Indian Stock News by Experts

Flat opening likely

<DIV> It is better to know some of the questions than all of the answers. Can the bulls sustain the current tempo? That is the big question worrying most players at the moment after the recent spurt. While the main indices could advance a little more in the near term, investors are still skeptical about a sustained turnaround. That is because considerable amount of headwinds still persist, both on the local as well as global front. The US, Europe and Japan are most probably already in recession, and though the credit crunch has eased substantially, it will be a while before the global economy is back on track. India too remains vulnerable to a sharp slowdown despite the slew of measures unleashed by the Government and the RBI to arrest the slide. Not just FY09, a few economists see continued pain for the Indian economy in the coming fiscal year as well. India Inc. is now suffering from contraction in demand and difficulties in funding capex despite the RBI's liquidity-boosting steps. Among the positive events are the correction in commodity prices and a possible reversal of the interest rate cycle. The captains of Indian Industry are hoping for some more measures from the Government and the RBI, to help revive economic growth. While that may happen, the global downturn will continue to pinch in some ways or the other. There is also a question mark over the sustainability of the recent FII buying, notwithstanding some revival in the global risk appetite. Today, we expect the market to open on a flat to slightly higher note. There could be some softening at higher levels after the recent rally, as most Asian stock benchmarks (barring the Nikkei), are down sharply. The main US stock indices too ended almost unchanged overnight ahead of the Presidential Election on Nov. 4. European shares rose for a fifth consecutive session. FIIs were net buyers of Rs3.6bn (provisional) in the cash segment on Monday while the local institutions pulled out Rs970mn. In the F&O segment, the foreign funds were net buyers at Rs13.2bn. On Friday, FIIs were net buyers of Rs11.83bn in the cash segment. US stocks closed nearly flat on Monday, as automakers reported dismal monthly sales and a report showed that US manufacturing activity dropped sharply in October. Investors were cautious as the race for the White House neared the finish line. After marginal moves in either direction Monday, the Dow Jones Industrial Average fell by just 5 points to end at 9,319.83, with 16 of its 30 components posting losses. The S&P 500 Index shed 2 points to 966.31, while the Nasdaq Composite index added 5 points to 1,726.33. Market breadth was positive. But, volume was pretty thin, narrowly topping one billion on the New York Stock Exchange, with advancing stocks outpacing declining issues roughly 9 to 7. On the eve of Election Day, Democratic presidential candidate Barack Obama and Republican rival John McCain are making final appearances around the country, with polls consistently showing Obama ahead in the campaign for the White House. Pacing gains among the S&P's 10 industry groups were telecommunications shares. Retail shares were mixed ahead of sales reports due later in the week. Energy shares proved the biggest laggards. Lending rates continued to improve amid efforts of US and world governments to get money flowing again. Treasury prices rose, lowering the corresponding yields. Oil prices slipped and the dollar gained versus other major currencies. Meanwhile, slumping manufacturing and construction activity, and plunging auto sales, added to bets that a recession is already underway. In the afternoon, Dallas Federal Reserve Bank President Richard Fisher forecast that there will be no economic growth through 2009. Additionally, in the afternoon, the government said it will borrow a record $550bn in the fourth quarter and another $368bn in the first quarter of next year as it looks to fund the massive financial rescue plans recently put in place. A huge drop in October auto sales left the industry on track to post the worst monthly results in 25 years. GM reported a 45% decline in October sales, versus a year ago. Ford reported October sales plunged 30% versus a year ago. The dollar fell against the euro and gained against the yen. COMEX gold for January delivery climbed $8.60 to settle at $727.50 an ounce. Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.91% from 3.96% late on Friday. US light crude oil for December delivery fell $3.90 to settle at $63.91 a barrel on the New York Mercantile Exchange. Gasoline prices fell another 2.1 cents overnight, to a national average of $2.415 a gallon. Investors were playing it cautious ahead of Election Day. Analysts say investors will be glad to have the election over and to know that a change in administration is coming, regardless of whether Republican John McCain or Democrat Barack Obama wins. Although Wall Street would seem to prefer business-friendly Republicans, studies have shown that stocks tend to do better under Democratic presidents than Republicans and best during times of gridlock, when one party controls the White House and another the Congress. Across the Atlantic, European shares rose for a fifth consecutive session, as investors continued to welcome central banks' efforts to shore up sentiment. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 223.38. The French CAC-40 added 1.2% to 3,527.97, while Germany's DAX 30 advanced 0.8% to 5,026.84 and the UK's FTSE 100 closed up 1.5% at 4,443.28. Bulls started off November with a bang led by a rally in banking, realty and capital goods stocks. Further on, firm cues from the international equity markets coupled with the PM's assurance on growth initiatives also added to market sentiment. The upswing propelled the BSE benchmark Sensex above 10K levels to close at 10,337. While, the NSE Nifty index surged past the 3,000 mark adding 158 points to finally end at 3,043 levels. IDFC rallied by over 12% to Rs65 after reports stated that the company was in talks with GE Commercial Finance, to acquire about 35% stake in the latter's construction equipment finance business in India. The scrip touched an intra-day high of Rs67 and a low of Rs60 and recorded volumes of over 61,00,000 shares on BSE. PTC India surged by over 7% to Rs56 after reports stated that the company was looking at picking up stakes in power generation projects across the country. The scrip touched an intra-day high of Rs57 and a low of Rs54 and recorded volumes of over 5,00,000 shares on BSE. BEL advanced by 6% to Rs641 following reports that the company plans to set up its third central research laboratory at Hyderabad, which will focus on research in emerging technologies in the fields of opto-electronics and electronic warfare. The scrip touched an intra-day high of Rs645 and a low of Rs622 and recorded volumes of over 7,000 shares on BSE. Tata Chemicals gained by 5% to Rs166 after the company reported results for the second quarter ended 30 September, 2008. The revenue stood at Rs466.1mn with an increase of 169% yoy. The profit before tax has increased by 120% at Rs58.7mn. The scrip touched an intra-day high of Rs169 and a low of Rs161 and recorded volumes of over 3,00,000 shares on BSE. Shares of Jyoti Ltd surged by over 3% to Rs35 after reports stated that the company has entered into technology tie-ups with German and Dutch companies for its windmill project. The scrip touched an intra-day high of Rs38 and a low of Rs32 and recorded volumes of over 11,000 shares on BSE. Apollo Tyres advanced by over 2% to Rs24 after reports stated that the company would begin its operations in Europe by opening its first sales, marketing and technical office in Germany in January. The scrip touched an intra-day high of Rs25.2 and a low of Rs23.9 and recorded volumes of over 3,00,000 shares on BSE. Zylog Systems gained by 5% to Rs115 after reports stated that it would spend US$17.5mn for acquiring three overseas companies. The scrip touched an intra-day high of Rs118 and a low of Rs112 and recorded volumes of over 68,000 shares on BSE. Zee News gained by 2.5% to Rs38.7 after the company announced that it acquired 26% stake in Sky B, West Bengal, stated reports. The scrip touched an intra-day high of Rs40 and a low of Rs37 and recorded volumes of over 2,00,000 shares on BSE. Looking at Monday's rally, bulls might extend the gains atleast in the early trades. The fall in inflation and drop in crude prices may augur well for the time being but we still have to get some confidence. For the time being, avoid some fresh buying at higher levels in large quantities as we are yet to get clarity on the economy. </DIV>

Flat opening likely

It is better to know some of the questions than all of the answers. Can the bulls sustain the current tempo? That is the big question worrying most players at the moment a…

04 Nov 2008

Precious metals bring some glaze back

<DIV>Gold and silver prices rise after three sessions of drop After three sessions of loss, gold prices ended higher on Monday, 03 November, 2008. Traders anticipated that bullion metals are done with current low levels that they have attained in recent times. Silver prices also rose today. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Losses in equity markets had also forced traders to sell gold. Since past couple of weeks, precious metals, mainly gold, had dropped as traders tried to gain back some of the money that had lost in other markets. On Monday, Comex Gold for December delivery rose $8.6 (1.2%) to close at $726.8 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (30.5%) since then. Last week, gold prices ended lower by 1.6%. For the month of October, gold ended lower by 18%. It was the biggest percentage loss for gold since February, 1983. This year, gold prices have lost 12.7% till date. The dollar index has gained 13.5% this year and of that almost 8% in October, 2008 itself. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%. On Monday, Comex silver futures for December delivery rose by 2 cents (0.2%) to $9.75 an ounce. Last week, silver fell 1.9%. For the month of October, silver slipped by 20%. Till date, silver has lost 35% this year. Silver had ended month and quarter of September 2008 with a loss of 10%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa. In the currency market on Monday, the U.S. dollar posted broad-based gains against other major currencies rising both against the British pound and the euro ahead of key interest rate decisions in Europe due later this week. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, rose 1.3% to 86.35. On Monday, crude for December delivery closed at $63.91, lower by 5.8%. It gained 5.7% last week but ended 32.6% lower for the month of October, 2008. Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps. Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%. At the MCX, gold prices for December delivery closed lower by Rs 118 (1%) at Rs 11,614 per 10 grams. Prices rose to a high of Rs 11,777 per 10 grams and fell to a low of Rs 11,545 per 10 grams during the day's trading. At the MCX, silver prices for December delivery closed Rs 180 (1.06%) lower at Rs 16,768/Kg. Prices opened at Rs 17,100/kg and fell to a low of Rs 16,617/Kg during the day's trading. </DIV>

Precious metals bring some glaze back

Gold and silver prices rise after three sessions of dropAfter three sessions of loss, gold prices ended higher on Monday, 03 November, 2008. Traders anticipated that bullion…

04 Nov 2008

Crude plunges

<DIV><TR> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>Prices slip by almost 6% on demand concerns and firm dollar Crude prices ended with losses on Monday, 03 November, 2008. The firm dollar and the current global crisis were the main reasons behind the subdued crude prices. Today's weak economic data also added to this. On Monday, crude-oil futures for light sweet crude for December delivery closed at $63.91/barrel (higher by $3.9 or 5.8%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 57% since then. Last week, prices rose by 5.7%. On a yearly basis, crude price is lower by 33%. For this year in 2008, crude prices have dropped 35.2%. For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983. In the currency market on Monday, the U.S. dollar posted broad-based gains against other major currencies rising both against the British pound and the euro ahead of key interest rate decisions in Europe due later this week. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, rose 1.3% to 86.35. Among najor economic report for the day, the Institute of Supply Management (ISM) Index survey reported today, Monday, 03 November, 2008 that national manufacturing activity at US in October fell to the lowest level since 1982. Specifically, the ISM Manufacturing Index declined 4.6 to 38.9 in October, which was worse than the expected reading of 41.0. The number indicates contraction in manufacturing and the overall economy. Readings below 50% in the ISM diffusion index indicate that more firms are contracting than growing. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better or worse this month than last month. OPEC officials decided last month at its meeting at Vienna that OPEC will pare production by 1.5 million barrels a day w.e.f 1 November, 2008. The official production quota is currently 28.8 million barrels, and it cut by 1.5 million in November. Last week, the Centre for Global Energy Studies said that global oil demand may fall for the first time in 15 years in 2008 and stagnate next year. For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%. Against this background, December reformulated gasoline futures fell 13.3 cents to close at $1.3625 a gallon and December heating oil futures shed 10.1 cents to end at $1.9828 a gallon. December natural gas saw a modest gain by the close. It finished at $6.838 per million British thermal units, up 5.5 cents. At the MCX, crude oil for November delivery closed at Rs 3,167/barrel, lower by Rs 165 (4.95%) against previous day's close. Natural gas for November delivery closed at Rs 326/mmbtu, higher by Rs 5.2/mmbtu (1.6%). </TR></DIV>

Crude plunges

Prices slip by almost 6% on demand concerns and firm dollarCrude prices ended with losses on Monday, 03 November, 2008. The firm dollar and the current global cr…

04 Nov 2008

Winning streak continues

<DIV>The market continued to add to its value for the fourth consecutive session as firm Asian indices and strong buying in frontline stocks helped the sentiment remain bullish for the whole trading session. After accumulating over 1,300 points in the last three sessions, the Sensex opened marginally above its previous close and rallied sharply to touch an intra-day high of 10,373. While, the market remained well above 10,100 mark in the first half, it came off the high, as traders booked profits at higher levels. However, resumption of buying at lower levels in realty and capital goods (CG) stocks towards the close saw the Sensex recover from its lows. The Sensex finally ended the session with a gain of 550 points at 10,338, while Nifty added 158 points to close at 3,044. The market breadth was neutral. Of the 2,652 stocks traded on the BSE, 1,968 stocks advanced whereas 634 stocks declined. Fifty stocks ended unchanged. Among the sectoral indices, the BSE Realty jumped 8.29% followed by BSE CG (up 8.19%), BSE Bankex (up 7.51%) and BSE Power (up 6.14%). Most of the heavyweights ended with solid gains though some select frontline stocks closed with marginal losses. Among the blue chips, Reliance Infrastructure shot up by 17.15% at Rs535.10, DLF soared 14.89% at Rs253.05, JP Associates surged 13.36% at Rs81.45 and Ranbaxy Laboratories advanced by 12.33% at Rs190.35. State Bank of India (SBI) added 11.81% at Rs1,240.55, Tata Motors moved up 11.12% at Rs190.90 and Larsen & Toubro (L&T) scaled up 10.78% at Rs892.25. Among the laggards Satyam Computer Services fell 1.54% at Rs300.10 and Infosys Technologies slipped 0.23% at Rs1,378.50. Realty stocks shone in today's trades and closed with strong gains. Orbit Corporation vaulted 33.15% at Rs70.70, Peninsula Land soared 14.91% at Rs23.50, DLF surged 14.89% at Rs253.05 and Parsvnath Developers advanced by 11.59% at Rs45.25. Over 2.13 crore Reliance Natural Resources shares changed hands on the BSE followed by Suzlon Energy (1.54 crore shares), Cals Refineries (0.99 crore shares), GVK Power & Infrastructure (0.89 crore shares) and Unitech (0.87 crore shares). </DIV>

Winning streak continues

The market continued to add to its value for the fourth consecutive session as firm Asian indices and strong buying in frontline stocks helped the sentiment remain bullish f…

04 Nov 2008

RBI cuts CRR and repo rates

<DIV>After infusing Rs 1,85,000-crore liquidity into the banking system, the RBI on Saturday effected yet another 100 basis points cut in Cash Reserve Ratio (CRR) and a 0.5 percent reduction in key short-term lending (repo) rate, signaling softening of interest rates to prop up growth. The one percentage point cut in CRR, the amount which banks have to park with the apex bank, has been brought down to 5.5 percent to infuse additional liquidity of Rs 40,000 crore into the system. The CRR cut will be in two tranches and the first one of 0.5 percent will be effective retrospectively from October 25 and the second from November 8. The RBI also cut the repo rate, the rate at which it lends to banks, by 0.5 percent to 7.5 percent with effect from November 3. The central bank has also reduced the statutory liquidity ratio (SLR), the amount which banks are mandated to park in government securities, by 100 basis points to 24 percent. Welcoming the decision, ICICI Bank Joint Managing Director Chanda Kochhar said, "it will release much needed liquidity into the system and signal reduction in interest rates." The SLR cut would inject about Rs 40,000 crore into the banking system. To provide further comfort on liquidity and to impart flexibility in liquidity management to banks, the Central Bank has introduced a special refinance facility to scheduled commercial banks. Under this facility, the banks will be able to borrow short-term funds from Reserve Bank up to a maximum period of 90 days. The RBI also said that it would continue to sell foreign exchange (US dollars) through agent banks to augment supply in the domestic foreign exchange market or intervene directly to meet any demand-supply gaps. "The Reserve Bank would either sell the foreign exchange directly or advise the bank concerned to buy it in the market. All transactions by the Reserve Bank will be at prevailing market rates and as per market practice," the apex bank said. The apex bank, has also, "as a temporary measure" decided to permit systemically important non-deposit-taking non-banking financial companies (NBFCs-ND-SI) to raise short-term foreign currency borrowings under the approval route. This is, however, subject to their complying with the prudential norms on capital adequacy and exposure norms, it said. It has also decided to conduct buy-back of market stabilisation scheme (MSS) dated securities so as to provide another avenue for injecting liquidity of a more durable nature into the system. Earlier, under the MSS, government securities had been issued to sterilise the expansionary effects of forex inflows. But now, with considerable forex outflows, it has been decided to conduct buy-back of MSS dated securities, the RBI said. This would be calibrated with the market borrowing programme of the government and the securities proposed to be bought back and the timing and modalities of these operations would be notified separately, the RBI said. </DIV>

RBI cuts CRR and repo rates

After infusing Rs 1,85,000-crore liquidity into the banking system, the RBI on Saturday effected yet another 100 basis points cut in Cash Reserve Ratio (CRR) and a 0.5 perce…

02 Nov 2008

S&P says India outlook stable

<DIV>Standard & Poor's Ratings Services affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on the Republic of India. The outlook on the long-term rating remains stable. The ratings on India reflect the country's strong economic growth prospects and its deep government debt market, which helps accommodate its weak fiscal position. "India's economic prospects remain strong with growth likely to average more than 7.0% in the medium term," said Standard & Poor's credit analyst Takahira Ogawa. "Underpinning that growth is the gradual deregulation of the industrial sector, continued trade liberalization, a dynamic service sector, and modest improvements in infrastructure." "The ratings on India remain constrained by a weak fiscal profile, especially the high government debt burden and deficit, which are still among the largest for rated sovereigns," Mr. Ogawa said. Commitment to fiscal consolidation across all levels of government has been one of the supporting factors for the sovereign credit rating in the past several years. However, higher oil prices and populist measures for the coming general election have weakened the government's efforts in fiscal consolidation. The stable rating outlook balances India's good external liquidity and growth prospects with its weak fiscal flexibility. An improvement in the sovereign ratings will depend on resumed fiscal consolidation that leads to a materially lower debt and interest burden, and additional reforms that lift the country's growth prospects and income levels. On the other hand, further fiscal slippage, a marked decline in external liquidity indicators, or policy measures that weaken economic growth prospects, could lead to downward pressure on the ratings. The consolidated debt of India's central and state (general) governments is projected at 82% of 2008 GDP, while interest payments are likely to consume about 30% of general government revenue. India's contingent liabilities are also high. Government-guaranteed debt alone amounts to nearly 9% of 2007 GDP. </DIV>

S&P says India outlook stable

Standard & Poor's Ratings Services affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on the Republic of India. The outlook on the long-term rating …

02 Nov 2008

Shut the ... Govt to Assocham

<DIV>Taking strong exception to industry chamber Assocham's forecast that a quarter of people in certain key sectors will lose jobs in the next ten days, government on Friday said the economy is poised for the other way. "The Deputy Chairman of the Planning Commission and my colleague Jairam Ramesh (Minister of State for Commerce) have taken serious exceptions to an Assocham report... The pace of job creation may slow down but that doesn't mean that jobs are being destroyed," Finance Minister P Chidambaram told reporters here. The Minister further said another industry chamber FICCI too had contradicted the Assocham study, which had said that in the next ten days or so about 25 to 30 percent employees are likely to lose jobs in seven sectors including aviation, information technology, steel, financial services, real estate, cement and construction. Chidambaram further said that 7 percent growth rate, the lowest projection made by experts, would "create more job than was done in entire NDA regime, when the growth was only 5.8 percent. Why this question was not raised when the economy was growing at 5.3 percent?" Replying to questions on the recent report on slowing of the US economy, the Minister said, "when the world output slows down, the growth in developed countries slows down... it will have an indirect impact on India." However, he added, "the India economy is domestic consumption and investment driven economy. Exports will play a significant role but not as much as they do in China." Pointing out that at the moment it was difficult to estimate the impact of global economic slowdown on exports, Chidambaram said in April-August 2008-09 it grew by 35.1 percent though September showed a slight dip. "We will see as we go along... but we are not happy that any country's economy should contract. We want all countries' economies to grow," the Minister said adding India was not happy with slowing down in the US economy. "But it is there... that's a reality," he said. With regard to the inflation rate, which has come down to below 11 percent after four months, the Minister said, "let us hope the measures that we have taken will have an impact." The annual rate of inflation has come down to 10.68 percent for the week ending October 18. Replying questions on India's stand on G-20 meeting on global economy, Chidambaram said, "it is being formulated and hopefully we will be able to give some details in the next few days." Finance Minister earlier in the week held a meeting of experts, including RBI Governor D Subbarao, SEBI Chairman C B Bhave and former RBI Governors C Rangarajan and Bimal Jalan among others, to formulate the views on global financial crisis that India would take at the G-20 meeting called by US President George Bush in Washington on November 15. </DIV>

Shut the ... Govt to Assocham

Taking strong exception to industry chamber Assocham's forecast that a quarter of people in certain key sectors will lose jobs in the next ten days, government on Friday sai…

02 Nov 2008

Growth will fall, but no job cuts - PC

<DIV>The Indian economy would grow at 7 percent despite the global economic meltdown but this would not mean a reduction in existing job levels, Finance P Chidambaram said Friday. "The RBI (Reserve Bank of India) estimates that growth (in fiscal 2008-09) would be at 7 percent. I think it would be at 7.5 percent but definitely would not be lower than 7 percent," Chidambaram told reporters here. "Growth at 9 percent (as was originally anticipated) would signal rapid creation of jobs. Growth at a lower rate does not imply a destructive employment situation," the finance minister maintained. "It is for this reason that I disagree with a (industry lobby) Assocham (Associated Chambers of Commerce and Industry) study (saying that Indian corporates would cut jobs by 25 percent due to the global financial crisis)," Chidambaram said. "The pace of creating jobs might slow down, but even at 7 percent, jobs will be created," he added. Responding to a question on the impact of the crisis on India's exports, Chidambaram said he couldn't "elaborate" on this. Asked what India would bring to the table at the G-20 meeting US President George Bush has called in Washington next month to deal with the financial crisis, the finance minister replied: "We are formulating our response." </DIV>

Growth will fall, but no job cuts - PC

The Indian economy would grow at 7 percent despite the global economic meltdown but this would not mean a reduction in existing job levels, Finance P Chidambaram said Friday…

02 Nov 2008

Market spurts on rate cut by major global central banks

<DIV>Bulls tightened their grip as key benchmark indices spurted to hit new intraday high in late trade on rally in index heavyweights, Reliance Industries and ICICI Bank. The BSE Sensex was up 806.46 points or 8.92%. Earlier, weak European markets had pulled the Sensex sharply off the higher level after the barometer index had surged 814.74 points in mid-afternoon trade when it did a catch-up with a rally in global markets on Thursday, 30 October 2008, triggered by a rate cut by the US Federal Reserve. The Indian market was shut on Thursday, 30 October 2008, for a public holiday. A steady decline in inflation for the fifth successive week and reports that the government is considering more measures to pump in liquidity in the financial system added to the positive sentiment. Bank stocks spurted on fall in inflation. IT stocks jumped on rise in American depository receipts (ADR) overnight. The market breadth was strong indicating a broad-based buying. The wholesale price index (WPI)-based year-on-year inflation dropped to 10.68% in the week ended 18 October from 11.07% in the previous week. Following the steady decline in headline inflation, economists expect inflation to enter single digit domain by end-November 2008. European stocks fell as on concerns about the global economy weighed on investors. Key benchmark indices in France, Germany and UK were down by between 0.34% to 2.11%. Japan's Nikkei average dropped 5% after a lower-than-expected 20 basis points cut in interest rate announced by Bank of Japan today, 31 October 2008. Global markets had rallied on Thursday, 30 October 2008, after the US Federal Reserve cut its main policy rate to 1% on Wednesday, 29 October 2008, to stave off the credit crunch. China cut rates on Wednesday, 29 October 2008 with Taiwan and Hong Kong following up with rate cuts on Thursday, 30 October 2008. As per the provisional figures, the BSE 30-share Sensex was up 806.46 points or 8.92% to 9.850.97. The index jumped 825.91 points at the day's high of 9.870.42 in late trade. The Sensex rose 317.15 points at day's low of 9,361.66 in early trade. The S&P CNX Nifty was down 208.20 points or 7.72% to 2,905.25 as per the provisional figures. BSE clocked a turnover of Rs 3,699 crore today, 31 October 2008 as compared to a turnover of Rs 3,104.10 on 29 October 2008. The BSE Mid-Cap index was up 3.59% at 3,205.42 and the BSE Small-Cap index was up 2.63% at 3,771.11. Both the indices underperformed the Sensex. The market breadth was strong. On BSE, 1538 shares advanced as compared to 952 that declined. 70 shares remained unchanged. India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) surged 14.14% to Rs 1,374.90, after the petroleum ministry said the $4.20 per metric million British thermal units (mmBtu) price fixed by an empowered group of ministers for gas from Reliance Industries' KG-D6 was only for the purpose of valuation of government share and the selling price could be higher. Mahindra & Mahindra (up 23.33% to Rs 373), Jaiprakash Associates (up 15.82% to Rs 71.40) and Tata Power Company (up 11.93% to Rs 690) were from the major gainers from the Sensex pack. India's largest drug maker by sales Ranbaxy Laboratories fell 1.39% to Rs 170.45, off day's high of Rs 200 ahead of Q3 September2008 result today. Telecom stocks rose after mixed Q2 results. India's largest telecom service provider by sales Reliance Communications jumped 14.95% as net profit on consolidated basis, rose 17.33% to Rs 1530.78 crore on 23.29% rise in total income to Rs 5645 crore in Q2 September 2008 over Q2 September 2007. India's largest telecom service provider by market share Bharti Airtel rose 8.03% to Rs 664.70 despite a 0.9% fall in net profit to Rs 1604.78 crore on 35.6% rise in total income to Rs 8302.8 crore in Q2 September 2008 over Q2 September 2007. India's largest oil exploration firm by revenue ONGC rose 5.38% despite a 5.7% fall in net profit to Rs 4808 crore in Q2 September 2008 over Q2 September 2007 caused by a steep rise in the subsidy burden. India's largest real estate major by market capitalization DLF gained 4.16% ahead of Q2 September 2008 result today. Metal stocks shrugged off fall in metal prices on the London Metal Exchange yesterday, 30 October 2008 triggered by fears of fall in demand as the US economy shrank at a 0.3% annual rate in the third quarter, its sharpest contraction in seven years. Tata Steel, Steel Authority of India Hindustan Zinc, Sterlite Indusries rose by between 0.11% to 17.65%. India's largest aluminum maker by sales Hindalco Industries jumped 13.26% as net profit rose 12.04% to Rs 719.95 crore on 15.42% rise in total income to Rs 5,859.95 crore in Q2 September 2008 over Q2 September 2007. State-run aluminium major National Aluminium Company (Nalco) jumped 5.82% after net profit rose 1.07% to Rs 444.46 crore on 12.3% growth in total income to Rs 1654.50 crore in Q2 September 2008 over Q2 September 2007. Banking stocks jumped as the fifth successive week of decline in inflation has given more room for the central bank to cut rates. The BSE's banking sector index Bankex rose 7.51% and was the third biggest gainer form the sectoral indices on BSE. India's largest private sector bank by net profit ICICI Bank jumped 15.5% as ADR spurted 13.64% overnight. India's largest commercial bank State Bank of India rose 0.79%. India's second largest private sector bank by net profit HDFC Bank gained 8.29% to Rs 981 off day's high of Rs 1,059, as ADR soared 11.38% overnight. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively in the BSE Bankex. Punjab National Bank rose 3.42% on 31.3% rise in net profit to Rs 707.09 crore on 35.1% rise in total income to Rs 5313.18 crore in Q2 September 2008 over Q2 September 2007. Kotak Mahindra Bank lost 2.10% after net profit fell 36.50% to Rs 47.86 crore in Q2 September 2008 over Q2 September 2007. India's largest home loan lender by sales HDFC rose 11.81%. There is speculation and anticipation in the market that the Reserve Bank of India may cut cash reserve ratio (CRR) — the cash deposits that banks are required to keep with the central bank — by one percentage point from the existing 6.5% to 5.5%. IT stocks gained as rally in ADRs offset a stronger rupee. India's third largest IT exporter by sales Satyam Computer Services rose 5.05%, as ADR rose 7.61%. India's fourth largest IT exporter by sales Wipro rose 6.16%, as ADR jumped 7.78%. India's second largest IT exporter by sales Infosys gained 6.06%, as ADR jumped 4.98%. India's largest IT exporter by sales Tata Consultancy Services fell 0.93%. The Indian rupee crept higher in opening deals on Friday on expectations the local stock market will rise and help revive investor appetite. The partially convertible rupee was at 49.50 per dollar, 0.4% stronger than Wednesday's close of 49.69/70 per dollar. A stronger rupee affects IT firms negatively as they earn most of their revenues in dollar terms. India's largest commercial vehicle maker by sales Tata motors rose 9.11% despite a 34.1% fall in net profit to Rs 346.99 crore on 11.34% rise in total income to Rs 7508.13 crore in Q2 September 2008 over Q2 September 2007. MMTC rose 1.12% as net profit rose 24.98% to Rs 46.78 crore on 110.92% rise in total income to Rs 12497.23 crore in Q2 September 2008 over Q2 September 2007. Essar Oil surged 11.82% on posting a net profit of Rs 26 crore in Q2 September 2008 compared to a net loss of Rs 14 crore in Q2 September 2007. Kirloskar Electric Company rose 3.75% after the company decided to set up a manufacturing unit for AC motors and AC generators. IVRCL Infrastructure & Projects surged 5.86% as net profit rose 61.98% to Rs 57.10 crore in Q2 September 2008 over Q2 September 2007. While Japanese stocks tumbled, other Asian stocks were trading mixed today, 31 October 2008. Key benchmark indices in China, Singapore and Hong Kong, fell by between 0.66% to 3.09%. However, South Korea and Taiwan rose by between 2.61% to 3.99%. Oil prices dropped more than $1 a barrel to $64.55 on Friday, 31 October 2008, after data showed the US economy suffered its sharpest contraction in seven years in the third quarter, as consumers cut spending and businesses reduced investment. </DIV>

Market spurts on rate cut by major global central banks

Bulls tightened their grip as key benchmark indices spurted to hit new intraday high in late trade on rally in index heavyweights, Reliance Industries and ICICI Bank. The BS…

02 Nov 2008

Cautious guidance hammers US stocks

<DIV>Merck and Yahoo announce layoffs and Apple gives cautious guidance Stocks at Wall Street registered substantial loses for the second consecutive day on Wednesday, 22 October, 2008. The Dow ended the day with a 514 point drop today following yesterday's 237 point drop. Couple of companies that came out with earning reports announced job cuts on Wall Street today. Market had started the day in the red. Earning reports dominated overall market sentiments. While more companies beat expectations, outlooks, however, leaned negative as companies remained uncertain about the economic environment. All ten sectors posted a loss. The Dow Jones Industrial Average ended the day down by 514 points, to 8,519. The Nasdaq Composite Index, finished lower by 80 points at 1,615. S&P 500 finished lower by 58 points at 896.78. All thirty Dow stocks ended in the red led by Aloca. The stocks closed lower by 11%. Among the major companies that reported earnings today, and topped earnings estimates were Apple, McDonald's and Merck. Merck said that it plans to cut 7,200 jobs, or 13% of its workforce. AT&T and Boeing were two of the bigger names that missed earnings estimates. The technology sector witnessed lesser losses due to positive reactions to earnings reports from Apple and Yahoo!. Apple reported better-than-expected quarterly earnings due to strong iPhone sales. The company's outlook for its current quarter, however, was cautious and was well below the market estimates. On the other hand, Yahoo! reported in-line earnings, and the results were better-than-feared. Yahoo said it plans to cut 1,500 jobs, or 10% of its workforce. Crude prices fell today, and closed at the $65/barrel level for the first time in eighteen months. Prices fell due to a strong dollar and also after the Energy Department reported a more than expected build up in crude inventories for the week ended 17 October. Crude-oil futures for light sweet crude for December delivery closed at $66.75/barrel (lower by $5.45 or 7.5%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 55% since then. On a yearly basis, crude price is lower by 24%. For this year in 2008, crude prices have dropped 34%. In the currency market on Wednesday, the dollar soared against the euro and the British pound pressured by further fund repatriation and expectations that the European Central Bank and the Bank of England will move to aggressively cut interest rates in coming months. But the greenback slipped against the yen. The dollar index, a measure of the greenback against a trade-weighted basket of six major currencies, traded at 85.602, up from 84.434 on late Tuesday. Volume on the New York Stock Exchange topped 1.5 billion, and for every stock on the rise, six fell. On the Nasdaq, 1.1 billion shares traded, and decliners topped advancers, also by a 6-to-1 ratio. Initial jobless claims for the week ending 18 October are due ahead of the opening bell tomorrow. Other than that, earning reports will dominate the day once again. </DIV>

Cautious guidance hammers US stocks

Merck and Yahoo announce layoffs and Apple gives cautious guidanceStocks at Wall Street registered substantial loses for the second consecutive day on Wednesday, 22 October,…

23 Oct 2008

Daily News Roundup - Oct 23 2008

<DIV>Moody's lowers Tata Steel outlook to negative. (ET) NTPC plans to raise US$1bn to fund expansion plans. (ET) TVS Motors to reduce investment by 20% and cut production. (BS) Ashok Leyland to cut its vehicle output in second half of the current financial year. (BS) Jet, Kingfisher likely to reduce flight. (ET) Singapore based PE firm buys into HDIL and Indiabulls Real Estate. (ET) SAIL to set up steel processing units in Himachal Pradesh and Rajasthan. (DNA) DLF emerges as sole bidder for developing Mumbai rail land. (BL) Elder Pharma buys 3 small Bulgarian-based pharma companies. (ET) Areva T&D bags Bhilai Steel order worth Rs2.2bn. (BS) Tata Tele Services to roll-out services in J&K and North East region from November. (FE) JSW Steel and Georgian Steel Holding Group have closed US$28mn debt financing for setting up steel plant in Georgia. (DNA) Crompton Greaves is considering cutting down its capex budget for this year. (DNA) HOV services open facility in North California. (BS) DLF enter into an agreement with Italian apparel brand Alcott and Paris based SIA group to launch them in India. (ET) HDFC Bank opens a branch in Bahrain. (BS) Honda India and Hero Honda ventures to jointly source auto parts. (BL) LIC to launch credit card with Corporation Bank. (FE)Government may pump Rs30bn into 7 public sector banks to shore up their capital adequacy ratio to 12%. (BS) Government may miss FY09 budget targets for fiscal and revenue deficit. (ET) Government allows airlines to clear fuel dues owed to oil companies, totaling about Rs30bn in six EMIs. (ET) Indian Banks ask RBI to ease norms on reserve requirements. (ET) RBI eases norms on overseas borrowing for Indian companies. (ET) DoT faces 3G spectrum crunch in 9 other circles. (ET) Petroleum secretary says government has no immediate plans to cut fuel prices. (ET) SEBI plans to review direct market access facility rules. (ET) Government may import 100mn ton of coal to meet the projected demand in the 11th five year plan. (BS) DoT to meet defence ministry on Oct24 to discuss the issue on spectrum vacation. (DNA) Banks unlikely to extend credit support to airlines. (BL) </DIV>

Daily News Roundup - Oct 23 2008

Moody's lowers Tata Steel outlook to negative. (ET)NTPC plans to raise US$1bn to fund expansion plans. (ET)TVS Motors to reduce investment by 20% and cut production. (BS)As…

23 Oct 2008

Real Crisis for real estate employees

Real Crisis for real estate employees

DLF, Unitech, Omaxe, Parsvnath and BPTP plan to lay off staff in significant numbers soon after DiwaliDevelopers wait for Diwali to get over as they don't want to dampen sen…

23 Oct 2008

Asian markets shattered as wall street sinks deeper

<DIV>Shanghai, Hang Seng extend losses while Nikkei also enters the losers club with 6.7% fall The stock markets across the Asian region closed lower after Wall Street fell overnight on profit taking from recent sharp rises and recession fears following disappointing earnings reported by big name companies such as Dupont, Caterpillar, and Texas Instruments. The Dow Jones Industrial Average ended the day down by 231 points, to 9,033. The Nasdaq Composite Index finished lower by 73 points at 1,696. S&P 500 finished lower by 30 points at 955. Crude oil prices fell for a second day after the U.S. dollar climbed to a 20-month high against the euro, reducing the appeal of commodities as a hedge. Crude oil for December delivery declined as much as $3.28, or 4.5%, to $68.90 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $69.10 a barrel at 2:33 p.m. Singapore time. The November contract expired yesterday, after declining $3.36 to settle at $70.89 a barrel. Prices, which have tumbled 53 percent from the record $147.27 on July 11, are down 21 percent from a year ago. In currency trading, the U.S. dollar fell against the Japanese yen. The U.S. dollar fell to the mid 99-yen levels in late Tokyo deals from the lower 100-yen range in early trade and lower 101-yen levels late Tuesday in Tokyo. The Japanese yen also gained against the euro. The Australian dollar closed down 3.28% as ongoing fears about a global recession dragged commodity prices and high-yielding currencies lower. The Aussie finished the domestic session at US$0.6687-0.6692, down from Tuesday's close of US$0.6914-0.6919. The New Zealand dollar fell against the U.S. dollar ahead of the Reserve Bank of New Zealand's interest rate decision. The central bank is expected to cut the official cash rate by 100 basis points. The kiwi finished the domestic session at US$0.6020, down from US$0.6144 in early trade and US$0.6178 late Tuesday. The South Korean won fell 3.1% against the dollar. The won finished the session at 1,362.0-1,363.1 a dollar, after hitting a low of 1,399.9 a dollar, its weakest since October 10, compared to Tuesday's domestic close of 1,320.1 a dollar. The Philippines peso edged down to a new 18-month low against its US counterpart today morning in Asia. The peso plunged to 48.6650 against the US dollar, compared to yesterday's close of 48.1750. Coming back in equities, the Japanese stock market tumbled nearly 7%, ending its three-day winning streak. Worries about the grim outlook for Japanese firms' earnings and a stronger yen dented investor sentiment. The market opened lower following an overnight retreat on Wall Street, but Japanese stocks widened their losses in the afternoon on a flurry of bad news that aggravated fears about the global slowdown. The benchmark Nikkei 225 Stock Average plunged 631.56 points or 6.79% to end at 8,674.69, posting its biggest loss in a week, and the broader Topix index of all first-section issues lost 67.41 points or 7.05% to 889.23. On economic front, all industry activity index, which captures the monthly change in overall production by all industries of the Japanese economy, fell 1.8%. The indices of all industry activity except agriculture, forestry and fisheries declined 1.8% in August as compared to a 0.8% rise in July. Indices of Industrial Production plunged 4.1%, while indices of building work and indices of tertiary industry activity declined 2.4% and 1.4% respectively in the month of August as against the previous month. In Mainland China, the benchmark index closed sharply lower after some key companies reported weaker-than-expected quarterly earnings, heightening worries about the impact of the global slowdown. In addition to this yesterday, the Ministry of Finance and the State Administration of Taxation said in a joint statement that China will raise export rebates on textiles, toys and apparel and some other products next month to support exporters amid declining external demand. The Shanghai Composite Index finished lower for a second day, down 62.71 points or 3.20% to end at 1,895.82 while the Shenzhen A-share Index fell 8.84 points or 1.62 pct to 536.53. In Hong Kong, the Hang Seng Index struggled for a came back in the positive territory closing the day in negative territory. The benchmark index closed down by 5.15% at 14,266.50, while the Hang Seng China Enterprises Index slumped by 7.79% to 6,700.87. The Australian stock market plunged more than 3% on profit taking after posting sharp gains in the previous two trading sessions. The key S&P/ASX index lost most of the previous session's gains, led by BHP Billiton and Westfield. The benchmark S&P/ASX200 index closed down 146.4 points, or 3.4%, at 4,156.1, its lowest point for the day. The broader All Ordinaries index lost 131.4 points or 3.1% to 4,120.0. On the economic front, Australia's rate of inflation increased by more than expected in the third quarter. The Australian Bureau of Statistics reported that the country's Consumer Price Index for the three months to September increased 1.2% over the previous quarter. Annually, CPI grew to 5.0%. The New Zealand stock market closed sharply lower, ending a three-day winning streak. The benchmark NZX 50 index closed down 52.62 points or 1.78% at 2,899.40 after surging 2.15% on yesterday. The broader NZX All Capital index shed 40.21 points or 1.34% to 2,953.46. On the economic front, Statistics New Zealand reported that visitor arrivals in September dropped 7.0% to 157,700 from the 168,800 reported for September 2007. For the full year to September 2008, there were 2.469 million visitor arrivals, down 6,200 or less than 1% from the previous 12-month period. New Zealand resident departures were down 8.0% compared to September 2007. The South Korean stock market plunged more than 5% to a new three year-low on deepening economic fears, extending its modest losses registered yesterday. The benchmark Korea Composite Stock Price Index or Kospi closed down 61.51 points or 5.14% at 1,134.59 points, its lowest close since September 6, 2005. In intraday trading, the key index fell more than 8% to hit a low of 1,095.56. The Kospi has shed 22% over the month, and is down 40% from the year's high of 1,901 hit in mid-May. In Taiwan, Taiex - the benchmark index continued to remain below the key 5,000 points level breaching the previous five-year low level. The weighted index closed down 80.13 points or 1.62% at 4,862.59 - the lowest level since 11 June 2003 when it ended at 4,804.65 points. The market was distracted by fears that an anti-government demonstration planned by the opposition for Saturday could turn violent. On the economic front, Taiwan's unemployment rate was 4.27% in September, versus 4.14% in August and 3.99% in September 2007, the Directorate General of Budget, Accounting and Statistics (DGBAS) said. In the first nine months of the year, unemployment averaged 3.96%, versus 3.92% a year earlier. On a seasonally adjusted basis, the September unemployment rate was 4.12%, compared with 3.93% in August and 3.89% a year earlier. In Malaysia, the Kula Lumpur composite index was down by 13.88 points or 1.51% at 904.28. On economic front, the international reserves of Bank Negara Malaysia amounted to RM371.8 billion, equivalent to USD107.6 billion as on 15 October 2008, 2% down from RM379.3 billion as recorded on 30 September 2008. The reserves position is sufficient to finance 8.7 months of retained imports and is 4 times the short-term external debt. In India, the weakness prevailed on the regional bourses in mid-afternoon trade on declined in global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. At 15.20 IST the BSE Sensex was down 522.16 points or 4.86%. The S&P CNX Nifty was down 5.33% to 3,062.40. Elsewhere, the Philippines stock market tumbled 1.12% or 23.73 points to 2,093.01 while Singapore Strait Times was trading lower by 99.66 points or 5.19% trading at 1,821.13. In other regional markets, European shares fell with commodity-sector firms leading decliners as BHP Billiton added to growing evidence that the global economy continues to deteriorate. The U.K. FTSE 100 index fell 1.9% to 4,150.07, the German DAX 30 index dropped 2.5% to 4,662.77 and the French CAC-40 index slid 2.5% to 3,389.53. </DIV>

Asian markets shattered as wall street sinks deeper

Shanghai, Hang Seng extend losses while Nikkei also enters the losers club with 6.7% fallThe stock markets across the Asian region closed lower after Wall Street fell overni…

23 Oct 2008

Market tumbles as Asian stocks slump on global recession worries

<DIV>The market gave away a large part of the last two days' gains on weak global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. The BSE Sensex slumped 513.49 points or 4.81%. Though in the red, both the both the BSE Mid-Cap and Small-Cap indices outperformed the Sensex. Index heavyweight Reliance Industries fell more than 5.5%. Tata Steel fell more than 12% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. Sterlite Industries fell more than 10%. The market breadth was weak. IT stocks fell on Wipro's cautious outlook at the time of announcing Q2 results before trading hours. Metal stocks declined sharply on weak global metal prices. Banking stocks fell in weak market after recent gains triggered by the central bank's repo rate cut. Down 6.79%, Japanese stocks led decline in Asian equities as poor US corporate results and falling commodity prices fanned worries of a protracted global economic slowdown. Stocks in Hong, China, Singapore, South Korea and Taiwan were down by bewteen 1.62% to 5.07%. European markets which opened after Indian market, fell on global recession worries. Key benchmark indices in France, Germany and UK fell by between 3.51% to 3.69%. Trading in US index futures suggested the Dow would fall 185 points at the opening bell. The BSE 30-share Sensex lost 513.49 points or 4.81% to 10,169.90. The Sensex fell 555.17 points at day's low of 10,128.22 in late trade. The index declined 198.84 points at the day's high of 10,484.85 in early trade. The S&P CNX Nifty was down 169.75 points or 5.25% to 3,065.15. After an earlier steep slide, the Sensex had risen 708.04 points or 7.09% in two trading sessions to 10,683.39 on Tuesday, 21 October 2008, from its close of 9,975.35 on 17 October 2008, boosted by a repo rate cut by the central bank and on short covering on the stock market regulator's warning to foreign funds against overseas lending of shares. There has been a massive erosion in investors' wealth this year. The barometer index is down 10,117.09 points or 49.86% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,036.87 points or 52.04% below its all-time high of 21,206.77 struck on 10 January 2008. BSE clocked a turnover of Rs 3,087 crore today as compared to a turnover of Rs 3,882.49 crore on 21 October 2008. Nifty October 2008 futures were at 3051, at a discount of 14.15 points as compared to spot closing of 3065.15. NSE's futures & options (F&O) segment turnover was Rs 50,046.83 crore, which was higher than Rs 49,845.05 crore on Tuesday, 21 October 2008. The BSE Mid-Cap index was down 2.7% at 3,490.39 and the BSE Small-Cap index was down 2.02% at 4,111.67. Both the indices outperformed the Sensex. BSE Metal index (down 7.9% to 5,619.45), BSE Realty index (down 7.57% to 2,433.70), BSE Bankex (down 5.78% to 5,504.48), BSE Oil & Gas index (down 5.56% to 6,397.58), BSE Teck index (down 5.37% to 2,160.07) underperformed the Sensex. BSE FMCG index (up 0.62% to 1,969.56), BSE HealthCare index (down 3.16 % to 3,199.32), BSE Consumer Durables index (down 3.63% to 2,189.33), BSE IT index (down .4.01% to 2,790.27), BSE PSU index (down 4.22% to 5,046.33), BSE Power index (down 4.27% to 1,676.62), BSE Auto index (down 4.42% to 2,985.16), BSE Capital Goods index (down 4.45% to 7,226.93), underperformed the Sensex. The market breadth was weak. On BSE, 778 shares advanced as compared to 1733 that declined. 77 shares remained unchanged. India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 5.83% to Rs 1,315.55, ahead of Q2 September 2008 result tomorrow, 23 October 2008. The Bombay High Court, on Tuesday, 21 October 2008, allowed the central government to implead itself in the RIL-Reliance Natural Resources (RNRL) case on gas supply after RNRL said it had no problem to the government being a party in the matter. The hearing of the case is now likely to continue after Diwali vacation. Jaiprakash Associates (down 7.88% to Rs 72.50), ACC (down 7.11% to Rs 452.15), Larsen & Toubro (down 5.34% to Rs 815.15) were the major losers from the Sensex pack. Reliance Infrastructure fell 6.56% despite 15.5% rise in net profit to Rs 288.97 crore on 51.11% rise in total income to Rs 2674.86 crore in Q2 September 2008 over Q2 September 2007. Metal stocks declined on slump in metal prices on the London Metal Exchange. The BSE Metal index was down 7.9% and was the major loser from the sectoral indices on BSE. Sterlite Industries, Hindustan Zinc, National Aluminum Company, Steel Authority of India and Tata Steel fell by between 7.13% to 10.04%. India's largest steel maker by sales Tata Steel fell 12.04% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes. Tata Steel, will declare Q2 September 2008 results on 24 October 2008. India's largest aluminum maker by sales Hindalco Industries skidded 5.67% reports it may sell a part of its Rs 2,081.34-crore stake in group companies, including Grasim Industries, Idea Cellular and Aditya Birla Nuvo, to raise funds to repay a part of the $3-billion bridge loan it obtained to buy Novelis. Telecom stocks fell on reports telecom firms may have to shell out Rs 6,000 crore for failing to verify their customers. India's largest telecom services provider by market share Bharti Airtel fell more than 7.5%. India's second largest telecom services provider by market capitalisation Reliance Communications fell more than 8.5%. The government on Monday, 20 October 2008, announced that it would impose a fine of Rs 1,000 for every unverified subscriber. Banking majors fell after recent gains on hopes lower rates will boost lending. ICICI Bank, HDFC Bank and State Bank of India fell by between 3.64% to 8.04%. The BSE's banking sector index Bankex declined 5.57%. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively, in the Bankex. Yes Bank was almost fell 2.92% in an otherwise weak market, as net profit jumped 40.50% to Rs 63.62 crore in Q2 September 2008 over Q2 September 2008. Bank of India declined 6.41% after providing for Rs 108.60 crore on account of exposure to troubled US investment bank Lehman Brothers, in Q2 September 2008. Power Finance Corporation fell 0.09% even on 16.70%rise in net profit to Rs 329.33 crore in Q2 September 2008 over Q2 September 2007. The Reserve Bank of India cut repo rate by 100 basis points to 8% on 20 October 2008. The repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days. IT stocks slumped on overnight fall in American depository receipts (ADRs) and on cautious outlook by IT major Wipro. Weak rupee which augurs well for the sector did not stem the slide. The BSE IT index fell 4.37%. India's fourth largest IT exporter by sales Wipro fell 5.79% after it said the outlook is cautious in the near term given the extent of strain on the global economy. Wipro ADR fell 2.87% on Tuesday, 21 October 2008, ahead of the results. Wipro reported 56.13% spurt in net profit to Rs 852.50 crore on a 15.48% increase in total income to Rs 5551.60 crore in Q2 September 2008 over Q1 June 2008. India's third largest IT exporter by sales Satyam Computer Services lost 2.93%. Its ADR skidded 1.63% overnight. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008. India's second largest IT exporter by sales Infosys fell 3.56%. Infosys ADR lost 5.21% overnight. India's largest IT services provider by sales Tata Consultancy Services lost 2.63%, ahead of Q2 results today. Infosys, Satyam Computer Services, Tata Consultancy Service and Wipro have a weightage of 55.06%, 16.01%, 10.45% and 7.09%, respectively, in the BSE IT index. Tech Mahindra rose 1.3% as net profit rose 16.36% to Rs 295.98 crore in Q2 September 2008 over Q1 June 2008. Compucom Software surged 4.93%, on proposal to consider issue of bonus shares. Geodesic rose 2.93% as net profit jumped 23.54% to Rs 48.95 in Q2 September 2008 over Q1 June 2008. Educomp Solutions tumbled 11.47% on BSE, on profit taking, as net profit soared 51.40% to Rs 25.39 crore in Q2 September 2008 over Q1 June 2008. The rupee weakened to a record low against the dollar on Wednesday as losses in the stock market fuelled concerns more foreigners would likely pare their risk exposure and repatriate investments. At the Interbank foreign exchange (Forex) market, the rupee, which ended steady at 49.00/49.01 yesterday, fell by 25 paise to 49.25 against the greenback. PSU OMCs fell despite crude oil falling nearly $3 to hit a one-week low below $70 a barrel and extending a 4% slide in the previous session, on mounting worries that output cuts by Organisation of Petroleum Exporting Countries (OPEC) will not be enough to offset slackening energy demand. BPCL, HPCL and Indian Oil Corporation fell by between 2.09% to 8.15%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price Bongaigaon Refinery & Petrochemicals slumped 7.23%, on slipping into the red in Q2 September 2008 Most realty stocks declined today after yesterday's rise despite hopes cut in lending rates will spur demand for residential properties. The BSE Realty index fell 7.57% and was the second major loser from the sectoral indices on BSE. Realty majors, DLF, Indiabulls Real Estate Unitech fell by between 5.05% to 12.75%. BSE FMCG index rose 1.26% and was the only gainer from the sectoral indices on BSE. United Spirits, Hindustan Unilever and REI Agro rose by between 0.05% to 5.08%. India's largest cigarette maker by sales ITC rose 3.05%. The company will announce the Q2 September 2008 result on 24 October 2008. Rate sensitive auto stocks fell despite hopes rate cuts would spur auto demand which is largely driven by finance. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors declined between 1.95% to 7.14%. India's largest commercial vehicle maker by sales Tata Motors declined 4.94% on reports of missing its original Nano rollout deadline of October-December 2008. Ashapura Minechem dropped 19.7% on reports the company faces three lawsuits in New York federal court seeking a total of more than $47 million. Reliance Natural Resources declined 3.43% on BSE on muted growth in net profit in Q2 September 2008. Kirloskar Brothers jumped 7.41% on its consortium winning an order worth Rs 1446 crore, with the company's share pegged at Rs 270 crore. Pantaloon Retail India gained 0.07% as net profit surged 21.90% to Rs 36.18 crore in Q1 September 2008 over Q1 September 2007. Champagne Indage was locked at lower limit of 5%, a 52-week low on plan to raise up to Rs 120 crore. Max India provisionally ended down 6.57% as net profit declined 30.67% to Rs 11.73 crore in Q2 September 2008 over Q2 September 2007. Piramal Healthcare fell 7.57% as net profit fell 14.2% to Rs 69.44 crore on 19.7% rise in total income to Rs 636.9 crore in Q2 September 2008 over Q2 September 2007. Housing Development & Infrastructure clocked the highest volume of 99.89 lakh shares on BSE. Chambal Fertilisers & Chemicals (79.51 lakh shares), IFCI (65.13 lakh shares), Reliance Petroleum (61.34 lakh shares), Reliance Natural Resources (59.23 lakh shares) were the other volume toppers in that order. Reliance Industries clocked the highest turnover of Rs 189.32 crore on BSE. Reliance Capital (Rs 169.53 crore), ICICI Bank (Rs 149.63 crore), Housing Development & Infrastructure (Rs 148.64 crore) and State Bank of India (Rs 135.48 crore) were the other turnover toppers in that order </DIV>

Market tumbles as Asian stocks slump on global recession worries

The market gave away a large part of the last two days' gains on weak global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. The BSE Sense…

23 Oct 2008

A Bad year for IPOs

<DIV>Even as late as June this year, investors in initial public offers (IPOs) continued to be better off than those who dabbled in the secondary market. Smaller IPOs continued to deliver good listing gains, even while selecting stocks in the secondary market became a much more difficult proposition. But the vicious downswing in the market over the past three months has well and truly blown the froth off the IPO market. Not just the new ones, but even ones that were listed over the past year have all plunged below their offer price. Seventy-six of the 83 IPOs that listed between March 2007 and March 2008 are now available below their offer price. Here are the lessons from those 83 IPOs (recent ones were excluded as the time window would be insufficient to draw conclusions). Of the total 96 initial public offers in the period, 13 were withdrawn. The remaining 83 IPOs were considered for this analysis. For performance study, price movement from the listing date to October 15 was considered. Should have sold on first day One common lesson for investors from IPOs in this period is that, irrespective of the quality of the issuer, you would have fared better had you booked gains on the listing day. Holding these stocks in expectation of better gains in the secondary market would have resulted in sharp erosion in value. Fifty-two of the 83 stocks that debuted in the period closed in the green on listing day. Of these, 22 listed at a price which clocked a 50 per cent gain over their issue price. However, of the 83 stocks only one (Allied Digital) currently trades at a price higher than its listing price; all others have fallen from their Day One prices. On the other hand, of those that had a bad listing, only three — Koutons Retail, Page Industries and Bang Overseas — made gains in the days following listing. The wait was not worth it for the others. If stocks gave away much of the gains made on listing, a good number of them also plunged below their issue prices. As many as 76 IPO stocks are trading below their offer price now. When it comes to the extent of losses, the quality of the business didn't matter much — IPOs from quality businesses, such as BGR Energy, Transformers and Rectifiers and Edelweiss Capital, were among the worst performers — their prices beaten down by over 70 per cent. The extent of decline in stock prices shows that the pricing for IPOs in a bull market tends to factor in premium valuations and probably assume best scenarios for these businesses, resulting in high downside risk. Better bet than listed peers Would investors have been better off picking stocks from the secondary market as compared to the IPO? The answer is still 'no'. Though IPOs have put up a dismal performance, they have still fared marginally better than peers from the same sector in the secondary market. A study of 30 prominent IPOs in this period suggests that newly listed stocks fared better than their listed peers since their offer date. Of the 30 IPOs, 18 recorded a lower percentage fall than a listed peer from the same sector, from the time of their offer. In fact, select stocks such as Maytas Infra (up 22 per cent) and Religare Enterprises (up 76 per cent) actually delivered hefty gains from their offer price, even as listed companies from the sector fell sharply. Nagarjuna Construction (down 79 per cent) and Geojit Financial Services (down 47 per cent), loosely comparable to the above, declined sharply over the same period. But do note that it is only the listing gains that have ensured better performance from the debutants. Religare Enterprises, a financial services firm focussed on broking services, was sold at Rs 185 in its IPO. But on the day of listing, the stock closed at Rs 525.30, a straight 183 per cent gain. In one year from the month it listed (October 2007), the stock lost nearly 38 per cent, but the gains made on listing are still holding the stock above its issue price. This further supports the logic for selling stocks on the day of listing. Maytas Infra, Power Grid Corporation, Everonn Systems, Allied Digital Services and ICRA are the other stocks that held on to gains over their offer price, thanks to strong listing performance. So, if you were to make a decision on the day of the offer, the IPO would have been the better buy. But if you were to look for secondary market options, an older peer would have been a better buy than a newly listed stock. The subscription figures delude As in the preceding year, overwhelming response to an IPO was no guarantee of the stock's performance. Of the IPOs in this period, Everonn Systems was in the top place, over-subscribed 145.5 times, followed by Future Capital (131.79 times), Mundra Port and SEZ (115.32 times) and BGR Energy (115.13 times). However, from the date of listing to now (October 15), Everonn Systems has fallen by 55 per cent, Future Capital by 77 per cent, Mundra Port and SEZ by 60 per cent and BGR Energy by 81 per cent. The best performing IPO — Allied Digital Services — was subscribed by a little over 59 times and Indian Bank, another good performer, by 32 times. No sector orientation Last year's IPO returns numbers showed a distinct trend, with those from financial services, software and infrastructure faring relatively well. But this year's performance tally shows no sector-specific trend in the returns. In every sector an equal number of IPOs performed better than their listed peers as those that did worse. The stocks that topped the listing gains list were Everonn Systems, Vishal Retail, Religare Enterprises, Nitin Fire and Mundra Port, hailing from diverse sectors. But the common thread that ran through them all was the time of their debut. All these stocks were listed between June and December last year, a period when the Sensex rallied from 14K to 20K levels. And of all the IPOs, only seven are still holding above their issue price — Religare Enterprises, Maytas Infra, Koutons Retail, Everonn Systems, Time Technoplast, ICRA and Page Industries. Again, all of them listed between March and December 2007. The performance of the IPOs was thus a function of market conditions at the time of the offer, more than company-specific or sector-specific factors. Of the 17 stocks that listed in the choppy markets between January and March this year only Bang Overseas is still in the green (up 54 per cent from the issue price). However, at current levels a few of them are really attractive 'buys' — Maytas Infra, Consolidated Construction Consortium, Mundra SEZ, Onmobile Global and MindTree Consultancy. Given the change in the earnings outlook, the ones in the financial sector are better avoided as concerns over the financial turmoil in broader markets persist. Clearly this has been a bad year for greenhorns, whether they were investors or companies seeking to make a debut in the market! </DIV>

A Bad year for IPOs

Even as late as June this year, investors in initial public offers (IPOs) continued to be better off than those who dabbled in the secondary market. Smaller IPOs continued t…

19 Oct 2008

Global markets recover, but worst may not be over

<DIV>Global stock markets were quite volatile this week, and the bias remained negative, as investors continued to be skeptical of the series of measures taken to shore up the banking system and unclog the credit markets. Sure, the money market rates did improve from last week, but still remained much above the levels just before the Lehman Brothers' bankruptcy filing. Also, the logjam in credit markets put several large scale M&A deals in jeopardy. On the whole though, this week was much better after last week's carnage, which was one of the worst ever for the global equity markets. Britain led the way this week's government initiatives to lift troubled banks out of a deep hole, unlock the credit markets and stop the bloodletting in stocks. The UK unveiled a plan partially to nationalise some of its biggest banks. £20bn (US$35bn) of public money will be injected into Royal Bank of Scotland and £17bn into HBOS and Lloyds TSB (which have announced a merger) in return for substantial stakes - around 60% in RBS and 40% in Lloyds TSB-HBOS. The US followed suit by providing US$250bn for bank recapitalisation; half of which will go to nine banks, including Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley. In return, the government will get non-voting preference shares that pay a 5% dividend, rising to 9% after five years. In a sign of growing tensions among policymakers, Sheila Bair, head of the US Federal Deposit Insurance Corporation, criticised the $700bn rescue package for banks for not doing more to help homeowners avoid foreclosure. Germany said it would guarantee bank debt to the tune of €400bn (US$540bn) and supply an extra €100bn to stabilise financial markets; France unveiled a €360bn package of measures, including €40bn of capital funding for banks; and the Netherlands guaranteed €200bn in interbank lending. Austria, Italy, Spain and others also produced proposals. UBS also got a bail-out. The Swiss government took a 9% stake in the bank and created a fund that allows UBS to offload US$60bn in toxic assets. Credit Suisse said that it won't follow compatriot UBS in transferring bad assets to a mostly Swiss National Bank-funded entity. However, it increased its Tier 1 capital base to 13.7% from 10.4% by raising 10 billion Swiss francs of new capital from major investors, including a subsidiary of the Qatar Investment Authority. The Bank of Japan held an emergency meeting and decided to loosen up companies' access to cash. Hong Kong provided a blanket guarantee on all bank deposits. And Australia introduced a stimulus bill to boost the economy, including funding for first-time homebuyers. South Korea's policy makers held an emergency summit, seeking steps to restore confidence after shares plunged to a three-year low and the won declined by the most since the 1997 Asian crisis. The United Arab Emirates (UAE) pledged an extra US$19bn for its banks. Qatar said it would take stakes of up to 20% in banks so that they could continue to fund regional infrastructure projects. Some questioned whether the Gulf states' sovereign-wealth funds still had an appetite to invest abroad, a lifeline to many earlier in the credit crunch. Concerted efforts by governments around the world to unfreeze the short-term credit markets started to bear some fruit. The cost of borrowing dollars in London for three months was headed for a weekly decline, the first one since July, after central banks injected billions of dollars into money markets and governments guaranteed loans. Money-market rates jumped after Lehman Brothers went bankrupt on Sept. 15. The dollar rate will drop about 10 basis points to 4.4% on Friday. It was 4.82% a week ago. Global money market rates fell this week after central banks joined forces to offer lenders an unlimited supply of dollars and the ECB did the same with euros. Still, lending costs among banks remain near record highs relative to the Federal Reserve's benchmark rate of 1.5%. Meanwhile, European leaders called for an overhaul of the global financial system to avert another major crisis. Europe demanded a global summit to discuss the creation of a new form of capitalism, based on moral values, and the effective regulation and supervision of all corners of the financial world, including hedge funds and rating agencies. The proposed global summit has been described as the starting point for a new "Bretton Woods", the 1944 meeting of Western leaders that led to the foundation of the World Bank and the IMF. It would probably happen in November or December. Britain's prime minister, Gordon Brown, said the world needs more transparency, integrity and systems of global governance. He wants to see cross-border colleges of national supervisors to assume oversight of the 30 largest financial institutions in the world, by the end of the year, and to see the IMF become an early warning system for problems looming in the world economy. </DIV>

Global markets recover, but worst may not be over

Global stock markets were quite volatile this week, and the bias remained negative, as investors continued to be skeptical of the series of measures taken to shore up the ba…

19 Oct 2008

Nifty October 2008 futures below 3100

Nifty October 2008 futures below 3100

Turnover dropsNifty October 2008 futures were at 3068, at a discount of 6.35 points as compared to spot closing of 3074.35. NSE's futures & options (F&O) segment turnover wa…

19 Oct 2008

RBI policy review, global markets to dictate trend

<DIV>Concerns about a global recession may continue to weigh on the domestic bourses which have tumbled in a global equities rout in the past few days. Lack of buying support has accentuated the decline on the bourses Foreign institutional investors (FIIs) continue to press sales. They have sold shares worth Rs 46,661.20 crore in the calendar year 2008 so far (till 16 October 2008). Investors now await the mid-term monetary policy review by the Reserve Bank of India (RBI) due on 24 October 2008. Some reports suggest that RBI is set to cut the repo (repurchase) rate by a steep 50 basis points, to signal a strong shift in policy focus to growth from inflation. Repo rate is the rate at which RBI provides funds to banks against the collateral of government bonds for a day to three days. On the inflation front, experts feel that the wholesale price index is expected to move downward, and will eventually come down to single-digit numbers by January 2009. Inflation based on the whole price index rose 11.44% in year through 4 October 2008, lower than previous week's 11.8% rise, data released on 16 October 2008, showed. Index bellwether Reliance Industries (RIL) will declare its Q2 September 2008 results on 23 October 2008. According per media reports, RIL's gross refining margins, or GRMs, are expected to decline significantly in Q2. As per research report published by foreign brokerage houses, RIL may report a 4.3% fall in its gross refining margins (GRM) to $13 per barrel in Q2 September 2008 over Q2 September 2007. The GRM is the difference between the selling price of the finished products and raw material cost. Reliance Industries has 13.64% weightage in Sensex and therefore any sharp fall in the stock may drag the key indices further lower. Other September 2008 quarter results due next week include Jaiprakash Associates, Reliance Natural Resources, Reliance Petroleum, Idea Cellular, Jet Airways (India), MIC Electronics, Chambal Fertilisers & Chemicals, MRF, Pantaloon Retail (India), Federal Bank, Allahabad Bank, Bank of Rajasthan, Rolta India, United Phosphorus, Titan Industries, Ashok Leyland, Chennai Petroleum Corporation, Emami, Finolex Industries, Geodesic, Hero Honda Motors, Hindustan Motors, Hindustan Zinc, Indiabulls Securities, and Marico, among other will declare their September ended quarter results next week. </DIV>

RBI policy review, global markets to dictate trend

Concerns about a global recession may continue to weigh on the domestic bourses which have tumbled in a global equities rout in the past few days. Lack of buying support has…

19 Oct 2008

Inflation coming down slightly

<DIV><TR> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>India's inflation, based on the wholesale price index (WPI), slowed to a 15-week low towards the end of September, as prices either declined or remained stable, the Government said. The annual point-to-point inflation stood at 11.8% in the week ended September 27 as against 11.99% in the previous week, the Commerce & Industry said in a statement. The rate was below a median forecast of 11.98%. The annual inflation rate was 3.36% during the corresponding week of the previous year. The WPI for 'all commodities' declined by 0.1% to 240.7 from 241.0 in the previous week. Inflation for the week ended Aug. 2 was revised up to 12.91% from a provisional estimate of 12.44% while the WPI for the same period was increased to 241.4 from the preliminary forecast of 240.4. The index for Primary Articles group declined by 0.2% to 250.9 from 251.3 in the preceding week, while the annual point-to-point inflation declined to 11.17% from 11.29% reported in the previous week. The index for Fuel & Power group remained unchanged at its previous week's level of 375.3. The rate of inflation remained unchanged at 16.52% for this commodity group. The index for Manufactured Products declined by 0.1% to 207.2 from 207.5 in the previous week. The rate of inflation declined to 10.33% from 10.55% in the previous week. Inflation for 30 essential commodities increased marginally to 7.74% in the week ending September 27 from 7.7% in the previous week. </TR></DIV>

Inflation coming down slightly

India's inflation, based on the wholesale price index (WPI), slowed to a 15-week low towards the end of September, as prices either declined or remained stable, …

13 Oct 2008

Industrial output plummets in August

Industrial output plummets in August

The turmoil in the global financial markets now seems to have started affecting the Indian economy in a really bad way. India's industrial production plunged to its worst le…

13 Oct 2008

Expect global slowdown - IMF

<DIV>The world economy is decelerating quickly—buffeted by an extraordinary financial shock and by still-high energy and commodity prices—and many advanced economies are close to or moving into recession, the IMF says in its latest World Economic Outlook (WEO). The October 2008 report which was released two days prior to the IMF-World Bank Annual Meetings in Washington, said that growth in emerging economies is also weakening after years of strong growth, though it will still drive global growth. Speaking at the WEO press conference, IMF Chief Economist Olivier Blanchard emphasized the importance of implementing joint financial and macroeconomic policies at this point "to stem the negative momentum on multiple fronts." On the financial side, "this implies the design of comprehensive programs to deal with systemic problems," while on the macroeconomic side, "this implies the use of monetary and fiscal policies to support growth and break negative feedback loops between the financial and real sectors," he said. "With the right macro and financial policies—and these policies are available—we ca </DIV>

Expect global slowdown - IMF

The world economy is decelerating quickly—buffeted by an extraordinary financial shock and by still-high energy and commodity prices—and many advanced economies are close to…

13 Oct 2008

Global markets continue to singe...

<DIV>The mayhem in global markets continued this week, as the financial contagion deepened in Europe, and even spread to Japan later in the week. Equity markets across the globe plunged badly amid mounting fears that the worst financial crisis since the Great Depression would result in a prolonged and painful global recession. The incessant carnage prompted governments and regulators to take more emergency steps to try and stop the bloodshed. But, all the efforts yielded little results, as the MSCI World Index suffered its worst week in more than three decades. The Nikkei in Japan lost a fourth of its value while the Hang Seng dropped 16%. The FTSE 100 in London fell below 4,000 for the first time in more than five years. The Dow Jones Industrial Average sank under 9,000 for the first time since 2003. The Nasdaq fell below 1,700 and the S&P 500 plunged into triple digits. Russian stock exchanges delayed the opening of trading and Indonesia extended a two-day halt. Iceland suspended equity trading until Oct. 13 after the government seized Kaupthing hf, the country's biggest bank. Russia's government said it will start buying stocks of domestic companies next week to help support prices. Consob, Italy's securities-market regulator, banned all short sales on the country's stocks. The cost of borrowing in dollars in London for three months rose as cash injections and interest-rate cuts by 10 major central banks failed to unlock the frozen money markets. The cost to protect corporate bonds from default soared to records around the world on investor concerns that the deepening credit crisis will trigger more failures as companies struggle to finance their businesses. </DIV>

Global markets continue to singe...

The mayhem in global markets continued this week, as the financial contagion deepened in Europe, and even spread to Japan later in the week. Equity markets across the globe …

13 Oct 2008

What if .. ICICI goes bust ?

<DIV>Frequently Asked Questions What will happen to my account ? Will I get my money back ? Is my money INSURED ? Will RBI give the money I have in ICICI ? READ more ... The deposit insurance system in India is subject to the Provisions of Deposit Insurance Act (enacted in 1961). Deposit Insurance and Credit Guarantee Corporation (DICGC) is the body that operates the deposit insurance system. Q1 Which banks are insured by the DICGC? Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC. Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the Reserve Bank are covered under the Deposit Insurance Scheme. At present all co-operative banks other than those from the States of Meghalaya, Mizoram, Nagaland, and the Union Territories of Chandigarh, Lakshadweep and Dadra & Nagar Haveli are covered under the deposit insurance scheme of DICGC. Primary cooperative societies are not insured by the DICGC. Q2 What does the DICGC insure? In the event of a bank failure, DICGC protects bank deposits that are payable in India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits (i) Deposits of foreign Governments; (ii) Deposits of Central/State Governments; (iii) Inter-bank deposits; (iv) Deposits of the State Land Development Banks with the State co-operative bank; (v) Any amount due on account of deposit received outside India; (vi) Any amount, which has been specifically exempted by the Corporation with the previous approval of Reserve Bank of India. Q3 What is the maximum deposit amount insured by the DICGC? Presently, deposits of each depositor in a bank is insured upto a maximum of Rs.1,00,000 (Rupees One Lakh) for both principal and interest amount held by him "in the same right and same capacity" as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force. Q4 How will I know whether my bank is insured by the DICGC or not? The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the bank's officials in this regard or visit DICGC website on the web address www.dicgc.org.in. What is the ceiling on amount of Insured deposits kept by one person in Q5 different branches of a bank? The deposits kept by one person in different branches of a bank are aggregated for the purpose of insurance cover and presently a maximum amount upto Rupees one lakh is paid. Q6 Does the DICGC insure just the principal deposit amount or both principal and accrued interest? The DICGC insures principal and interest upto a maximum amount of Rs. One lakh. For example, if an individual had deposit(s) with principal amount of Rs.95,000 plus accrued interest of Rs.4,000, the total amount insured by the DICGC would be Rs.99,000. If, however, the principal amount were Rs. One lakh, the accrued interest would not be insured, not because it was interest but because the amount was over the insurance limit. Q7 Can deposit insurance be increased by depositing funds into several different accounts all at the same bank? No. All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks they would then be separately insured. Q8 What is a single ownership account? A single (or individual) ownership account is an account owned by one person. Such accounts include those in the owner's name; those established for the benefit of the owner by agents, nominees, guardians, custodians, or conservators; and those established by a business that is a sole proprietorship. Q9 Are deposits in different banks separately insured? Yes. If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each bank. Q10 If I have deposits at two different banks, and those two banks are closed on the same day, are my funds added together, or insured separately? Your funds from each bank would be insured separately, regardless of the date of closure. Q11 What is the meaning of deposits held in the same right and capacity and different right and capacity? If a person opens in his name more than one account in a bank, for example Mr. K.A.Pandit opens one savings account and one or more fixed deposit accounts, all the accounts are considered in the same right and same capacity and insurance coverage is limited to a maximum of Rupees one lakh. But if Mr. K.A.Pandit opens a joint account, the joint account is considered in a different right and different capacity and insurance coverage is provided separately. Each joint account is insured separately from any deposits individually owned by the joint depositors. Each joint account owned by a combination of different persons is insured upto Rupees one lakh. All joint accounts owned by the combination of same persons are added together and the combined total is insured upto Rupees one lakh. <DIV style="FONT-FAMILY: verdana; TEXT-ALIGN: center"></DIV> <TABLE style="COLOR: rgb(0,0,0)" cellSpacing=1 cellPadding=2 align=center border=1> <TBODY> <TR> <TD style="TEXT-ALIGN: center" vAlign=top colSpan=6> Illustrations </TD></TR> <TR> <TD style="TEXT-ALIGN: left" vAlign=top colSpan=6> Deposits held in different capacities </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Savings </TD> <TD vAlign=top> Current </TD> <TD vAlign=top> FD </TD> <TD vAlign=top> Total </TD> <TD vAlign=top> Deposits </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> A/C </TD> <TD vAlign=top> A/C </TD> <TD vAlign=top> A/C </TD> <TD vAlign=top> Deposits </TD> <TD vAlign=top> Insured </TD></TR> <TR> <TD vAlign=top> Shri S. K. Pandit </TD> <TD vAlign=top> 17,200 </TD> <TD vAlign=top> 22,000 </TD> <TD vAlign=top> 80,000 </TD> <TD vAlign=top> 1,19,200 </TD> <TD vAlign=top> 1,00,000 </TD></TR> <TR> <TD vAlign=top> (Individual) </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD></TR> <TR> <TD vAlign=top> Shri S. K. Pandit </TD> <TD vAlign=top> </TD> <TD vAlign=top> 75,000 </TD> <TD vAlign=top> 50,000 </TD> <TD vAlign=top> 1,25,000 </TD> <TD vAlign=top> 1,00,000 </TD></TR> <TR> <TD vAlign=top colSpan=2> (Partner of ABC & Co.) </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD></TR> <TR> <TD vAlign=top> Shri S. K. Pandit </TD> <TD vAlign=top> 7,800 </TD> <TD vAlign=top> </TD> <TD vAlign=top> 80,000 </TD> <TD vAlign=top> 87,800 </TD> <TD vAlign=top> 87,800 </TD></TR> <TR> <TD vAlign=top colSpan=2> (Guardian for Master Ajit) </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD></TR> <TR> <TD vAlign=top> Shri S. K. Pandit </TD> <TD vAlign=top> </TD> <TD vAlign=top> 2,30,000 </TD> <TD vAlign=top> 45,000 </TD> <TD vAlign=top> 2,75,000 </TD> <TD vAlign=top> 1,00,000 </TD></TR> <TR> <TD vAlign=top colSpan=2> (Director, J.K. Udyog Ltd.) </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD> <TD vAlign=top> </TD></TR></TBODY></TABLE> <TABLE style="COLOR: rgb(0,0,0)" cellSpacing=1 cellPadding=2 align=center border=1> <TBODY> <TR> <TD vAlign=top colSpan=3> Deposits held in joint accounts </TD></TR> <TR> <TD vAlign=top> Account (i) </TD> <TD vAlign=top> First a/c holder- "Shri A. K. Sharma" </TD> <TD vAlign=top> Maximum insured amount upto </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Second a/c holder - "Smt. B. Sharma" </TD> <TD vAlign=top> Rs.1 lakh </TD></TR> <TR> <TD vAlign=top> Account (ii) </TD> <TD vAlign=top> First a/c holder - " Shri A. K. Sharma" </TD> <TD vAlign=top> Maximum insured amount upto </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Second a/c holder - "Shri P. Sharma" </TD> <TD vAlign=top> Rs.1 lakh </TD></TR> <TR> <TD vAlign=top> Account (iii) </TD> <TD vAlign=top> First a/c holder - "Smt. B. Sharma" </TD> <TD vAlign=top> The a/c will be clubbed with the </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Second a/c holder-"Shri A. K. Sharma" </TD> <TD vAlign=top> a/c at (i) </TD></TR> <TR> <TD vAlign=top> Account (iv) </TD> <TD vAlign=top> First a/c holder - "Shri A. K. Sharma" </TD> <TD vAlign=top> Maximum insured amount upto </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Second a/c holder - "Smt. B. Sharma" </TD> <TD vAlign=top> Rs.1 lakh </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Third a/c holder - "Shri P. Sharma" </TD> <TD vAlign=top> </TD></TR> <TR> <TD vAlign=top> Account (v) </TD> <TD vAlign=top> First a/c holder - "Smt. B. Sharma" </TD> <TD vAlign=top> The a/c will be clubbed with the </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Second a/c holder - "Shri P. Sharma" </TD> <TD vAlign=top> a/c at (iv) </TD></TR> <TR> <TD vAlign=top> </TD> <TD vAlign=top> Third a/c holder - "Shri A. K. Sharma" </TD> <TD vAlign=top> </TD></TR></TBODY></TABLE> Q12 Can the bank deduct the amount of dues payable to it by the depositor? Yes. Banks have the right to set off their dues from the amount of deposits. The deposit insurance is available after netting of such dues. Q13 Who pays the cost of deposit insurance? Deposit insurance premium is borne entirely by the insured bank. Q14 When is the DICGC liable to pay? If a bank goes into liquidation: The DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit upto Rupees one lakh within two months from the date of receipt of claim list from the liquidator. If a bank is reconstructed or amalgamated / merged with another bank: Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent authority and the said scheme provides for each depositor being paid or credited with, on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay to every such depositor in accordance with the provisions of section 18 of DICGC Act an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less: Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force. Q15 Does the DICGC directly deal with the depositors of failed banks? No. In the event of a bank's liquidation, the liquidator prepares depositor wise claim list and sends it to the DICGC. After scrutiny the DICGC pays the money to the liquidator who is liable to pay to the depositors. In the case of amalgamation / merger of banks, the amount due to each depositor is paid to the transferee bank. Q16 Can any insured bank withdraw from the DICGC coverage? No. The deposit insurance scheme is compulsory and no bank can withdraw from it. Q17 Can the DICGC withdraw deposit insurance cover from any bank? The Corporation may cancel the registration of an insured bank if it fails to pay the premium for three consecutive half year periods. In the event of the DICGC withdrawing its cover from any bank for default in the payment of premium the public will be notified through newspapers. Registration of an insured bank stands cancelled if the bank is prohibited from accepting fresh deposits; or its licence is cancelled or a licence is refused to it by the Reserve Bank; or it is wound up either voluntarily or compulsorily; or it ceases to be a banking company or a co-operative bank within the meaning of Section 36A(2) of the Banking Regulation Act, 1949; or it has transferred all its deposit liabilities to any other institution; or it is amalgamated with any other bank or a scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit acceptance of fresh deposits. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation. Q18 What will be the Corporation's liability on de-registration of banks ? The Corporation has deposit insurance liability on liquidation etc. of "insured banks" i.e. banks which have been de-registered (a) on account of prohibition on acceptance of fresh deposits or (b) on cancellation of license or where it is found that license can not be granted. The liability of the Corporation in these cases is limited to the extent of deposits as on the date of cancellation of registration of bank as an insured bank subject to the monetary ceilings applicable. On liquidation etc. of other de-registered banks i.e. banks which have been de-registered on other grounds such as non payment of premium or their ceasing to be eligible cooperative banks under section 2(gg) of the DICGC Act, 1961, the Corporation has no liability.</DIV>

What if .. ICICI goes bust ?

Frequently Asked QuestionsWhat will happen to my account ?Will I get my money back ?Is my money INSURED ?Will RBI give the money I have in ICICI ?READ more ... The deposit …

13 Oct 2008

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