scope for another 25-30 per cent correction in prices in most (property) markets of the country," ASK Property Investment Advisors
said in a report based on a review of the sector.
Stating that demand was overwhelmingly gravitating towards "affordable housing", ASK said that end-users and investors were shying away from real estate resulting in a demand-supply mismatch with the creation of substantial inventory of premium/affordable properties.
Demand would be increasingly price and product sensitive with completed properties commanding a 15-30 per cent premium over under construction properties due to a perceived increase in project execution task, it said.
"The top seven cities continue to have considerable latent demand for housing and at the right price, buyers are rushing to the market," it said, adding demand in the seven top cities had been impacted more than tier-III and emerging cities.
MUMBAI: With investors shying away from real estate sector, Property Investment Advisors ASK expects there could be an up to 30 percent price correction across most realty markets in the country.
"We believe that there is scope for another 25-30 per cent correction in prices in most (property) markets of the country," ASK Property Investment Advisors
said in a report based on a review of the sector.
Stating that demand was overwhelmingly gravitating towards "affordable housing", ASK said that end-users and investors were shying away from real estate resulting in a demand-supply mismatch with the creation of substantial inventory of premium/affordable properties.
Demand would be increasingly price and product sensitive with completed properties commanding a 15-30 per cent premium over under construction properties due to a perceived increase in project execution task, it said.
"The top seven cities continue to have considerable latent demand for housing and at the right price, buyers are rushing to the market," it said, adding demand in the seven top cities had been impacted more than tier-III and emerging cities.
HSBC Global (Singapore) hikes stake in Glenmark to 5%
Drug maker Glenmark Pharmaceuticals on Tuesday said HSBC Global Asset Management (Singapore) has hiked its stake to 5.01 percent for an estimated Rs 2.75 crore through an open market transaction.
In a disclosure to the Bombay Stock Exchange, Glenmark Pharma said the foreign fund house has purchased 2.18 lakh shares in the company, through an open market transaction, on March 12.
Calculated on the basis of the closing price of Glenmark on March 12, the transaction would have cost Rs 2.75 crore to the fund house.
Prior to the aforesaid purchase, HSBC Global Asset Management (Singapore) held 4.93 per cent stake, which increased to 5.01 per cent constituting 1.25 crore shares in Glenmark Pharma. Shares of Glenmark Pharma settled at Rs 143.10, down 3.90 per cent on the BSE.
In a disclosure to the Bombay Stock Exchange, Glenmark Pharma said the foreign fund house has purchased 2.18 lakh shares in the company, through an open market transaction, on March 12.
Calculated on the basis of the closing price of Glenmark on March 12, the transaction would have cost Rs 2.75 crore to the fund house.
Prior to the aforesaid purchase, HSBC Global Asset Management (Singapore) held 4.93 per cent stake, which increased to 5.01 per cent constituting 1.25 crore shares in Glenmark Pharma. Shares of Glenmark Pharma settled at Rs 143.10, down 3.90 per cent on the BSE.
BGR Energy electrifies on securing credit lines for a large project
BGR Energy Systems spurted 12.80% to Rs 144.50 on BSE after it secured credit lines worth Rs 3850 crore for execution of a large project.
The company made this announcement during market hours on Monday, 23 March 2009 when the stock jumped 5.35%.
The stock hit a high of Rs 153.70 and a low of Rs 132.10 during the day. The stock hit a 52-week high of Rs 499 on 17 April 2008 and a 52-week low of Rs 107 on 9 March 2009.
The company's current equity is Rs 72 crore. Face value per share is Rs 10.
The current price of Rs 144.50 discounts the company's Q3 December 2008 annualized EPS of Rs 15.12, by a PE multiple of 9.55.
BGR Energy Systems said a consortium of eleven banks led by IDBI Bank will arrange the line of credit for the company's dual currency engineering procurement and construction (EPC) power project contract consisting of Rs 3,296 crore and $450 million. The contract is from the Rajasthan Rajya Vidyut Utpadan Nigam. The funds arranged in dollars will be utilised for the financing of imported equipments, which has mainly come from China, the company's release to stock exchanges said.
BGR Energy Systems said it has mandated IDBI Bank to arrange fund-based facility of Rs 700 crore and non-fund based (bank guarantee and letter of credit) facilities of Rs 3,150 crore.
On 24 February 2009 BGR Energy Systems secured an overseas order worth $8.57 million from State Company of Oil Projects (SCOP), Iraq for supply of 14 floating and fixed-roof steel storage tanks. The contract is to be executed within 12 months.
BGR Energy Systems had in January 2009 secured a line of credit to fund its working capital requirements for a major power project at Tamil Nadu. The company had, in June 2008, bagged an engineering, procurement and construction (EPC) contract worth Rs 3100 crore for a thermal power project of Tamil Nadu Electricity Board (TNEB).
BGR Energy Systems' net profit gained 24.7% to Rs 27.21 crore on 23.4% increase in net sales to Rs 472.43 crore in Q3 December 2008 over Q3 December 2007.
BGR Energy Systems is a supplier of systems and equipment for the power, oil and gas, petrochemical and process industries.
The company made this announcement during market hours on Monday, 23 March 2009 when the stock jumped 5.35%.
The stock hit a high of Rs 153.70 and a low of Rs 132.10 during the day. The stock hit a 52-week high of Rs 499 on 17 April 2008 and a 52-week low of Rs 107 on 9 March 2009.
The company's current equity is Rs 72 crore. Face value per share is Rs 10.
The current price of Rs 144.50 discounts the company's Q3 December 2008 annualized EPS of Rs 15.12, by a PE multiple of 9.55.
BGR Energy Systems said a consortium of eleven banks led by IDBI Bank will arrange the line of credit for the company's dual currency engineering procurement and construction (EPC) power project contract consisting of Rs 3,296 crore and $450 million. The contract is from the Rajasthan Rajya Vidyut Utpadan Nigam. The funds arranged in dollars will be utilised for the financing of imported equipments, which has mainly come from China, the company's release to stock exchanges said.
BGR Energy Systems said it has mandated IDBI Bank to arrange fund-based facility of Rs 700 crore and non-fund based (bank guarantee and letter of credit) facilities of Rs 3,150 crore.
On 24 February 2009 BGR Energy Systems secured an overseas order worth $8.57 million from State Company of Oil Projects (SCOP), Iraq for supply of 14 floating and fixed-roof steel storage tanks. The contract is to be executed within 12 months.
BGR Energy Systems had in January 2009 secured a line of credit to fund its working capital requirements for a major power project at Tamil Nadu. The company had, in June 2008, bagged an engineering, procurement and construction (EPC) contract worth Rs 3100 crore for a thermal power project of Tamil Nadu Electricity Board (TNEB).
BGR Energy Systems' net profit gained 24.7% to Rs 27.21 crore on 23.4% increase in net sales to Rs 472.43 crore in Q3 December 2008 over Q3 December 2007.
BGR Energy Systems is a supplier of systems and equipment for the power, oil and gas, petrochemical and process industries.
Energy Development Company charged up after hike in stake by a director
Energy Development Company was frozen at the 10% upper circuit at Rs 47.45 at 14:51 IST after a director in the firm Pankaja Kumari Singh raised her holding in the firm by 0.63% through open market purchases.
The company made the announcement of the hike in stake by Pankaja Kumari Singh after market hours on Monday, 23 March 2009.
The stock hit a high of Rs 47.45 and a low of Rs 45.10 so far during the day. The stock had hit a 52-week high of Rs 168.45 on 25 March 2008 and a 52 week low of Rs 31.20 on 3 December 2008.
The company's current equity is Rs 27.50 crore. Face value per share is Rs 10.
The current price of Rs 47.45 discounts Q3 December 2008 annualised EPS of Rs 8.73, by a PE multiple of 5.43.
A filing to the BSE dated 23 March 2009 showed Pankaja Kumari Singh acquired 1,73,488 shares between 9 to 20 March 2009. Post the latest acquisition, Singh's holding in the company rose to 1.54% from 0.90% earlier. Meanwhile, Amar Singh, Chairman of Energy Development Company and Samajwadi Party leader also hiked his stake to 0.91% in the company after buying 1,700 shares from open market on 18 March 2009, a BSE filing on 19 March 2009 showed. Pankaja Kumari Singh is Amar Singh's wife.
Energy Development Company is into electricity generation and operates a 9-megawatt (mw) hydro electric plant at Harangi and a 1.5-MW wind mill at Hassan district in Karnataka.
The company's net profit rose 43.20% to Rs 6 crore on 16.10% rise in net sales to Rs 18.19 crore in Q3 December 2008 over Q3 December 2007.
The company made the announcement of the hike in stake by Pankaja Kumari Singh after market hours on Monday, 23 March 2009.
The stock hit a high of Rs 47.45 and a low of Rs 45.10 so far during the day. The stock had hit a 52-week high of Rs 168.45 on 25 March 2008 and a 52 week low of Rs 31.20 on 3 December 2008.
The company's current equity is Rs 27.50 crore. Face value per share is Rs 10.
The current price of Rs 47.45 discounts Q3 December 2008 annualised EPS of Rs 8.73, by a PE multiple of 5.43.
A filing to the BSE dated 23 March 2009 showed Pankaja Kumari Singh acquired 1,73,488 shares between 9 to 20 March 2009. Post the latest acquisition, Singh's holding in the company rose to 1.54% from 0.90% earlier. Meanwhile, Amar Singh, Chairman of Energy Development Company and Samajwadi Party leader also hiked his stake to 0.91% in the company after buying 1,700 shares from open market on 18 March 2009, a BSE filing on 19 March 2009 showed. Pankaja Kumari Singh is Amar Singh's wife.
Energy Development Company is into electricity generation and operates a 9-megawatt (mw) hydro electric plant at Harangi and a 1.5-MW wind mill at Hassan district in Karnataka.
The company's net profit rose 43.20% to Rs 6 crore on 16.10% rise in net sales to Rs 18.19 crore in Q3 December 2008 over Q3 December 2007.
Two-day rally fizzles out, Sensex sheds 225 points from the day's high
24 Mar 2009, Tuesday
The two-day rally came to a halt on Tuesday, as investors resorted to profit booking which took away all the good work done during the day. Market watchers said volatility will remain high in the next two days ahead of the derivative contracts expiry for March.
“After a sharp rally in the last few sessions, the correction witnessed Tuesday was bound to happen. However, the short term trend (the run-up to the elections) still remains upward. In fact, according to technical charts, Nifty to reach 3100 levels in the next 3-4 days and around 3250 in 15 days.
National Stock Exchange’s Nifty settled at 2938.70, down 0.04 per cent or 1.2 points. The index touched a high of 3017.40 and low of 2914.50 during the day.
Bombay Stock Exchange’s Sensex ended at 9,471.04, up 0.5 per cent or 47.02 points. The index slipped from a high of 9,699.00 to a low of 9,402.64 intra-day.
Brokers said this fall was expected and there were signs of investor fatigue, with a slowing economy and uncertainty about the outcome of upcoming general elections.
The Congress party today presented its election manifesto. Among other measures, it said it would include a hugely subsidised food scheme in new measures to protect farmers and the poor from the impact of the global slowdown. Some economists see the move increasing the country's spiralling fiscal deficit.
The market kickstarted trade on a firm footing celebrating the rally across global equities after the US administration unveiled a plan to mop up toxic assets from banks' balance sheet. The 50-share Nifty even managed to surpass the 3000 mark in early trade. Till noon, key indices moved from strength to strength.
But the rally was shortlived, and the buying activity gave way to selling pressure. A mixed opening on the European bourses also played on investor sentiment. Metals were the worst hit. Healthcare and consumer durables did not participate in the rally.
Among frontline counters, Reliance Capital (-6.84%), SAIL (-6.28%), Reliance Communications (-5.62%), Idea Cellular (-5.53%), Hindalco Industries (-5.38%) and Reliance Infrastructure (-4.96%) faced selling pressure.
But banking stocks were in demand for a major part of the day on the back of gains across global financial stocks. The BSE Bankex settled 2.18 per cent higher after surging more than 6 per cent through the day.
HDFC Bank (5.99%), Siemens (5.56%), Suzlon Energy (4.81%), Zee (3.74%) and Unitech (2.86%) held onto gains.
Secondline stocks were badly beaten. BSE Midcap Index ended down 0.58 per cent and BSE Smallcap Index edged 0.68 per cent lower.
Market breadth, which started on a strong note, worsened in late trade. On BSE, 1395 declines outnumbered 1134 advances.
Meanwhile, stocks across Asia-Pacific posted significant gains mirroring Wall Street. In Japan, the Nikkei 3.3 per cent, Hong Kong's Hang Seng index was up 3.4 per cent and South Korea's Kospi gained 1.9 per cent. Elsewhere, Shanghai's index rose 0.6 per cent, Australia's ASX added 0.8 per cent and Taiwan's benchmark was up 2.3 per cent.
However, European markets painted a mixed picture. Britain's FTSE 100 was down 1.2 per cent while Germany's DAX 30 and France's CAC-40 added 0.2 per cent each.
The two-day rally came to a halt on Tuesday, as investors resorted to profit booking which took away all the good work done during the day. Market watchers said volatility will remain high in the next two days ahead of the derivative contracts expiry for March.
“After a sharp rally in the last few sessions, the correction witnessed Tuesday was bound to happen. However, the short term trend (the run-up to the elections) still remains upward. In fact, according to technical charts, Nifty to reach 3100 levels in the next 3-4 days and around 3250 in 15 days.
National Stock Exchange’s Nifty settled at 2938.70, down 0.04 per cent or 1.2 points. The index touched a high of 3017.40 and low of 2914.50 during the day.
Bombay Stock Exchange’s Sensex ended at 9,471.04, up 0.5 per cent or 47.02 points. The index slipped from a high of 9,699.00 to a low of 9,402.64 intra-day.
Brokers said this fall was expected and there were signs of investor fatigue, with a slowing economy and uncertainty about the outcome of upcoming general elections.
The Congress party today presented its election manifesto. Among other measures, it said it would include a hugely subsidised food scheme in new measures to protect farmers and the poor from the impact of the global slowdown. Some economists see the move increasing the country's spiralling fiscal deficit.
The market kickstarted trade on a firm footing celebrating the rally across global equities after the US administration unveiled a plan to mop up toxic assets from banks' balance sheet. The 50-share Nifty even managed to surpass the 3000 mark in early trade. Till noon, key indices moved from strength to strength.
But the rally was shortlived, and the buying activity gave way to selling pressure. A mixed opening on the European bourses also played on investor sentiment. Metals were the worst hit. Healthcare and consumer durables did not participate in the rally.
Among frontline counters, Reliance Capital (-6.84%), SAIL (-6.28%), Reliance Communications (-5.62%), Idea Cellular (-5.53%), Hindalco Industries (-5.38%) and Reliance Infrastructure (-4.96%) faced selling pressure.
But banking stocks were in demand for a major part of the day on the back of gains across global financial stocks. The BSE Bankex settled 2.18 per cent higher after surging more than 6 per cent through the day.
HDFC Bank (5.99%), Siemens (5.56%), Suzlon Energy (4.81%), Zee (3.74%) and Unitech (2.86%) held onto gains.
Secondline stocks were badly beaten. BSE Midcap Index ended down 0.58 per cent and BSE Smallcap Index edged 0.68 per cent lower.
Market breadth, which started on a strong note, worsened in late trade. On BSE, 1395 declines outnumbered 1134 advances.
Meanwhile, stocks across Asia-Pacific posted significant gains mirroring Wall Street. In Japan, the Nikkei 3.3 per cent, Hong Kong's Hang Seng index was up 3.4 per cent and South Korea's Kospi gained 1.9 per cent. Elsewhere, Shanghai's index rose 0.6 per cent, Australia's ASX added 0.8 per cent and Taiwan's benchmark was up 2.3 per cent.
However, European markets painted a mixed picture. Britain's FTSE 100 was down 1.2 per cent while Germany's DAX 30 and France's CAC-40 added 0.2 per cent each.
Monday, March 23, 2009
Biggest rally in Sensex in more than three months
Nifty rallies above 2900 led by RIL, HDFC
Bears were caught off guard as Indian equity benchmarks rallied Monday mirroring Asian and European markets. Banks, oil&gas and
metal stocks were in the limelight while realty space ended with modest gains.
What started as a firm opening turned into a rally as traders frantically covered their positions. Volumes were also high as funds continued to churn portfolio ahead of March F&O series expiry and end of financial year 2008-09.
“A lot of short covering also seems to have driven the market as those who must have gone short at 2800 levels must have covered shorts. We could see the Nifty rallying upto 3000-3050 in a session or two. However, any rise above that looks unlikely because of forthcoming elections,” said Ambarish Baliga, vice-president, Karvy Stock
Broking
Bombay Stock Exchange’s Sensex ended at 9,424.02, higher by 457.34 points or 5.10 per cent from Friday’s close. The index extended gains to a high of 9454.69 after opening at 9040.30.
National Stock Exchange’s Nifty closed at 2939.90, up 132.85 points or 4.73 per cent. The broader index hit a high of 2949.75 and low of 2807.25.
The BSE Midcap Index ended 2.73 per cent higher and BSE Smallcap Index gained 2.01 per cent. Amongst the sectoral indices, BSE Bankex was up 6.66 per cent, BSE Oil&gas Index climbed 6.4per cent and BSE Metal Index moved up 6.31 per cent. BSE Realty Index ended with modest gains.
Ranbaxy Laboratories (10.8%), Tata Steel (10.39%), Hindalco Industries
(9.35%), HDFC (8.44%) and Reliance Industries (7.56%) spearheaded the rally on the Sensex.
The gains in Ranbaxy can be attributed to the company receiving good manufacturing practice certificate from UK and Australian health regulators for its Paonta Sahib facility in Himachal Pradesh. The MHRA approval will not only cover product filings for the UK but will also apply to product filings for the entire European Union.
Shares of Tata Motors closed over 3 per cent higher ahead of the launch of small car, Nano. While revolutionizing the Indian car market with its breakthrough budget pricing, the mad rush for the Nano is likely to result in a windfall for cash-starved Tata Motors that is likely to adopt a direct sale model for the car with a unique distribution plan.
Reliance Infrastructure closed 10 per cent higher after Anil Dhirubhai Ambani Group-owned Delhi Airport Metro Express, a special-purpose vehicle floated by Reliance Infrastructure for building the airport metro express line connecting the heart of the capital with the international airport, managed to raise Rs 2,500 crore funding for the project.
DLF, down 2.16 per cent, was the lone laggard in the 30-share index. Market breadth across BSE was extremely positive with 1,629 advances against 899 declines.
European markets were following the global trend led by gains in banking stocks. FTSE 100 was up 1.61 per cent, CAC 40 was up 1.42 per cent and DAX moved 1.84 per cent higher. Wall Street is all set to surge Monday ahead of U.S. Treasury Department’s plan to buy toxic assets from banks. Talks of stimulus package by Japan is also likely to keep the market mood upbeat.
Bears were caught off guard as Indian equity benchmarks rallied Monday mirroring Asian and European markets. Banks, oil&gas and
metal stocks were in the limelight while realty space ended with modest gains.
What started as a firm opening turned into a rally as traders frantically covered their positions. Volumes were also high as funds continued to churn portfolio ahead of March F&O series expiry and end of financial year 2008-09.
“A lot of short covering also seems to have driven the market as those who must have gone short at 2800 levels must have covered shorts. We could see the Nifty rallying upto 3000-3050 in a session or two. However, any rise above that looks unlikely because of forthcoming elections,” said Ambarish Baliga, vice-president, Karvy Stock
Broking
Bombay Stock Exchange’s Sensex ended at 9,424.02, higher by 457.34 points or 5.10 per cent from Friday’s close. The index extended gains to a high of 9454.69 after opening at 9040.30.
National Stock Exchange’s Nifty closed at 2939.90, up 132.85 points or 4.73 per cent. The broader index hit a high of 2949.75 and low of 2807.25.
The BSE Midcap Index ended 2.73 per cent higher and BSE Smallcap Index gained 2.01 per cent. Amongst the sectoral indices, BSE Bankex was up 6.66 per cent, BSE Oil&gas Index climbed 6.4per cent and BSE Metal Index moved up 6.31 per cent. BSE Realty Index ended with modest gains.
Ranbaxy Laboratories (10.8%), Tata Steel (10.39%), Hindalco Industries
(9.35%), HDFC (8.44%) and Reliance Industries (7.56%) spearheaded the rally on the Sensex.
The gains in Ranbaxy can be attributed to the company receiving good manufacturing practice certificate from UK and Australian health regulators for its Paonta Sahib facility in Himachal Pradesh. The MHRA approval will not only cover product filings for the UK but will also apply to product filings for the entire European Union.
Shares of Tata Motors closed over 3 per cent higher ahead of the launch of small car, Nano. While revolutionizing the Indian car market with its breakthrough budget pricing, the mad rush for the Nano is likely to result in a windfall for cash-starved Tata Motors that is likely to adopt a direct sale model for the car with a unique distribution plan.
Reliance Infrastructure closed 10 per cent higher after Anil Dhirubhai Ambani Group-owned Delhi Airport Metro Express, a special-purpose vehicle floated by Reliance Infrastructure for building the airport metro express line connecting the heart of the capital with the international airport, managed to raise Rs 2,500 crore funding for the project.
DLF, down 2.16 per cent, was the lone laggard in the 30-share index. Market breadth across BSE was extremely positive with 1,629 advances against 899 declines.
European markets were following the global trend led by gains in banking stocks. FTSE 100 was up 1.61 per cent, CAC 40 was up 1.42 per cent and DAX moved 1.84 per cent higher. Wall Street is all set to surge Monday ahead of U.S. Treasury Department’s plan to buy toxic assets from banks. Talks of stimulus package by Japan is also likely to keep the market mood upbeat.
Thursday, March 19, 2009
AKRUTI CITY - PRICE RIGGING OR SHORT SELLERS’ TRAP?
JIGAR TANNA,
The stock price of Akruti City, which was ruling at Rs.880 on 27th Feb 09,
at the beginning of March F&O Series, has moved to Rs.2,300 in just three
weeks. A rise of over 150%.Is this a case of price rigging by the operator
or have short sellers been trapped?
It is necessary to understand the past financial developments that have
taken place in the stock in the last three months. Promoters of the company,
in Oct 08, had availed loan of Rs. 140 crore from Barclays, by pledging
about 70 lakh shares of Akruti, with a trigger of Rs. 610. Share price fell
to Rs.606.30 on BSE and to Rs.605.25 on NSE, on 13-1-09, and hence Barclays
recalled its loan by giving a notice of 7 days to the borrowers. The
promoters at that time were already indebted to Indiabulls with 15.50 lakh
shares being pledged with them. This news came to the knowledge of a group
of bear cartel (comprising of 4 institutional investors) and suspecting that
promoters would be unable to repay this huge amount, this cartel short sold
about 11 lakh shares on 14th and 15th Jan in F&O Segment. Due to this ,
share hit its 52 week low at Rs.550 on 15-1-09. This cartel was able to
short sell maximum of 11 lakh shares as Market Wide Limit of the stock on
NSE in F&O segment is 13 lakh shares only.
This cartel rolled over its shorts from Jan to Feb series by incurring a
loss of Rs.100 per share, as Jan series was ruling at Rs.880 while Feb
series was ruling at Rs.780. Even shorts were rolled from Feb to March
series at a loss of Rs.150 per share, as Feb was ruling at Rs.1,050 and
March at Rs.900 per share. March F&O expiry is due on 26th March. April
series is ruling at Rs.1,785 against Rs.2,250 of March, with a higher
difference of Rs.465 per share. It is learnt that this cartel may not roll
over its shorts to April series. If this is indeed true, the share price
which is now ruling at Rs.2,300 can even rise to Rs.3,000 , by the time
March series expires.
On 18-3-09, 1.97 lakh shares were marked for delivery on BSE (out of 42.88
lakh shares traded) and 3.12 lakh shares on NSE (out of 61.60 lakh traded).
Insiders say that as the floating stock is about 5 lakh shares with the
public (out of total public float of 67 lakh shares) all of this is
practically cornered by the informed circles, thus increasing problems for
the bear cartel. Of this 5 lakh, 1 lakh shares are of inside circle having
traded amongst them for tax planning. Insiders also say that these 4 lakh
shares , even if were acquired at an average of Rs.2,000 per share, would
have cost Rs.80 crore, which is less than the profit made by the insiders,
as a mark to market profit ,on open interest of F&O, which is estimated at
Rs.200 crore.
If the bear cartel does not opt to roll over its position in April series,
we may see climax of this drama on 26th March, with share price peaking on
that day. If it is rolled over (which is unlikely) we may see this drama
continuing and share can move to Rs.4,000 by April expiry.
This establishes that this is not a case of price rigging but short sellers
getting trapped and are now trying to get out of the mess having created by
them. In this cartel , two local Merchant Bankers and Brokerage Houses with
2 FIIs , through P Notes, are said to be involved, who played on inside
information, which is unethical and prohibited. A huge price has been paid
by them for this breach.
It is also said that these types of cartels are active in the market and are
hammering the stock prices of Realty and Banking sectors by building up
shorts in F&O segment. If they experience the same treatment from the
promoters and informed circles of the stocks battered by them , we may see
the Akruti saga getting repeated in those stocks.
To curb this, SEBI should urgently think of making F&O series with
SECURITIES SETTLED instead of CASH SETTLED on F&O expiry.
--
Regards,
Jigar Tanna,
Arihant Capital Markets Ltd.
Taken from Another Forum
The stock price of Akruti City, which was ruling at Rs.880 on 27th Feb 09,
at the beginning of March F&O Series, has moved to Rs.2,300 in just three
weeks. A rise of over 150%.Is this a case of price rigging by the operator
or have short sellers been trapped?
It is necessary to understand the past financial developments that have
taken place in the stock in the last three months. Promoters of the company,
in Oct 08, had availed loan of Rs. 140 crore from Barclays, by pledging
about 70 lakh shares of Akruti, with a trigger of Rs. 610. Share price fell
to Rs.606.30 on BSE and to Rs.605.25 on NSE, on 13-1-09, and hence Barclays
recalled its loan by giving a notice of 7 days to the borrowers. The
promoters at that time were already indebted to Indiabulls with 15.50 lakh
shares being pledged with them. This news came to the knowledge of a group
of bear cartel (comprising of 4 institutional investors) and suspecting that
promoters would be unable to repay this huge amount, this cartel short sold
about 11 lakh shares on 14th and 15th Jan in F&O Segment. Due to this ,
share hit its 52 week low at Rs.550 on 15-1-09. This cartel was able to
short sell maximum of 11 lakh shares as Market Wide Limit of the stock on
NSE in F&O segment is 13 lakh shares only.
This cartel rolled over its shorts from Jan to Feb series by incurring a
loss of Rs.100 per share, as Jan series was ruling at Rs.880 while Feb
series was ruling at Rs.780. Even shorts were rolled from Feb to March
series at a loss of Rs.150 per share, as Feb was ruling at Rs.1,050 and
March at Rs.900 per share. March F&O expiry is due on 26th March. April
series is ruling at Rs.1,785 against Rs.2,250 of March, with a higher
difference of Rs.465 per share. It is learnt that this cartel may not roll
over its shorts to April series. If this is indeed true, the share price
which is now ruling at Rs.2,300 can even rise to Rs.3,000 , by the time
March series expires.
On 18-3-09, 1.97 lakh shares were marked for delivery on BSE (out of 42.88
lakh shares traded) and 3.12 lakh shares on NSE (out of 61.60 lakh traded).
Insiders say that as the floating stock is about 5 lakh shares with the
public (out of total public float of 67 lakh shares) all of this is
practically cornered by the informed circles, thus increasing problems for
the bear cartel. Of this 5 lakh, 1 lakh shares are of inside circle having
traded amongst them for tax planning. Insiders also say that these 4 lakh
shares , even if were acquired at an average of Rs.2,000 per share, would
have cost Rs.80 crore, which is less than the profit made by the insiders,
as a mark to market profit ,on open interest of F&O, which is estimated at
Rs.200 crore.
If the bear cartel does not opt to roll over its position in April series,
we may see climax of this drama on 26th March, with share price peaking on
that day. If it is rolled over (which is unlikely) we may see this drama
continuing and share can move to Rs.4,000 by April expiry.
This establishes that this is not a case of price rigging but short sellers
getting trapped and are now trying to get out of the mess having created by
them. In this cartel , two local Merchant Bankers and Brokerage Houses with
2 FIIs , through P Notes, are said to be involved, who played on inside
information, which is unethical and prohibited. A huge price has been paid
by them for this breach.
It is also said that these types of cartels are active in the market and are
hammering the stock prices of Realty and Banking sectors by building up
shorts in F&O segment. If they experience the same treatment from the
promoters and informed circles of the stocks battered by them , we may see
the Akruti saga getting repeated in those stocks.
To curb this, SEBI should urgently think of making F&O series with
SECURITIES SETTLED instead of CASH SETTLED on F&O expiry.
--
Regards,
Jigar Tanna,
Arihant Capital Markets Ltd.
Taken from Another Forum
Wednesday, March 18, 2009
ICICI Bank extends gains for the 5th day
ICICI Bank rose 3.35% to Rs 335 on 18th March,09on reports the bank may spin off its ATM and point-of-sale terminals which accept credit and debit card payments.
ICICI Bank's American depository receipt (ADR) rose 3.56% to $13.08 on Tuesday, 17 March 2009.
The stock hit a high of Rs 335.90 and a low of Rs 327.10 so far during the day. The stock had a 52-week high of Rs 960.90 on 5 May 2008 and a 52-week low of Rs 252.75 on 6 March 2009.
India's largest private sector by market capitalisation has an equity capital of Rs 1113.26 crore. Face value per share is Rs 10.
The current price of Rs 335 discounts the bank's Q3 December 2008 annualized EPS of Rs 45.71, by a PE multiple of 7.32.
ICICI Bank is reportedly considering spinning off its automated teller machines (ATM) and point of sale terminals (PoS) which accept credit and debit card payments, and has sought bids from banking technology firms and private equity players.
This is the first time that an Indian bank is planning to transfer its ATM and PoS assets to a separate company. ICICI Bank reportedly has the second-largest ATM network that has more than 4,000 machines, and the largest PoS network with over two lakh terminals.
According to reports, Visa, FSS, Total Systems Services, KKR-owned First Data Corporation, Blackstone-CMS joint venture, Venture Infotek and a few private equity investors have shown interest in the deal.
Report suggested that there was a lot of interest in partnering ICICI Bank as payment is an area where many global companies are trying to get a foothold. Many banks today have an arrangement whereby ATMs are sourced from other companies, with banks paying a rent for the service. What ICICI is planning is very different: it intends to set up a new company and rope in other stakeholders.
From April 2009, banks will have to allow customers access to their accounts through any ATM in India. Non-customer transaction costs are likely to be netted by banks among themselves.
Despite the slowdown, payment services have emerged as one of the sectors that's generating interest among global players. TSYS, one of the world's largest companies for outsourced payment services, has recently set up shop in India.
The ICICI stock has fallen sharply in past few days on concerns that its Russian assets may be vulnerable as firms there struggle to stay afloat. Reports suggest that the market is quite concerned over the Russian exposure and expecting sharp write-downs as companies in Russia are in trouble.
Some days back CLSA in its research report said ICICI Bank's investments in Russia are unlikely to yield fruit in the near term. CLSA has not assigned any value to the bank's $584-million assets in Russia due to potential market-to-market losses.
CLSA added that although the bank has not reported any mark-to-market losses in Russia, the country's economic woes are expected to spoil the loan quality.
CLSA further mentioned that every additional $100 million written off on the bank's Russian assets would shed Rs 4 per share from ICICI's target price of Rs 535 a share.
ICICI's Russian arm, ICICI Bank Eurasia does not have a meaningful number of deposits and 84% of its total liabilities (including equity) in Russia are funded by group companies, the report added.
According to an earlier report dated September 2008, ICICI Bank Eurasia had assets worth $584 million (0.6% of the bank's total assets and 6% of its equity), including $434 million in the form of loans (including loans to banks and financials institutions) and $84 million in investments.
ICICI Bank Eurasia, was established in May 2005, after ICICI Bank acquired the entire equity of Investisionno-Kreditny Bank. The bank had opted for the acquisition route to save time, according to reports.
Last year, the management of ICICI Bank had to repeatedly assure investors and depositors after its exposure to collapsed Lehman Brothers triggered a slump in its share price.
ICICI Bank's net profit rose 3.4% to Rs 1272.15 crore on a 0.1% rise in sales to Rs 10350.62 crore in Q3 December 2008 over Q3 December 2007. The rise in Q3 December 2008 net profit was because earnings from fees and bond trading offset slowing credit growth and a rise in bad loans.
ICICI Bank provides retail-banking, corporate banking, cash management and treasury management services.
ICICI Bank's American depository receipt (ADR) rose 3.56% to $13.08 on Tuesday, 17 March 2009.
The stock hit a high of Rs 335.90 and a low of Rs 327.10 so far during the day. The stock had a 52-week high of Rs 960.90 on 5 May 2008 and a 52-week low of Rs 252.75 on 6 March 2009.
India's largest private sector by market capitalisation has an equity capital of Rs 1113.26 crore. Face value per share is Rs 10.
The current price of Rs 335 discounts the bank's Q3 December 2008 annualized EPS of Rs 45.71, by a PE multiple of 7.32.
ICICI Bank is reportedly considering spinning off its automated teller machines (ATM) and point of sale terminals (PoS) which accept credit and debit card payments, and has sought bids from banking technology firms and private equity players.
This is the first time that an Indian bank is planning to transfer its ATM and PoS assets to a separate company. ICICI Bank reportedly has the second-largest ATM network that has more than 4,000 machines, and the largest PoS network with over two lakh terminals.
According to reports, Visa, FSS, Total Systems Services, KKR-owned First Data Corporation, Blackstone-CMS joint venture, Venture Infotek and a few private equity investors have shown interest in the deal.
Report suggested that there was a lot of interest in partnering ICICI Bank as payment is an area where many global companies are trying to get a foothold. Many banks today have an arrangement whereby ATMs are sourced from other companies, with banks paying a rent for the service. What ICICI is planning is very different: it intends to set up a new company and rope in other stakeholders.
From April 2009, banks will have to allow customers access to their accounts through any ATM in India. Non-customer transaction costs are likely to be netted by banks among themselves.
Despite the slowdown, payment services have emerged as one of the sectors that's generating interest among global players. TSYS, one of the world's largest companies for outsourced payment services, has recently set up shop in India.
The ICICI stock has fallen sharply in past few days on concerns that its Russian assets may be vulnerable as firms there struggle to stay afloat. Reports suggest that the market is quite concerned over the Russian exposure and expecting sharp write-downs as companies in Russia are in trouble.
Some days back CLSA in its research report said ICICI Bank's investments in Russia are unlikely to yield fruit in the near term. CLSA has not assigned any value to the bank's $584-million assets in Russia due to potential market-to-market losses.
CLSA added that although the bank has not reported any mark-to-market losses in Russia, the country's economic woes are expected to spoil the loan quality.
CLSA further mentioned that every additional $100 million written off on the bank's Russian assets would shed Rs 4 per share from ICICI's target price of Rs 535 a share.
ICICI's Russian arm, ICICI Bank Eurasia does not have a meaningful number of deposits and 84% of its total liabilities (including equity) in Russia are funded by group companies, the report added.
According to an earlier report dated September 2008, ICICI Bank Eurasia had assets worth $584 million (0.6% of the bank's total assets and 6% of its equity), including $434 million in the form of loans (including loans to banks and financials institutions) and $84 million in investments.
ICICI Bank Eurasia, was established in May 2005, after ICICI Bank acquired the entire equity of Investisionno-Kreditny Bank. The bank had opted for the acquisition route to save time, according to reports.
Last year, the management of ICICI Bank had to repeatedly assure investors and depositors after its exposure to collapsed Lehman Brothers triggered a slump in its share price.
ICICI Bank's net profit rose 3.4% to Rs 1272.15 crore on a 0.1% rise in sales to Rs 10350.62 crore in Q3 December 2008 over Q3 December 2007. The rise in Q3 December 2008 net profit was because earnings from fees and bond trading offset slowing credit growth and a rise in bad loans.
ICICI Bank provides retail-banking, corporate banking, cash management and treasury management services.
Sensex ends up 1.3% @ 8,977
MUMBAI: The Sensex ended Wednesday with a gain of 113 points or 1.27% at 8,977.
The index opened 92 points higher at 8,956 backed by positive global cues. Aggressive buying in realty and metal stocks led the index rally to a high of 9,120, up 256 points from the previous close.
However profit taking at higher levels, mainly banking and oil & gas coupled with weakness in FMCG stocks saw the index pare gains in the last session. The Sensex touched the day's low of 8,951.
The BSE Realty index soared 7.7% (113 points) to 1,584. The Metal index surged 3.5% (173 points) to 5,147, and the Capital Goods index gained over 3% (188 points) at 6,084.
The market breadth was fairly positive, out of 2,589 stocks traded, 1,551 advanced and 930 declined today.
TOP GAINERS
DLF zoomed nearly 8% to Rs 171, and Jaiprakash Associates soared 6.5% to Rs 79.
Tata Steel and BHEL rallied around 4.5% each to Rs 176 and Rs 1,459, respectively.
Reliance Infrastructure and ICICI Bank surged 3.5% each to Rs 480 and Rs 335, respectively.
Sterlite, Hindalco and Larsen & Toubro advanced over 3% each to Rs 302, Rs 45 and Rs 636, respectively.
Tata Motors and Reliance gained 2.5% each at Rs 176 and Rs 1,331, respectively.
HDFC Bank and TCS were up around 2% each at Rs 843 and Rs 507, respectively.
TOP LOSERS
Mahindra & Mahindra slumped 4% to Rs 362. Tata Power shed 2.5% at Rs 661.
ITC slipped over 2% to Rs 169, and ACC was down 1.5% at Rs 548.
VOLUME & VALUE TOPPERS
Akruti topped the value chart with a turnover of Rs 786.55 crore followed by Reliance (Rs 217.06 crore), ICICI Bank (Rs 146.17 crore), Educomp Solutions (Rs 143.71 crore) and Everonn Systems (Rs 135.96 crore).
Vijaya Bank led the volume chart with trades of around 2.69 crore shares followed by Cals Refineries (2.01 crore), Suzlon Energy (1.58 crore), Satyam (1.40 crore) and Reliance Natural Resources (1 crore).
The index opened 92 points higher at 8,956 backed by positive global cues. Aggressive buying in realty and metal stocks led the index rally to a high of 9,120, up 256 points from the previous close.
However profit taking at higher levels, mainly banking and oil & gas coupled with weakness in FMCG stocks saw the index pare gains in the last session. The Sensex touched the day's low of 8,951.
The BSE Realty index soared 7.7% (113 points) to 1,584. The Metal index surged 3.5% (173 points) to 5,147, and the Capital Goods index gained over 3% (188 points) at 6,084.
The market breadth was fairly positive, out of 2,589 stocks traded, 1,551 advanced and 930 declined today.
TOP GAINERS
DLF zoomed nearly 8% to Rs 171, and Jaiprakash Associates soared 6.5% to Rs 79.
Tata Steel and BHEL rallied around 4.5% each to Rs 176 and Rs 1,459, respectively.
Reliance Infrastructure and ICICI Bank surged 3.5% each to Rs 480 and Rs 335, respectively.
Sterlite, Hindalco and Larsen & Toubro advanced over 3% each to Rs 302, Rs 45 and Rs 636, respectively.
Tata Motors and Reliance gained 2.5% each at Rs 176 and Rs 1,331, respectively.
HDFC Bank and TCS were up around 2% each at Rs 843 and Rs 507, respectively.
TOP LOSERS
Mahindra & Mahindra slumped 4% to Rs 362. Tata Power shed 2.5% at Rs 661.
ITC slipped over 2% to Rs 169, and ACC was down 1.5% at Rs 548.
VOLUME & VALUE TOPPERS
Akruti topped the value chart with a turnover of Rs 786.55 crore followed by Reliance (Rs 217.06 crore), ICICI Bank (Rs 146.17 crore), Educomp Solutions (Rs 143.71 crore) and Everonn Systems (Rs 135.96 crore).
Vijaya Bank led the volume chart with trades of around 2.69 crore shares followed by Cals Refineries (2.01 crore), Suzlon Energy (1.58 crore), Satyam (1.40 crore) and Reliance Natural Resources (1 crore).
Monday, March 16, 2009
Buy back Rs 20000-crore government bonds via auctions this week.
Bond yields tumbled after the central bank announced a larger-than-expected buyback auctions after rejecting all bids at Friday's debt sale. The 8.24% bond maturing in 2018 was at 6.37%, compared with its previous close of 6.80%. The central bank said on Friday it would buy back Rs 20000-crore government bonds via auctions this week.
Lower bond yields or higher bond prices (the two are inversely related) will result in appreciation in the value of the bond portfolio of banks.
Lower bond yields or higher bond prices (the two are inversely related) will result in appreciation in the value of the bond portfolio of banks.
Buyback of foreign currency convertible bonds (FCCBs)
A good news for corporate India is the extension of the deadline for buyback of foreign currency convertible bonds (FCCBs) by the Reserve Bank of India (RBI) by nine months to 31 December 2009. The central bank made the announcement after trading hours on Friday, 13 March 2009. In December 2008, the RBI had liberalised the procedure for buyback of FCCBs by Indian companies, both under the automatic and approval routes.
Under the automatic route, some of the conditions for buyback of FCCBs were: value of the FCCB should be at a minimum discount of 15% on the book value; the funds used for the buyback should be out of existing foreign currency funds held either in India (including funds held in EEFC account) or abroad and/or out of fresh ECB raised in conformity with the current ECB norms.
Buyback FCCBs will help companies reduce liabilities. It will also ease concerns about the impact of foreign exchange fluctuations in the profit & loss account, to the extent of the reduction of the FCCBs. The recent steep slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.
Under the automatic route, some of the conditions for buyback of FCCBs were: value of the FCCB should be at a minimum discount of 15% on the book value; the funds used for the buyback should be out of existing foreign currency funds held either in India (including funds held in EEFC account) or abroad and/or out of fresh ECB raised in conformity with the current ECB norms.
Buyback FCCBs will help companies reduce liabilities. It will also ease concerns about the impact of foreign exchange fluctuations in the profit & loss account, to the extent of the reduction of the FCCBs. The recent steep slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.
Akruti City leads gainers in 'A' group
Monday,March,16,2009
Mumbai-based realty developer Akruti City surged 19.50% to Rs 1,404.55, extending gains for the seventh session a row. It topped the gainers in BSE's 'A' group. The stock is up 63.70% from a recent low of Rs 858 on 2 March 2009.
The surge in Akruti City stock could be because of low free float. As a result, even a whiff of demand ignites prices. Ninety per cent of the equity was held by the promoters and 1.85% by institutions end December 2008. So there is just 8.2% equity floating in the market. Of this, 6.29% is non-promoter corporate holding. The scrip had risen in a similar manner in September 2008, when the market was abuzz with rumors that Barclays Capital might buy close to 5% stake in the company. The stock had pared gains soon after the management denied such development.
Mumbai-based realty developer Akruti City surged 19.50% to Rs 1,404.55, extending gains for the seventh session a row. It topped the gainers in BSE's 'A' group. The stock is up 63.70% from a recent low of Rs 858 on 2 March 2009.
The surge in Akruti City stock could be because of low free float. As a result, even a whiff of demand ignites prices. Ninety per cent of the equity was held by the promoters and 1.85% by institutions end December 2008. So there is just 8.2% equity floating in the market. Of this, 6.29% is non-promoter corporate holding. The scrip had risen in a similar manner in September 2008, when the market was abuzz with rumors that Barclays Capital might buy close to 5% stake in the company. The stock had pared gains soon after the management denied such development.
Sunday, March 15, 2009
Vedanta on way to being leader in metal sector
Kunal Bose / Mumbai March 16, 2009, 0:13 IST
Vedanta group Chairman Anil Agarwal is a brave heart. The global financial crisis, which triggered a meltdown in metals, does not seem to have dimmed his ambition to acquire leadership in aluminium, copper and zinc.
When Vedanta acquired a controlling stake in Sesa Goa, a private-sector producer and iron ore, from Japan’s Mitsui in 2007, it was rightly seen as a declaration of the group’s intention to occupy space in the steel sector at the appropriate time. It can be discounted that Vedanta’s proposed steel project in Orissa has been shelved.
‘Fortune favours the brave’, goes the saying. Agarwal has experienced this more than once.
After he acquired the majority stake in aluminium maker Balco in December 2001, the indifferently performing Balco’s capacity rose by 250,000 tonnes to 350,000 tonnes.
Who could have foreseen that after Sterlite, a Vedanta group company, took control of a non-performing Hindustan Zinc in April 2002, the entity would would come to own a zinc-lead capacity of 1 million tonnes by 2010.
Vedanta group is now well on course to achieve the minimum declared capacity of 1 million tonnes for every non-ferrous metal in its portfolio.
It also has grand plans for Sesa Goa which owns iron ore reserves of 180 million tonnes.
The experience of steel makers here, not to speak of mining groups in acquiring assets overcoming the maze of regulatory hurdles, is not at all encouraging. However, no one doubts Vedanta’s capacity to pull a rabbit out of its hat. This is specially so after Sterlite sewing up the $1.1-billion Asarco deal.
Tata Steel must now be regretting that it acquired Corus in April 2007 by paying the full price in a booming market. So also Hindalco for its acquisition of the world’s largest aluminium rolling company Novelis.
In this regard too, luck has been on the side of Vedanta. Initially, Vedanta made an offer of $2.6 billion for Asarco. But that was a year ago, when copper was commanding over double today’s price. See how much cheaper Asarco assets has now become for Vedanta.
But why should Vedanta be going ahead with all its expansion programmes here and abroad when we find leading metal groups, including ArcelorMittal, Rio Tinto Alcan and Chinalco doing some serious production cuts and shelving expansion programmes till economic activity gains in pace.
According to one school of thinking, if funds are available, a difficult proposition when banks are being bailed out by governments, then a group like Vedanta should not wait for the next spurt in demand to create new capacity. Vedanta officials claim that the group, which is having Rs 30,000 crore in cash, remains committed to investing as much as Rs 60,000 crore in new projects.
In Vedanta’s capacity creation package, alumina and aluminium take the cake. At this point, India’s total aluminium capacity is 1.3 million tonnes in which the share of Vedanta is 385,000 tonnes. But here account has not been taken of Vedanta’s 500,000-tonne smelter in Orissa’s Jharsuguda, which is now getting commissioned.
In a move to make best use of Orissa’s bauxite and coal deposits, Vedanta has decided to finally create 1.6 million tonnes of smelting capacity at Jharsuguda to be backed by a 5 million tonne alumina refinery at Lanjigarh and a power complex of 3,750 MW. At the same time, Balco’s aluminium capacity will be raised to 1 million tonnes.
If Vedanta has its way then all this capacity will be on ground by 2013. But we have seen how time consuming it is proving for Vedanta to start mining operation at Lanjigarh where it owns bauxite deposit of 75 million tonnes but also has the government promise of an equally large deposit nearby.
But all this is to support its 1 million tonne refinery, which sadly now has to be fed with costly bauxite from third party mines. This will be the case till such time Vedanta has got the final set of environmental clearances post Supreme Court assent to start mining.
Building a 5-million-tonne refinery at Lanjigarh will be justified provided linkages to bauxite deposits lasting about 50 years could be acquired. Orissa, where most of Vedanta’s aluminium action is to unfold, has as much as 1.7 billion tonnes of the country’s total 3.3 billion tonnes of bauxite reserves. Even after allotment/earmarking of deposits for different groups, Orissa is left with free bauxite reserves of 640 million tonnes.
Vedanta says it has strong claims to free deposits because of the world’s single largest smelter it is committed to build at Jharsuguda. But whether Vedanta will get all the bauxite it needs will be a toss of dice.
via:B.S
Vedanta group Chairman Anil Agarwal is a brave heart. The global financial crisis, which triggered a meltdown in metals, does not seem to have dimmed his ambition to acquire leadership in aluminium, copper and zinc.
When Vedanta acquired a controlling stake in Sesa Goa, a private-sector producer and iron ore, from Japan’s Mitsui in 2007, it was rightly seen as a declaration of the group’s intention to occupy space in the steel sector at the appropriate time. It can be discounted that Vedanta’s proposed steel project in Orissa has been shelved.
‘Fortune favours the brave’, goes the saying. Agarwal has experienced this more than once.
After he acquired the majority stake in aluminium maker Balco in December 2001, the indifferently performing Balco’s capacity rose by 250,000 tonnes to 350,000 tonnes.
Who could have foreseen that after Sterlite, a Vedanta group company, took control of a non-performing Hindustan Zinc in April 2002, the entity would would come to own a zinc-lead capacity of 1 million tonnes by 2010.
Vedanta group is now well on course to achieve the minimum declared capacity of 1 million tonnes for every non-ferrous metal in its portfolio.
It also has grand plans for Sesa Goa which owns iron ore reserves of 180 million tonnes.
The experience of steel makers here, not to speak of mining groups in acquiring assets overcoming the maze of regulatory hurdles, is not at all encouraging. However, no one doubts Vedanta’s capacity to pull a rabbit out of its hat. This is specially so after Sterlite sewing up the $1.1-billion Asarco deal.
Tata Steel must now be regretting that it acquired Corus in April 2007 by paying the full price in a booming market. So also Hindalco for its acquisition of the world’s largest aluminium rolling company Novelis.
In this regard too, luck has been on the side of Vedanta. Initially, Vedanta made an offer of $2.6 billion for Asarco. But that was a year ago, when copper was commanding over double today’s price. See how much cheaper Asarco assets has now become for Vedanta.
But why should Vedanta be going ahead with all its expansion programmes here and abroad when we find leading metal groups, including ArcelorMittal, Rio Tinto Alcan and Chinalco doing some serious production cuts and shelving expansion programmes till economic activity gains in pace.
According to one school of thinking, if funds are available, a difficult proposition when banks are being bailed out by governments, then a group like Vedanta should not wait for the next spurt in demand to create new capacity. Vedanta officials claim that the group, which is having Rs 30,000 crore in cash, remains committed to investing as much as Rs 60,000 crore in new projects.
In Vedanta’s capacity creation package, alumina and aluminium take the cake. At this point, India’s total aluminium capacity is 1.3 million tonnes in which the share of Vedanta is 385,000 tonnes. But here account has not been taken of Vedanta’s 500,000-tonne smelter in Orissa’s Jharsuguda, which is now getting commissioned.
In a move to make best use of Orissa’s bauxite and coal deposits, Vedanta has decided to finally create 1.6 million tonnes of smelting capacity at Jharsuguda to be backed by a 5 million tonne alumina refinery at Lanjigarh and a power complex of 3,750 MW. At the same time, Balco’s aluminium capacity will be raised to 1 million tonnes.
If Vedanta has its way then all this capacity will be on ground by 2013. But we have seen how time consuming it is proving for Vedanta to start mining operation at Lanjigarh where it owns bauxite deposit of 75 million tonnes but also has the government promise of an equally large deposit nearby.
But all this is to support its 1 million tonne refinery, which sadly now has to be fed with costly bauxite from third party mines. This will be the case till such time Vedanta has got the final set of environmental clearances post Supreme Court assent to start mining.
Building a 5-million-tonne refinery at Lanjigarh will be justified provided linkages to bauxite deposits lasting about 50 years could be acquired. Orissa, where most of Vedanta’s aluminium action is to unfold, has as much as 1.7 billion tonnes of the country’s total 3.3 billion tonnes of bauxite reserves. Even after allotment/earmarking of deposits for different groups, Orissa is left with free bauxite reserves of 640 million tonnes.
Vedanta says it has strong claims to free deposits because of the world’s single largest smelter it is committed to build at Jharsuguda. But whether Vedanta will get all the bauxite it needs will be a toss of dice.
via:B.S
India may slip into deflation by April: D&B
Press Trust of India / New Delhi March 15, 2009, 15:39 IST
India may go into deflation by the beginning of April this year due to weak consumption demand and a higher base effect, research firm Dun & Bradstreet said today.
"There will be negative inflation for a few weeks in the first quarter of next fiscal, driven largely by higher base effect but we do not expect a pronounced deflationary trend in the economy," Dun and Bradstreet Chief Operating Officer Kaushal Sampat told PTI.
Deflation is a general decline in prices, that is often caused by a reduction in the supply of money or credit.
The deflationary phase, wherein there is a decrease in general price level and demand conditions drop significantly are likely to last only for a few weeks as the recent fiscal as well as monetary measures of the government is likely to boost demand.
"Consumption demand is expected to receive a boost once the lagged effects of the aggressive policy responses by the government and the RBI start unfolding," Sampat added.
Inflation fell to more than six-year low of 2.43 per cent for the week ended February 28 mainly on account of fall in prices of manufactured products and some food items. The wholesale price index stood at 6.21 per cent during the corresponding week a year ago.
India may go into deflation by the beginning of April this year due to weak consumption demand and a higher base effect, research firm Dun & Bradstreet said today.
"There will be negative inflation for a few weeks in the first quarter of next fiscal, driven largely by higher base effect but we do not expect a pronounced deflationary trend in the economy," Dun and Bradstreet Chief Operating Officer Kaushal Sampat told PTI.
Deflation is a general decline in prices, that is often caused by a reduction in the supply of money or credit.
The deflationary phase, wherein there is a decrease in general price level and demand conditions drop significantly are likely to last only for a few weeks as the recent fiscal as well as monetary measures of the government is likely to boost demand.
"Consumption demand is expected to receive a boost once the lagged effects of the aggressive policy responses by the government and the RBI start unfolding," Sampat added.
Inflation fell to more than six-year low of 2.43 per cent for the week ended February 28 mainly on account of fall in prices of manufactured products and some food items. The wholesale price index stood at 6.21 per cent during the corresponding week a year ago.
Thursday, March 12, 2009
Nifty closes at 2600; Bharti, Suzlon fall
12 Mar 2009, 1540 hrs IST, ET Bureau
MUMBAI: Indian benchmarks retreated in the last half an hour of trade but still ended in the green as traders booked profits at higher levels.
National Stock Exchange’s Nifty ended at 2602.40, up 29.25 points or 1.14 per cent. The index touched an intra-day high of 2646.10 and low of 2574.50.
Bombay Stock Exchange’s Sensex closed at 8312.95 152.55 points or 1.87 per cent. The index hit a high of 8439.71 and low of 8274.78.
BSE Midcap Index closed up 0.36 per cent and BSE Smallcap Index edged 0.32 per cent up.
BSE Auto Index moved up 3.64 per cent, BSE Bankex gained 3.14 per cent and BSE Oil&gas Index moved 2.83 per cent higher.
The rally in the Nifty pack was led by ICICI Bank (8.67%), Sterlite Industries
(7.16%), Tata Motors (6.92%), Sun Pharmaceuticals (5.81%) and Maruti Suzuki (5.38%).
Bharti Airtel (-7.36%), Suzlon Energy (-4.74%), Zee Entertainment (-3.94%), Tata Power (-3.2%) and NTPC (-3.06%) were the index losers.
Market breadth was negative on the BSE with 1160 advances and 1265 declines.
(All figures are provisional)
VIA:E.T
MUMBAI: Indian benchmarks retreated in the last half an hour of trade but still ended in the green as traders booked profits at higher levels.
National Stock Exchange’s Nifty ended at 2602.40, up 29.25 points or 1.14 per cent. The index touched an intra-day high of 2646.10 and low of 2574.50.
Bombay Stock Exchange’s Sensex closed at 8312.95 152.55 points or 1.87 per cent. The index hit a high of 8439.71 and low of 8274.78.
BSE Midcap Index closed up 0.36 per cent and BSE Smallcap Index edged 0.32 per cent up.
BSE Auto Index moved up 3.64 per cent, BSE Bankex gained 3.14 per cent and BSE Oil&gas Index moved 2.83 per cent higher.
The rally in the Nifty pack was led by ICICI Bank (8.67%), Sterlite Industries
(7.16%), Tata Motors (6.92%), Sun Pharmaceuticals (5.81%) and Maruti Suzuki (5.38%).
Bharti Airtel (-7.36%), Suzlon Energy (-4.74%), Zee Entertainment (-3.94%), Tata Power (-3.2%) and NTPC (-3.06%) were the index losers.
Market breadth was negative on the BSE with 1160 advances and 1265 declines.
(All figures are provisional)
VIA:E.T
Aurobindo Pharma promoter pledges 20.5% stake
Press Trust of India / Mumbai March 12, 2009, 16:19 IST
Aurobindo Pharma today said one its promoter P V Ramprasad Reddy has pledged 20.50 per cent stake in the company for an undisclosed amount.
In a filing on the Bombay Stock Exchange, the company said Reddy has pledged over 1.10 crore shares representing 20.50 per cent stake in the company.
Shares of Aurobindo Pharma were trading at Rs 161, up 1.77 per cent on the BSE.
Aurobindo Pharma today said one its promoter P V Ramprasad Reddy has pledged 20.50 per cent stake in the company for an undisclosed amount.
In a filing on the Bombay Stock Exchange, the company said Reddy has pledged over 1.10 crore shares representing 20.50 per cent stake in the company.
Shares of Aurobindo Pharma were trading at Rs 161, up 1.77 per cent on the BSE.
Japanese economy shrank 12.1% in Q4: Govt
12 Mar 2009, 1502 hrs IST, AGENCIES
TOKYO: Japan's economy shrank less than first thought in the fourth quarter of 2008 but still logged its worst performance in almost 35 years as exports collapsed, the government said Thursday.
The world's second-largest economy contracted 3.2 percent in the three months to December -- 12.1 percent on an annualised basis -- as the global downturn choked off demand for cars, high-tech goods and other exports, data showed.
"The figures are not good," said Prime Minister Taro Aso. "The economy is worsening."
The latest snapshot was slightly less bleak than an initial estimate of a 12.7 percent drop, but it was still the worst quarter since early 1974.
The revision "is hardly something to cheer about," said Rabobank International strategist Jan Lambregts, noting that the improvement was due to higher inventories, which is not positive for the economy.
Japan was once seen as relatively immune to the financial crisis, but its economy is now shrinking much faster than many others, including the United States. The government says the crisis is the deepest since World War II.
"Exports fell off a cliff in the fourth quarter," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore, who sees more trouble ahead.
In 2009 the economy is likely to shrink 5.7 percent, "which would be the worst year since the Second World War," said Cohen.
Recent data point to another sharp contraction in the first quarter of 2009. Japan logged a record current account deficit in January as exports almost halved from a year earlier, while factory output has plummeted.
The country's recovery from the 1990s recession was driven almost entirely by brisk exports. But the global downturn has caused demand for Japanese goods to dry up, prompting companies to shed tens of thousands of jobs.
"At the moment there's no light at the end of the tunnel," said Graham Davis, director of the Economist Intelligence Unit in Tokyo. "Until international demand recovers, Japan will stay in this funk."
Japan's banks escaped the worst of the subprime loan crisis but its manufacturers have been badly hurt because their products, such as cars and televisions, often drop off consumer shopping lists when times are tough.
Corporate icons such as Sony and Toyota are heading for big losses in the current financial year because of weak demand and the strength of the yen, which is bad for export earnings.
Finance Minister Kaoru Yosano called for concerted action to jump-start the global economy.
"We can make our policies more effective by each country taking fiscal stimulus measures simultaneously," he said ahead of a weekend meeting of finance chiefs from the Group of 20 nations in Britain.
Analysts expect the economy to keep shrinking through most of 2009.
"We look for the Japanese economy to hit bottom in October-December 2009, led by an increase in exports" spurred by stimulus measures in China and the United States, said Barclays Capital economist Kyohei Morita.
Tokyo's Nikkei stock index dropped to the lowest level in more than 26 years earlier this week. The Nikkei fell 2.4 percent on Thursday.
The central bank has slashed interest rates to 0.1 percent and taken steps to spur lending, such as purchases of bonds.
Japan has announced a series of stimulus packages to spur growth, though huge public debt -- a hangover from efforts to spend its way out of the 1990s recession -- has left it with limited ammunition to fight the crisis.
via:E.T
TOKYO: Japan's economy shrank less than first thought in the fourth quarter of 2008 but still logged its worst performance in almost 35 years as exports collapsed, the government said Thursday.
The world's second-largest economy contracted 3.2 percent in the three months to December -- 12.1 percent on an annualised basis -- as the global downturn choked off demand for cars, high-tech goods and other exports, data showed.
"The figures are not good," said Prime Minister Taro Aso. "The economy is worsening."
The latest snapshot was slightly less bleak than an initial estimate of a 12.7 percent drop, but it was still the worst quarter since early 1974.
The revision "is hardly something to cheer about," said Rabobank International strategist Jan Lambregts, noting that the improvement was due to higher inventories, which is not positive for the economy.
Japan was once seen as relatively immune to the financial crisis, but its economy is now shrinking much faster than many others, including the United States. The government says the crisis is the deepest since World War II.
"Exports fell off a cliff in the fourth quarter," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore, who sees more trouble ahead.
In 2009 the economy is likely to shrink 5.7 percent, "which would be the worst year since the Second World War," said Cohen.
Recent data point to another sharp contraction in the first quarter of 2009. Japan logged a record current account deficit in January as exports almost halved from a year earlier, while factory output has plummeted.
The country's recovery from the 1990s recession was driven almost entirely by brisk exports. But the global downturn has caused demand for Japanese goods to dry up, prompting companies to shed tens of thousands of jobs.
"At the moment there's no light at the end of the tunnel," said Graham Davis, director of the Economist Intelligence Unit in Tokyo. "Until international demand recovers, Japan will stay in this funk."
Japan's banks escaped the worst of the subprime loan crisis but its manufacturers have been badly hurt because their products, such as cars and televisions, often drop off consumer shopping lists when times are tough.
Corporate icons such as Sony and Toyota are heading for big losses in the current financial year because of weak demand and the strength of the yen, which is bad for export earnings.
Finance Minister Kaoru Yosano called for concerted action to jump-start the global economy.
"We can make our policies more effective by each country taking fiscal stimulus measures simultaneously," he said ahead of a weekend meeting of finance chiefs from the Group of 20 nations in Britain.
Analysts expect the economy to keep shrinking through most of 2009.
"We look for the Japanese economy to hit bottom in October-December 2009, led by an increase in exports" spurred by stimulus measures in China and the United States, said Barclays Capital economist Kyohei Morita.
Tokyo's Nikkei stock index dropped to the lowest level in more than 26 years earlier this week. The Nikkei fell 2.4 percent on Thursday.
The central bank has slashed interest rates to 0.1 percent and taken steps to spur lending, such as purchases of bonds.
Japan has announced a series of stimulus packages to spur growth, though huge public debt -- a hangover from efforts to spend its way out of the 1990s recession -- has left it with limited ammunition to fight the crisis.
via:E.T
Industrial growth again turns negative in January
12 Mar 2009, 1220 hrs IST, PTI
NEW DELHI: Industrial production declined by 0.5 per cent in January 2009, the contraction being for the second month in a row, in spite of stimulus packages announced by the government to ward off the impact of global recession.
Industrial output grew by 6.2 per cent in the same month a year ago.
This is the third time in this fiscal that industrial growth has turned negative.
The slide in industrial production was led by manufacturing, which fell by 0.8 per cent, followed by mining output, which declined by 0.4 per cent.
However, electricity generation was up 1.8 per cent in January.
For the first 10 months of this fiscal, industrial growth stood at 3 per cent, which might make the official projection of overall economic growth of 7.1 per cent for 2008-09 quite difficult.
The official projection pegged industrial growth to be 4.8 per cent for 2008-09.
NEW DELHI: Industrial production declined by 0.5 per cent in January 2009, the contraction being for the second month in a row, in spite of stimulus packages announced by the government to ward off the impact of global recession.
Industrial output grew by 6.2 per cent in the same month a year ago.
This is the third time in this fiscal that industrial growth has turned negative.
The slide in industrial production was led by manufacturing, which fell by 0.8 per cent, followed by mining output, which declined by 0.4 per cent.
However, electricity generation was up 1.8 per cent in January.
For the first 10 months of this fiscal, industrial growth stood at 3 per cent, which might make the official projection of overall economic growth of 7.1 per cent for 2008-09 quite difficult.
The official projection pegged industrial growth to be 4.8 per cent for 2008-09.
Tuesday, March 10, 2009
HEARD ON THE STREET
ICICI BANK may touch Rs:150/-
RCOM: may touch 100/-
Ranbaxy: may touch 75/-
IVRCL : may touch 50/-
NIFTY : may touch 1800
SBI: 600
Let's Pray GOD
RCOM: may touch 100/-
Ranbaxy: may touch 75/-
IVRCL : may touch 50/-
NIFTY : may touch 1800
SBI: 600
Let's Pray GOD
ICICI Bank: Finding Every Banana Peel To Slip Upon
*ICICI Bank-Finding Every Banana Peel To Slip Upon*
*CMP Rs 269*
**
*I have often wondered what a commercial bank is? A financial broker that
takes the depositors money and lends to a borrower without being responsible
to either. So do these privately owned institutions deserve valuations of a
fast growing manufacturing concern, when effectively they grow only as
financial
intermediaries?*
**
*With the current collapsing state of the global financial system and the
rising extent of delinquent loans and bankruptcies, a new pseudo globally
nationalised banking structure is emerging.*
**
*ICICI Bank's functioning needs to be looked into, especially considering
that the GOI owns not even a shred of the nation's second largest bank, that
too of a bank which has found "a banana peel left-over any and everywhere to
slip upon". *
**
*Take a look at ICICI Bank Eurasia-the bank's Russian arm. ICICI has an
exposure of $ 580 mn to the Russian clientele in the form of corporate
loans, retail loans and placement with Russian Banks.*
**
*Analysts now claim that close to $ 100 mn would be the extent of NPAs so
far, add to which the Q3 profits of Rs 900 crore that ICICI Bank made from
Bond trading and investors would realise that the maths simply did not work
for this institution. Nearly a quarters profit could have been under-stated
by mis-representing the extent of NPAs at the institution.*
**
*Additionally, at the recently held 13th International Investors Conference
at Bombay, sponsored by BOA-Merrill Lynch the presenters from ICICI spoke
about growing their loan book between 0 and 5 per cent in FY09 and FY10. *
**
*The effort as they called it was going to be Balance Sheet preservation.
This can be read as no further credit to be lent till old debts are
recovered. So can a private bank hope to gain double digit PEs for its stock
price when it is saddled with debts and is simply not growing?*
**
*As a pure utility, should it not fetch low single digit PEs that speak of a
suddenly high profile bank having gone sullen and morose about its own
business prospects? One that works as a pure water or power utility that you
plug in or plug out of, as and when desired? Why the atrociously high market
capitalisation for the equity of an institution that works on 6X leverage of
its own equity?*
**
*To put the facts straight*
*ICICI Bank (IBank's) asset book in Russia is much smaller than UK ($ 7.6
bn) and Canada ($ 5.2 bn). ICICI Bank Eurasia was established in May 2005,
when IBank acquired the entire share capital of Investisionno-Kreditny Bank.
The total exposure of this institution exceed $ 580 mn as of September 2008.
There is no meaningful deposit franchise in Russia and 84 per cent of total
liabilities are funded by the parent ICICI Bank. *
**
*Further ICICI Bank's stake in Russian subsidiaries works out to $ 70 mn and
another $ 30 mn of infusion may be needed in FY10, as the impression is that
ICICI Bank Eurasia may face MTM/NPL losses in excess of $ 100 mn on
its Russian assets which are scattered amongst financial, trade, metal
industry loans. Every $ 100 mn knock will negatively impact the $ 6 bn
market cap of ICICI Bank.*
**
*What investors need to look out for are more disclosures from this
institution in the coming, especially relating to its exposure to commodity
oil and gas plays in Russia, and metal plays in the CIS nations. These
disclosure alone will help put a fair price on the ICICI Bank stock. *
From A Forum:by MAVERICK
*CMP Rs 269*
**
*I have often wondered what a commercial bank is? A financial broker that
takes the depositors money and lends to a borrower without being responsible
to either. So do these privately owned institutions deserve valuations of a
fast growing manufacturing concern, when effectively they grow only as
financial
intermediaries?*
**
*With the current collapsing state of the global financial system and the
rising extent of delinquent loans and bankruptcies, a new pseudo globally
nationalised banking structure is emerging.*
**
*ICICI Bank's functioning needs to be looked into, especially considering
that the GOI owns not even a shred of the nation's second largest bank, that
too of a bank which has found "a banana peel left-over any and everywhere to
slip upon". *
**
*Take a look at ICICI Bank Eurasia-the bank's Russian arm. ICICI has an
exposure of $ 580 mn to the Russian clientele in the form of corporate
loans, retail loans and placement with Russian Banks.*
**
*Analysts now claim that close to $ 100 mn would be the extent of NPAs so
far, add to which the Q3 profits of Rs 900 crore that ICICI Bank made from
Bond trading and investors would realise that the maths simply did not work
for this institution. Nearly a quarters profit could have been under-stated
by mis-representing the extent of NPAs at the institution.*
**
*Additionally, at the recently held 13th International Investors Conference
at Bombay, sponsored by BOA-Merrill Lynch the presenters from ICICI spoke
about growing their loan book between 0 and 5 per cent in FY09 and FY10. *
**
*The effort as they called it was going to be Balance Sheet preservation.
This can be read as no further credit to be lent till old debts are
recovered. So can a private bank hope to gain double digit PEs for its stock
price when it is saddled with debts and is simply not growing?*
**
*As a pure utility, should it not fetch low single digit PEs that speak of a
suddenly high profile bank having gone sullen and morose about its own
business prospects? One that works as a pure water or power utility that you
plug in or plug out of, as and when desired? Why the atrociously high market
capitalisation for the equity of an institution that works on 6X leverage of
its own equity?*
**
*To put the facts straight*
*ICICI Bank (IBank's) asset book in Russia is much smaller than UK ($ 7.6
bn) and Canada ($ 5.2 bn). ICICI Bank Eurasia was established in May 2005,
when IBank acquired the entire share capital of Investisionno-Kreditny Bank.
The total exposure of this institution exceed $ 580 mn as of September 2008.
There is no meaningful deposit franchise in Russia and 84 per cent of total
liabilities are funded by the parent ICICI Bank. *
**
*Further ICICI Bank's stake in Russian subsidiaries works out to $ 70 mn and
another $ 30 mn of infusion may be needed in FY10, as the impression is that
ICICI Bank Eurasia may face MTM/NPL losses in excess of $ 100 mn on
its Russian assets which are scattered amongst financial, trade, metal
industry loans. Every $ 100 mn knock will negatively impact the $ 6 bn
market cap of ICICI Bank.*
**
*What investors need to look out for are more disclosures from this
institution in the coming, especially relating to its exposure to commodity
oil and gas plays in Russia, and metal plays in the CIS nations. These
disclosure alone will help put a fair price on the ICICI Bank stock. *
From A Forum:by MAVERICK
China enters deflation; inflation at -1.6% in Feb 2009
China`s consumer price index, its main inflation benchmark, fell to (-) 1.6% in February, the National Statistics Bureau reported on Tuesday.
The decline was led by 1.9% fall in food prices. It is the first time since December 2002 the index has slipped into negative.
For the same period last year, i.e. in February 2008, the inflation was at its 12-year peak of 8.7%, amid shortages of grain and pork. The 1.6% decline in consumer prices compares with a 1% increase in January 2009.
The statistics bureau said that the producer price index, another key price indicator, fell 4.5% in February compared with a 3.3% decline in January.
Source: IRIS International (10 March 2009)
The decline was led by 1.9% fall in food prices. It is the first time since December 2002 the index has slipped into negative.
For the same period last year, i.e. in February 2008, the inflation was at its 12-year peak of 8.7%, amid shortages of grain and pork. The 1.6% decline in consumer prices compares with a 1% increase in January 2009.
The statistics bureau said that the producer price index, another key price indicator, fell 4.5% in February compared with a 3.3% decline in January.
Source: IRIS International (10 March 2009)
Govt to release January 2009 IIP data,& Inflation on 12 March 2009
The government is set to release the industrial production data for the month of January 2009 on Thursday, 12 March 2009. Industrial production had declined for the second time in three months in December 2008, data on 12 February 2009 showed. The index of industrial production (IIP) declined 2% in December 2008 compared to a revised 1.7% gain in November 2008 and a 0.3% decline in October 2008. The 2% drop in industrial production in December 2008 was largely due to a sharp 2.5% year-on-year contraction in manufacturing which has the largest weightage of 80% in IIP.
Meanwhile, data released by the government on 6 March 2009 showed a 1.4% growth infrastructure sector output in January 2009 from a year earlier, below an unrevised 2.3% in December 2008. Infrastructure sector output had risen by 3.6% in January 2008, and in the 2007/08 fiscal year it rose 5.6% from a year earlier. The infrastructure sector accounts for 26.68% of the country's industrial output.
A latest ABN AMRO Bank purchasing managers' index (PMI) which is based on a survey of 500 companies showed that Indian manufacturing activity shrank for a fourth straight month in February 2009. Yet, the February 2009 index was slightly better than January 2009. The PMI rose to a seasonally adjusted 47 in February 2009, slightly better from January 2009. A reading above 50 signals economic expansion while a figure below 50 suggests contraction. Manufacturing makes up about 16% of India's gross domestic product.
The performance of the exports sector was dismal in January 2009. India's exports fell for the fourth month in a row in January 2009. Exports fell an annual 15.9% in January 2009 to $12.38 billion as the global slowdown shaved off demand for Indian goods.
As per initial estimates available with the commerce ministry, exports dropped 13.7% in February 2009, registering a decline for the fifth consecutive month. Meanwhile, imports also fell for second consecutive month, by 18.2%.
The gross domestic product (GDP) also showed a marked slowdown in India's economy. GDP grew 5.3% in Q3 December 2008. The figure was sharply lower than a 7.6% growth in Q2 September 2008 as the global economic crisis cut demand and exports. India has estimated the economy to grow 7.1% in 2008/09, slowing from a 9% rise in the previous year.
via:E.T
Meanwhile, data released by the government on 6 March 2009 showed a 1.4% growth infrastructure sector output in January 2009 from a year earlier, below an unrevised 2.3% in December 2008. Infrastructure sector output had risen by 3.6% in January 2008, and in the 2007/08 fiscal year it rose 5.6% from a year earlier. The infrastructure sector accounts for 26.68% of the country's industrial output.
A latest ABN AMRO Bank purchasing managers' index (PMI) which is based on a survey of 500 companies showed that Indian manufacturing activity shrank for a fourth straight month in February 2009. Yet, the February 2009 index was slightly better than January 2009. The PMI rose to a seasonally adjusted 47 in February 2009, slightly better from January 2009. A reading above 50 signals economic expansion while a figure below 50 suggests contraction. Manufacturing makes up about 16% of India's gross domestic product.
The performance of the exports sector was dismal in January 2009. India's exports fell for the fourth month in a row in January 2009. Exports fell an annual 15.9% in January 2009 to $12.38 billion as the global slowdown shaved off demand for Indian goods.
As per initial estimates available with the commerce ministry, exports dropped 13.7% in February 2009, registering a decline for the fifth consecutive month. Meanwhile, imports also fell for second consecutive month, by 18.2%.
The gross domestic product (GDP) also showed a marked slowdown in India's economy. GDP grew 5.3% in Q3 December 2008. The figure was sharply lower than a 7.6% growth in Q2 September 2008 as the global economic crisis cut demand and exports. India has estimated the economy to grow 7.1% in 2008/09, slowing from a 9% rise in the previous year.
via:E.T
World economy to shrink below zero: IMF chief
10 Mar 2009, 1301 hrs IST, REUTERS
DAR ES SALAAM: The world economy is likely to shrink to "below zero" this year, in what many are now referring to as the “Great Recession” the head of the international Monetary Fund said on Tuesday.
"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.
"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled" Strauss-Kahn added.
As advanced countries focus on problems in their own economies, Strauss-Kahn called on the international community not to forget Africa, where regional growth is expected to slow sharply to 3 percent this year, half the rate of the past five years.
Strauss-Kahn warned the projection for 3 percent "may be too optimistic".
"Even though the crisis has been slow in reaching Africa's shores, we all know it is coming and its impact will be severe," he said. "We must ensure that the voices of the poor are heard. We must ensure that Africa is not left out," he added.
He said the crisis threatens to unravel Africa's economic and social success over the last decade and that millions of people will be thrown back into poverty.
"This is not only about protecting economic growth and household incomes - it is also about containing the threat of civil unrest, perhaps even war. It is about people and their futures," he added.
He said the combined impact of economic and financials shocks on Africa's growth will be severe. Financial flows are becoming more scarce, trade financing even scarcer and more expensive and foreign investment in Africa's stock and bond markets has fallen, he added.
"As growth around the world has almost come to a halt, demand for Africa's products is plunging. Tourism revenue is likely to decline as consumers around the world are tightening their belts," Strauss-Kahn said.
Tanzanian President Jakaya Kikwete said the crisis poses the greatest danger to Africa in recent history and threatens to reverse, even wipe out, hard won social-economic gains.
"So far Africa's voices on this unnerving situation have been muted," Kikwete told the 300 delegates.
VIA:E.T
DAR ES SALAAM: The world economy is likely to shrink to "below zero" this year, in what many are now referring to as the “Great Recession” the head of the international Monetary Fund said on Tuesday.
"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.
"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled" Strauss-Kahn added.
As advanced countries focus on problems in their own economies, Strauss-Kahn called on the international community not to forget Africa, where regional growth is expected to slow sharply to 3 percent this year, half the rate of the past five years.
Strauss-Kahn warned the projection for 3 percent "may be too optimistic".
"Even though the crisis has been slow in reaching Africa's shores, we all know it is coming and its impact will be severe," he said. "We must ensure that the voices of the poor are heard. We must ensure that Africa is not left out," he added.
He said the crisis threatens to unravel Africa's economic and social success over the last decade and that millions of people will be thrown back into poverty.
"This is not only about protecting economic growth and household incomes - it is also about containing the threat of civil unrest, perhaps even war. It is about people and their futures," he added.
He said the combined impact of economic and financials shocks on Africa's growth will be severe. Financial flows are becoming more scarce, trade financing even scarcer and more expensive and foreign investment in Africa's stock and bond markets has fallen, he added.
"As growth around the world has almost come to a halt, demand for Africa's products is plunging. Tourism revenue is likely to decline as consumers around the world are tightening their belts," Strauss-Kahn said.
Tanzanian President Jakaya Kikwete said the crisis poses the greatest danger to Africa in recent history and threatens to reverse, even wipe out, hard won social-economic gains.
"So far Africa's voices on this unnerving situation have been muted," Kikwete told the 300 delegates.
VIA:E.T
Asia funds see $1 bn record outflow; India pull out continues
Press Trust of India / New Delhi March 10, 2009, 19:43 IST
Global investors pulled out a record over $1 billion from Asia equity funds including India in the first week of March with China-focused funds accounting for nearly one-third of the money flowing out of the region, according to a latest report.
Asia (excluding-Japan) equity funds saw the biggest outflows in dollar terms of $1.09 billion -- the highest in 20-weeks or in five months, according to data complied by international fund tracking firm EPFR Global.
Funds flowing to China accounted for a third of the money pulled out of Asia (excluding-Japan) equity funds as official talk of eight per cent growth in emerging Asia's biggest economy, was not supported by any additional policy measures.
"Funds investing in two of the other BRIC markets, India and Russia, posted outflows while Brazil equity funds eked out a sixth straight week of inflows," the EPFR report stated.
Further, all of the major emerging markets equity fund groups tracked by EPFR Global recorded outflows during the reviewed week March 4, as Latin America equity funds saw their eighth week $795 million inflow streak come to an end.
Besides, fund groups investing in traditionally defensive sectors failed to attract investments, with healthcare/biotechnology, consumer goods and utilities sector funds posting outflows to the tune of $277 million, $15 million and $12 million, respectively.
Global investors pulled out a record over $1 billion from Asia equity funds including India in the first week of March with China-focused funds accounting for nearly one-third of the money flowing out of the region, according to a latest report.
Asia (excluding-Japan) equity funds saw the biggest outflows in dollar terms of $1.09 billion -- the highest in 20-weeks or in five months, according to data complied by international fund tracking firm EPFR Global.
Funds flowing to China accounted for a third of the money pulled out of Asia (excluding-Japan) equity funds as official talk of eight per cent growth in emerging Asia's biggest economy, was not supported by any additional policy measures.
"Funds investing in two of the other BRIC markets, India and Russia, posted outflows while Brazil equity funds eked out a sixth straight week of inflows," the EPFR report stated.
Further, all of the major emerging markets equity fund groups tracked by EPFR Global recorded outflows during the reviewed week March 4, as Latin America equity funds saw their eighth week $795 million inflow streak come to an end.
Besides, fund groups investing in traditionally defensive sectors failed to attract investments, with healthcare/biotechnology, consumer goods and utilities sector funds posting outflows to the tune of $277 million, $15 million and $12 million, respectively.
Nifty may breach 2000 if rupee falls below 53-53.50
Nifty may breach 2000 if rupee falls below 53-53.50: Vijay Bhambwani 9 Mar 2009, 1608 hrs IST, ET Bureau
MUMBAI: Correlating the ups and down in the Indian rupee with the stock market, Vijay Bhambwani, CEO, bsplindia.com, suggests that if the rupee continues with its downward fall, the Indian stock market may fall breach October lows and fall further. “If the rupee falls below the 53.0-53.50 mark vis-a-vis the USD, expect a mini meltdown atleast in the equity markets. In that case, the 2250 level (on Nifty) will be breached easily to form a new low. The possibility of that low being below the 2000 levels on the Nifty spot is fairly high,” he says.
Bhambwani supports his outlook by comparing the value of rupee at the time of October lows. “The October 2008 lows were made with the INR at 51.20 - 51.40 band. The rupee has breached the 52 level since then. Clearly the nation’s ‘share price’ (currency) indicates weakness. The curency market is a far more accurate barometer of the nation’s health compared to the equity indices. Whether you like it or not, we are under siege. Had it not been March (NAV time), the indices would have been much lower to reflect a truer picture than it shows now,” Bhambwani said.
He lists various factors that could lead to further fall in the Indian rupee and subsequent impact on the stock market.
“Should oil prices rally and the Rupee weaken (as it will), expect the landed prices of fossil fuels to hit us with a double whammy. Even if crude declines but the rupee weakens, the landed cost remains high. If the government resorts to usual stunts like duty / excise cuts etc etc, the fiscal deficit balloons. The rupee falls even further. A falling rupee means a de-rating by Moody’s, Fitch and S&P.
Consequently, the foreign borrowings are at higher interest rates. Corporate profitability is lower and stock prices fall. Falling rupee means FIIs exit domestic equity investments due to treasury considerations and may want to enter same stocks at lower levels. But their exit will lead to sharp declines in the rupee, causing fresh declines in return. It's a vicious circle. Rising commodity prices are likely to be another thorn in the flesh of the corporates as raw material costs zoom higher. Monitor this market keenly after the forex market.
Most experts have failed to take this consideration into their calculations when they are putting forth their projections. This year’s elections are likely to be a major drain on the exchequer and the real costs to the public will be high. Whichever party forms the government, managing finances will be a tight rope in an optimistic scenario and death by hanging in case the finances are mis-managed. The fiscal deficit going past the 7-7.50 per cent of GDP will be viewed poorly by global lenders / investors.
Taking a half hearted view on the market signals is likely to cause incorrect readings in the markets. Only a balanced approach will yield superior results. We suggest our investors keep their ears to the ground to monitor the market more efficiently,” he advised.
via:E.T
MUMBAI: Correlating the ups and down in the Indian rupee with the stock market, Vijay Bhambwani, CEO, bsplindia.com, suggests that if the rupee continues with its downward fall, the Indian stock market may fall breach October lows and fall further. “If the rupee falls below the 53.0-53.50 mark vis-a-vis the USD, expect a mini meltdown atleast in the equity markets. In that case, the 2250 level (on Nifty) will be breached easily to form a new low. The possibility of that low being below the 2000 levels on the Nifty spot is fairly high,” he says.
Bhambwani supports his outlook by comparing the value of rupee at the time of October lows. “The October 2008 lows were made with the INR at 51.20 - 51.40 band. The rupee has breached the 52 level since then. Clearly the nation’s ‘share price’ (currency) indicates weakness. The curency market is a far more accurate barometer of the nation’s health compared to the equity indices. Whether you like it or not, we are under siege. Had it not been March (NAV time), the indices would have been much lower to reflect a truer picture than it shows now,” Bhambwani said.
He lists various factors that could lead to further fall in the Indian rupee and subsequent impact on the stock market.
“Should oil prices rally and the Rupee weaken (as it will), expect the landed prices of fossil fuels to hit us with a double whammy. Even if crude declines but the rupee weakens, the landed cost remains high. If the government resorts to usual stunts like duty / excise cuts etc etc, the fiscal deficit balloons. The rupee falls even further. A falling rupee means a de-rating by Moody’s, Fitch and S&P.
Consequently, the foreign borrowings are at higher interest rates. Corporate profitability is lower and stock prices fall. Falling rupee means FIIs exit domestic equity investments due to treasury considerations and may want to enter same stocks at lower levels. But their exit will lead to sharp declines in the rupee, causing fresh declines in return. It's a vicious circle. Rising commodity prices are likely to be another thorn in the flesh of the corporates as raw material costs zoom higher. Monitor this market keenly after the forex market.
Most experts have failed to take this consideration into their calculations when they are putting forth their projections. This year’s elections are likely to be a major drain on the exchequer and the real costs to the public will be high. Whichever party forms the government, managing finances will be a tight rope in an optimistic scenario and death by hanging in case the finances are mis-managed. The fiscal deficit going past the 7-7.50 per cent of GDP will be viewed poorly by global lenders / investors.
Taking a half hearted view on the market signals is likely to cause incorrect readings in the markets. Only a balanced approach will yield superior results. We suggest our investors keep their ears to the ground to monitor the market more efficiently,” he advised.
via:E.T
Friday, March 6, 2009
Nifty ends above 2600 on short covering (SENSEX CLOSED Above:8300)
6 Mar 2009, 1749 hrs IST
Equity indices bounced back in the last hour of Friday’s session on short covering ahead of a truncated trading week. The Indian benchmarks outperformed not only the broad market but also the global markets which were reeling under selling pressure.
The session began with a gap down opening as market took cues from weak US and Asian markets. Lack of conviction amongst traders saw indices gyrate in a narrow range. However, towards the end of session, bulls dominated on positive opening of the European markets.
Bombay Stock Exchange’s Sensex ended at 8325.82, up 127.90 points or 1.56 per cent from Thursday’s close. The 30-share index touched a high of 8347.74 recovering from a low of 8047.17.
National Stock Exchange’s Nifty closed at 2620.15, up 43.45 points or 1.64 per cent. The index touched an intra-day high of 2628.10 and low of 2539.45.
“Nifty is likely to remain in the range of 2880-2500 which are its resistance and support levels respectively. General perception in the market is bearish and it is a matter of time that Nifty breaks the support and heads for new lows. The spike in the market was more due to short positions being squared off after a sharp fall during the week and some bargain buying,” said Sudhanshu Pandey, chief technical analyst, LKP Shares.
However, the BSE Midcap Index ended down 0.65 per cent and BSE Smallcap Index declined 0.83 per cent. Amongst sectoral indices, BSE IT Index was up 3.05 per cent and BSE Capital Goods Index higher by 1.51 per cent. On the other hand, the BSE FMCG Index fell 1.85 per cent and BSE Realty Index was down 0.94 per cent. Market breadth on BSE showed 1,419 declines against 993 advances.
Biggest Sensex gainers were HDFC (6.40%), Hindalco Industries (4.38%), Jaiprakash Associates (4.27%), Tata Consultancy Services (3.84%) and Wipro (3.37%).
Losers comprised Maruti Suzuki (-2.77%), Hindustan Unilever (-2.65%), Ranbaxy Laboratories (-2.15%), ITC (-1.61%) and DLF (-1.12%).
Satyam Computer Services closed at the 20 per cent upper circuit on SEBI’s nod to induct a strategic partner for taking management control of the software firm. The market regulator’s approval to Satyam comes after the Company Law Board authorised the Satyam board to make a preferential allotment of equity shares to a strategic investor. The investor will not be permitted to sell any equity shares acquired for a period of three years from the date of the acquisition.
Piramal Healthcare ended with losses after the management confirmed that it was not looking at selling to any company and was only open for long-term partnerships globally. The scrip closed over 8 per cent lower.
Recently listed Edserv Softsystems closed below its issue price of Rs 60, hitting a lower circuit for yet another day after a stellar debut.
On the economy front, India's infrastructure sector output grew 1.4 per cent in January from a year earlier, below an unrevised 2.3 percent in December, government data showed on Friday. Infrastructure output rose at an annual 3.6 percent in January 2008, and in the 2007-08 fiscal it rose 5.6 percent from a year earlier. The infrastructure sector accounts for 26.68 percent of the country’s industrial output.
Meanwhile, European markets which opened in the green, gave away all gains ahead of US unemployment data. At 5 pm IST, FTSE 100 was down 0.93 per cent, CAC 40 fell 1.71 per cent and DAX declined 1.45 per cent. Wall Street is likely to open in the red as traders aer worried about the rise in unemployment due to recessionary pressure. Dow Jones stock futures was down 0.97 per cent, S&P 500 fell 0.90 per cent and Nasdaq 100 slipped 0.81 per cent.
via: E.T
Equity indices bounced back in the last hour of Friday’s session on short covering ahead of a truncated trading week. The Indian benchmarks outperformed not only the broad market but also the global markets which were reeling under selling pressure.
The session began with a gap down opening as market took cues from weak US and Asian markets. Lack of conviction amongst traders saw indices gyrate in a narrow range. However, towards the end of session, bulls dominated on positive opening of the European markets.
Bombay Stock Exchange’s Sensex ended at 8325.82, up 127.90 points or 1.56 per cent from Thursday’s close. The 30-share index touched a high of 8347.74 recovering from a low of 8047.17.
National Stock Exchange’s Nifty closed at 2620.15, up 43.45 points or 1.64 per cent. The index touched an intra-day high of 2628.10 and low of 2539.45.
“Nifty is likely to remain in the range of 2880-2500 which are its resistance and support levels respectively. General perception in the market is bearish and it is a matter of time that Nifty breaks the support and heads for new lows. The spike in the market was more due to short positions being squared off after a sharp fall during the week and some bargain buying,” said Sudhanshu Pandey, chief technical analyst, LKP Shares.
However, the BSE Midcap Index ended down 0.65 per cent and BSE Smallcap Index declined 0.83 per cent. Amongst sectoral indices, BSE IT Index was up 3.05 per cent and BSE Capital Goods Index higher by 1.51 per cent. On the other hand, the BSE FMCG Index fell 1.85 per cent and BSE Realty Index was down 0.94 per cent. Market breadth on BSE showed 1,419 declines against 993 advances.
Biggest Sensex gainers were HDFC (6.40%), Hindalco Industries (4.38%), Jaiprakash Associates (4.27%), Tata Consultancy Services (3.84%) and Wipro (3.37%).
Losers comprised Maruti Suzuki (-2.77%), Hindustan Unilever (-2.65%), Ranbaxy Laboratories (-2.15%), ITC (-1.61%) and DLF (-1.12%).
Satyam Computer Services closed at the 20 per cent upper circuit on SEBI’s nod to induct a strategic partner for taking management control of the software firm. The market regulator’s approval to Satyam comes after the Company Law Board authorised the Satyam board to make a preferential allotment of equity shares to a strategic investor. The investor will not be permitted to sell any equity shares acquired for a period of three years from the date of the acquisition.
Piramal Healthcare ended with losses after the management confirmed that it was not looking at selling to any company and was only open for long-term partnerships globally. The scrip closed over 8 per cent lower.
Recently listed Edserv Softsystems closed below its issue price of Rs 60, hitting a lower circuit for yet another day after a stellar debut.
On the economy front, India's infrastructure sector output grew 1.4 per cent in January from a year earlier, below an unrevised 2.3 percent in December, government data showed on Friday. Infrastructure output rose at an annual 3.6 percent in January 2008, and in the 2007-08 fiscal it rose 5.6 percent from a year earlier. The infrastructure sector accounts for 26.68 percent of the country’s industrial output.
Meanwhile, European markets which opened in the green, gave away all gains ahead of US unemployment data. At 5 pm IST, FTSE 100 was down 0.93 per cent, CAC 40 fell 1.71 per cent and DAX declined 1.45 per cent. Wall Street is likely to open in the red as traders aer worried about the rise in unemployment due to recessionary pressure. Dow Jones stock futures was down 0.97 per cent, S&P 500 fell 0.90 per cent and Nasdaq 100 slipped 0.81 per cent.
via: E.T
Thursday, March 5, 2009
Sensex ends below 8200; ICICI Bank, RIL plunge
5 Mar 2009, 1542 hrs IST,
Indian indices ended towards day’s lows on Thursday as traders booked profits in heavyweights from oil&gas and banking space. Weak European markets did little to boost sentiments.
Bombay Stock Exchange’s Sensex ended at 8185.35, down 261.14 points or 3.09 per cent. The index touched an intra-day low of 8166.97 and high of 8535.03.
National Stock Exchange’s Nifty closed at 2574.60, down 70.70 points or 2.67 per cent. The index touched a low of 2564.10 and high of 2663.90 in today’s trade.
Biggest Sensex gainers were Jaiprakash Associates (2.83%), Sun Pharmaceuticals (1.2%), Tata Consultancy Services (0.53%) and Wipro (0.1%).
Significant losses in Ranbaxy Laboratories (-10.62%), ICICI Bank (-6.26%), Reliance Industries (-5.42%), Tata Power (4.78%) and HDFC Bank (4.63%) dragged the Sensex sharply lower.
Market breadth on BSE showed 1663 declines against 715 advances.
European markets fell Thursday after a rally on Wednesday and ahead of interest rate decisions in Britain and the euro zone. FTSE 100 was down 1.40 per cent, CAC 40 fell 1.35 per cent and DAX declined 1.87 per cent.
(All figures are provisional)
Indian indices ended towards day’s lows on Thursday as traders booked profits in heavyweights from oil&gas and banking space. Weak European markets did little to boost sentiments.
Bombay Stock Exchange’s Sensex ended at 8185.35, down 261.14 points or 3.09 per cent. The index touched an intra-day low of 8166.97 and high of 8535.03.
National Stock Exchange’s Nifty closed at 2574.60, down 70.70 points or 2.67 per cent. The index touched a low of 2564.10 and high of 2663.90 in today’s trade.
Biggest Sensex gainers were Jaiprakash Associates (2.83%), Sun Pharmaceuticals (1.2%), Tata Consultancy Services (0.53%) and Wipro (0.1%).
Significant losses in Ranbaxy Laboratories (-10.62%), ICICI Bank (-6.26%), Reliance Industries (-5.42%), Tata Power (4.78%) and HDFC Bank (4.63%) dragged the Sensex sharply lower.
Market breadth on BSE showed 1663 declines against 715 advances.
European markets fell Thursday after a rally on Wednesday and ahead of interest rate decisions in Britain and the euro zone. FTSE 100 was down 1.40 per cent, CAC 40 fell 1.35 per cent and DAX declined 1.87 per cent.
(All figures are provisional)
Wednesday, March 4, 2009
Gateway Distriparks recovers from record low
Gateway Distriparks jumped 5.20% to Rs 46.50 at on BSE, having recovered from a record low of Rs 43.75, after a block deal of 60 lakh shares was executed on BSE at Rs 46.50 per share.
At the day's low of Rs 43.75, the stock had declined 1.02% before the block deal.
The block deal constituted 5.54% of the company's equity.
The stock hit a high of Rs 48.75 so far during the day. The stock hit a low of Rs 43.75 so far during the day, which is a record low for the counter. The stock hit a 52-week high of Rs 132.70 on 30 April 2008.
The company's current equity is Rs 108.33 crore. Face value per share is Rs 10.
The current price of Rs 46.50 discounts the company's Q3 December 2008 annualized EPS of Rs 10.60, by a PE multiple of 4.39.
Gateway Distriparks' net profit rose 50.2% to Rs 28.69 crore on 28.9% increase in net sales to Rs 59.85 crore in Q3 December 2008 over Q3 December 2007.
Gateway Distriparks is mainly into container handling business.
Gateway Distriparks had on 20 February 2009 announced that Prism International, a promoter, has pledged 1.30 crore or 12% stake of the company with IL&FS Financial Services as security for a term loan. The entire proceeds of the loan were used to purchase equity shares of the company to increase the shareholdings in the company through the creeping acquisition route as per Sebi guidelines, Prism International.
The total promoters' shareholding in the company stood at 45.56% as on 31 December 2008.
At the day's low of Rs 43.75, the stock had declined 1.02% before the block deal.
The block deal constituted 5.54% of the company's equity.
The stock hit a high of Rs 48.75 so far during the day. The stock hit a low of Rs 43.75 so far during the day, which is a record low for the counter. The stock hit a 52-week high of Rs 132.70 on 30 April 2008.
The company's current equity is Rs 108.33 crore. Face value per share is Rs 10.
The current price of Rs 46.50 discounts the company's Q3 December 2008 annualized EPS of Rs 10.60, by a PE multiple of 4.39.
Gateway Distriparks' net profit rose 50.2% to Rs 28.69 crore on 28.9% increase in net sales to Rs 59.85 crore in Q3 December 2008 over Q3 December 2007.
Gateway Distriparks is mainly into container handling business.
Gateway Distriparks had on 20 February 2009 announced that Prism International, a promoter, has pledged 1.30 crore or 12% stake of the company with IL&FS Financial Services as security for a term loan. The entire proceeds of the loan were used to purchase equity shares of the company to increase the shareholdings in the company through the creeping acquisition route as per Sebi guidelines, Prism International.
The total promoters' shareholding in the company stood at 45.56% as on 31 December 2008.
ICICI Bank 's assets in Russia were at risk.
ICICI Bank lost 4.47% to Rs 283.15 at 15:30 IST on concerns the bank's assets in Russia were at risk.
The stock hit an intraday low of Rs 280, also its 52-week low. It hit an intraday high of Rs 305.82 so far during the day. The stock had a 52-week high of Rs 1065 on 3 March.
ICICI Bank stock had declined 9.66% in two consecutive sessions to Rs 296.40 on 3 March 2009 from Rs 328.10 on 27 February 2009. The stock has witnessed a sharp setback in the past few weeks amid a broad-based decline in banking
stocks caused by concerns of rising defaults of Indian banks in a weakening economy.
Despite fears of rising defaults, the leading domestic institutional investor Life Insurance Corporation of India (LIC) is mopping up ICICI Bank shares. LIC recently hiked its stake in ICICI Bank to 9.38% by acquiring over 2.27 crore shares or 2.04% of the bank's equity stake through open market between 21 November 2008 and 17 February 2009. ICICI bank made this announcement on 24 February 2009. Before the purchase, LIC held 7.34% stake in the private sector bank.
ICICI bank, India's largest private sector bank by net profit, has an equity capital of Rs 1113.26 crore. Face value per share is Rs 10.
The current price of Rs 283.15 discounts its Q3 December 2008 annualised EPS of Rs 45.71, by a PE multiple of 6.19.
ICICI Bank's Russian assets may be vulnerable as firms there struggle to stay afloat. Reports suggest that the market is quite concerned over the Russian exposure and expecting sharp write-downs as companies in Russia are in trouble.
Last week CLSA in its research report said ICICI Bank's investments in Russia are unlikely to yield fruit in the near term. CLSA has not assigned any value to the bank's $584-million assets in Russia due to potential market-to-market losses.
CLSA added that although the bank has not reported any mark-to-market losses in Russia, the country's economic woes are expected to spoil the loan quality.
CLSA further mentioned that every additional $100 million written off on the bank's Russian assets would shed Rs 4 per share from ICICI's target price of Rs 535 a share.
ICICI's Russian arm, ICICI Bank Eurasia does not have a meaningful number of deposits and 84% of its total liabilities (including equity) in Russia are funded by group companies, the report added.
According to an earlier report dated September 2008, ICICI Bank Eurasia had assets worth $584 million (0.6% of the bank's total assets and 6% of its equity), including $434 million in the form of loans (including loans to banks and financials institutions) and $84 million in investments.
ICICI Bank Eurasia, was established in May 2005, after ICICI Bank acquired the entire equity of Investisionno-Kreditny Bank. The bank had opted for the acquisition route to save time, according to reports.
Last year, the management of ICICI Bank had to repeatedly assure investors and depositors after its exposure to collapsed Lehman Brothers triggered a slump in its share price.
ICICI Bank's net profit rose 3.4% to Rs 1272.15 crore on a 0.1% rise in sales to Rs 10350.62 crore in Q3 December 2008 over Q3 December 2007. The rise in Q3 December 2008 net profit was because earnings from fees and bond trading offset slowing credit growth and a rise in bad loans.
The stock hit an intraday low of Rs 280, also its 52-week low. It hit an intraday high of Rs 305.82 so far during the day. The stock had a 52-week high of Rs 1065 on 3 March.
ICICI Bank stock had declined 9.66% in two consecutive sessions to Rs 296.40 on 3 March 2009 from Rs 328.10 on 27 February 2009. The stock has witnessed a sharp setback in the past few weeks amid a broad-based decline in banking
stocks caused by concerns of rising defaults of Indian banks in a weakening economy.
Despite fears of rising defaults, the leading domestic institutional investor Life Insurance Corporation of India (LIC) is mopping up ICICI Bank shares. LIC recently hiked its stake in ICICI Bank to 9.38% by acquiring over 2.27 crore shares or 2.04% of the bank's equity stake through open market between 21 November 2008 and 17 February 2009. ICICI bank made this announcement on 24 February 2009. Before the purchase, LIC held 7.34% stake in the private sector bank.
ICICI bank, India's largest private sector bank by net profit, has an equity capital of Rs 1113.26 crore. Face value per share is Rs 10.
The current price of Rs 283.15 discounts its Q3 December 2008 annualised EPS of Rs 45.71, by a PE multiple of 6.19.
ICICI Bank's Russian assets may be vulnerable as firms there struggle to stay afloat. Reports suggest that the market is quite concerned over the Russian exposure and expecting sharp write-downs as companies in Russia are in trouble.
Last week CLSA in its research report said ICICI Bank's investments in Russia are unlikely to yield fruit in the near term. CLSA has not assigned any value to the bank's $584-million assets in Russia due to potential market-to-market losses.
CLSA added that although the bank has not reported any mark-to-market losses in Russia, the country's economic woes are expected to spoil the loan quality.
CLSA further mentioned that every additional $100 million written off on the bank's Russian assets would shed Rs 4 per share from ICICI's target price of Rs 535 a share.
ICICI's Russian arm, ICICI Bank Eurasia does not have a meaningful number of deposits and 84% of its total liabilities (including equity) in Russia are funded by group companies, the report added.
According to an earlier report dated September 2008, ICICI Bank Eurasia had assets worth $584 million (0.6% of the bank's total assets and 6% of its equity), including $434 million in the form of loans (including loans to banks and financials institutions) and $84 million in investments.
ICICI Bank Eurasia, was established in May 2005, after ICICI Bank acquired the entire equity of Investisionno-Kreditny Bank. The bank had opted for the acquisition route to save time, according to reports.
Last year, the management of ICICI Bank had to repeatedly assure investors and depositors after its exposure to collapsed Lehman Brothers triggered a slump in its share price.
ICICI Bank's net profit rose 3.4% to Rs 1272.15 crore on a 0.1% rise in sales to Rs 10350.62 crore in Q3 December 2008 over Q3 December 2007. The rise in Q3 December 2008 net profit was because earnings from fees and bond trading offset slowing credit growth and a rise in bad loans.
Tuesday, March 3, 2009
Sensex registers lowest close in over three years
3 Mar 2009, 1657 hrs IST, PTI
MUMBAI: A sudden all-round sell-off at the fag end brought down the benchmark Sensex below 8,400 after more than three months but the Index registered its lowest closing low of 8,427.29 in more than three years, down by a whopping 180 points despite a firm European opening.
The market resumed on a weak note after sluggish Asian cues following a steep fall on Wall Street yesterday. But it moved in a narrow range till late afternoon, coming in and out of positive terrain.
But sudden bouts of heavy selling in the concluding session pulled the bellwether Sensex down to an intra-day low of 8,390.21 before ending the day at 8,427.29, a steep fall of 179.79 points or 2.09 per cent.
The Sensex had finished at 8,308.93 on November 10, 2005. It also completed its three sessions of losing today. The broader 50-issue Nifty of the National Stock Exchange
also plunged by 52.20 points or 1.95 per cent to 2,622.40 from its last close.
Selling was so strong that all sectoral indices ended in the red with a fall between 3.15 per cent and 1.03 per cent. Only three out of the 30 Sensex counters registered gains.
Brokers said the rupee falling to record low levels against the US dollar also prompted foreign funds to pull out of bourses.
While a sharp plunge in exports in January weakened sentiment, the deepening global financial crisis dampened trading activity in software exporting units led by Infosys Technologies as American International Group's record loss worsened investor confidence. Over 50 per cent of India's software business revenue comes from the US markets.
The IT sector index fell by 1.86 per cent to 2,019.24 after Infosys, the second-largest software exporter, fell 1.74 per cent to Rs 1,197.60, Tata Consultancy Services, the largest software exporter, by 3.12 per cent to Rs 445.15, and Wipro, third, dropped 1.16 per cent to Rs 200.50.
MUMBAI: A sudden all-round sell-off at the fag end brought down the benchmark Sensex below 8,400 after more than three months but the Index registered its lowest closing low of 8,427.29 in more than three years, down by a whopping 180 points despite a firm European opening.
The market resumed on a weak note after sluggish Asian cues following a steep fall on Wall Street yesterday. But it moved in a narrow range till late afternoon, coming in and out of positive terrain.
But sudden bouts of heavy selling in the concluding session pulled the bellwether Sensex down to an intra-day low of 8,390.21 before ending the day at 8,427.29, a steep fall of 179.79 points or 2.09 per cent.
The Sensex had finished at 8,308.93 on November 10, 2005. It also completed its three sessions of losing today. The broader 50-issue Nifty of the National Stock Exchange
also plunged by 52.20 points or 1.95 per cent to 2,622.40 from its last close.
Selling was so strong that all sectoral indices ended in the red with a fall between 3.15 per cent and 1.03 per cent. Only three out of the 30 Sensex counters registered gains.
Brokers said the rupee falling to record low levels against the US dollar also prompted foreign funds to pull out of bourses.
While a sharp plunge in exports in January weakened sentiment, the deepening global financial crisis dampened trading activity in software exporting units led by Infosys Technologies as American International Group's record loss worsened investor confidence. Over 50 per cent of India's software business revenue comes from the US markets.
The IT sector index fell by 1.86 per cent to 2,019.24 after Infosys, the second-largest software exporter, fell 1.74 per cent to Rs 1,197.60, Tata Consultancy Services, the largest software exporter, by 3.12 per cent to Rs 445.15, and Wipro, third, dropped 1.16 per cent to Rs 200.50.
Monday, March 2, 2009
Bearish phase may pull down India's GDP to 3 pc: Morgan Stanley
2 Mar 2009, 2038 hrs IST, PTI
Continuation of the bearish phase in the global economy could pull down India's economic growth rate to a dismal 3 per cent in 2009, said international financial services major Morgan Stanley.
Morgan Stanley's research report released on Monday said, depending upon the extent of economic recovery in the developed world, India's Gross Domestic Product (GDP) growth rate during 2009 could range between 3 per cent and 5 per cent.
"Based on bull-bear case outlook for G7 (club of developed countries), we see bull scenario growth for India at 5 per cent in 2009 and 7.4 per cent in 2010 and bear case at 3 per cent in 2009 and 4.5 per cent in 2010", it added.
However, on an average, the report projected India's economic growth rate for 2009 at 4.3 per cent and for 2010 at 6.1 per cent.
According to advance estimates of national income released by the government recently, the economic growth rate during 2008-09 is expected to moderate to 7.1 per cent from 9 per cent in the previous fiscal.
The third quarter growth (October-December 2008) rate has been estimated at 5.3 per cent, down from 8.9 per cent posted during the corresponding period last year.
Continuation of the bearish phase in the global economy could pull down India's economic growth rate to a dismal 3 per cent in 2009, said international financial services major Morgan Stanley.
Morgan Stanley's research report released on Monday said, depending upon the extent of economic recovery in the developed world, India's Gross Domestic Product (GDP) growth rate during 2009 could range between 3 per cent and 5 per cent.
"Based on bull-bear case outlook for G7 (club of developed countries), we see bull scenario growth for India at 5 per cent in 2009 and 7.4 per cent in 2010 and bear case at 3 per cent in 2009 and 4.5 per cent in 2010", it added.
However, on an average, the report projected India's economic growth rate for 2009 at 4.3 per cent and for 2010 at 6.1 per cent.
According to advance estimates of national income released by the government recently, the economic growth rate during 2008-09 is expected to moderate to 7.1 per cent from 9 per cent in the previous fiscal.
The third quarter growth (October-December 2008) rate has been estimated at 5.3 per cent, down from 8.9 per cent posted during the corresponding period last year.
AIG enters record books with $61.7 billion loss
2 Mar 2009, 1900 hrs IST, REUTERS
NEW YORK: American International Group Inc posted a $61.7 billion fourth-quarter loss -- the biggest quarterly loss in corporate history—after reaching a revised rescue deal with the US government that wards off for now the prospect of crippling credit rating downgrades.
The massive quarterly loss, equal to $22.95 a share, was AIG's fifth in a row, bringing the total loss over that period to more than $100 billion.
The US Treasury and Federal Reserve said AIG had posed a systemic risk requiring government action to prevent its problems from damaging the entire financial system
.
AIG, the recipient of $150 billion in taxpayer aid last year, will get access to an additional $30 billion under the government's revised plan announced on Monday.
It also got more lenient terms on existing financing and will be able to significantly pay down an outstanding credit facility in a swap that will give the government a preferred-share stake in two life insurance businesses.
AIG also announced plans to spin off part of its property-casualty business, to be renamed AIU Holdings.
The revamped rescue package is the third since last fall when the government stepped in to bail out AIG, once the world's biggest insurer by market value.
The Treasury and the Fed said that AIG, which has counterparties around the globe, was so important to the US economy and financial system that it had to be helped, and they held out the possibility more aid might be needed.
"This will take time and possibly further government support if markets do not stabilize and improve," they said in a statement.
Via:E.T
NEW YORK: American International Group Inc posted a $61.7 billion fourth-quarter loss -- the biggest quarterly loss in corporate history—after reaching a revised rescue deal with the US government that wards off for now the prospect of crippling credit rating downgrades.
The massive quarterly loss, equal to $22.95 a share, was AIG's fifth in a row, bringing the total loss over that period to more than $100 billion.
The US Treasury and Federal Reserve said AIG had posed a systemic risk requiring government action to prevent its problems from damaging the entire financial system
.
AIG, the recipient of $150 billion in taxpayer aid last year, will get access to an additional $30 billion under the government's revised plan announced on Monday.
It also got more lenient terms on existing financing and will be able to significantly pay down an outstanding credit facility in a swap that will give the government a preferred-share stake in two life insurance businesses.
AIG also announced plans to spin off part of its property-casualty business, to be renamed AIU Holdings.
The revamped rescue package is the third since last fall when the government stepped in to bail out AIG, once the world's biggest insurer by market value.
The Treasury and the Fed said that AIG, which has counterparties around the globe, was so important to the US economy and financial system that it had to be helped, and they held out the possibility more aid might be needed.
"This will take time and possibly further government support if markets do not stabilize and improve," they said in a statement.
Via:E.T
Rane Brake Lining-Nisshinbo to pick up additional 8% stake
2 Mar 2009, 1938 hrs IST, ET Bureau
CHENNAI: The board of Rane Brake Lining, flagship of Rane group, has decided to allow its Japanese technology partner, Nisshinbo Industries to pick up an additional 8% stake by investing Rs 3.5 crore in equity at premium.
For long, the foreign partner is having a 10% stake in RBL, which is a leading manufacturer of brake lining products for commercial vehicles and passenger cars.
RBL informed stock exchanges on Monday it has been decided to issue 7 lakh fully paid up shares of Rs 10 each at a premium of Rs 40 per share on preferential basis as per Sebi guidelines to Nisshinbo.
An EGM will be held on March 30 to get the approval of shareholders. The issue price will be close to the current market price of RBL.
In the Rs 7.21 crore paid up capital of RBL, the Indian promoters hold 42.72% stake. Since 1996, the Japanese partner is holding 10% stake.
Rane group chairman, L Ganesh told ET, " We have been getting their best technology and R & D support for long. Last year, they wanted to increase their holding".
Further, he said " With Japanese and Korean players dominating the Indian car market, the additional stake will help in getting the latest technology from Nisshinbo and expanding our customers in the Indian and export markets.
Globally, its major customers are Toyota, Suzuki and Nissan. In Korea, it is supplying to Hyundai through its subsidiary:.
RBL is already a major supplier to Maruti Suzuki. For Toyota, it is supplying for Innova. There is scope to expand the tie up for the small car project of Toyota.
Reeling under the severe down turn in the vehicle sector, RBL reported a loss of Rs 1.81 crore in the third quarter ending December 31, 2008 on a net sales of Rs 42.83 crore.
CHENNAI: The board of Rane Brake Lining, flagship of Rane group, has decided to allow its Japanese technology partner, Nisshinbo Industries to pick up an additional 8% stake by investing Rs 3.5 crore in equity at premium.
For long, the foreign partner is having a 10% stake in RBL, which is a leading manufacturer of brake lining products for commercial vehicles and passenger cars.
RBL informed stock exchanges on Monday it has been decided to issue 7 lakh fully paid up shares of Rs 10 each at a premium of Rs 40 per share on preferential basis as per Sebi guidelines to Nisshinbo.
An EGM will be held on March 30 to get the approval of shareholders. The issue price will be close to the current market price of RBL.
In the Rs 7.21 crore paid up capital of RBL, the Indian promoters hold 42.72% stake. Since 1996, the Japanese partner is holding 10% stake.
Rane group chairman, L Ganesh told ET, " We have been getting their best technology and R & D support for long. Last year, they wanted to increase their holding".
Further, he said " With Japanese and Korean players dominating the Indian car market, the additional stake will help in getting the latest technology from Nisshinbo and expanding our customers in the Indian and export markets.
Globally, its major customers are Toyota, Suzuki and Nissan. In Korea, it is supplying to Hyundai through its subsidiary:.
RBL is already a major supplier to Maruti Suzuki. For Toyota, it is supplying for Innova. There is scope to expand the tie up for the small car project of Toyota.
Reeling under the severe down turn in the vehicle sector, RBL reported a loss of Rs 1.81 crore in the third quarter ending December 31, 2008 on a net sales of Rs 42.83 crore.
Ranbaxy up on clarification from US FDA
2 Mar 2009, 1154 hrs IST, ET Bureau
MUMBAI: Even in a bad market, the share price of Ranbaxy Laboratories surged over 1.5% on news that the US FDA has clarified that there was no evidence that certain drugs from Ranbaxy do not meet their quality specifications and has not identified any health risks associated with the currently marketed products from Paonta facilities.
At 11:43 am on NSE, the stock was trading at Rs 162.80, up 0.62% from the previous close. The stock had risen to a high of Rs 166.30 earlier in the day, with total trade quantity at 5.87 lakh shares.
"We believe the current USFDA action will have limited impact on Ranbaxy’s US sales since the import ban on products from the Paonta facilities is already in place since September 2008. Though we had reduced our US sales estimates for CY2009E after the import alert, we would be again reviewing our estimates post the 1QCY2009E results to gauge any further impact of the AIP especially for products, which used clinical data from the Paonta facility," Angel Broking said to its clients recommending the stock with a target of Rs 277.
Earlier on Sep 16, 2008, the USFDA had issued two warning letters and instituted an Import Alert barring entry of all finished drug products and active pharmaceutical ingredients (API) from Ranbaxy's Dewas, Paonta Sahib facilities due to violation of US current Good Manufacturing Practices requirements. That action barred commercial importation of 30 different generic drugs into the US and continues to be in effect.
Since then the Ranbaxy stock has slipped by 18%.
"We maintain a Buy on the stock, with a Target Price of Rs277 wherein the Core business is valued at Rs178 giving it a fair P/E of 16x CY2009E Core Earnings of Rs 11.1, Rs 24 for the Non-Core Income and NPV Rs75 is ascribed to the FTF opportunities available to the company," the Angel report said.
MUMBAI: Even in a bad market, the share price of Ranbaxy Laboratories surged over 1.5% on news that the US FDA has clarified that there was no evidence that certain drugs from Ranbaxy do not meet their quality specifications and has not identified any health risks associated with the currently marketed products from Paonta facilities.
At 11:43 am on NSE, the stock was trading at Rs 162.80, up 0.62% from the previous close. The stock had risen to a high of Rs 166.30 earlier in the day, with total trade quantity at 5.87 lakh shares.
"We believe the current USFDA action will have limited impact on Ranbaxy’s US sales since the import ban on products from the Paonta facilities is already in place since September 2008. Though we had reduced our US sales estimates for CY2009E after the import alert, we would be again reviewing our estimates post the 1QCY2009E results to gauge any further impact of the AIP especially for products, which used clinical data from the Paonta facility," Angel Broking said to its clients recommending the stock with a target of Rs 277.
Earlier on Sep 16, 2008, the USFDA had issued two warning letters and instituted an Import Alert barring entry of all finished drug products and active pharmaceutical ingredients (API) from Ranbaxy's Dewas, Paonta Sahib facilities due to violation of US current Good Manufacturing Practices requirements. That action barred commercial importation of 30 different generic drugs into the US and continues to be in effect.
Since then the Ranbaxy stock has slipped by 18%.
"We maintain a Buy on the stock, with a Target Price of Rs277 wherein the Core business is valued at Rs178 giving it a fair P/E of 16x CY2009E Core Earnings of Rs 11.1, Rs 24 for the Non-Core Income and NPV Rs75 is ascribed to the FTF opportunities available to the company," the Angel report said.
RANBAXY: Last Hope :Rs.157
AN EXTRACT FROM MARKET BHAVISHYA, 2-MARCH-09
RANBAXY:
Last Hope :Rs.157
Once Breaks with volumes........watch panic selling upto Rs.139---133 in hrs only.
Already broken Big triangle :Our TARGET Rs.75
RANBAXY:
Last Hope :Rs.157
Once Breaks with volumes........watch panic selling upto Rs.139---133 in hrs only.
Already broken Big triangle :Our TARGET Rs.75
Nifty falls below 2700; RIL-RPL merger non-event
2 Mar 2009, 1054 hrs IST, ET Bureau
MUMBAI: Equities were witnessing selling pressure as investors booked profits
following sell-off in Asian markets. Hopes of support from the index heavyweight Reliance Industries were short-lived as the merger swap ratio between the RIL-Reliance Petroleum failed to lift sentiments.
According to the merger ratio Reliance Petroleum shareholders will get one share of Reliance Industries for every 16 shares held. Reliance Industries is to extinguish treasury stock. The merger will be effective from April 1, 2009.
The merger of stand-alone refinery Reliance Petroleum with integrated oil, gas and petrochemicals major Reliance Industries would create truly global-scale operations, and more. It would lead to synergies, tax savings and rev up valuations right across the board. The stock market did appear to give the thumbs down to the news of the merger on Friday, albeit only slightly so
“Dow closed in the negative and all Asian markets are in the negative. The US market corrected on Friday on the back of news that the US government will increase its stake in Citigroup. Reliance and RPL have approved a merger and the swap ratio has been decided at 1 share of Reliance for 16 shares held in RPL. We continue to believe that globally things will get worse from current levels. Hence, we remain bearish on the market for the short term. For the day, we expect the market to open down and see selling continuing through the day,” said Religare report.
At 10:20 am, National Stock Exchange’s Nifty was at 2698.40, down 65.25 points or 2.36 per cent. The index touched an intra-day low of 2677.65 and high of 2764.60.
Bombay Stock Exchange’s Sensex was at 8682.17, down 209.44 points or 2.36 per cent. The broader index touched an intra-day low of 8644.03 and a high of 8762.88.
“Trend deciding level for the day is 8,855 / 2,753. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 8,981 / 2,798. However, if NIFTY trades below 8,855 / 2,753 for the first half-an-hour of trade then it may correct up to 8,765 / 2,719,” said Angel Broking note.
Second rung stocks were less affected. BSE Midcap Index was down 1.18 per cent and BSE Smallcap Index slipped 0.69 per cent.
Zee Entertainment (-5.94%), Tata Steel (-4.92%), HDFC Bank
(-4.19%), Punjab National Bank (-4.06%) and Power Grid (-3.87%) were the major Nifty losers.
BPCL (0.03%) was the only gainer.
All the sectoral indices were in the red led by losses in metals, banks and realty space. BSE Metal Index was down 3.23 per cent, BSE Bankex was down 3.15 per cent and BSE Realty Index slipped 2.22 per cent.
Shares of Tata Steel were down on profit booking after a surge Friday when the company announced its consolidated results. The company reported consolidated net profit of Rs 732.2 crore for the third quarter ended December 2008. The Jamshedpur-based steel company also said it planned to prepay around $400-500 million of its debt next financial year. Although Tata Steel’s year ago consolidated net profit at Rs 1,325 crore was higher, the current financial year’s third quarter net profit surprised the market.
Shares of Reliance Industries were down 2.14 per cent and Reliance Petroleum was marginally lower.
Meanwhile, Asian stocks slid, dragging the Nikkei 225 Stock Average down the most in in five weeks on concerns the global recession is deepening. The Nikkei 225 Stock Average declined 3.90 per cent, Hong Kong’s Hang Seng Index sank 3.83 per cent, South Korea’s Kospi slid 3.98 per cent and Taiwan Weighted was down 2.82 per cent.
Market breadth was negative on the BSE with 979 declines and 508 advances.
via:E.T
MUMBAI: Equities were witnessing selling pressure as investors booked profits
following sell-off in Asian markets. Hopes of support from the index heavyweight Reliance Industries were short-lived as the merger swap ratio between the RIL-Reliance Petroleum failed to lift sentiments.
According to the merger ratio Reliance Petroleum shareholders will get one share of Reliance Industries for every 16 shares held. Reliance Industries is to extinguish treasury stock. The merger will be effective from April 1, 2009.
The merger of stand-alone refinery Reliance Petroleum with integrated oil, gas and petrochemicals major Reliance Industries would create truly global-scale operations, and more. It would lead to synergies, tax savings and rev up valuations right across the board. The stock market did appear to give the thumbs down to the news of the merger on Friday, albeit only slightly so
“Dow closed in the negative and all Asian markets are in the negative. The US market corrected on Friday on the back of news that the US government will increase its stake in Citigroup. Reliance and RPL have approved a merger and the swap ratio has been decided at 1 share of Reliance for 16 shares held in RPL. We continue to believe that globally things will get worse from current levels. Hence, we remain bearish on the market for the short term. For the day, we expect the market to open down and see selling continuing through the day,” said Religare report.
At 10:20 am, National Stock Exchange’s Nifty was at 2698.40, down 65.25 points or 2.36 per cent. The index touched an intra-day low of 2677.65 and high of 2764.60.
Bombay Stock Exchange’s Sensex was at 8682.17, down 209.44 points or 2.36 per cent. The broader index touched an intra-day low of 8644.03 and a high of 8762.88.
“Trend deciding level for the day is 8,855 / 2,753. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 8,981 / 2,798. However, if NIFTY trades below 8,855 / 2,753 for the first half-an-hour of trade then it may correct up to 8,765 / 2,719,” said Angel Broking note.
Second rung stocks were less affected. BSE Midcap Index was down 1.18 per cent and BSE Smallcap Index slipped 0.69 per cent.
Zee Entertainment (-5.94%), Tata Steel (-4.92%), HDFC Bank
(-4.19%), Punjab National Bank (-4.06%) and Power Grid (-3.87%) were the major Nifty losers.
BPCL (0.03%) was the only gainer.
All the sectoral indices were in the red led by losses in metals, banks and realty space. BSE Metal Index was down 3.23 per cent, BSE Bankex was down 3.15 per cent and BSE Realty Index slipped 2.22 per cent.
Shares of Tata Steel were down on profit booking after a surge Friday when the company announced its consolidated results. The company reported consolidated net profit of Rs 732.2 crore for the third quarter ended December 2008. The Jamshedpur-based steel company also said it planned to prepay around $400-500 million of its debt next financial year. Although Tata Steel’s year ago consolidated net profit at Rs 1,325 crore was higher, the current financial year’s third quarter net profit surprised the market.
Shares of Reliance Industries were down 2.14 per cent and Reliance Petroleum was marginally lower.
Meanwhile, Asian stocks slid, dragging the Nikkei 225 Stock Average down the most in in five weeks on concerns the global recession is deepening. The Nikkei 225 Stock Average declined 3.90 per cent, Hong Kong’s Hang Seng Index sank 3.83 per cent, South Korea’s Kospi slid 3.98 per cent and Taiwan Weighted was down 2.82 per cent.
Market breadth was negative on the BSE with 979 declines and 508 advances.
via:E.T
Sunday, March 1, 2009
India must learn to live with slowdown
Won’t get better soon, learn to live with slowdown
1 Mar 2009, 1700 hrs IST, Swaminathan S Anklesaria Aiyar, ET Bureau
Indian politicians and citizens are mostly in denial about the impact of the global meltdown on India. Politicians make brave statements laughing away the slowdown, saying India will be least hit and first out of the slump. Three stimulus packages in three months have been announced with fanfare.
But the slowdown continues. Impatient citizens and Opposition parties demand additional stimuli. But this rests on the illusion that the economy will return to fast growth if only it imbibes enough caffeine.
Sorry, but this is not a problem of caffeine shortage. The world is going through the worst downswing since the Great Depression, and India willy nilly has to go downward with the rest of the world. We should expect the slowdown to continue for several quarters, until the world economy recovers. We must batten down our hatches and patiently ride out this storm.
Official data have just revealed the ugly truth that GDP growth declined to a dismal 5.3% in the October-December quarter, way below official expectations. Agriculture declined by an unexpected 2.2% in this period: poor harvests of sugarcane, cotton, pulses and oilseeds overwhelmed gains in rice, horticulture and animal husbandry. In this quarter, the Pay Commission award boosted community services growth by a whopping 17%. This is mostly illusory: higher pay does not mean better service. Despite this illusory boost, overall GDP growth only touched 5.3%.
This lends credence to the IMF’s forecast of 5.1% GDP growth for the calendar year 2009. We may experience some small improvement in the last quarter of 2009, but a return to fast growth will have to wait till late 2010, or even 2011.
Let nobody think that more stimulus packages will somehow save us. The slump was not caused by lack of government stimulus — it occurred despite an enormous stimulus from Chidambaram’s 2008 budget through the farm loan waiver, Pay Commission award, and spiraling subsidies for petroleum products, fertilisers and food. Because of these — and falling tax revenue — the overall fiscal deficit of the Centre and states in 2008-09 will be a massive 11% of GDP. Yet, this massive stimulus proved helpless to combat the global downswing.
India’s 9% growth in the preceding five years was due to an unprecedented global boom, not great reforms or cleverness on our part. A huge global tide lifted all boats — even Africa grew at an unprecedented 6%. Alas, the tide is now falling, and lowering all boats. Drinking more caffeine will not raise India’s boat in a falling tide.
We must accept that we are part and parcel of the global economy. The global boom drove up our growth to 9% and the global slump has lowered it to 5%. We must abandon the illusion that we can somehow grow fast again while the rest of the world stagnates. We must learn to live with the global downswing , and ride out the storm. We cannot end the storm on our own: we must patiently wait for it to subside.
Meanwhile, our aim must be to alleviate pain, and build infrastructure for future growth. Seen in this light, the so-called stimulus packages are actually alleviation packages. They are worthwhile measures to alleviate economic pain, and stem deterioration. But they cannot stimulate the economy back to fast growth. This crisis was not caused by us and cannot be solved by us. Our role is to ride out the storm.
What policy lessons flow from this? First, lower your expectations and targets, for false hopes can lead to policy excesses. Second, overhaul procedures for infrastructure contracts, because red tape currently prevents accelerated spending in this vital sector.
Third, don’t cut taxes endlessly in the hope that this will revive the economy. Taxes should of course be cut in a downswing, but should then be raised again in the next upswing. Raising taxes is politically far more difficult than cutting them. I support the tax cuts so far, but oppose any further cuts on the ground that they will be too difficult to reverse later.
Instead, the Reserve Bank of India should loosen its purse strings, and pump more cash into the economy. Today, huge government deficits are swallowing up all bank finance, leaving little for corporations. This squeeze has lifted interest rates for corporations even as the RBI cuts its own rates. So, the RBI must abandon its taboo on buying government bonds, and print currency to finance the government’s deficit. This has inflationary potential, but inflation is not today’s problem. Politically, printing money is more easily reversible than cutting taxes further. That’s the way to go.
VIA:E.T
1 Mar 2009, 1700 hrs IST, Swaminathan S Anklesaria Aiyar, ET Bureau
Indian politicians and citizens are mostly in denial about the impact of the global meltdown on India. Politicians make brave statements laughing away the slowdown, saying India will be least hit and first out of the slump. Three stimulus packages in three months have been announced with fanfare.
But the slowdown continues. Impatient citizens and Opposition parties demand additional stimuli. But this rests on the illusion that the economy will return to fast growth if only it imbibes enough caffeine.
Sorry, but this is not a problem of caffeine shortage. The world is going through the worst downswing since the Great Depression, and India willy nilly has to go downward with the rest of the world. We should expect the slowdown to continue for several quarters, until the world economy recovers. We must batten down our hatches and patiently ride out this storm.
Official data have just revealed the ugly truth that GDP growth declined to a dismal 5.3% in the October-December quarter, way below official expectations. Agriculture declined by an unexpected 2.2% in this period: poor harvests of sugarcane, cotton, pulses and oilseeds overwhelmed gains in rice, horticulture and animal husbandry. In this quarter, the Pay Commission award boosted community services growth by a whopping 17%. This is mostly illusory: higher pay does not mean better service. Despite this illusory boost, overall GDP growth only touched 5.3%.
This lends credence to the IMF’s forecast of 5.1% GDP growth for the calendar year 2009. We may experience some small improvement in the last quarter of 2009, but a return to fast growth will have to wait till late 2010, or even 2011.
Let nobody think that more stimulus packages will somehow save us. The slump was not caused by lack of government stimulus — it occurred despite an enormous stimulus from Chidambaram’s 2008 budget through the farm loan waiver, Pay Commission award, and spiraling subsidies for petroleum products, fertilisers and food. Because of these — and falling tax revenue — the overall fiscal deficit of the Centre and states in 2008-09 will be a massive 11% of GDP. Yet, this massive stimulus proved helpless to combat the global downswing.
India’s 9% growth in the preceding five years was due to an unprecedented global boom, not great reforms or cleverness on our part. A huge global tide lifted all boats — even Africa grew at an unprecedented 6%. Alas, the tide is now falling, and lowering all boats. Drinking more caffeine will not raise India’s boat in a falling tide.
We must accept that we are part and parcel of the global economy. The global boom drove up our growth to 9% and the global slump has lowered it to 5%. We must abandon the illusion that we can somehow grow fast again while the rest of the world stagnates. We must learn to live with the global downswing , and ride out the storm. We cannot end the storm on our own: we must patiently wait for it to subside.
Meanwhile, our aim must be to alleviate pain, and build infrastructure for future growth. Seen in this light, the so-called stimulus packages are actually alleviation packages. They are worthwhile measures to alleviate economic pain, and stem deterioration. But they cannot stimulate the economy back to fast growth. This crisis was not caused by us and cannot be solved by us. Our role is to ride out the storm.
What policy lessons flow from this? First, lower your expectations and targets, for false hopes can lead to policy excesses. Second, overhaul procedures for infrastructure contracts, because red tape currently prevents accelerated spending in this vital sector.
Third, don’t cut taxes endlessly in the hope that this will revive the economy. Taxes should of course be cut in a downswing, but should then be raised again in the next upswing. Raising taxes is politically far more difficult than cutting them. I support the tax cuts so far, but oppose any further cuts on the ground that they will be too difficult to reverse later.
Instead, the Reserve Bank of India should loosen its purse strings, and pump more cash into the economy. Today, huge government deficits are swallowing up all bank finance, leaving little for corporations. This squeeze has lifted interest rates for corporations even as the RBI cuts its own rates. So, the RBI must abandon its taboo on buying government bonds, and print currency to finance the government’s deficit. This has inflationary potential, but inflation is not today’s problem. Politically, printing money is more easily reversible than cutting taxes further. That’s the way to go.
VIA:E.T
Why RIL wants to merge RPL with itself
28 Feb 2009, 1023 hrs IST
Why the merger?
RIL has traditionally set up large capital-intensive projects under new companies to ring-fence itself from project risk. This happened with the first Jamnagar refinery, also called Reliance Petroleum. Now that RPL is up and running, it doesn’t make sense to keep it separate.
Why now?
RIL has not issued any statement. There is speculation that RPL is sitting on inventory losses and may need balance sheet support from RIL. RPL enjoys a 7-year tax break while the export-oriented status of the first unit of the Jamnagar refinery, which is part of RIL, will expire soon.
Chevron link
Chevron bought a 5% stake in RPL in 2006. It had the option to increase it to 29% before July 2009, and the speculation was that the merger would follow. The non-exercise of this option hastened RIL’s decision to fold its 70% subsidiary into itself.
Treasury stock
It could be cancelled to prevent equity dilution. RIL may also create an SPV to park the treasury shares and sell them or borrow against the stock later.
SEZ & EOU status
RPL and RIL will not lose SEZ and EOU status. They will remain as they are.
What are bankers saying
Banks say their single-borrower limit may be breached following the merger. Bank officials say they may have to ask RBI for a special dispensation.
What's in for investors
The market feels RPL shareholders will lose out. But the final position will depend on the swap ratio. The ratio could be between 17:1 (17 RPL shares for one RIL share) based on Friday’s closing prices and 24:1 derived from the book value. Analysts say it could be around 20:1. It also depends on whether the treasury stock is cancelled.
Why the merger?
RIL has traditionally set up large capital-intensive projects under new companies to ring-fence itself from project risk. This happened with the first Jamnagar refinery, also called Reliance Petroleum. Now that RPL is up and running, it doesn’t make sense to keep it separate.
Why now?
RIL has not issued any statement. There is speculation that RPL is sitting on inventory losses and may need balance sheet support from RIL. RPL enjoys a 7-year tax break while the export-oriented status of the first unit of the Jamnagar refinery, which is part of RIL, will expire soon.
Chevron link
Chevron bought a 5% stake in RPL in 2006. It had the option to increase it to 29% before July 2009, and the speculation was that the merger would follow. The non-exercise of this option hastened RIL’s decision to fold its 70% subsidiary into itself.
Treasury stock
It could be cancelled to prevent equity dilution. RIL may also create an SPV to park the treasury shares and sell them or borrow against the stock later.
SEZ & EOU status
RPL and RIL will not lose SEZ and EOU status. They will remain as they are.
What are bankers saying
Banks say their single-borrower limit may be breached following the merger. Bank officials say they may have to ask RBI for a special dispensation.
What's in for investors
The market feels RPL shareholders will lose out. But the final position will depend on the swap ratio. The ratio could be between 17:1 (17 RPL shares for one RIL share) based on Friday’s closing prices and 24:1 derived from the book value. Analysts say it could be around 20:1. It also depends on whether the treasury stock is cancelled.
Natco Pharma's request on ESOPs turned down by SEBI
27 Feb 2009, 1433 hrs IST, ET Bureau
MUMBAI: SEBI has turned down Natco Pharma's request to give cash to employees who are ready to forgo their entitlement of stock options
The origin of the case goes back to 2004 when Natco Pharma granted six lakh stock options to its employees at Rs 10 per share. At that time, the market price of the shares was Rs 140. Further, the options were to be vested in four equal instalments during the years 2006, 2007, 2008 and 2009.
However, due to the market downturn, the share price has fallen below Rs 50 and most of the employees of the company indicated that they would like to forgo their entitlement of options and would instead prefer equivalent cash. According to the company, it proposes paying cash at or more than the market value prevailing on the date due for exercise of the options.
Hence, in a letter dated January 6, Hyderabad-based Natco Pharma asked for a no-action letter from the Securities and Exchange Board of India. The market regulator, however, has opined that the company cannot pay cash equivalent to its employees as regulations clearly say that stock option scheme "essentially envisages allotment of shares to eligible employees by a listed company against exercise of employee stock options vested in such employees in terms of the ESOS".
The SEBI release, however, adds that the market regulator's stand is based on the representation made by Natco Pharma and that "different facts or conditions might require a different result". This letter does not express a decision of the board on the questions referred, it adds.
MUMBAI: SEBI has turned down Natco Pharma's request to give cash to employees who are ready to forgo their entitlement of stock options
The origin of the case goes back to 2004 when Natco Pharma granted six lakh stock options to its employees at Rs 10 per share. At that time, the market price of the shares was Rs 140. Further, the options were to be vested in four equal instalments during the years 2006, 2007, 2008 and 2009.
However, due to the market downturn, the share price has fallen below Rs 50 and most of the employees of the company indicated that they would like to forgo their entitlement of options and would instead prefer equivalent cash. According to the company, it proposes paying cash at or more than the market value prevailing on the date due for exercise of the options.
Hence, in a letter dated January 6, Hyderabad-based Natco Pharma asked for a no-action letter from the Securities and Exchange Board of India. The market regulator, however, has opined that the company cannot pay cash equivalent to its employees as regulations clearly say that stock option scheme "essentially envisages allotment of shares to eligible employees by a listed company against exercise of employee stock options vested in such employees in terms of the ESOS".
The SEBI release, however, adds that the market regulator's stand is based on the representation made by Natco Pharma and that "different facts or conditions might require a different result". This letter does not express a decision of the board on the questions referred, it adds.
India to miss 7.1% growth target in 2008-09 on disappointing Q3 figures of GDP
27 Feb 2009, 1800 hrs IST, ET Bureau
India is unlikely to achieve the 7.1% growth estimated by the government statisticians and other forecasters unless the economy experiences a sharp acceleration in economic activity in the January-March 2009. The economy would need to expand by 8.1%, at constant prices, in the fourth quarter of the current fiscal, from a year ago, to realise the growth projected for the whole fiscal year.
That, however, may be tough given the sluggish domestic and global conditions. Yet, the government continues to be sanguine about growth expectations for the full year. The impact of the three instalments of fiscal stimulus and likely rate cuts by the central bank
is expected to kick in during the fourth quarter.
The economy expanded at its slowest pace in nearly six years in September-December 2008 quarter, growing at 5.3% year-on-year, as manufacturing and exports contracted. While the three stimulus packages announced by the government (December 7, January 2 and February 24) is expected to help stimulate domestic demand for some goods, global conditions are not seen to improve until the end of the year. This would mean that exports in the final quarter too would remain depressed.
The surprise element in the third quarter GDP numbers was the sharp contraction in agriculture, down 2.2% from the same quarter a year ago. To some extent, the contraction can be explained as the base effect; farm output grew 6.9% in the same quarter last year. Economists expect this data for agricultural output may be revised upwards when revised estimates are released in July 2009.
The slower than expected growth in the third quarter becomes a matter of concern, as the second half of the fiscal year usually accounts for about 54% of the GDP. For the agriculture sector, the third quarter performance is the most important.
The Central Statistical Organisation (CSO) in its advance estimates for 2008-09, earlier this month, suggested that the Indian economy was set for a 7.1% expansion despite the contraction in industrial production and exports experienced over the past few months. In January, the Prime Minister’s Economic Advisory Council said it expected the economy to grow 7.1%, down from its earlier estimates of 7.8% made in July 2008.
via:E.T
India is unlikely to achieve the 7.1% growth estimated by the government statisticians and other forecasters unless the economy experiences a sharp acceleration in economic activity in the January-March 2009. The economy would need to expand by 8.1%, at constant prices, in the fourth quarter of the current fiscal, from a year ago, to realise the growth projected for the whole fiscal year.
That, however, may be tough given the sluggish domestic and global conditions. Yet, the government continues to be sanguine about growth expectations for the full year. The impact of the three instalments of fiscal stimulus and likely rate cuts by the central bank
is expected to kick in during the fourth quarter.
The economy expanded at its slowest pace in nearly six years in September-December 2008 quarter, growing at 5.3% year-on-year, as manufacturing and exports contracted. While the three stimulus packages announced by the government (December 7, January 2 and February 24) is expected to help stimulate domestic demand for some goods, global conditions are not seen to improve until the end of the year. This would mean that exports in the final quarter too would remain depressed.
The surprise element in the third quarter GDP numbers was the sharp contraction in agriculture, down 2.2% from the same quarter a year ago. To some extent, the contraction can be explained as the base effect; farm output grew 6.9% in the same quarter last year. Economists expect this data for agricultural output may be revised upwards when revised estimates are released in July 2009.
The slower than expected growth in the third quarter becomes a matter of concern, as the second half of the fiscal year usually accounts for about 54% of the GDP. For the agriculture sector, the third quarter performance is the most important.
The Central Statistical Organisation (CSO) in its advance estimates for 2008-09, earlier this month, suggested that the Indian economy was set for a 7.1% expansion despite the contraction in industrial production and exports experienced over the past few months. In January, the Prime Minister’s Economic Advisory Council said it expected the economy to grow 7.1%, down from its earlier estimates of 7.8% made in July 2008.
via:E.T
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