Indian Stock News by Experts

ICICI Bank - UK investment has zero exposure to US

<DIV>ICICI Bank, the largest private sector lender in the country whose shares suffered heavy hammering on the bourses, on Monday allayed fears over its overseas exposure. In a statement issued today, the bank said that 98 per cent of ICICI Bank UK PLC's non-India investment book of $ 3.5 billion is rated investment grade and above. Of this, exposure to US is only about 18 per cent. "ICICI Bank UK PLC has zero exposure to US sub-prime credit, whether directly or through credit derivatives such as CDOs/CLNs/CDS," the statement said. This unsolicited statement from the country's second largest bank seems to be an effort to quell the general negative sentiment and the fears over the bank's overseas exposure. One year-low Shares of the bank closed at a one-year low of Rs 493.3, down 12.11 per cent from Friday's close of Rs 561.25, on the BSE, on Monday. The stock touched a low of Rs 483 during day trade. It was a case of 'extreme pessimism' driving the stock down, said a banking analyst. The fears were on account of both international and domestic developments. On the international front, the fear is that the bank may face mark-to-market losses given it exposure to overseas financial institutions. On the domestic front there are concerns about the high exposure to residential mortgages and credit card receivables, both segments which are likely to see a rise in defaults, said a banking analyst with a broking house. According to the head of research of a securities firm, ICICI Bank is likely to see a rise in small ticket defaults i.e. personal loans and credit card receivables, which will impact revenues. Also, the bank has not been able to make good its treasury losses of the last fiscal, on account of forex derivative transactions, due to the volatile market conditions. This too is likely to put pressure on earnings, he said. Almost 30 per cent of the retail book consists of housing loans. As on June 30, 2008, the bank's outstanding on credit cards was Rs 8,500 crore, on personal loans Rs 12,000 crore and on home loans 65,600 crore. A recent report by Merrill Lynch, said that the bank is likely to post a modest growth of 13 per cent due to weaker loan growth (15 per cent) and a likely hit of $30 million on its CDS book (as part of the Indian balance sheet) and higher non-performing loans provisions . A report by Motilal Oswal estimated that ICICI Bank will see only 1 per cent growth in earnings in the second quarter, against the sector earnings growth of 15 per cent. The concern over asset quality is not restricted to ICICI Bank alone, but is a concern for the banking sector. "With the extent of an economic slowdown and interest rates remaining high, there will be some deterioration in the asset quality," said Mr Abhishek Agrawal, analyst, Angel Broking Ltd. </DIV>

ICICI Bank - UK investment has zero exposure to US

ICICI Bank, the largest private sector lender in the country whose shares suffered heavy hammering on the bourses, on Monday allayed fears over its overseas exposure.In a st…

30 Sep 2008

Am-Bushed.Time to bid Good Buy!

<DIV>When you go to buy, use your eyes, not your ears President Bush and the leaders of both parties were in for a rude shock after the US government failed to win an approval for its mega rescue plan. The Dow Jones Industrial Average on Wall Street had its biggest single-day point loss ever. The S&P and the Nasdaq too came in for some harsh punishment. European shares tumbled to their second-worst single-session loss amid desperate government bailouts of banks across Europe. Among the emerging market indices, the Bovespa in Brazil (we know a lot many of you see some correlation with Indian market) ended down 9.3% overnight. Asian stocks too took a beating this morning, but have since recovered some lost ground. There's hardly any good news, barring the steep fall in crude oil, which again (like we told you earlier) is linked to apprehensions of a substantial slowdown in global energy demand amid the unprecedented financial crisis. Global investors are rushing to buy safe-haven Bonds and Gold. Predictably, we expect a gap-down opening in the wake of global carnage and anxiety surrounding the fate of the US economy and its wider global fallout. Things on the macro front are not too encouraging either. Interest rates are at a six-year peak. Inflation is hovering above the 12% mark. The rupee is losing ground steadily, and hit a five-year low on Monday. The Indian government and the RBI too could announce some more measures if the markets here do not recover. Amidst all the gloom, some flowers may bloom. A bounce back is not ruled out later in the day. You will hear rumors and whispers of margin calls being triggered if stocks come crashing substantially. Close your ears for now and open your eyes to opportunities for the medium to long term. For those happy hunting for mid-cap bargains, avoid the temptation and stick to the large caps. Don't go overboard as the near term outlook remains hazy. Add some stocks at lower levels today for quick gains during a bounce back. If you don't have the money and the appetite, just say good bye! US stocks plunged on Monday after the much-touted bailout package for America's troubled financial system was voted out by the House of Representatives, sparking fears of more pain for the world's biggest economy. The Dow Jones Industrial Average suffered its worst point drop on record, knocking off a mind-boggling US$1.2 trillion in market value, the first such instance ever in the history of Wall Street. The Dow slumped 777.68 points, surpassing the 684.81 loss on Sept. 17, 2001 - the first trading day after the September 11 attacks. However, the 7% decline does not rank among the top 10 percentage declines. The S&P 500 index nose-dived 106.59 points or 8.8%, to close at 1,106.42. It was its seventh worst day ever on a percentage basis and the biggest one-day percentage drop since the crash of 1987, when it lost 20.50%. The Nasdaq Composite index slid nearly 200 points or 9.1%, to shut shop at 1,983.73. This was its third worst day on a percentage basis and also its worst decline since the crash of 1987. Market breadth was negative. Twenty-five stocks fell for each that rose on the New York Stock Exchange (NYSE), as two billion shares were traded on the floor, up 35% over the three- month average. US stocks tumbled ahead of the vote and the selling accelerated on fears that Congress would not be able come up with a fix for nearly frozen credit markets. There was also news that troubled Wachovia had to sell its banking assets to Citigroup. A number of European banks also collapsed and had to be rescued by their respective governments and regulators. But the possibility that the House won't pass the bailout plan caused stock losses to accelerate. Although another version of the plan will likely go before Congress, investors are skeptical whether it would be enough to avert the crisis. Meanwhile, the Federal Reserve and other central banks around the world announced steps to make billions available to troubled banks. The TED spread hit a more than 26-year high of 3.58% before dipping back to 3.54%. The TED spread is the difference between what banks charge each other to borrow for three months and what the Treasury pays. The three-month Treasury bill, seen as the safest place to park money in the short term, fell to 0.34% from 0.83% late on Friday. Earlier this month, the three-month bill fell to a 68-year low around 0% as panic gripped financial markets. Long-term Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.58% from 3.82% late on Friday. US light crude oil for November delivery fell $10.52 to settle at $96.37 a barrel, in the second-biggest one-day plunge ever. COMEX gold for December delivery rose $5.90 to $894.40 an ounce. In currency trading, the dollar gained against the euro and fell against the yen. Gas prices fell for the 12th day in a row, according to a nationwide survey of credit card activity. Apple shares slumped almost 18% after RBC and Morgan Stanley analysts downgraded the stock to "neutral" from "buy" saying the consumer spending slowdown will hurt profits. European shares slid, as financial market turmoil led to bailouts of financial institutions in Belgium, Britain, Germany and even Iceland. The pan-European Dow Jones Stoxx 600 index skidded 5.5% to 251.37, a three-year low, as metals extractors, financial services firms and banks paced a decline. The UK's FTSE 100 dropped 5.3% to 4,818.77, while Germany's DAX 30 shed 4.2% to 5,807.08 and the French CAC-40 dived 5% to 3,953.48. The AEX was down 8.8% to 323.55 in Holland and the ISEQ was down 12.7% to 3,303.62 in Ireland. In the emerging markets, the Bovespa in Brazil was down 9.4% at 46,028 while the IPC index in Mexico slid 6.4% to 23,955. The RTS index in Russia slumped 7.1% to 1194 while the ISE National 30 index was down 1.6% at 45,472. Global cues to drive sentiments Weak global cues coupled with heavy selling in the scrips all over dragged the BSE benchmark Sensex and the Nifty index below the 12,500 and 3,800mark. Market sentiments were again hit as concerns continue to surface whether the US$700bn bailout would ease the global credit crunch. The BSE benchmark Sensex slipped 506 points to close at 12,595 and the NSE Nifty index fell 135 points to close at 3,850. Among the 30 components of the Sensex, 29 stocks ended in the red and only 1 stock i.e. Hindustan Unilever ended with positive bias. ICICI Bank, Infosys and L&T were among the major laggards. Among the BSE Sectoral indices, BSE Bankex index (down 6%), BSE Consumer Durable index (down 5.6%), BSE IT index (down 5.5%) and BSE Realty index (down 5.2%). Nagarjuna Construction announced that M/s. A V S R Holdings Pvt. Ltd an investment company belonging to the promoters group has acquired during the period September 19, 2008 to September 26, 2008. 509,743 equity shares of Rs2/- each of the company in the aggregate (Equivalent to 0.22% of the paid-up capital) through purchases from the Market. With the aforesaid acquisition, the holding of the promoters group in the company has gone up to 23.29% of the total equity of the Company. Shares of Nagarjuna Construction plunged by over 11% to Rs95 touching an intra-day high of Rs109 and a low of Rs92 and recorded volumes of over 2,00,000 shares on BSE. Shares of ICICI Bank plunged by over 12% and slipped below the Rs500 mark on the back of heavy selling. The stock has declined by over 65% from its 52-week high of Rs1,465. The stock finally ended at Rs493 touching an intra-day high of Rs569 and a low of Rs483 and recorded volumes of over 58,00,000 shares on BSE. Shares of Subex ended on a flat note at Rs77. The company announced that BT (British Telecom) signed a three-year framework contract at an estimated value of US$ 50mn, for Subex to provide the company with products and services in the domains of revenue assurance, fraud detection, interconnect billing and event integrity. Shares of Gwalior Chemicals declined by over 9% to Rs66 after 5.8% equity changed hands on the BSE. The scrip touched an intra-day high of Rs72 and a low of Rs65 and recorded volumes of over 14,00,000 shares on BSE. Shares of Orchid Chemicals gained by 1% at Rs214 after the company announced that it would collaborate with Merck to develop novel Anti-Infective drugs. The company would get US$100mn milestone payment from Merck and would also get royalties on net sale. The scrip touched an intra-day high of Rs217 and a low of Rs198 and recorded volumes of over 2,00,000 shares on BSE. Shares of HCL Tech declined by over 8% to Rs195 after the company offered to buy Axon Group Plc, countering a bid from Infosys. The company had announced in the previous week that it offered to buy Axon for 650 pence per share. The price was 8.3% higher than an offer from Infosys. The scrip touched an intra-day high of Rs213 and a low of Rs188 and recorded volumes of over 1,00,000 shares on BSE. RIL has offered to sell diesel from the company's refinery in India if the government removes double taxation of the fuel. (BS) The Government may not allow RIL to supply KG basin gas to RNRL and NTPC in violation of the gas utilization policy, which accords priority to the fertilizer sector. (ET) Subex has bagged a US$50mn contract from British Telecom. (ET) British Telecom has put the sale of its stake in Tech Mahindra on hold. (ET) Tata Motors has stepped up production of Indica at its Tata-Fiat JV plant at Ranjangaon and may start Nano production also at this plant. (ET) Maruti to increase it's yet to be launched new compact car A-Star's production by 50,000 units. (ET) Aurobindo Pharma has received USFDA approval for marketing Cyclobenzaprine hydrochloride tablets. (ET) Sterlite Industries to start mining bauxite from Niyamgiri hills in Kalahandi district within a year. (BS) IVRCL Infrastructures and Projects Ltd bagged a Rs4.2bn lift irrigation scheme in Madhya Pradesh. (BL) Suven Life Science has got DCGI approval for Phase I clinical trials of SUVN-502, a product used in the treatment of Alzeimer disease. (ET) TIG Capital plans to invest over US$400mn for a substantial stake in Kingfisher Airlines. (ET) Union Bank of India, which had extended a credit line of Rs3bn and term loan of Rs1bn to DSP Merrill Lynch, has put both the deals on freeze. (ET) NHPC may delay its initial public offer due to market turmoil. (ET) Orchid Chemicals has entered into strategic research collaboration and licensing agreement with Merck & Co Inc. (FE) The boards of MindTree and Aztecsoft have approved a share swap ratio of 2:11 for their merger. (ET) Area T&D and GE Consumer have jointly announced a strategic alliance. (FE) Aksh Optifibre has entered into a three-year agreement with Sony Pictures Entertainment. (FE) Mahindra Holidays & Resorts India to spend Rs3.5-4.0bn to double its capacity to 1,500 apartments over the next one year. (BS) Jet Airways Chairman Naresh Goyal to sell up to 10% of his stake in the company. (BS) Adani Enterprise entered in a JV with Chemoil for marine fuel supply. (BS) Economic Front Page The rupee hit a five-year low of 47.115 against the US Dollar in intra-day trade, before recovering to close at 46.97, the lowest since July 19, 2006. (BS) Nasscom may cut software exports growth forecast downwards by few percentage points for 2008-09. (ET) Banks have made a strong representation to RBI to release more cash into their system. (ET) The Home Ministry and the Department of Industrial Policy and Promotion have denied DoT's plans to let foreign telcos bid for 3G spectrum without an Indian partner. (ET) The Government is likely to allocate start-up GSM technology spectrum in the Maharashtra circle to new telecom licensees. (ET) The Government has revived the proposal for allowing 100% FDI in electronics and sports goods retail. (ET) Indian banks plan to stop loans to local arms of crisis-hit US companies, this may result in cancellation of deals worth ~Rs20bn. (ET) India and the European Union have agreed to conclude a broad-based Trade and Investment Agreement by 2009 and double their trade turnover to e100bn in the next five years. (ET) The Supreme Court has approved smoking ban in public places from October 2. (ET) The Petroleum Planning and Analysis Cell has made a strong pitch for a judicious mix of reduction in excise duties and state taxes along with a gradual increase in prices to bring the price of automotive fuels at par with international prices.(FE) Union food and agriculture minister Sharad Pawar has rejected duty free imports of raw sugar. (ET) Indian tea production in January-July 2008 increased by 17mn kgs to 476.6mn kgs compared to same period last year. (ET) Manmade fibre textile exports increased by 35% yoy in Apr-Jul'08. (FE)</DIV>

Am-Bushed.Time to bid Good Buy!

When you go to buy, use your eyes, not your earsPresident Bush and the leaders of both parties were in for a rude shock after the US government failed to win an approval fo…

30 Sep 2008

Gold rallies

<DIV> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>Gold Rallies Towards All Time High The dollar's fortunes reversed sharply, falling from near the 107-level against the yen to plunge to the 104-handle after it was announced that the House of Representatives voted against the $700 billion bailout plan by a vote of 228 to 205. The failure to pass the Administration's plan to purchase toxic assets off banks' balance sheets was incredibly disappointing to markets and heightens uncertainty over the outlook for the financial sector and raises the risk for the economy to plunge into a prolonged recession. Gold for December delivery rose $5.90, or 0.7%, to close at $894.40 an ounce on the Comex division of the New York Mercantile Exchange. MCX Gold contract for October expiry closed the session at Rs 13455 per 10 grams up Rs 301. Global central banks continued to pump liquidity into the financial system with another bout of coordinated intervention. The Fed announced that it would be injecting another $630 billion in an effort to prevent the credit markets from locking up. </DIV>

Gold rallies

Gold Rallies Towards All Time HighThe dollar's fortunes reversed sharply, falling from near the 107-level against the yen to plunge to the 104-handle after it wa…

30 Sep 2008

ICICI FII Holdings

ICICI FII Holdings

Foreign funds which hold more than 1% stake in ICICI Bank include Allamanda Investments Pte Ltd, Merrill Lynch Capital Markets Espana, Government of Singapore, CLSA Mauritiu…

30 Sep 2008

Real Estate Stocks at 52 week lows

<DIV>Realty stocks took a tumble on the bourses and many logged their 52-week low on Monday. The BSE Realty Index closed at a 52-week low at 3,407.87, down 5.26 per cent. It had dropped 16.79 per cent over the week from 4,095.50, and 31.78 per cent over the month. In January, the index clocked a high of 13,848.09. Over the week, almost all real estate company stocks have taken a hammering, dovetailing the Sensex's fall with the negative market sentiment at an all-time high, which this week is compounded by the wait for the US congressional nod for the $700-billion bailout package for bankrupt investment firms there. Delhi-based DLF Ltd stock closed at Rs 350. 60, 5.12 per cent lower than its previous close. The DLF issue was priced at Rs 525. (52-week high – Rs 1,225, low Rs 329) Buyback In July, the company announced its buyback intention of up to Rs 600 a share for Rs 1,100 crore. On September 18, it informed BSE that its board of directors would meet on September 30 to consider and approve a public announcement with the proposed buyback of equity of the company. Sobha Developers' stock suffered a 9.59 per cent drop, closing at Rs 171.55. The issue price was Rs 640 (Rs 1,060, Rs 164.50). Puravankara Projects traded at Rs 154.05 at close, down 3.14 per cent. The IPO price was Rs 400 (Rs 535, Rs 132.05). At close, Omaxe stock traded at Rs 96.05, down 4.38 per cent, far below its issue price of Rs 310 (Rs 613, Rs 93.60). Housing Development and Infrastructure Ltd was at Rs 166.05, down 13.72 per cent lower than its previous close (Rs 1,432, Rs 160.20). Parsvnath Developers was down 7.04 per cent at Rs 89.85 (Rs 598, Rs 86.60). Among the marginal declines, was Ansal Infrastructure at Rs 77.30, down 4.13 per cent, and Unitech, which lost 1.98 per cent at Rs 108.85, but recovered from day's of low Rs 97.5, which is its 52-week low. Of the many investments Lehman Brothers made in India, Delhi-based Unitech received about $175 million (Rs 740 crore). Mr Hardeep Dayal of Centrum Broking Pvt Ltd said it was a knee-jerk reaction as the medium and long-term story remains strong. Market sentiments were down and only need-based buying was happening. People have held back their decisions to purchase properties, in anticipation of a price fall which is real. Mr Dayal was however, hopeful of a turnaround in a year. Liquidity crunch Enam Securities Researchers pointed out that aggressive land acquisition at peak prices through short-term high cost debt and huge working capital mismanagement (short-term debt used for long-term projects) were some of the ills that plagued the industry. Moreover, developers had stubbornly held on to selling prices and high-cost inventories, hoping for a renewal of demand and hike in prices. Enam said the realty business model consists of three stages of value creation — land acquisition/aggregation and conversion, construction and development, and the lease/sale of the property. The whole business model depended on the ability to infuse cheap monies at the earliest stages, including additional infusion through exits at the end of each stage, to be able to funnel monies back to stage 1 — land acquisition. Further, as each project funds another in this working-cap intensive business, liquidity is the key exponentiator of the business. This funnelling process has now unravelled. With decreasing options, distress-sale of land parcels was the only option for some </DIV>

Real Estate Stocks at 52 week lows

Realty stocks took a tumble on the bourses and many logged their 52-week low on Monday.The BSE Realty Index closed at a 52-week low at 3,407.87, down 5.26 per cent. It had d…

30 Sep 2008

Bailout shattered, House rejects US financial-rescue plan

<DIV> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>The US House on Monday, September 29, voted down the Bush administration`s historic USD 700 billion financial bailout plan, that led to one of the worst days for stocks. This is a sharp blow to all-party efforts, despite repeated warnings about the U.S. heading towards a long-term economic slowdown. Treasury Secretary Henry Paulson warned on that stressed world markets would reduce credit availability threatening American jobs and livelihood. Meanwhile, officials are trying to figure out what the next step will be for rescue-related legislation, and an aide in the House speaker`s office said lawmakers are ready to work in a bipartisan way. U.S. stocks plunged after the news was broken. Dow Jones Industrial Average ended down 777 points, or 7%, to 10,365. Major Asian indices also reacted to the bailout failure. Japan, South Korea and Australia markets plummeted in early trading on Tuesday. </DIV>

Bailout shattered, House rejects US financial-rescue plan

The US House on Monday, September 29, voted down the Bush administration`s historic USD 700 billion financial bailout plan, that led to one of the worst days for…

30 Sep 2008

Bloodbath on Wall Street

<DIV>US stocks plunged on Monday after the much-touted bailout package for America's troubled financial system was voted out by the House of Representatives, sparking fears of more pain for the world's biggest economy. The Dow Jones Industrial Average suffered its worst point drop on record, knocking off a mind-boggling US$1.2 trillion in market value, the first such instance ever in the history of Wall Street. The Dow slumped 777.68 points, surpassing the 684.81 loss on Sept. 17, 2001 - the first trading day after the September 11 attacks. However, the 7% decline does not rank among the top 10 percentage declines. The S &P 500 index nose-dived 106.59 points or 8.8%, to close at 1,106.42. It was its seventh worst day ever on a percentage basis and the biggest one-day percentage drop since the crash of 1987, when it lost 20.50%. The Nasdaq Composite index slid nearly 200 points or 9.1%, to shut shop at 1,983.73. This was its third worst day on a percentage basis and also its worst decline since the crash of 1987. Market breadth was negative. Twenty-five stocks fell for each that rose on the New York Stock Exchange (NYSE), as two billion shares were traded on the floor, up 35% over the three- month average. </DIV>

Bloodbath on Wall Street

US stocks plunged on Monday after the much-touted bailout package for America's troubled financial system was voted out by the House of Representatives, sparking fears of mo…

30 Sep 2008

A day to remember/forget ?

<DIV>The failure of the bailout package in Congress literally dropped jaws on Wall Street and triggered a historic selloff—including a terrifying decline of nearly 500 points in mere minutes as the vote took place, the closest thing to panic the stock market has seen in years. The Dow Jones industrial average lost 777 points on Monday, its biggest single-day fall ever, easily beating the 684 points it lost on the first day of trading after the Sept. 11, 2001, terrorist attacks. As uncertainty gripped investors, the credit markets, which provide the day-to-day lending that powers business in the United States, froze up even further. At the New York Stock Exchange, traders watched with faces tense and mouths agape as TV screens showed the House vote rejecting the Bush administration's $700 billion plan to buy up bad debt and shore up the financial industry. Activity on the trading floor became frenetic as the "sell" orders blew in. The selling was so intense that just 162 stocks on the Big Board rose, while 3,073 dropped. The Dow Jones Wilshire 5000 Composite Index recorded a paper loss of $1 trillion across the market for the day, a first. The Dow industrials, which were down 210 points at 1:30 p.m. EDT, nose-dived as traders on Wall Street and investors across the country saw "no" votes piling up on live TV feeds of the House vote. By 1:42 pm, the decline was 292 points. Then the bottom fell out. Within five minutes, the index was down about 700 points as it became clear the bill was doomed. "How could this have happened? Is there such a disconnect on Capitol Hill? This becomes a problem because Wall Street is very uncomfortable with uncertainty," said Gordon Charlop, managing director with Rosenblatt Securities. "The bailout not going through sends a signal that Congress isn't willing to do their part," he added. While investors didn't believe that the plan was a cure-all and it could take months for its effects to be felt, most market watchers believed it was at least a start toward setting the economy right and unlocking credit. "Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson, president of Johnson Research Group. "This isn't a market for the timid." Before trading even began came word that Wachovia Corp., one of the biggest banks to struggle from rising mortgage losses, was being rescued in a buyout by Citigroup Inc. That followed the recent forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies — Bear Stearns Cos., Washington Mutual Inc. and Lehman Brothers Holdings Inc., all of them felled by bad mortgage investments. And it raised the question: Which banks are next, and how many? The Federal Deposit Insurance Corp. lists more than 110 banks in trouble in the second quarter, and the number has probably grown since. Wall Street is contending with all of it against the backdrop of a credit market — where bonds and loans are bought and sold — that is barely functioning because of fears that anyone lending money will never be paid back. More evidence could be found Monday in the Treasury's three-month bill, where investors were stashing money, willing to accept the tiniest of returns simply to be sure that their principal would survive. The yield on the three-month bill was 0.15 percent, down from 0.87 percent and approaching zero, a level reached last week when fear was also running high. Analysts said the government needs to find a way to help restore confidence in the markets. "It's probably fair to say that we are not going to see any significant stability in the credit markets or the stock market until we see some sort of rescue package passed," said Fred Dickson, director of retail research for D.A. Davidson & Co. The bailout bill failed 228-205 in the House, and Democratic leaders said the House would reconvene Thursday in hopes of a quick vote on a revised bill. "We need to put something back together that works," Treasury Secretary Henry Paulson said. "We need it as soon as possible." The Dow fell 777.68 points, just shy of 7 percent, to 10,365.45, its lowest close in nearly three years. The decline also surpasses the record for the biggest decline during a trading day — 721.56 at one point on Sept. 17, 2001, when the market reopened after 9/11. In percentage terms, it was only the 17th-biggest decline for the Dow, far less severe than the 20-plus-percent drops seen on Black Monday in 1987 and before the Great Depression. Broader stock indicators also plummeted. The Standard & Poor's 500 index declined 106.62, or nearly 9 percent, to 1,106.39. It was the S&P's largest-ever point drop and its biggest percentage loss since the week after the October 1987 crash. The Nasdaq composite index fell 199.61, more than 9 percent, to 1,983.73, its third-worst percentage decline. The Russell 2000 index of smaller companies fell 47.07, or 6.7 percent, to 657.72. A huge drop in oil prices was another sign of the economic chaos that investors fear. Light, sweet crude fell $10.52 to settle at $96.36 on the New York Mercantile Exchange as investors feared energy demand would continue to slide amid further economic weakness. And gold, where investors flock when they need a relatively secure investment, rose $23.20 to $911.70 on the Nymex. Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets. "Things are dying and breaking apart," he said. The federal Office of Thrift Supervision, one of the government's banking regulators, indicated that the market was overreacting to the House vote and that its fears about the financial system are misplaced. "There is an irrational financial panic taking place today, and we support and applaud the continuing efforts of Secretary Paulson and congressional leadership to restore liquidity and public confidence," John Reich, Director of the federal Office of Thrift Supervision, said in a statement. The plan would have placed caps on pay packages of top executives that accepted help from the government, and included assurances the government would ultimately be reimbursed by the companies for any losses. The Treasury would have been permitted to spend $250 billion to buy banks' risky assets, giving them a much-needed cash infusion. There also would be another $100 billion for use at the president's discretion and a final $350 billion if Congress signs off. But Wall Street found further reason for worry overseas. Three European governments agreed to a $16.4 billion bailout for Fortis NV, Belgium's largest retail bank, and the British government said it was nationalizing mortgage lender Bradford & Bingley, which has a $91 billion mortgage and loan portfolio. It was the latest sign that the credit crisis has spread beyond the US. </DIV>

A day to remember/forget ?

The failure of the bailout package in Congress literally dropped jaws on Wall Street and triggered a historic selloff—including a terrifying decline of nearly 500 points in …

30 Sep 2008

The Era of Leverage is over

<DIV>A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the financial system. Back then, though, it was fantastically hard to get American policymakers – let alone bankers – to listen. In the go-go days of the credit bubble, Washington policymakers blithely assumed that the Western financial system had plenty of capital to cope with any potential risks. Consequently, as one former BIS official admits: "Worrying about leverage wasn't fashionable at all – no one wanted to hear." Fast-forward a couple of years and, my, how those Western financiers are having to eat humble pie (even to the point of accepting a helping hand from the once-ailing Japanese). After all, the events of the past year have now made it patently – horrifically – obvious that the Western banking system has become dangerously undercapitalized in recent years, to the point where even the Federal Reserve is having to shore up its defences. Moreover, it is now also clear that Western policymakers are belatedly trying to correct this state of affairs. The days when high leverage, mega bonuses and wacky instruments were equated with financial virility have gone; instead a more humble, back-to-basics and slim-line approach is what investors are demanding. Thus, deleveraging is now all the rage – in whatever form it might take. The news that Morgan Stanley and Goldman Sachs – which were the last surviving big investment banks on Wall Street – have become regulated banks is a particularly compelling sign of this trend. On a micro level, the move packs a powerful historical punch, since it essentially spells the end of the old broker-dealer business model, with its bold, buccaneering approach to life. In a broader sense, it also provides further evidence that the era of high leverage is over. After all, one key factor that has marked the brokers out in recent years is that they did not face the type of strict leverage rules that were applied to US commercial banks. Thus, while the latter group was generally forced to keep tangible equity at 5 per cent of assets, or more, brokers operated with a lower equity ratio. That let them have leverage ratios of more than 30 times – which in turn turbocharged their profits. The regulatory controls on the commercial banks have sometimes produced disagreeable side effects – most notably encouraging banks such as Citi to create a plethora of off-balance sheet vehicles, such as the now notorious structured investment vehicles. However, these rules also meant that groups such as Citi, JPMorgan Chase and Bank of America started the crisis with more ammunition. And Sunday's news shows that Goldman Sachs and Morgan Stanley now recognise they must do the same, if they are to survive. Moreover, they are not the only ones facing a slimmer life. Over in Switzerland, the central bank now wants to impose a comparably tough leverage ratio on groups such as UBS (which, remarkably, has been operating with even more leverage than some US brokers in recent years). Separately, international regulators in Basel are now tweaking the so-called Basel Two capital rules to force banks to hold more capital against esoteric assets. And efforts are now under way to toughen the rules for a putative central clearing house for credit derivatives – which, in turn, would prompt lower leverage in that sector too. In the long term, all this is utterly desirable. Indeed, it is also overdue. However, nobody should forget that the shift also presents policymakers with yet another headache. After all, even at the best of times, deleveraging is never an easy process; and right now, it threatens to produce a particularly unpleasant downward drag on asset prices and growth. Some industry analysts estimate, for example, that if investment banks were to cut leverage ratios from 30 times (or recent levels) to 20 times, this would trigger $6,000bn worth of asset sales, excluding likely deleveraging by hedge funds too. Of course, such deleveraging will not happen overnight, or necessarily in such a simplistic way. But what these rough calculations show, as George Magnus at UBS points out, is that the putative $700bn RTC fund cannot be considered an all-encompassing solution to the current woes. Deleveraging, in other words, still has a long way to run – at Morgan Stanley and Goldman Sachs, for starters. By Gillian Tett for FT </DIV>

The Era of Leverage is over

A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the finan…

30 Sep 2008

Asian Markets Remain Cautious On Concerns Of Bailout Plan

<DIV>Hong Kong, Sensex Lead the Regional Fall As Markets In China, Malaysia, and Taiwan Closed For Holiday The stock markets across the Asian region closed lower, led by Hong Kong and India, ahead of a vote in both the Senate and the Congress on the revised $700 billion rescue package agreed by the U.S. lawmakers. On Friday, U.S. stocks ended mixed after gains in big financial companies lifted the Dow Jones Industrials Average more than 120 points, while worries about smaller banks and parts of the technology sector weighed on the market. The Dow closed up 121.07 points or 1.1 %at 11,143.13 and the S&P 500 closed up 4.09 points or 0.3 % at 1,213.27, while the Nasdaq closed down 3.23 points or 0.2 %at 2,183.34. Oil extended its decline, pressured by a rise in the U.S. dollar, on optimism ahead of a vote on the U.S. financial sector bailout package. By 3:49 a.m. ET, oil was quoted at $103.86 a barrel, down $3.03 from Friday's close. In currency market, the U.S. dollar gained against the yen, but gave away some of the gains in late Tokyo deals. The U.S. dollar dipped to the lower 106-yen levels in late Tokyo deals from the upper 106-yen levels in early Tokyo deals. The dollar closed in the upper 105-yen zone late Friday in Tokyo. The U.S. dollar was quoted at 106.24-106.26 yen, up 0.90 yen from Friday's close of 105.95-106.05 yen The Australian dollar closed weaker, finishing below US$0.83 for the first time in more than a week as U.S. lawmakers prepared to vote on a revised bailout package for Wall Street. The Aussie finished the local session at US$0.8218-0.8221, down from Friday's close of US$0.8318-0.8322. The New Zealand dollar finished a mixed session weaker at US$0.6858, compared to US$0.6864 in early local deals and US$0.6876 late Friday. The South Korean won fell more than 3% to near 5-year lows against the dollar. The won fell to as low as 1,199.8 a dollar, its weakest since December 29, 2003, before finishing the local session at 1,188.6-1,189.0 a dollar on talk of dollar-selling intervention, compared to Friday's domestic close of 1,160.5 a dollar. The Philippines peso weakened further as it closed at 46.990 against the dollar compared to Friday's domestic close P46.745 a dollar. Coming back to Asian equities, the investors turned cautious on concerns about the effectiveness of the plan and also on worries about the health of financial institutions in Europe. Meanwhile, the stock markets in China, Malaysia, and Taiwan remained closed on account of public holidays. The Japanese stock market pared early gains to close lower on Monday, extending losses for a third day. The market started off higher, after the White House and congressional leaders struck a deal Sunday on a bill to resolve the ongoing financial crisis, but lost ground as investors turned cautious ahead of a vote in the U.S. House of Representatives as early as today. The benchmark Nikkei 225 index closed down 149.55 points or 1.26% at 11,743.61 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 20.02 points or 1.74% to finish at 1,127.87. On the economic front, Japanese retail sales rose 0.7% in August from a year earlier, rising for the 13th straight month, the Ministry of Economy, Trade and Industry said. In July, retail sales rose by a revised 2.0% on year. Sales at department stores and supermarkets fell, for the fifth straight month, by 2.2% on year after adjustment for the change in the number of stores. The Hong Kong stocks were battered today as property players tumbled after HSBC Holdings' local banking unit raised mortgage rates by a half-point because of rising funding costs. Ping An Insurance (Group) Co. slumped after three European countries were forced to rescue Fortis, in which the insurance major has a stake. The Hang Seng Index ended 4.3% down to 17,880.68 and the Hang Seng China Enterprises Index slumped 6.6% to 8,955.26. The Australian stock market closed lower, extending its losses for the third consecutive trading session. After opening on a firm note following, the market lost ground as investors turned cautious ahead of a vote on the rescue package in both the Senate and the Congress. The benchmark S&P/ASX 200 index closed down 97.4 points, or 2.0%, at 4,807.4, while the broader All Ordinaries index lost 95.4 points, or 1.9%, to finish at 4,839.2. The New Zealand stock market closed slightly higher on Monday, ending a two-day losing streak. The market started off higher, encouraged by news that U.S. lawmakers have tentatively agreed to a US$700 billion rescue plan for the ailing U.S. financial sector, but pared most of its early gains in the after noon session following weakness in other regional markets. The benchmark NZX 50 Index closed up 0.95 point or 0.03% at 3,188.51 and the broader NZX All Capital Index added 3.46 points or 0.11% to finish at 3,210.0. On the economic front, New Zealand's annual trade deficit contracted in August, according to data released by Statistics New Zealand. For the month of August, the deficit was NZ$750 million, the smallest August deficit in dollar terms since 2004. The monthly deficit through July 2008 was a downwardly revised NZ$808.1 million. The nation's trade balance for the year through August was a deficit of NZ$4.3 billion. Meanwhile, the value of New Zealand's M3 money supply rose 7.2% on year in August to NZ$205.23 billion, the Reserve Bank of New Zealand said. The South Korean market closed lower as steep falls in the won weighed on banks. The Korea Composite Stock Price Index or Kospi closed down 19.97 points or 1.35% at 1,456.36 after rising to near 1,500 points in early trade. The Philippines stock exchange went up for a fourth successive day though the quantum of the up move was rather limited as investors remained cautious while waiting for the final approval of a US government plan to buy bad debts from troubled financial institutions. The benchmark PSEi ended up 0.39% on 29 September 2008, as the weakness in the Service sector hovered over the market and the early gains were given away in the closing hours of the session. The benchmark index PSEi closed up 10.35 points or 0.39% to 2,607.58.While the all-share index leaped 12.09 points or 0.73% to 1,648.30. Three of the eight indices, however, went down. Industrial stocks gained the most, advancing by 53.88 points or 1.75% to 3,119.1 while the service sector led today's losers, followed by property stocks and mining and oil indices. In India, the BSE Sensex plunged to 52-week low. Sensex was down a massive 644.38 points in the afternoon. According to the provision closing the Sensex closed down by 506.43 points or 3.87% to 12595.75. Elsewhere, Singapore's Straits Times index was trading down by 2.1% at 2,316.34 while the Indonesia's Jakarta composite index was down 0.74% at 1,832.51. In other regional market, European shares headed back towards three-year lows, with banks falling sharply as news of bailouts for Fortis and Hypo Real Estate and the nationalization of Bradford & Bingley highlighted current turmoil in the sector, while details of a U.S. plan to shore up the financial sector received a cool reception. In the opening trade, the U.K. FTSE 100 index dropped 2.5% to 4,962.97, the German DAX 30 index fell 2.8% to 5,896.35 and the French CAC-40 index dropped 2.7% to 4,051.29. At 10.53 GMT, the U.K. FTSE 100 index fell further 3.3% to 4,920.62, the German DAX 30 index lost 2.8% to 5,891.05 and the French CAC-40 index declined 3.1% to 4,036.34. On the economic front, Euro zone economic sentiment weakened to 87.7 in September from 88.5 in August. The commission said the reading reached its lowest since 2001. However, the index stood above the expected reading of 87.2. The overall decrease in sentiment was characterized by a fall in confidence in industry, services and construction. The industrial confidence index stood at -12, down from -9 in August. The indicator measuring services confidence fell to zero and that for the construction sector slid to -16. At the same time, consumer confidence remained unchanged at -19 and retail trade confidence rose in September to -8 from -10. Separately, the Commission said the business confidence index slid to 0.79 in September from minus 0.28 in the prior month. The reading for August was revised from minus 0.33. Looking ahead the day is scheduled to release core personal consumption expenditure index for month of August, which will be followed by the data on personal income and expenditure. In the late evening we have building permits details from New Zealand. Japan's statistical house will release its monthly figures of unemployment and industrial production for the month of August. </DIV>

Asian Markets Remain Cautious On Concerns Of Bailout Plan

Hong Kong, Sensex Lead the Regional Fall As Markets In China, Malaysia, and Taiwan Closed For HolidayThe stock markets across the Asian region closed lower, led by Hong Kong…

30 Sep 2008

Market slumps on global financial instability; Sensex hits 18-month low

<DIV>Stocks fell across the globe on persistent questions on the effectiveness of the US bailout package and on continued instability in the global banking sector. The domestic market fell for the third consecutive trading session with Sensex declining 1,096.77 points in last three sessions. The barometer index today ended 506.43 points down. The market recovered after witnessing a sharp intra-day fall. The BSE Sensex recovered close to 200 points from the day's low. The barometer index hit 1-½ year low and the S&P CNX Nifty hit its lowest level in 17 months in mid-afternoon trade. The market breadth was extremely weak as selling was witnessed across the board. ICICI Bank fell more than 12%. The US lawmakers agreeing on a $700 billion bank-rescue package and the House of Representatives approving the nuclear deal with India over the weekend failed to boost the investor sentiments. European markets which opened after Indian markets were down. France's CAC 40, Germany's DAX and UK's FTSE 100 were down between 2.77% to 3.04%. European markets fell as the Belgian, Dutch and Luxembourg governments were forced to rescue financial firm Fortis over the weekend. Stricken UK lender Bradford & Bingley was also nationalised after its branch network and deposit business was sold to Spain's Banco Santander. Most Asian markets were trading lower today, 29 September 2008. Hong Kong's Hang Seng, Japan's Nikkei, Singapore's Straits Times, South Korea's Seoul Composite fell between 1.26% 4.07%. In US, congressional leaders from both parties said they had a tentative agreement on Sunday, 28 September 2008 and lawmakers prepared to vote on Monday, 29 September 2008, on a $700 billion US government fund to buy bad debt. The bailout plan will be introduced in the House of Representatives today, 29 September 2008 and then head to the Senate. Meanwhile, the Indo-US nuclear deal moved into the last lap clearing a major hurdle when the House of Representatives approved a legislation on it that will now go to the Senate before the two countries can implement the civil nuclear agreement. The BSE 30-share Sensex plunged 506.43 points or 3.87% to 12,595.75. The index shed 699.34 points at the day's low of 12,402.82 hit in mid-afternoon trade. The Sensex edged up 11.35 points at day's high of 13,113.53, hit at the onset of the trading session. The S&P CNX Nifty was down 135.20 points or 3.39% to 3,850.05. The BSE Sensex is down 7,691.24 points or 37.91% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8,611.02 points or 40.6% below its all-time high of 21,206.77 struck on 10 January 2008. The index is down 1,096.77 points from a recent high of 13,692.52 hit on 24 September 2008. BSE clocked a turnover of Rs 4,579 crore today 29 September 2008 as compared to a turnover of Rs 4,850.22 crore on Friday 26 September 2008. Nifty October 2008 futures were at 3880.40, at a premium of 30.35 points as compared to spot closing of 3850.05. NSE's futures & options (F&O) segment turnover was Rs 59,905.71 crore, which was higher than Rs 44,297.14 crore on Friday, 26 September 2008. As per the provisional figures on BSE, the foreign institutional investors (FII)s sold shares worth Rs 476.94 crore while domestic funds bought shares worth Rs 554.82 crore today,29 September 2008. The BSE Mid-Cap index was down 4.13% at 4,736.55 and the BSE Small-Cap index was down 5.12% at 5,561.42. BSE Bankex (down 6.02% to 6,175.10), BSE Consumer Durables index (down 5.68% to 2,872.39), BSE IT index (down 5.47% to 3,057.92), BSE Realty index (down 5.26% to 3407.87), BSE Power index (down 5.22% to 2225.08), BSE TEck index (down 5.13% to 2,490.01), BSE Capital Goods index (down 4.86% to 10,270.60) underperformed Sensex. BSE Metal index (down 3.77% to 9,144.23), BSE HealthCare index (down 3.06% to 3,651.18), BSE Auto index (down 2.95% to 3,624.24), BSE PSU index (down 2.88% to 6,146.61), BSE Oil & Gas index (down 1.72% to 8,925.01) and BSE FMCG index (down 0.44% to 2,179.50) outperformed Sensex. The market breadth was weak on BSE with 357 shares advancing as compared to 2,287 that declined. 41 shares remained unchanged. India's largest private firm by market capitalization and oil refiner Reliance Industries fell 1.53% to Rs 1,930.95. The stock recovered from the session's low of Rs 1,881. India's largest FMCG firm by sales Hindustan Unilever rose 0.79% to Rs 254.50. India's largest oil exploration firm by revenue ONGC was down 1.14% at Rs 1,023.30. It recovered from the session's low of Rs 994. India's fourth largest IT exporter by sales Wipro fell 0.19% to Rs 343.10. It recovered from the session's low of Rs 330.10. India's largest private sector bank in terms of net profit ICICI Bank slumped 12.11% to Rs 493.30. The bank clarified today during the market hours that 98% of ICICI Bank UK PLC's non-India investment book is rated investment grade and above. ICICI Bank UK PLC has zero exposure to US subprime-credit, it said. India's largest real estate player by market capitalization DLF fell 5.12% to Rs 350.60. It recovered from the session's low of Rs 329. India's largest electric equipment maker by sales Bharat Heavy Electricals declined 2.65% to Rs 1,509.50. It recovered from the session's low of Rs 1,441. India's largest home loan lender HDFC fell 2.68% to Rs 2,032.75. It recovered from the session's low of Rs 2000. Jaiprakash Associates (down 11.85% to Rs 106.70), Satyam Computer Services (down 9.13% to Rs 292.55), Tata Consultancy Services (down 8.4% to Rs 619.65), edged lower from the Sensex pack. Reliance Natural Resources clocked the highest volume of 1.42 crore shares on BSE. IFCI (89.91 lakh shares), Chambal Fertilisers and Chemicals (71.69 lakh shares), Jaiprakash Associates (63.84 lakh shares) and ICICI Bank (58.37 lakh shares) were the other volume toppers in that order. Reliance Capital clocked the highest turnover of Rs 309.01 crore on BSE. Reliance Industries (Rs 299.81 crore), ICICI Bank (Rs 295.37 crore), Axis Bank (Rs 157.21 crore) and Larsen & Toubro (Rs 134.79 crore) were the other turnover toppers in that order. US light crude for November delivery fell $1.09 to $105.85 a barrel today, 29 September 2008 pressured by gains in the US dollar. US stocks rose on Friday, 26 September 2008. The Dow Jones gained 121.07 points, or 1.10%, to 11,143.13. The S&P 500 index was up 3.83 points, or 0.32%, to 1,213.01, and the Nasdaq composite index was down 3.23 points, or 0.15%, to 2,183.34. Back home, indices tumbled on Friday, 26 September 2008 on uncertainty about the future of the US financial system. The BSE 30-share Sensex fell 445 points or 3.28% to 13,102.18 and the S&P CNX Nifty lost 137.10 points or 3.34% to 3985.25, on that day. Key benchmark indices suffered a severe setback in the week ended Friday, 26 September 2008, mirroring weak global market and amid impasse over the proposed $700 billion bailout deal for the US financial sector. The barometer index BSE Sensex lost 940.14 points or 6.69% to 13,102.18 in and the S&P CNX Nifty shed 260 points or 6.12% at 3985.25, in the week. </DIV>

Market slumps on global financial instability; Sensex hits 18-month low

Stocks fell across the globe on persistent questions on the effectiveness of the US bailout package and on continued instability in the global banking sector. The domestic m…

30 Sep 2008

Indian banks post Rs 410 cr MTM losses

<DIV>The Indian banking sector saw a mark-to-market losses of around Rs 410 crore due to their investment in instruments of troubled US financial giants like Lehman Brothers and AIG, 75 per cent of which is accounted by ICICI Bank alone. "In terms of MTM losses of the banking sector including private sector, stood at Rs 410 crore owing to financial crisis in some of financial institutions. Of this, ICICI Bank alone has MTM loss of about Rs 309 crore," a senior Finance Ministry official said in New Delhi. MTM is based on the market value of underlying securities and keep varying. MTM is a notional loss but it would be reflected in the balance sheet. Besides, some state-owned banks had exposure in the instruments of these troubled US financial institutions to the tune of Rs 234 crore. "Exposure of a few public sector banks to credit-linked and floating rate notes of Lehman Brothers and other troubled institutions is about USD 52 million," he said. In his first reaction after the collapse of Lehman Brothers and the bailout of the largest US insurer AIG, Finance Minister P Chidambaram had said India's financial institutions were on a sound foundation. As far as PSU banks are concerned, in which the government is a majority owner, he had said they didn't have any 'undue exposure'. "In fact, many of them have no exposure at all. Whatever exposures they have are in accordance with RBI's prudential guidelines," he said, adding, ICICI Bank had some exposure which it has disclosed. The London subsidiary of ICICI Bank had USD 80-million exposure in the senior bonds of Lehman Brothers. ICICI Bank Joint Managing Director Chanda Kochhar had said the investment by the subsidiary constitutes less than one per cent of the total assets of the subsidiary and less than 0.1 per cent of the consolidated total assets of the ICICI Group. On June 30, 2008, ICICI Bank and its subsidiaries had consolidated total assets of Rs 484,643 crore. The Finance Minister had said while the country's banking system was reasonably insulated from the global crisis, the credit crunch could have some effect in India as well. "If there is a credit crunch in the rest of the world, it will, to some extent, impact the credit availability in Indian market. RBI, day before yesterday, took steps to provide liquidity to the banks," he had said. </DIV>

Indian banks post Rs 410 cr MTM losses

The Indian banking sector saw a mark-to-market losses of around Rs 410 crore due to their investment in instruments of troubled US financial giants like Lehman Brothers and …

28 Sep 2008

Govt clears 27 new SEZs

<DIV>The Board of Approval (BoA) on Special Economic Zones (SEZs) approved 27 proposals, with 17 getting the formal clearance and 10 others receiving in-principle green signal. The formally approved 17 SEZs, included an SEZ by Bharat Forge near Pune which would spread across 1,271 hectares and see investments of over Rs50bn. Another significant SEZ that was formally approved was a 1,804 hectares SEZ by Jindal's JSW Bengal Steel in Midnapur in West Bengal. This SEZ would see an investment of Rs153.21bn. Other 10 SEZs also received in-principle approvals from the Board of Approval. These include a heavy engineering SEZ of 467 hectares to be built by L&T Ship Building in Tamil Nadu. The project would see an investment of Rs16.65bn. One of the largest projects among these plans would involve an investment of Rs113.4bn. The multi-product EMPI Vittal Centre has got in-principle nod and will come up on an area of 1,100 hectares in Gujarat. The SEZ is being promoted by former Central Vigilance Commissioner N Vittal. </DIV>

Govt clears 27 new SEZs

The Board of Approval (BoA) on Special Economic Zones (SEZs) approved 27 proposals, with 17 getting the formal clearance and 10 others receiving in-principle green signal. T…

28 Sep 2008

Why global markets are fluctuating

<DIV>Ok, first let's talk about what really went wrong in an easy to understand layman's language Financial Markets is all about confidence in the System and an underlying assumption that system will not fail. But, after the bankruptcy of Lehman Brothers in USA and Northern Rock in UK and the bailout of Fannie, Freddie and AIG investors world over have lost confidence and faith in the system. Infact some people have even started doubting if any system exists at all. Their doubts are not unfounded as the tricky web of Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDO), which are traded privately and no one, yes no one including SEC, FED or US Treasury regulate them. And this is where the problem lies. It is an unregulated trillion dollar market which has no system in place to track follow and regulate the flow of deals and transactions. It all started with the boom in USA real estate market a decade back. The cheap credit fueled the real estate rally for almost a decade. The innovative Investment Bankers at Wall Street wanted a pie of the action and devised some new innovative instruments like mortgage backed securities and insured them with Credit Default Swaps. </DIV>

Why global markets are fluctuating

Ok, first let's talk about what really went wrong in an easy to understand layman's languageFinancial Markets is all about confidence in the System and an underlying assumpt…

28 Sep 2008

HCL Tech makes counterbid for Axon

<DIV> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>HCL Technologies announced on Friday that it was making a counter bid to acquire UK-based IT firm Axon Group. Under the terms of the offer, Axon shareholders would receive 650 pence in cash for each share, inclusive of the Interim Dividend. The offer price values the entire issued and to be issued share capital of Axon at approximately £441.1mn. The Infosys bid valued Axon at around £407mn. It may be recalled that earlier, HCL Tech had denied media reports of it making a counter offer for Axon. The offer price represents a premium of 42.6% to the average closing price of 455.7 pence per Axon share for the three months ended August 22, being the last business day prior to the announcement of the offer by Infosys for Axon; 29.4% to the closing price of 502.5 pence per Axon share on August 22, being the last business day prior to the announcement of the offer by Infosys for Axon; and 8.3% to the Infosys offer of 600 pence per Axon share, inclusive of the Interim Dividend. </DIV>

HCL Tech makes counterbid for Axon

HCL Technologies announced on Friday that it was making a counter bid to acquire UK-based IT firm Axon Group. Under the terms of the offer, Axon shareholders wou…

28 Sep 2008

Tremors continue to rattle Wall Street

<DIV>After last week's startling events on Wall Street that sent shockwaves across the global markets, many would have thought the problems facing the US financial sector were over. However, that was not to be, as more tremors struck the world's premier financial market this week that added to the global gloom. What's worse, at the end of another tough week, there was no clarity on whether the US government will be able to arrest the slide. An unprecedented bailout package proposed by White House to pull the rotten financial sector out of the abyss was stuck in the crosshair of political gamesmanship. The failure of the Bush regime to convince the lawmakers on both sides about the massive rescue plan sent global markets into a tailspin on the last day of the week. The fire sale of Washington Mutual to JP Morgan also had an adverse effect on market sentiment. Shares of North Carolina's Wachovia Corp. nearly 30% in early trading on Friday following the failure of Washington Mutual. The Federal Reserve gave America's last two big investment banks, Goldman Sachs and Morgan Stanley, permission to change their status to bank holding firms. They will be subject to stiffer regulation, but allowed to take deposits. Goldman Sachs raised US $5bn to shore up its capital by selling shares to Berkshire Hathaway, the firm run by Warren Buffett, a celebrated investor. The next day, it raised US $5bn more from a share offering. Mitsubishi-UFJ, Japan's largest bank, agreed to buy up to 20% of Morgan Stanley for US $8.4bn. The Federal Bureau of Investigation said it was looking into 26 cases of potential fraud related to the collapse of America's mortgage industry. The financial institutions under investigation are said to include the now-defunct Lehman Brothers, as well as AIG, Fannie Mae and Freddie Mac. In a bid to attract more investment to America's struggling financial sector, the Fed relaxed rules on bank ownership. Private-equity firms will now be allowed to own bigger stakes. </DIV>

Tremors continue to rattle Wall Street

After last week's startling events on Wall Street that sent shockwaves across the global markets, many would have thought the problems facing the US financial sector were ov…

28 Sep 2008

Market tanks on uncertainty over US bailout deal

<DIV>Key benchmark indices suffered a sever setback mirroring weak global imarket and amid impasse over the proposed $700 billion bailout deal for the US financial sector. Sustained selling by foreign institutional investors weighed on the market sentiment. The market posted losses in four out of five trading sessions. The S&P CNX Nifty fell below the psychological 4,000 level. Among index pivotals Ranbaxy Laboratories and Hindalco Industries hit 52-week lows on BSE. A financial crisis engulfed the global markets earlier this month with the US investment banking giant Lehman Brothers filing for bankruptcy, Merrill Lynch being bought over by the Bank of America and the US government bailout of American Insurance Group (AIG) for $85 billion in turn of 80% stake. On Thursday, 25 September 2008, JPMorgan Chase acquired the banking assets of Washington Mutual after the troubled thrift was seized by federal regulators, marking the biggest bank failure in the United States. The barometer index BSE Sensex lost 940.14 points or 6.69% to settle at 13,102.18 in the week ended Friday, 26 September 2008. The S&P CNX Nifty shed 260 points or 6.12% at 3985.25 in the week. The BSE Mid-Cap index lost 287.96 points or 5.50% to 4,940.82 in the week ended Friday, 26 September 2008. The BSE Small-Cap index slipped 354.21 points or 5.69% to 5,861.78 in the week. The BSE Sensex is down 7184.84 points or 35.41% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8104.59 points or 38.21% below its all-time high of 21,206.77 struck on 10 January 2008. Trading for the week started on a subdued note as rise in oil prices weighed on the market sentiments on Monday, 22 September 2008. The BSE 30-share Sensex fell 47.36 points or 0.34% to 13,994.96 and the S&P CNX Nifty fell 22.20 points or 0.52% to 4223.05, on that day. Key benchmark indices suffered sharp losses on Tuesday, 23 September 2008, mirroring fall in global stocks on uncertainty about the potency of the US government's $700 billion bank bailout. The BSE 30-share Sensex was down 424.65 points or 3.03% to 13,570.31 and the S&P CNX Nifty fell 96.15 points or 2.28% to 4,126.90, on that day. Domestic bourses saw a relief rally on Wednesday, 24 September 2008, posting decent gains to snap two-day losses. The BSE 30-share Sensex rose 122.21 points or 0.9% to 13,692.52 and the S&P CNX Nifty gained 34.35 points or 0.83% to 4,161.25, on that day. On Thursday, 25 September 2008, key benchmark indices ended volatile session in the red. The BSE 30-share Sensex shed 145.34 points or 1.06% to 13,547.18 and the S&P CNX Nifty was down 50.70 points or 1.22% to 4110.55, on that day. Indices tumbled on Friday, 26 September 2008, as Washington Mutual's failure and uncertainty over the fate of the US government's $700 billion rescue plan for the financial sector haunted investor sentiment. First-time jobless claims in the US rose to their highest count in seven years pointing to a slow down. The BSE 30-share Sensex lost 445 points or 3.28% to 13,102.18 and the S&P CNX Nifty fell 125.30 points or 3.05% to 3,985.25, on that day. Foreign institutional investors FIIs have been consistently pressing sales to pull out their investments from India and other emerging markets in an attempt shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 8,061 crore (till 25 September 2008). FII outflow reached Rs 36,574.90 crore in calendar 2008. India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) lost 4.43% at Rs 1960.90. Reliance Industries (RIL) began production of crude oil at KG-D6 block of the Krishna Godavari basin on 17 September 2008, the company said on 22 September 2008. RIL holds 90% participating interest in the block while the balance is being held by Niko Resources. Sterlite Industries (India) fell 4.36% to Rs 447.20. The company's parent Vedanta Resources dropped a restructuring plan. As per a restructuring plan proposed earlier, the Vedanta group was to create three units focused on commodities: copper, zinc and lead; aluminium and energy; and iron ore. India's largest drug maker by sales Ranbaxy Laboratories tumbled 23.67% at Rs 272.40 on reports the Canadian drug regulator, Health Canada, issued a notice to Ranbaxy saying it will be particularly cautious about drug marketing applications from Ranbaxy after the US drug regulator blocked the sale of more than 30 generic medicines made in two factories by the company. The stock hit a 52-week low of Rs 269.05 on 26 September 2008. Banking shares were hard hit on fears local banks may reportedly suffer losses on their exposure to the US financial giants that collapsed recently. ICICI Bank (down 10.64% at Rs 561.25), HDFC Bank (down 4.12% at Rs 1245.70), and State Bank of India (down 8.33% at Rs 1434.20), dipped. Real estate heavyweights were not spared either. India's largest real estate developer in terms of market capitalisation DLF lost 13.45% to Rs 369.50. Unitech, the country's second largest real estate developer in terms of market capitalisation fell 30.59% to Rs 111.05, after sliding to a 52-week low of Rs 109.10 on 26 September 2008. India's largest aluminium producer Hindalco Industries slipped 12.19% at 99.10 after hitting a 52-week low of Rs 98.50 on 26 September 2008. The company's Rs 5,050 crore rights share offering for subscription Monday, 22 September 2008. The sale in a ratio of three shares for every seven held at Rs 96 a share will close on 10 October 2008. The company aims to use the funds to repay a bridge loan it had taken to buy Canada's Novelis in 2007. Software firms fell on lingering concerns about the economic prospects for the United States, their biggest export market. Satyam Computer (down 13.01% to Rs 321.95), Infosys Technologies (down 10.85% to Rs 1447.10), Wipro (down 17.54% to Rs 343.75), slipped. India's largest software exporter by sales TCS lost 11.69% at Rs 676.45 after hitting a 52-week low of Rs 666.20 on 26 September 2008. India's largest state-run oil explorer Oil & Natural Gas Corporation (ONGC) dropped 3.45% to Rs 1035.10. As per reports, ONGC Videsh (OVL), the overseas investment arm of ONGC, may take a $1 billion short-term loan to partly fund the $2.8 billion acquisition of London Stock Exchange-listed Imperial Energy. Inflation remained steady, the latest data showed. Inflation based on the wholesale price index rose 12.14% in 12 months to 13 September 2008, unchanged from the previous week's annual rise, government data released after trading hours on Thursday, 25 September 2008, showed. Inflation for the week ended 19 July 2008 was revised upwards to 12.54% from 11.98%. On 22 September 2008 the Indian government eased overseas borrowing rules for infrastructure companies, increasing the amount they can bring in to $500 million from $100 million. The ceiling on borrowing by infrastructure firms has been raised to $500 million a year from the exiting $100 million a year. </DIV>

Market tanks on uncertainty over US bailout deal

Key benchmark indices suffered a sever setback mirroring weak global imarket and amid impasse over the proposed $700 billion bailout deal for the US financial sector. Sustai…

28 Sep 2008

Nifty falls below 4,000

<DIV><TR> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>Stocks fell sharply today, ending a lackluster week of trading mired in uncertainty about the future of the US financial system. The BSE 30-share Sensex fell 445 points. Wary investors continued to unload shares across-the-board as news of the biggest ever US bank failure compounded the bearish sentiments, with the US government brokering a last-ditch purchase of thrift Washington Mutual by JPMorgan. The S&P CNX Nifty fell below the psychological 4,000 level. Realty, metal and banking stocks slumped. Export-driven information technology stocks extended recent fall. Weak US economic data also weighed on market sentiments. Data released overnight showed US-made durable goods fell 4.5% in August 2008, while sales of new homes in the US dropped 11.5% during the month. First-time jobless claims in the US rose to their highest count in seven years pointing to a slow down. European stocks posted a steep decline as uncertainty persisted over the $700 billion US financial sector bailout plan. Key indices in UK, France and Germany were down 2.07% to 2.12%. Asian market, which opened before Indian market, ended in red. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.16% to 2.16%. The BSE 30-share Sensex fell 445 points or 3.28% to 13,102.18. The index shed 492.76 points at the day's low of 13,054.42 at the fag end of the trade. It was down 60.98 points at day's high of 13,486.20, hit at the onset of trading session. The S&P CNX Nifty was down 137.10 points or 3.34% to 3985.25. Nifty October 2008 futures were at 3984.50, at a discount of 0.75 points as compared to spot closing. The BSE Mid-Cap index fell 2.99% at 4,940.82 and the BSE Small-Cap index fell 3.11% at 5,861.78. Both the indices outperformed the Sensex. The market breadth was poor on BSE with 442 shares advancing as compared to 2172 that declined. 59 shares remained unchanged. BSE clocked a turnover of Rs 4835 crore as against Rs 5,070.61 crore on Thursday, 25 September 2008. NSE's futures & options (F&O) segment turnover was Rs 44297.14 crore, which was almost half of Rs 82697.69 crore on Thursday, 25 September 2008. </TR></DIV>

Nifty falls below 4,000

Stocks fell sharply today, ending a lackluster week of trading mired in uncertainty about the future of the US financial system. The BSE 30-share Sensex fell 445…

28 Sep 2008

Gold Falls Below $ 900

<DIV> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'></TD></TR></TBODY></TABLE>US Still Not Decided On Bailout Plan Gold for December expiry finished down $17.80 at $891.20 while Congress heard testimony from White House officials and may soon decide whether or not to give its support to the proposed $700 billion bailout plan. The U.S. dollar saw moderate strength against other major currencies on Tuesday in New York. The dollar edged higher against the euro and moved away from a recently-seen four-week low. In trading with the British pound, the dollar inched away from a monthly low with a mild afternoon rally. MCX Gold contract for October expiry was also quiet shaky in the intra day trades and closed the session at Rs 13013 per 10 grams up Rs 104. Oil prices also fell on Tuesday as November took over as the front-month contract, further reducing gold's hedge value. Light sweet crude fell to $106.09, down $3.28 on the session. October crude oil finished above $120 a barrel on Monday as traders scrambled to collect oil on the final day of the contract. </DIV>

Gold Falls Below $ 900

US Still Not Decided On Bailout PlanGold for December expiry finished down $17.80 at $891.20 while Congress heard testimony from White House officials and may so…

24 Sep 2008

FDIC data hints at more financial trouble in US

<DIV> If the indications from Federal Deposit Insurance Corporation (FDIC), the fund established by the US government to insure deposits of banks and institutions, are anything to go by, the worst does not seem to be over for the US financial markets. FDIC said the banks and savings institutions on the 'problem list' grew to 117 in the second quarter of the calendar year 2008 against 90 in the first quarter. "More banks will come on the list as credit problems worsen. Assets of problem institutions also will continue to rise," said Ms Sheila C. Bair, Chairman, FDIC, in a statement. FDIC reported that net income of commercial banks and savings institutions under its ambit plunged 87 per cent to $5 billion in the second quarter of the calendar year 2008 against $37 billion logged in the same quarter last year. With the exception of the fourth quarter of last year, the Q2 earnings were the lowest for the industry since the fourth quarter of 1991, it said. "By any yardstick, it was another rough quarter for bank earnings, but the results were not unexpected as the industry coped with financial market disruptions, housing slump, worsening economic conditions and the overall downturn in the credit cycle," said Ms Bair. Total assets of problem institutions increased from $26 billion to $78 billion, with $32 billion coming from California-based IndyMac Bank, which failed in July. Why the drop The FDIC cited higher provisions for loan losses as the primary reason for the drop in industry profits. Loss provisions totalled $50.2 billion, more than four times the $11.4 billion the industry set aside in the second quarter of 2007. Almost a third of the industry's net operating revenue went to building up loan-loss reserves. The size of the earnings decline was mainly attributable to a few large institutions, but more than half of all insured institutions (56.4 per cent) reported lower net income in the second quarter. The industry reported lower non-interest income than a year earlier, reflecting continuing weakness in market-sensitive revenues, such as income from trading and securitisation activities. Proceeds from sales of securities and other assets yielded a net loss in the second quarter, compared to a net gain a year ago. Ms Bair also announced that in early October, the FDIC will consider a plan to replenish the agency's Deposit Insurance Fund which experienced a large drop due to added loss reserves for IndyMac and other bank failures Via Thehindubusinessline</DIV>

FDIC data hints at more financial trouble in US

If the indications from Federal Deposit Insurance Corporation (FDIC), the fund established by the US government to insure deposits of banks and institutions, are anything t…

23 Sep 2008

PFC to wire up with PE firms to finance power plants

<DIV> Major financial institutions and private equity firms such as Cornell Capital and Actis are likely to join hands with leading domestic power sector financing company Power Finance Corporation (PFC) to set up an equity consortia for funding power projects in the country. The state-owned institution would identify power projects needing equity support and provide lucrative investment opportunity to consortia partners. The new initiative would be run by the newly set up arm of PFC, Power Equity Capital Advisors Pvt Ltd (PE-CAP). Other institutions and PE firms that may become part of the consortia include Sansar Capital Asia, Nexent Ventures, Capital Management Advisors and Highfield Capital Management. "This equity consortium will have both international and domestic financial institutions. While PFC will develop the standard appraisal criteria, the other members will infuse capital in the domestic power projects. This is a major step towards securing a safe and permanent line of equity for the fund-starved power projects in the country," a senior PFC official told ET. As per government estimates, an investment of over Rs 10.5 lakh crore is expected in the 11th Plan in the power sector. After exploring all possible avenues of funding, there is still a huge gap of over Rs 4 lakh crore. While PFC would meet debt requirement, the new initiative would strive to meet the equity shortfall. It would also provide avenues to PE firms to get a foothold in the Indian power market. To get the equity consortia running, PFC is also in talks with a list of heavyweights in the domestic financial sector, which include banks and insurance majors such as State Bank of India, Axis Bank, Bank Of India, LIC, HDFC, ICICI, Bajaj Allianz, Tata AIG and Oriental Insurance. "We are close to reaching an agreement with a number of these players and other global investment companies," said the official. "The plans of having a private equity fund were shelved because there are tax implications both at the fund level and at the investor end," he added. The advantage with the consortium is that there will be no cap on the investment amount that can be generated. After the assessment done by PFC, the members of the consortium may even finance the whole project depending on their financial strength," he added. Apart from others, the new initiative would also provide avenues to PFC to make its own equity investments in power projects. This is an area that is being actively pursued by the company. According to PFC, the equity consortia would be a big boon for the domestic power sector as it would help to bring down the overall cost of funds and subsequently result in lower tariff for consumers. The average cost of debt varies between 12% to 15% based on the project feasibility. A mix of equity and debt support is considered ideal for making projects viable on a longer term. Source: Economic Times</DIV>

PFC to wire up with PE firms to finance power plants

Major financial institutions and private equity firms such as Cornell Capital and Actis are likely to join hands with leading domestic power sector financing company Power …

23 Sep 2008

ChrysCap raises equity exposure in Amtek group

<DIV> <DIV class=entrybody> The clandestine disinterestedness fund, ChrysCapital, has added its disinterestedness acknowledgment in the Amtek group, which has a above attendance in the auto basic industry. The PE armamentarium has bought 7% in Amtek Auto, 4% added pale in Amtek India and beginning disinterestedness of 7.6% in Ahmednagar Forgings. Confirming the fund's acquisitions, Amtek accumulation CFO S Singhi said, "ChrysCapital has been affairs pale in our accumulation companies from the abiding point of view, with a time border of about 2-3 years. The armamentarium appears to be bullish on the auto sector." The PE fund's investments accept appear at a time back the auto and auto accessory sectors are casual through a asperous application afterward the ascent absorption ante and a arrest in demand. ChrysCapital has spent Rs 32 crore to access its captivation in Amtek India from 5.8% to 9.8% and alloyed Rs 23 crore into Ahmednagar Forgings. From its aiguille of Rs 207 on December 17, 2007, the shares of Amtek India slipped 66% to abutting at Rs 70.9 on Friday. Ahmednagar Forgings afford 67% to Rs 89 during the aforementioned period. The Amtek Accumulation is in the action of amalgamation the operations of its accumulation companies, Amtek India, Ahmednagar Forgings, Amtek Arena Gears, Amtek Crankshaft, Amtek Castings India with Amtek Auto. After the merger, ChrysCapital will authority about 8-9% pale in the alloyed entity, according to Singhi. Amtek Auto has alone affairs to access the Frankfurt-based KSM Castings due to differences over valuations. Amtek Auto reportedly offered 15% beneath than the allurement amount of 220 mn euros. Two PE funds additionally withdrew from the race. Consequently, KSM Castings has put its sales affairs on the backburner. The proposed accretion was allotment of Amtek's action to consolidate its European business. Amtek enjoys about 40% of the castings bazaar allotment in Western Europe. KSM Castings is a arch architect of aegis and complex, ablaze metal castings for the all-around automotive industry. Amtek has been on an accretion spree. The accumulation aboriginal acquired the US-based arena apparatus architect Midwest Manufacturing in 2002, followed by the UK-based GWK and Lloyds Brierly Hill. It afresh bought Triplex Ketlon, a accessory aggregation in the UK. In the calm market, Amtek acquired the Pune-based Akiel Castings and Amforge's conrod analysis in Delhi. Source: Economic Times</DIV></DIV>

ChrysCap raises equity exposure in Amtek group

The clandestine disinterestedness fund, ChrysCapital, has added its disinterestedness acknowledgment in the Amtek group, which has a above attendance in the auto basic ind…

23 Sep 2008

Asian Markets Follows Wall Street Losses

<DIV>Hong Kong, Shanghai shows retreat While Kospi Register Some Gains The stock markets across the Asian region closed mostly lower on worries about the effectiveness of the U.S. government's $700 billion bailout plan for failing financial firms. Investors also turned cautious ahead of the U.S. Treasury Secretary Henry Paulson's testimony to the Senate Banking Committee. The Dow closed down 3.3% at 11,015.69, the Nasdaq closed down 4.2% at 2,178.98 and the S&P 500 closed down 3.8% at 1,207.09. Crude oil futures for November settlement fell more than $2 in the Asian session Tuesday after the contract surged nearly $7 to settle at $109.37 a barrel. Crude-oil futures leaped more than $16 a barrel yesterday to score their biggest one-day gain in dollar terms since 1984 -- when crude began trading on the New York Mercantile Exchange. Crude futures rallied yesterday to a high of $130 a barrel -- their highest intraday level in two months -- buoyed by a steep drop in the U.S. dollar and speculation that the Bush administration's proposal to stabilize the financial sector might help revive economic growth. Trading was halted for five minutes after the October crude contract reached the daily price-movement limit of $10 per barrel. Under trading rules, the price-change limit is increased by another $10. Crude for October delivery rose $16.37, or 15.7%, to close at $120.92 a barrel on the New York Mercantile Exchange. The gain surpassed the previous price-gain record of $10.75, registered on June 6 of this year. According to Fact Set this is the highest percentage rise in a single day was seen on Jan. 3, 1994, at 20.9%. On the currency front, the Australian dollar held firm against a broadly weak U.S. dollar, supported by a rebound in commodities. However, the Aussie trimmed gains as a fresh bout of risk aversion swept financial markets. In late trade, the Aussie eased to US$0.8414 from a session high of US$0.8470. The Aussie closed Monday's local session at US$0.8328-0.8331 The New Zealand dollar steadied slightly below three-week highs on Tuesday. The kiwi finished the session at US$0.6892-0.6902 compared to Monday's local close of US$0.6861-0.6871. The South Korean won fell against the U.S. dollar. The local unit finished the session at 1,149.0 a dollar, down from Monday's close of 1,140.3 a dollar. Coming back in Asian equity markets, the financial markets in Japan remained closed on account of Autumn Equinox holiday. The Chinese stock market closed lower, on profit taking, after the key index surged more than 17% over the previous two sessions. Property developers and liquor producers led the losers. However, index heavyweight PetroChina posted sharp gains on news that its parent company bought 60 million shares, equivalent to a 0.03% stake. The benchmark Shanghai Composite Index closed down 1.56% at 2,201.51. The Hong Kong market closed sharply lower on profit taking following steep gains in the previous two sessions. The benchmark Hang Seng index closed down 3.87% at 18,872.85. The Australian stock market closed sharply lower, following two days of gains that saw the index climb almost 10%. The benchmark S&P/ASX 200 index closed down 1.9% at 4,923.5 and the broader All Ordinaries index lost 1.8% at 4,957.7. The New Zealand stock market closed lower after posting 3% gains over the previous two trading sessions. The benchmark NZX 50 index closed down 0.85% at 3,228.19 and the broader NZX All Capital index lost 0.79% to finish at 3,241.37. The South Korean market closed higher, recovering from a weak start following Wall Street's plunge overnight. Investors bought machinery, finance and other blue-chip stocks, despite weakness among regional markets and the biggest one-day jump in crude oil prices on Monday. The benchmark Korea Composite Stock Price Index, or KOSPI, rose 1.44% to finish at 1,481.37, extending gains for the third consecutive trading session. In India, weak global markets and high crude oil prices spooked domestic markets as benchmark index plunged by about 3% as doubts grew about the success of the US government $700 billion bailout package to shore up the economy. As per provisional closing, the BSE 30-share Sensex was down 424.65 points or 3.03% to 13,570.31. The index shed 451.49 points at the day's low of 13,543.47, hit in fag end of the session. The Sensex fell 16.7 points at day's high of 13,978.26, hit in mid-morning. The S&P CNX Nifty was down 95.80 points or 2.27% to 4127.25. Elsewhere, Taiwan's Taiex closed up 1.2% at 6,182; Singapore's STI closed down 2.7% at 2,476; Malaysia's KLCI closed down 0.2% at 1,026; Indonesia's Jakarta Composite index closed down 1.3% at 1,873. Japanese markets were closed for a holiday. In the other part of the world, European shares declined, with consumer discretionary stocks and banks under pressure as oil futures hovered around $107 a barrel and investors continued to fret about the U.S. government's plans to stabilize the financial sector and the health of the European economy. On a national level in Europe, the U.K. FTSE 100 index fell 2% to 5,13154, the German DAX 30 index declined 0.6% to 6,071.88 and the French CAC-40 index fell 1.4% to 4,165.21. At 10.37 GMT continued to gain further as U.K. FTSE 100 index plunged further by 2.24% to 5,118.78. The German DAX 30 index decreased by 0.73% to 6,062.94, while the French CAC-40 index was down by 1.6% to 4,156.10. Looking ahead for the day, all eyes will be on Federal Reserve Chairman Ben Bernanke when he testifies before the Senate Banking Committee regarding the U.S. financial markets. It will be accompanied by housing price index for the month of July and Richmond Fed manufacturing index for the month of September. In the evening ABC/ Washington Post will release its weekly consumer confidence report for the week ended on 21 September 2008. </DIV>

Asian Markets Follows Wall Street Losses

Hong Kong, Shanghai shows retreat While Kospi Register Some GainsThe stock markets across the Asian region closed mostly lower on worries about the effectiveness of the U.S.…

23 Sep 2008

Indian Banks exposure to failed investment banks

<DIV>Nine of the country's largest commercial banks including State Bank of India (SBI), ICICI Bank and HDFC Bank reportedly have exposure of $420 million in the US financial giants which collapsed recently. The government feels banks other than SBI would suffer losses of Rs 600 crore due to the crisis. The Children's Investment Fund (TCI), a UK-based hedge fund, is reportedly planning legal action against Anil Agarwal-owned Vedanta Resources for its recent restructuring proposal, on the ground that it is skewed against minority shareholders. Recently, the UK-based Vedanta Resources Inc., parent of the country's largest zinc and copper producer, Sterlite Industries India had announced that it was splitting its businesses into three commodity-based verticals to simplify the group corporate structure. Sterlite Technologies is reported to be in advanced discussions to acquire UK-based cabling company Brand-Rex for roughly $55 million. Cement prices are likely to go up by Rs 3 - Rs 5 per bag in Mumbai, Delhi, National Capital Region, Gujarat and the southern markets from 1 October 2008, suggest reports. Reliance Petroleum reportedly plans to begin production at its second refinery in Jamnagar by mid-November. Karuturi Global is reportedly raising $100 million by selling a 15% stake in its Dubai-based subsidiary. Essar Shipping Ports & Logistics is reportedly in talks with a few global container port operators for a tie-up as part of its plans for a foray into container berth operations in the Indian ports sector. Unlisted Sahara India Financial Corporation will reportedly sell its equity stake in Sahara One Media and Entertainment and use the proceeds to meet investment norms laid down by the Reserve Bank od India. Maytas Infrastructure said on Monday, 23 September 2008 it has secured contracts to build electricity sub-stations, transmission lines and related works in two districts in Maharashtra. The two contracts are totally worth Rs 481 crore, it said in a statement. Lanco Infratech on Monday, 23 September 2008 said it has received a contract worth Rs 308.98 crore from Andhra Pradesh government for construction related works. The board of Mirc Electronics at the meeting held on 18 September 2008 approved the proposed amalgamation of Guviso Holdings with the company. </DIV>

Indian Banks exposure to failed investment banks

Nine of the country's largest commercial banks including State Bank of India (SBI), ICICI Bank and HDFC Bank reportedly have exposure of $420 million in the US financial gia…

23 Sep 2008

Gold Surpasses $ 900 Mark Again

<DIV>Extreme Volatility In Financial Markets Gold futures rose more than 5% Monday to end above $900 an ounce for the first time in seven weeks, as a massive government plan to rescue the financial sector pressured the U.S. dollar, increasing the metal's appeal as an alternative investment. Gold for December delivery rose $44.30, or 5.1%, to close at $909 an ounce on the Comex division of the New York Mercantile Exchange, ending above $900 for the fist time since Aug. 4. MCX Gold contract closed the session at Rs 13117 per 10 grams up Rs 408. The dollar sold off sharply against the majors at the start of the week amid a sharp run-up in crude oil prices and steep declines in the US equity bourses. EUR/USD trades near the 1.48. Oil posted its largest single day advance, rallying by $16.37 to $120.92 per barrel, which was largely attributed to the expiration of October contracts. TThe greenback plunged from 1.4436 to above the 1.48-level against the EURO while losing sterling from 1.8262 to 1.8588. Uncertainty over the US government's $700 billion rescue plan to purchase bad mortgage debts off banks' balance sheets has triggered heightened volatility in the financial markets and raised fears on whether it will solve the current crisis. The plan is still pending Congressional approval, with additional details possibly not revealed until next week. The dollar will likely continue to bear the brunt of the sharp volatility and concerns of a potentially sharp spike in the deficit. Spot gold continues to trade above $900 per ounce, while crude oil was up by over $25 per barrel in the previous session. </DIV>

Gold Surpasses $ 900 Mark Again

Extreme Volatility In Financial MarketsGold futures rose more than 5% Monday to end above $900 an ounce for the first time in seven weeks, as a massive government plan to re…

23 Sep 2008

India's trade deficit balloons

<DIV>India's trade deficit, which crossed 10 billion dollars in July alone, is becoming a cause of concern for the government, a senior commerce ministry official said. "Trade deficit is worrying," Commerce Secretary Gopal Pillai told reporters here. He said if the confidence in the Indian economy is not maintained, trade deficit would prove to be a bigger problem. "If the confidence fails, then the trade deficit becomes a big issue," he said. India's exports grew to 16.34 billion dollars in July this year, while imports rose to 27.14 billion dollars, leaving a trade gap of 10.79 billion dollars. For the April-July 2008 period, the trade gap widened to 41.22 billion dollars as exports grew 24.6 per cent to 59.19 billion dollars, while imports reached 100.41 billion dollars. Growth in exports has been mainly on account of the sharp depreciation in value of the rupee against the dollar. The Indian currency closed at 45.45 to a dollar today. Last week, it had dipped to a two-year low of 46 against the greenback . Pillai, however, said the rupee would appreciate by early next year. "Post-December, the rupee is likely to appreciate as the global financial situation is expected to start improving," he said. Asked if the global slowdown will impact India's export target of 200 billion dollars for the current fiscal, Pillai said the target would be met. "Rupee depreciation is helping exports... In spite of all the recession if you have a 25 per cent growth in exports in dollar terms, it should be a big achievement," he said. </DIV>

India's trade deficit balloons

India's trade deficit, which crossed 10 billion dollars in July alone, is becoming a cause of concern for the government, a senior commerce ministry official said."Trade def…

23 Sep 2008

Chinese Banks exposure to Lehman

<DIV>Two more Chinese banks have reported holding Lehman Brothers bonds, raising total Lehman debt disclosed by Chinese lenders to USD 634.8 million. China Construction Bank Corp, the country's second-largest commercial lender by assets, said in a statement issued through the Hong Kong Stock Exchange that it holds USD 191.4 million in Lehman bonds. That was the biggest exposure reported so far for a Chinese bank to the failed Wall Street house. A midsize lender, China CITIC Bank Corp said in a separate statement it has USD 76 million in Lehman bonds. Analysts say the impact of Lehman's failure on Chinese banks should be limited. Other state-owned banks have reported holding Lehman debt but say it accounts for only a tiny fraction of their assets. China's biggest lender, Industrial & Commercial Bank of China Ltd., says it owns Lehman bonds worth USD 151.8 million. Construction Bank's Lehman holdings are 0.29 percent of net assets and should have no effect on its financial position, the bank said. It said the bank would make allowances for possible losses. Bank of China Ltd., the country's No. 3 lender by assets, says it owns Lehman bonds worth USD 75.6 million. Bank of Communications Ltd, the country's fifth-largest commercial lender, says it has USD 70 million in Lehman bonds. Another midsize lender, China Merchants Bank Ltd., says its Lehman bonds are valued at USD 70 million. Last week, China's Hua An Fund Management Co, warned of possible heavy losses due to Lehman's failure. Hua An said its International Balanced Fund is invested in notes provided by Lehman that are linked to stocks, bonds and other assets. </DIV>

Chinese Banks exposure to Lehman

Two more Chinese banks have reported holding Lehman Brothers bonds, raising total Lehman debt disclosed by Chinese lenders to USD 634.8 million.China Construction Bank Corp,…

23 Sep 2008

Major indices register handsome gains in Asia

<DIV>Overall session ends mixed though as SENSEX and Strait Times end in red The Asian equity markets ended on a strong note today with the major benchmark indices in the region closing with handsome gains though the region failed to witness an across the board rally. The overall sentiment remained positive, tracking gains in Wall Street on Friday after the US government moved toward instituting a $700 billion program to buy up banks' illiquid mortgage-related assets, shoring up confidence in the global financial system. US Federal Reserve also announced today that Goldman Sachs and Morgan Stanley would become bank holding companies, a new status that will allow them to stay in business and protect customer accounts China's securities regulator announced that listed firms would no longer need to obtain its prior approval for share buybacks. This helped the Shanghai stock index further as the index extended Friday's gains to finish the session with a sharp 7.8% gain. Broad based bottom fishing in banks and financials and properties on the new stimulus measures the securities regulator ushered in over the weekend to stabilize the stock markets proved key. Premier Wen Jiabao's pledge on Saturday to maintain the stability of the stock markets and the financial regime at large also ensured that the early gained were extended well into the session. The Shanghai Composite Index ended up 161.31 points, or 7.8% to 2,236.41. In Japan, the Nikkei 225 Stock Average was higher 169.73 points, or 1.4%, to 12,090.59 while the broader Topix was 19.57 points, or 1.7%, higher to 1,169. The Ministry of Economy, Trade and Industry said that an index measuring industrial activity in Japan increased 0.8% in July 2008 compared to the previous month. However, the other indices in the region showed a mixed pattern. Hang Seng ended at 19,632.20, up 304.47 points or 1.58% but the rest of the markets lagged behind. The Jakarta Composite Index ended at 1897.34, up 5.61 points or 0.30% while the KLSE composite added 2.92 points or 0.28% to close at 1028.62 points, giving away the intraday gains. Indian markets also gave away the initial gains and ended down 47.36 points or 0.34% at 13994.96 levels. Strait times also ended in red, paring about half a percent. Soaring commodity prices seem to have come back in the contention as yet another worrying factor for the emerging economies in the region with light, sweet crude oil prices hitting a high of $107.80 - recording a gain of more than three dollars in the session. Copper prices also scaled up and with US dollar sliding sharply to two week low against the Euro, traders began to factor in a real possibility of commodity prices staying higher in near term. </DIV>

Major indices register handsome gains in Asia

Overall session ends mixed though as SENSEX and Strait Times end in redThe Asian equity markets ended on a strong note today with the major benchmark indices in the region c…

23 Sep 2008

Load more posts