Indian Stock News & Views by Experts

Flat opening likely

2008-11-04T09:44:00.003+05:30

It is better to know some of the questions than all of the answers.

Can the bulls sustain the current tempo? That is the big question worrying most players at the moment after the recent spurt. While the main indices could advance a little more in the near term, investors are still skeptical about a sustained turnaround. That is because considerable amount of headwinds still persist, both on the local as well as global front. The US, Europe and Japan are most probably already in recession, and though the credit crunch has eased substantially, it will be a while before the global economy is back on track.

India too remains vulnerable to a sharp slowdown despite the slew of measures unleashed by the Government and the RBI to arrest the slide. Not just FY09, a few economists see continued pain for the Indian economy in the coming fiscal year as well. India Inc. is now suffering from contraction in demand and difficulties in funding capex despite the RBI's liquidity-boosting steps. Among the positive events are the correction in commodity prices and a possible reversal of the interest rate cycle. The captains of Indian Industry are hoping for some more measures from the Government and the RBI, to help revive economic growth. While that may happen, the global downturn will continue to pinch in some ways or the other.

There is also a question mark over the sustainability of the recent FII buying, notwithstanding some revival in the global risk appetite. Today, we expect the market to open on a flat to slightly higher note. There could be some softening at higher levels after the recent rally, as most Asian stock benchmarks (barring the Nikkei), are down sharply. The main US stock indices too ended almost unchanged overnight ahead of the Presidential Election on Nov. 4. European shares rose for a fifth consecutive session.

FIIs were net buyers of Rs3.6bn (provisional) in the cash segment on Monday while the local institutions pulled out Rs970mn. In the F&O segment, the foreign funds were net buyers at Rs13.2bn. On Friday, FIIs were net buyers of Rs11.83bn in the cash segment.

US stocks closed nearly flat on Monday, as automakers reported dismal monthly sales and a report showed that US manufacturing activity dropped sharply in October. Investors were cautious as the race for the White House neared the finish line.

After marginal moves in either direction Monday, the Dow Jones Industrial Average fell by just 5 points to end at 9,319.83, with 16 of its 30 components posting losses. The S&P 500 Index shed 2 points to 966.31, while the Nasdaq Composite index added 5 points to 1,726.33.

Market breadth was positive. But, volume was pretty thin, narrowly topping one billion on the New York Stock Exchange, with advancing stocks outpacing declining issues roughly 9 to 7.

On the eve of Election Day, Democratic presidential candidate Barack Obama and Republican rival John McCain are making final appearances around the country, with polls consistently showing Obama ahead in the campaign for the White House.

Pacing gains among the S&P's 10 industry groups were telecommunications shares. Retail shares were mixed ahead of sales reports due later in the week. Energy shares proved the biggest laggards.

Lending rates continued to improve amid efforts of US and world governments to get money flowing again. Treasury prices rose, lowering the corresponding yields. Oil prices slipped and the dollar gained versus other major currencies.

Meanwhile, slumping manufacturing and construction activity, and plunging auto sales, added to bets that a recession is already underway. In the afternoon, Dallas Federal Reserve Bank President Richard Fisher forecast that there will be no economic growth through 2009.

Additionally, in the afternoon, the government said it will borrow a record $550bn in the fourth quarter and another $368bn in the first quarter of next year as it looks to fund the massive financial rescue plans recently put in place.

A huge drop in October auto sales left the industry on track to post the worst monthly results in 25 years. GM reported a 45% decline in October sales, versus a year ago. Ford reported October sales plunged 30% versus a year ago.

The dollar fell against the euro and gained against the yen. COMEX gold for January delivery climbed $8.60 to settle at $727.50 an ounce. Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.91% from 3.96% late on Friday.

US light crude oil for December delivery fell $3.90 to settle at $63.91 a barrel on the New York Mercantile Exchange. Gasoline prices fell another 2.1 cents overnight, to a national average of $2.415 a gallon.

Investors were playing it cautious ahead of Election Day. Analysts say investors will be glad to have the election over and to know that a change in administration is coming, regardless of whether Republican John McCain or Democrat Barack Obama wins.

Although Wall Street would seem to prefer business-friendly Republicans, studies have shown that stocks tend to do better under Democratic presidents than Republicans and best during times of gridlock, when one party controls the White House and another the Congress.

Across the Atlantic, European shares rose for a fifth consecutive session, as investors continued to welcome central banks' efforts to shore up sentiment.

The pan-European Dow Jones Stoxx 600 index rose 0.6% to 223.38. The French CAC-40 added 1.2% to 3,527.97, while Germany's DAX 30 advanced 0.8% to 5,026.84 and the UK's FTSE 100 closed up 1.5% at 4,443.28.

Bulls started off November with a bang led by a rally in banking, realty and capital goods stocks. Further on, firm cues from the international equity markets coupled with the PM's assurance on growth initiatives also added to market sentiment.

The upswing propelled the BSE benchmark Sensex above 10K levels to close at 10,337. While, the NSE Nifty index surged past the 3,000 mark adding 158 points to finally end at 3,043 levels.

IDFC rallied by over 12% to Rs65 after reports stated that the company was in talks with GE Commercial Finance, to acquire about 35% stake in the latter's construction equipment finance business in India. The scrip touched an intra-day high of Rs67 and a low of Rs60 and recorded volumes of over 61,00,000 shares on BSE.

PTC India surged by over 7% to Rs56 after reports stated that the company was looking at picking up stakes in power generation projects across the country. The scrip touched an intra-day high of Rs57 and a low of Rs54 and recorded volumes of over 5,00,000 shares on BSE.

BEL advanced by 6% to Rs641 following reports that the company plans to set up its third central research laboratory at Hyderabad, which will focus on research in emerging technologies in the fields of opto-electronics and electronic warfare. The scrip touched an intra-day high of Rs645 and a low of Rs622 and recorded volumes of over 7,000 shares on BSE.

Tata Chemicals gained by 5% to Rs166 after the company reported results for the second quarter ended 30 September, 2008.

The revenue stood at Rs466.1mn with an increase of 169% yoy. The profit before tax has increased by 120% at Rs58.7mn. The scrip touched an intra-day high of Rs169 and a low of Rs161 and recorded volumes of over 3,00,000 shares on BSE.

Shares of Jyoti Ltd surged by over 3% to Rs35 after reports stated that the company has entered into technology tie-ups with German and Dutch companies for its windmill project. The scrip touched an intra-day high of Rs38 and a low of Rs32 and recorded volumes of over 11,000 shares on BSE.

Apollo Tyres advanced by over 2% to Rs24 after reports stated that the company would begin its operations in Europe by opening its first sales, marketing and technical office in Germany in January. The scrip touched an intra-day high of Rs25.2 and a low of Rs23.9 and recorded volumes of over 3,00,000 shares on BSE.

Zylog Systems gained by 5% to Rs115 after reports stated that it would spend US$17.5mn for acquiring three overseas companies. The scrip touched an intra-day high of Rs118 and a low of Rs112 and recorded volumes of over 68,000 shares on BSE.

Zee News gained by 2.5% to Rs38.7 after the company announced that it acquired 26% stake in Sky B, West Bengal, stated reports. The scrip touched an intra-day high of Rs40 and a low of Rs37 and recorded volumes of over 2,00,000 shares on BSE.

Looking at Monday's rally, bulls might extend the gains atleast in the early trades. The fall in inflation and drop in crude prices may augur well for the time being but we still have to get some confidence. For the time being, avoid some fresh buying at higher levels in large quantities as we are yet to get clarity on the economy.

Precious metals bring some glaze back

2008-11-04T09:44:00.001+05:30

Gold and silver prices rise after three sessions of drop

After three sessions of loss, gold prices ended higher on Monday, 03 November, 2008. Traders anticipated that bullion metals are done with current low levels that they have attained in recent times. Silver prices also rose today.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Losses in equity markets had also forced traders to sell gold. Since past couple of weeks, precious metals, mainly gold, had dropped as traders tried to gain back some of the money that had lost in other markets.

On Monday, Comex Gold for December delivery rose $8.6 (1.2%) to close at $726.8 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (30.5%) since then. Last week, gold prices ended lower by 1.6%. For the month of October, gold ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.

This year, gold prices have lost 12.7% till date. The dollar index has gained 13.5% this year and of that almost 8% in October, 2008 itself. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Monday, Comex silver futures for December delivery rose by 2 cents (0.2%) to $9.75 an ounce. Last week, silver fell 1.9%. For the month of October, silver slipped by 20%. Till date, silver has lost 35% this year. Silver had ended month and quarter of September 2008 with a loss of 10%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

In the currency market on Monday, the U.S. dollar posted broad-based gains against other major currencies rising both against the British pound and the euro ahead of key interest rate decisions in Europe due later this week. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, rose 1.3% to 86.35.

On Monday, crude for December delivery closed at $63.91, lower by 5.8%. It gained 5.7% last week but ended 32.6% lower for the month of October, 2008.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for December delivery closed lower by Rs 118 (1%) at Rs 11,614 per 10 grams. Prices rose to a high of Rs 11,777 per 10 grams and fell to a low of Rs 11,545 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 180 (1.06%) lower at Rs 16,768/Kg. Prices opened at Rs 17,100/kg and fell to a low of Rs 16,617/Kg during the day's trading.

Crude plunges

2008-11-04T09:43:00.001+05:30

Prices slip by almost 6% on demand concerns and firm dollar

Crude prices ended with losses on Monday, 03 November, 2008. The firm dollar and the current global crisis were the main reasons behind the subdued crude prices. Today's weak economic data also added to this.

On Monday, crude-oil futures for light sweet crude for December delivery closed at $63.91/barrel (higher by $3.9 or 5.8%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 57% since then. Last week, prices rose by 5.7%. On a yearly basis, crude price is lower by 33%. For this year in 2008, crude prices have dropped 35.2%.

For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983.

In the currency market on Monday, the U.S. dollar posted broad-based gains against other major currencies rising both against the British pound and the euro ahead of key interest rate decisions in Europe due later this week. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, rose 1.3% to 86.35.

Among najor economic report for the day, the Institute of Supply Management (ISM) Index survey reported today, Monday, 03 November, 2008 that national manufacturing activity at US in October fell to the lowest level since 1982.

Specifically, the ISM Manufacturing Index declined 4.6 to 38.9 in October, which was worse than the expected reading of 41.0. The number indicates contraction in manufacturing and the overall economy. Readings below 50% in the ISM diffusion index indicate that more firms are contracting than growing. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better or worse this month than last month.

OPEC officials decided last month at its meeting at Vienna that OPEC will pare production by 1.5 million barrels a day w.e.f 1 November, 2008. The official production quota is currently 28.8 million barrels, and it cut by 1.5 million in November.

Last week, the Centre for Global Energy Studies said that global oil demand may fall for the first time in 15 years in 2008 and stagnate next year.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Against this background, December reformulated gasoline futures fell 13.3 cents to close at $1.3625 a gallon and December heating oil futures shed 10.1 cents to end at $1.9828 a gallon.

December natural gas saw a modest gain by the close. It finished at $6.838 per million British thermal units, up 5.5 cents.

At the MCX, crude oil for November delivery closed at Rs 3,167/barrel, lower by Rs 165 (4.95%) against previous day's close. Natural gas for November delivery closed at Rs 326/mmbtu, higher by Rs 5.2/mmbtu (1.6%).

Winning streak continues

2008-11-04T09:41:00.001+05:30

The market continued to add to its value for the fourth consecutive session as firm Asian indices and strong buying in frontline stocks helped the sentiment remain bullish for the whole trading session. After accumulating over 1,300 points in the last three sessions, the Sensex opened marginally above its previous close and rallied sharply to touch an intra-day high of 10,373. While, the market remained well above 10,100 mark in the first half, it came off the high, as traders booked profits at higher levels. However, resumption of buying at lower levels in realty and capital goods (CG) stocks towards the close saw the Sensex recover from its lows. The Sensex finally ended the session with a gain of 550 points at 10,338, while Nifty added 158 points to close at 3,044.

The market breadth was neutral. Of the 2,652 stocks traded on the BSE, 1,968 stocks advanced whereas 634 stocks declined. Fifty stocks ended unchanged. Among the sectoral indices, the BSE Realty jumped 8.29% followed by BSE CG (up 8.19%), BSE Bankex (up 7.51%) and BSE Power (up 6.14%).

Most of the heavyweights ended with solid gains though some select frontline stocks closed with marginal losses. Among the blue chips, Reliance Infrastructure shot up by 17.15% at Rs535.10, DLF soared 14.89% at Rs253.05, JP Associates surged 13.36% at Rs81.45 and Ranbaxy Laboratories advanced by 12.33% at Rs190.35. State Bank of India (SBI) added 11.81% at Rs1,240.55, Tata Motors moved up 11.12% at Rs190.90 and Larsen & Toubro (L&T) scaled up 10.78% at Rs892.25. Among the laggards Satyam Computer Services fell 1.54% at Rs300.10 and Infosys Technologies slipped 0.23% at Rs1,378.50.

Realty stocks shone in today's trades and closed with strong gains. Orbit Corporation vaulted 33.15% at Rs70.70, Peninsula Land soared 14.91% at Rs23.50, DLF surged 14.89% at Rs253.05 and Parsvnath Developers advanced by 11.59% at Rs45.25.

Over 2.13 crore Reliance Natural Resources shares changed hands on the BSE followed by Suzlon Energy (1.54 crore shares), Cals Refineries (0.99 crore shares), GVK Power & Infrastructure (0.89 crore shares) and Unitech (0.87 crore shares).

RBI cuts CRR and repo rates

2008-11-02T19:22:00.001+05:30

After infusing Rs 1,85,000-crore liquidity into the banking system, the RBI on Saturday effected yet another 100 basis points cut in Cash Reserve Ratio (CRR) and a 0.5 percent reduction in key short-term lending (repo) rate, signaling softening of interest rates to prop up growth.

The one percentage point cut in CRR, the amount which banks have to park with the apex bank, has been brought down to 5.5 percent to infuse additional liquidity of Rs 40,000 crore into the system.

The CRR cut will be in two tranches and the first one of 0.5 percent will be effective retrospectively from October 25 and the second from November 8.

The RBI also cut the repo rate, the rate at which it lends to banks, by 0.5 percent to 7.5 percent with effect from November 3.

The central bank has also reduced the statutory liquidity ratio (SLR), the amount which banks are mandated to park in government securities, by 100 basis points to 24 percent.

Welcoming the decision, ICICI Bank Joint Managing Director Chanda Kochhar said, "it will release much needed liquidity into the system and signal reduction in interest rates."

The SLR cut would inject about Rs 40,000 crore into the banking system.

To provide further comfort on liquidity and to impart flexibility in liquidity management to banks, the Central Bank has introduced a special refinance facility to scheduled commercial banks.

Under this facility, the banks will be able to borrow short-term funds from Reserve Bank up to a maximum period of 90 days.

The RBI also said that it would continue to sell foreign exchange (US dollars) through agent banks to augment supply in the domestic foreign exchange market or intervene directly to meet any demand-supply gaps.

"The Reserve Bank would either sell the foreign exchange directly or advise the bank concerned to buy it in the market. All transactions by the Reserve Bank will be at prevailing market rates and as per market practice," the apex bank said.

The apex bank, has also, "as a temporary measure" decided to permit systemically important non-deposit-taking non-banking financial companies (NBFCs-ND-SI) to raise short-term foreign currency borrowings under the approval route.

This is, however, subject to their complying with the prudential norms on capital adequacy and exposure norms, it said.

It has also decided to conduct buy-back of market stabilisation scheme (MSS) dated securities so as to provide another avenue for injecting liquidity of a more durable nature into the system.

Earlier, under the MSS, government securities had been issued to sterilise the expansionary effects of forex inflows.

But now, with considerable forex outflows, it has been decided to conduct buy-back of MSS dated securities, the RBI said.

This would be calibrated with the market borrowing programme of the government and the securities proposed to be bought back and the timing and modalities of these operations would be notified separately, the RBI said.

S&P says India outlook stable

2008-11-02T19:20:00.001+05:30

Standard & Poor's Ratings Services affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on the Republic of India. The outlook on the long-term rating remains stable. The ratings on India reflect the country's strong economic growth prospects and its deep government debt market, which helps accommodate its weak fiscal position. "India's economic prospects remain strong with growth likely to average more than 7.0% in the medium term," said Standard & Poor's credit analyst Takahira Ogawa. "Underpinning that growth is the gradual deregulation of the industrial sector, continued trade liberalization, a dynamic service sector, and modest improvements in infrastructure."

"The ratings on India remain constrained by a weak fiscal profile, especially the high government debt burden and deficit, which are still among the largest for rated sovereigns," Mr. Ogawa said. Commitment to fiscal consolidation across all levels of government has been one of the supporting factors for the sovereign credit rating in the past several years. However, higher oil prices and populist measures for the coming general election have weakened the government's efforts in fiscal consolidation.

The stable rating outlook balances India's good external liquidity and growth prospects with its weak fiscal flexibility. An improvement in the sovereign ratings will depend on resumed fiscal consolidation that leads to a materially lower debt and interest burden, and additional reforms that lift the country's growth prospects and income levels. On the other hand, further fiscal slippage, a marked decline in external liquidity indicators, or policy measures that weaken economic growth prospects, could lead to downward pressure on the ratings.

The consolidated debt of India's central and state (general) governments is projected at 82% of 2008 GDP, while interest payments are likely to consume about 30% of general government revenue. India's contingent liabilities are also high. Government-guaranteed debt alone amounts to nearly 9% of 2007 GDP.

Shut the ... Govt to Assocham

2008-11-02T19:17:00.003+05:30

Taking strong exception to industry chamber Assocham's forecast that a quarter of people in certain key sectors will lose jobs in the next ten days, government on Friday said the economy is poised for the other way.

"The Deputy Chairman of the Planning Commission and my colleague Jairam Ramesh (Minister of State for Commerce) have taken serious exceptions to an Assocham report... The pace of job creation may slow down but that doesn't mean that jobs are being destroyed," Finance Minister P Chidambaram told reporters here.

The Minister further said another industry chamber FICCI too had contradicted the Assocham study, which had said that in the next ten days or so about 25 to 30 percent employees are likely to lose jobs in seven sectors including aviation, information technology, steel, financial services, real estate, cement and construction.

Chidambaram further said that 7 percent growth rate, the lowest projection made by experts, would "create more job than was done in entire NDA regime, when the growth was only 5.8 percent. Why this question was not raised when the economy was growing at 5.3 percent?"

Replying to questions on the recent report on slowing of the US economy, the Minister said, "when the world output slows down, the growth in developed countries slows down... it will have an indirect impact on India."

However, he added, "the India economy is domestic consumption and investment driven economy. Exports will play a significant role but not as much as they do in China."

Pointing out that at the moment it was difficult to estimate the impact of global economic slowdown on exports, Chidambaram said in April-August 2008-09 it grew by 35.1 percent though September showed a slight dip.

"We will see as we go along... but we are not happy that any country's economy should contract. We want all countries' economies to grow," the Minister said adding India was not happy with slowing down in the US economy. "But it is there... that's a reality," he said.

With regard to the inflation rate, which has come down to below 11 percent after four months, the Minister said, "let us hope the measures that we have taken will have an impact."

The annual rate of inflation has come down to 10.68 percent for the week ending October 18.

Replying questions on India's stand on G-20 meeting on global economy, Chidambaram said, "it is being formulated and hopefully we will be able to give some details in the next few days."

Finance Minister earlier in the week held a meeting of experts, including RBI Governor D Subbarao, SEBI Chairman C B Bhave and former RBI Governors C Rangarajan and Bimal Jalan among others, to formulate the views on global financial crisis that India would take at the G-20 meeting called by US President George Bush in Washington on November 15.

Growth will fall, but no job cuts - PC

2008-11-02T19:17:00.001+05:30

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

"The RBI (Reserve Bank of India) estimates that growth (in fiscal 2008-09) would be at 7 percent. I think it would be at 7.5 percent but definitely would not be lower than 7 percent," Chidambaram told reporters here.

"Growth at 9 percent (as was originally anticipated) would signal rapid creation of jobs. Growth at a lower rate does not imply a destructive employment situation," the finance minister maintained.

"It is for this reason that I disagree with a (industry lobby) Assocham (Associated Chambers of Commerce and Industry) study (saying that Indian corporates would cut jobs by 25 percent due to the global financial crisis)," Chidambaram said.

"The pace of creating jobs might slow down, but even at 7 percent, jobs will be created," he added.

Responding to a question on the impact of the crisis on India's exports, Chidambaram said he couldn't "elaborate" on this.

Asked what India would bring to the table at the G-20 meeting US President George Bush has called in Washington next month to deal with the financial crisis, the finance minister replied: "We are formulating our response."

Market spurts on rate cut by major global central banks

2008-11-02T19:13:00.001+05:30

Bulls tightened their grip as key benchmark indices spurted to hit new intraday high in late trade on rally in index heavyweights, Reliance Industries and ICICI Bank. The BSE Sensex was up 806.46 points or 8.92%. Earlier, weak European markets had pulled the Sensex sharply off the higher level after the barometer index had surged 814.74 points in mid-afternoon trade when it did a catch-up with a rally in global markets on Thursday, 30 October 2008, triggered by a rate cut by the US Federal Reserve. The Indian market was shut on Thursday, 30 October 2008, for a public holiday.

A steady decline in inflation for the fifth successive week and reports that the government is considering more measures to pump in liquidity in the financial system added to the positive sentiment. Bank stocks spurted on fall in inflation. IT stocks jumped on rise in American depository receipts (ADR) overnight. The market breadth was strong indicating a broad-based buying.

The wholesale price index (WPI)-based year-on-year inflation dropped to 10.68% in the week ended 18 October from 11.07% in the previous week. Following the steady decline in headline inflation, economists expect inflation to enter single digit domain by end-November 2008.

European stocks fell as on concerns about the global economy weighed on investors. Key benchmark indices in France, Germany and UK were down by between 0.34% to 2.11%.

Japan's Nikkei average dropped 5% after a lower-than-expected 20 basis points cut in interest rate announced by Bank of Japan today, 31 October 2008. Global markets had rallied on Thursday, 30 October 2008, after the US Federal Reserve cut its main policy rate to 1% on Wednesday, 29 October 2008, to stave off the credit crunch. China cut rates on Wednesday, 29 October 2008 with Taiwan and Hong Kong following up with rate cuts on Thursday, 30 October 2008.

As per the provisional figures, the BSE 30-share Sensex was up 806.46 points or 8.92% to 9.850.97. The index jumped 825.91 points at the day's high of 9.870.42 in late trade. The Sensex rose 317.15 points at day's low of 9,361.66 in early trade.

The S&P CNX Nifty was down 208.20 points or 7.72% to 2,905.25 as per the provisional figures.

BSE clocked a turnover of Rs 3,699 crore today, 31 October 2008 as compared to a turnover of Rs 3,104.10 on 29 October 2008.

The BSE Mid-Cap index was up 3.59% at 3,205.42 and the BSE Small-Cap index was up 2.63% at 3,771.11. Both the indices underperformed the Sensex.

The market breadth was strong. On BSE, 1538 shares advanced as compared to 952 that declined. 70 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) surged 14.14% to Rs 1,374.90, after the petroleum ministry said the $4.20 per metric million British thermal units (mmBtu) price fixed by an empowered group of ministers for gas from Reliance Industries' KG-D6 was only for the purpose of valuation of government share and the selling price could be higher.

Mahindra & Mahindra (up 23.33% to Rs 373), Jaiprakash Associates (up 15.82% to Rs 71.40) and Tata Power Company (up 11.93% to Rs 690) were from the major gainers from the Sensex pack.

India's largest drug maker by sales Ranbaxy Laboratories fell 1.39% to Rs 170.45, off day's high of Rs 200 ahead of Q3 September2008 result today.

Telecom stocks rose after mixed Q2 results. India's largest telecom service provider by sales Reliance Communications jumped 14.95% as net profit on consolidated basis, rose 17.33% to Rs 1530.78 crore on 23.29% rise in total income to Rs 5645 crore in Q2 September 2008 over Q2 September 2007.

India's largest telecom service provider by market share Bharti Airtel rose 8.03% to Rs 664.70 despite a 0.9% fall in net profit to Rs 1604.78 crore on 35.6% rise in total income to Rs 8302.8 crore in Q2 September 2008 over Q2 September 2007.

India's largest oil exploration firm by revenue ONGC rose 5.38% despite a 5.7% fall in net profit to Rs 4808 crore in Q2 September 2008 over Q2 September 2007 caused by a steep rise in the subsidy burden.

India's largest real estate major by market capitalization DLF gained 4.16% ahead of Q2 September 2008 result today.

Metal stocks shrugged off fall in metal prices on the London Metal Exchange yesterday, 30 October 2008 triggered by fears of fall in demand as the US economy shrank at a 0.3% annual rate in the third quarter, its sharpest contraction in seven years. Tata Steel, Steel Authority of India Hindustan Zinc, Sterlite Indusries rose by between 0.11% to 17.65%.

India's largest aluminum maker by sales Hindalco Industries jumped 13.26% as net profit rose 12.04% to Rs 719.95 crore on 15.42% rise in total income to Rs 5,859.95 crore in Q2 September 2008 over Q2 September 2007. State-run aluminium major National Aluminium Company (Nalco) jumped 5.82% after net profit rose 1.07% to Rs 444.46 crore on 12.3% growth in total income to Rs 1654.50 crore in Q2 September 2008 over Q2 September 2007.

Banking stocks jumped as the fifth successive week of decline in inflation has given more room for the central bank to cut rates. The BSE's banking sector index Bankex rose 7.51% and was the third biggest gainer form the sectoral indices on BSE. India's largest private sector bank by net profit ICICI Bank jumped 15.5% as ADR spurted 13.64% overnight. India's largest commercial bank State Bank of India rose 0.79%.

India's second largest private sector bank by net profit HDFC Bank gained 8.29% to Rs 981 off day's high of Rs 1,059, as ADR soared 11.38% overnight.

ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively in the BSE Bankex.

Punjab National Bank rose 3.42% on 31.3% rise in net profit to Rs 707.09 crore on 35.1% rise in total income to Rs 5313.18 crore in Q2 September 2008 over Q2 September 2007.

Kotak Mahindra Bank lost 2.10% after net profit fell 36.50% to Rs 47.86 crore in Q2 September 2008 over Q2 September 2007.

India's largest home loan lender by sales HDFC rose 11.81%.

There is speculation and anticipation in the market that the Reserve Bank of India may cut cash reserve ratio (CRR) the cash deposits that banks are required to keep with the central bank by one percentage point from the existing 6.5% to 5.5%.

IT stocks gained as rally in ADRs offset a stronger rupee. India's third largest IT exporter by sales Satyam Computer Services rose 5.05%, as ADR rose 7.61%. India's fourth largest IT exporter by sales Wipro rose 6.16%, as ADR jumped 7.78%. India's second largest IT exporter by sales Infosys gained 6.06%, as ADR jumped 4.98%. India's largest IT exporter by sales Tata Consultancy Services fell 0.93%.

The Indian rupee crept higher in opening deals on Friday on expectations the local stock market will rise and help revive investor appetite. The partially convertible rupee was at 49.50 per dollar, 0.4% stronger than Wednesday's close of 49.69/70 per dollar. A stronger rupee affects IT firms negatively as they earn most of their revenues in dollar terms.

India's largest commercial vehicle maker by sales Tata motors rose 9.11% despite a 34.1% fall in net profit to Rs 346.99 crore on 11.34% rise in total income to Rs 7508.13 crore in Q2 September 2008 over Q2 September 2007.

MMTC rose 1.12% as net profit rose 24.98% to Rs 46.78 crore on 110.92% rise in total income to Rs 12497.23 crore in Q2 September 2008 over Q2 September 2007.

Essar Oil surged 11.82% on posting a net profit of Rs 26 crore in Q2 September 2008 compared to a net loss of Rs 14 crore in Q2 September 2007.

Kirloskar Electric Company rose 3.75% after the company decided to set up a manufacturing unit for AC motors and AC generators.

IVRCL Infrastructure & Projects surged 5.86% as net profit rose 61.98% to Rs 57.10 crore in Q2 September 2008 over Q2 September 2007.

While Japanese stocks tumbled, other Asian stocks were trading mixed today, 31 October 2008. Key benchmark indices in China, Singapore and Hong Kong, fell by between 0.66% to 3.09%. However, South Korea and Taiwan rose by between 2.61% to 3.99%.

Oil prices dropped more than $1 a barrel to $64.55 on Friday, 31 October 2008, after data showed the US economy suffered its sharpest contraction in seven years in the third quarter, as consumers cut spending and businesses reduced investment.

Cautious guidance hammers US stocks

2008-10-23T09:52:00.001+05:30

Merck and Yahoo announce layoffs and Apple gives cautious guidance

Stocks at Wall Street registered substantial loses for the second consecutive day on Wednesday, 22 October, 2008. The Dow ended the day with a 514 point drop today following yesterday's 237 point drop. Couple of companies that came out with earning reports announced job cuts on Wall Street today. Market had started the day in the red. Earning reports dominated overall market sentiments. While more companies beat expectations, outlooks, however, leaned negative as companies remained uncertain about the economic environment. All ten sectors posted a loss.

The Dow Jones Industrial Average ended the day down by 514 points, to 8,519. The Nasdaq Composite Index, finished lower by 80 points at 1,615. S&P 500 finished lower by 58 points at 896.78.

All thirty Dow stocks ended in the red led by Aloca. The stocks closed lower by 11%.

Among the major companies that reported earnings today, and topped earnings estimates were Apple, McDonald's and Merck. Merck said that it plans to cut 7,200 jobs, or 13% of its workforce.

AT&T and Boeing were two of the bigger names that missed earnings estimates.

The technology sector witnessed lesser losses due to positive reactions to earnings reports from Apple and Yahoo!.

Apple reported better-than-expected quarterly earnings due to strong iPhone sales. The company's outlook for its current quarter, however, was cautious and was well below the market estimates. On the other hand, Yahoo! reported in-line earnings, and the results were better-than-feared. Yahoo said it plans to cut 1,500 jobs, or 10% of its workforce.

Crude prices fell today, and closed at the $65/barrel level for the first time in eighteen months. Prices fell due to a strong dollar and also after the Energy Department reported a more than expected build up in crude inventories for the week ended 17 October.

Crude-oil futures for light sweet crude for December delivery closed at $66.75/barrel (lower by $5.45 or 7.5%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 55% since then. On a yearly basis, crude price is lower by 24%. For this year in 2008, crude prices have dropped 34%.

In the currency market on Wednesday, the dollar soared against the euro and the British pound pressured by further fund repatriation and expectations that the European Central Bank and the Bank of England will move to aggressively cut interest rates in coming months. But the greenback slipped against the yen. The dollar index, a measure of the greenback against a trade-weighted basket of six major currencies, traded at 85.602, up from 84.434 on late Tuesday.

Volume on the New York Stock Exchange topped 1.5 billion, and for every stock on the rise, six fell. On the Nasdaq, 1.1 billion shares traded, and decliners topped advancers, also by a 6-to-1 ratio.

Initial jobless claims for the week ending 18 October are due ahead of the opening bell tomorrow. Other than that, earning reports will dominate the day once again.

Daily News Roundup - Oct 23 2008

2008-10-23T09:51:00.001+05:30

Moody's lowers Tata Steel outlook to negative. (ET)
NTPC plans to raise US$1bn to fund expansion plans. (ET)
TVS Motors to reduce investment by 20% and cut production. (BS)
Ashok Leyland to cut its vehicle output in second half of the current financial year. (BS)
Jet, Kingfisher likely to reduce flight. (ET)
Singapore based PE firm buys into HDIL and Indiabulls Real Estate. (ET)
SAIL to set up steel processing units in Himachal Pradesh and Rajasthan. (DNA)
DLF emerges as sole bidder for developing Mumbai rail land. (BL)
Elder Pharma buys 3 small Bulgarian-based pharma companies. (ET)
Areva T&D bags Bhilai Steel order worth Rs2.2bn. (BS)
Tata Tele Services to roll-out services in J&K and North East region from November. (FE)
JSW Steel and Georgian Steel Holding Group have closed US$28mn debt financing for setting up steel plant in Georgia. (DNA)
Crompton Greaves is considering cutting down its capex budget for this year. (DNA)
HOV services open facility in North California. (BS)
DLF enter into an agreement with Italian apparel brand Alcott and Paris based SIA group to launch them in India. (ET)
HDFC Bank opens a branch in Bahrain. (BS)
Honda India and Hero Honda ventures to jointly source auto parts. (BL)
LIC to launch credit card with Corporation Bank. (FE)Government may pump Rs30bn into 7 public sector banks to shore up their capital adequacy ratio to 12%. (BS)

Government may miss FY09 budget targets for fiscal and revenue deficit. (ET)
Government allows airlines to clear fuel dues owed to oil companies, totaling about Rs30bn in six EMIs. (ET)
Indian Banks ask RBI to ease norms on reserve requirements. (ET)
RBI eases norms on overseas borrowing for Indian companies. (ET)
DoT faces 3G spectrum crunch in 9 other circles. (ET)
Petroleum secretary says government has no immediate plans to cut fuel prices. (ET)
SEBI plans to review direct market access facility rules. (ET)
Government may import 100mn ton of coal to meet the projected demand in the 11th five year plan. (BS)
DoT to meet defence ministry on Oct24 to discuss the issue on spectrum vacation. (DNA)
Banks unlikely to extend credit support to airlines. (BL)

Real Crisis for real estate employees

2008-10-23T09:50:00.001+05:30

DLF, Unitech, Omaxe, Parsvnath and BPTP plan to lay off staff in significant numbers soon after Diwali

Developers wait for Diwali to get over as they don't want to dampen sentiments further

Asian markets shattered as wall street sinks deeper

2008-10-23T09:48:00.001+05:30

Shanghai, Hang Seng extend losses while Nikkei also enters the losers club with 6.7% fall

The stock markets across the Asian region closed lower after Wall Street fell overnight on profit taking from recent sharp rises and recession fears following disappointing earnings reported by big name companies such as Dupont, Caterpillar, and Texas Instruments. The Dow Jones Industrial Average ended the day down by 231 points, to 9,033. The Nasdaq Composite Index finished lower by 73 points at 1,696. S&P 500 finished lower by 30 points at 955.

Crude oil prices fell for a second day after the U.S. dollar climbed to a 20-month high against the euro, reducing the appeal of commodities as a hedge. Crude oil for December delivery declined as much as $3.28, or 4.5%, to $68.90 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $69.10 a barrel at 2:33 p.m. Singapore time. The November contract expired yesterday, after declining $3.36 to settle at $70.89 a barrel. Prices, which have tumbled 53 percent from the record $147.27 on July 11, are down 21 percent from a year ago.

In currency trading, the U.S. dollar fell against the Japanese yen. The U.S. dollar fell to the mid 99-yen levels in late Tokyo deals from the lower 100-yen range in early trade and lower 101-yen levels late Tuesday in Tokyo. The Japanese yen also gained against the euro.

The Australian dollar closed down 3.28% as ongoing fears about a global recession dragged commodity prices and high-yielding currencies lower. The Aussie finished the domestic session at US$0.6687-0.6692, down from Tuesday's close of US$0.6914-0.6919.

The New Zealand dollar fell against the U.S. dollar ahead of the Reserve Bank of New Zealand's interest rate decision. The central bank is expected to cut the official cash rate by 100 basis points. The kiwi finished the domestic session at US$0.6020, down from US$0.6144 in early trade and US$0.6178 late Tuesday.

The South Korean won fell 3.1% against the dollar. The won finished the session at 1,362.0-1,363.1 a dollar, after hitting a low of 1,399.9 a dollar, its weakest since October 10, compared to Tuesday's domestic close of 1,320.1 a dollar.

The Philippines peso edged down to a new 18-month low against its US counterpart today morning in Asia. The peso plunged to 48.6650 against the US dollar, compared to yesterday's close of 48.1750.

Coming back in equities, the Japanese stock market tumbled nearly 7%, ending its three-day winning streak. Worries about the grim outlook for Japanese firms' earnings and a stronger yen dented investor sentiment. The market opened lower following an overnight retreat on Wall Street, but Japanese stocks widened their losses in the afternoon on a flurry of bad news that aggravated fears about the global slowdown. The benchmark Nikkei 225 Stock Average plunged 631.56 points or 6.79% to end at 8,674.69, posting its biggest loss in a week, and the broader Topix index of all first-section issues lost 67.41 points or 7.05% to 889.23.

On economic front, all industry activity index, which captures the monthly change in overall production by all industries of the Japanese economy, fell 1.8%. The indices of all industry activity except agriculture, forestry and fisheries declined 1.8% in August as compared to a 0.8% rise in July. Indices of Industrial Production plunged 4.1%, while indices of building work and indices of tertiary industry activity declined 2.4% and 1.4% respectively in the month of August as against the previous month.

In Mainland China, the benchmark index closed sharply lower after some key companies reported weaker-than-expected quarterly earnings, heightening worries about the impact of the global slowdown. In addition to this yesterday, the Ministry of Finance and the State Administration of Taxation said in a joint statement that China will raise export rebates on textiles, toys and apparel and some other products next month to support exporters amid declining external demand. The Shanghai Composite Index finished lower for a second day, down 62.71 points or 3.20% to end at 1,895.82 while the Shenzhen A-share Index fell 8.84 points or 1.62 pct to 536.53.

In Hong Kong, the Hang Seng Index struggled for a came back in the positive territory closing the day in negative territory. The benchmark index closed down by 5.15% at 14,266.50, while the Hang Seng China Enterprises Index slumped by 7.79% to 6,700.87.

The Australian stock market plunged more than 3% on profit taking after posting sharp gains in the previous two trading sessions. The key S&P/ASX index lost most of the previous session's gains, led by BHP Billiton and Westfield. The benchmark S&P/ASX200 index closed down 146.4 points, or 3.4%, at 4,156.1, its lowest point for the day. The broader All Ordinaries index lost 131.4 points or 3.1% to 4,120.0.

On the economic front, Australia's rate of inflation increased by more than expected in the third quarter. The Australian Bureau of Statistics reported that the country's Consumer Price Index for the three months to September increased 1.2% over the previous quarter. Annually, CPI grew to 5.0%.

The New Zealand stock market closed sharply lower, ending a three-day winning streak. The benchmark NZX 50 index closed down 52.62 points or 1.78% at 2,899.40 after surging 2.15% on yesterday. The broader NZX All Capital index shed 40.21 points or 1.34% to 2,953.46.

On the economic front, Statistics New Zealand reported that visitor arrivals in September dropped 7.0% to 157,700 from the 168,800 reported for September 2007. For the full year to September 2008, there were 2.469 million visitor arrivals, down 6,200 or less than 1% from the previous 12-month period. New Zealand resident departures were down 8.0% compared to September 2007.

The South Korean stock market plunged more than 5% to a new three year-low on deepening economic fears, extending its modest losses registered yesterday. The benchmark Korea Composite Stock Price Index or Kospi closed down 61.51 points or 5.14% at 1,134.59 points, its lowest close since September 6, 2005. In intraday trading, the key index fell more than 8% to hit a low of 1,095.56. The Kospi has shed 22% over the month, and is down 40% from the year's high of 1,901 hit in mid-May.

In Taiwan, Taiex - the benchmark index continued to remain below the key 5,000 points level breaching the previous five-year low level. The weighted index closed down 80.13 points or 1.62% at 4,862.59 - the lowest level since 11 June 2003 when it ended at 4,804.65 points. The market was distracted by fears that an anti-government demonstration planned by the opposition for Saturday could turn violent.

On the economic front, Taiwan's unemployment rate was 4.27% in September, versus 4.14% in August and 3.99% in September 2007, the Directorate General of Budget, Accounting and Statistics (DGBAS) said. In the first nine months of the year, unemployment averaged 3.96%, versus 3.92% a year earlier. On a seasonally adjusted basis, the September unemployment rate was 4.12%, compared with 3.93% in August and 3.89% a year earlier.

In Malaysia, the Kula Lumpur composite index was down by 13.88 points or 1.51% at 904.28. On economic front, the international reserves of Bank Negara Malaysia amounted to RM371.8 billion, equivalent to USD107.6 billion as on 15 October 2008, 2% down from RM379.3 billion as recorded on 30 September 2008. The reserves position is sufficient to finance 8.7 months of retained imports and is 4 times the short-term external debt.

In India, the weakness prevailed on the regional bourses in mid-afternoon trade on declined in global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. At 15.20 IST the BSE Sensex was down 522.16 points or 4.86%. The S&P CNX Nifty was down 5.33% to 3,062.40.

Elsewhere, the Philippines stock market tumbled 1.12% or 23.73 points to 2,093.01 while Singapore Strait Times was trading lower by 99.66 points or 5.19% trading at 1,821.13.

In other regional markets, European shares fell with commodity-sector firms leading decliners as BHP Billiton added to growing evidence that the global economy continues to deteriorate.

The U.K. FTSE 100 index fell 1.9% to 4,150.07, the German DAX 30 index dropped 2.5% to 4,662.77 and the French CAC-40 index slid 2.5% to 3,389.53.

Market tumbles as Asian stocks slump on global recession worries

2008-10-23T09:47:00.001+05:30

The market gave away a large part of the last two days' gains on weak global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. The BSE Sensex slumped 513.49 points or 4.81%. Though in the red, both the both the BSE Mid-Cap and Small-Cap indices outperformed the Sensex.

Index heavyweight Reliance Industries fell more than 5.5%. Tata Steel fell more than 12% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. Sterlite Industries fell more than 10%. The market breadth was weak.

IT stocks fell on Wipro's cautious outlook at the time of announcing Q2 results before trading hours. Metal stocks declined sharply on weak global metal prices. Banking stocks fell in weak market after recent gains triggered by the central bank's repo rate cut.

Down 6.79%, Japanese stocks led decline in Asian equities as poor US corporate results and falling commodity prices fanned worries of a protracted global economic slowdown. Stocks in Hong, China, Singapore, South Korea and Taiwan were down by bewteen 1.62% to 5.07%.

European markets which opened after Indian market, fell on global recession worries. Key benchmark indices in France, Germany and UK fell by between 3.51% to 3.69%. Trading in US index futures suggested the Dow would fall 185 points at the opening bell.

The BSE 30-share Sensex lost 513.49 points or 4.81% to 10,169.90. The Sensex fell 555.17 points at day's low of 10,128.22 in late trade. The index declined 198.84 points at the day's high of 10,484.85 in early trade.

The S&P CNX Nifty was down 169.75 points or 5.25% to 3,065.15.

After an earlier steep slide, the Sensex had risen 708.04 points or 7.09% in two trading sessions to 10,683.39 on Tuesday, 21 October 2008, from its close of 9,975.35 on 17 October 2008, boosted by a repo rate cut by the central bank and on short covering on the stock market regulator's warning to foreign funds against overseas lending of shares.

There has been a massive erosion in investors' wealth this year. The barometer index is down 10,117.09 points or 49.86% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,036.87 points or 52.04% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 3,087 crore today as compared to a turnover of Rs 3,882.49 crore on 21 October 2008.

Nifty October 2008 futures were at 3051, at a discount of 14.15 points as compared to spot closing of 3065.15. NSE's futures & options (F&O) segment turnover was Rs 50,046.83 crore, which was higher than Rs 49,845.05 crore on Tuesday, 21 October 2008.

The BSE Mid-Cap index was down 2.7% at 3,490.39 and the BSE Small-Cap index was down 2.02% at 4,111.67. Both the indices outperformed the Sensex.

BSE Metal index (down 7.9% to 5,619.45), BSE Realty index (down 7.57% to 2,433.70), BSE Bankex (down 5.78% to 5,504.48), BSE Oil & Gas index (down 5.56% to 6,397.58), BSE Teck index (down 5.37% to 2,160.07) underperformed the Sensex.

BSE FMCG index (up 0.62% to 1,969.56), BSE HealthCare index (down 3.16 % to 3,199.32), BSE Consumer Durables index (down 3.63% to 2,189.33), BSE IT index (down .4.01% to 2,790.27), BSE PSU index (down 4.22% to 5,046.33), BSE Power index (down 4.27% to 1,676.62), BSE Auto index (down 4.42% to 2,985.16), BSE Capital Goods index (down 4.45% to 7,226.93), underperformed the Sensex.

The market breadth was weak. On BSE, 778 shares advanced as compared to 1733 that declined. 77 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 5.83% to Rs 1,315.55, ahead of Q2 September 2008 result tomorrow, 23 October 2008. The Bombay High Court, on Tuesday, 21 October 2008, allowed the central government to implead itself in the RIL-Reliance Natural Resources (RNRL) case on gas supply after RNRL said it had no problem to the government being a party in the matter. The hearing of the case is now likely to continue after Diwali vacation.

Jaiprakash Associates (down 7.88% to Rs 72.50), ACC (down 7.11% to Rs 452.15), Larsen & Toubro (down 5.34% to Rs 815.15) were the major losers from the Sensex pack.

Reliance Infrastructure fell 6.56% despite 15.5% rise in net profit to Rs 288.97 crore on 51.11% rise in total income to Rs 2674.86 crore in Q2 September 2008 over Q2 September 2007.

Metal stocks declined on slump in metal prices on the London Metal Exchange. The BSE Metal index was down 7.9% and was the major loser from the sectoral indices on BSE. Sterlite Industries, Hindustan Zinc, National Aluminum Company, Steel Authority of India and Tata Steel fell by between 7.13% to 10.04%.

India's largest steel maker by sales Tata Steel fell 12.04% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes. Tata Steel, will declare Q2 September 2008 results on 24 October 2008.

India's largest aluminum maker by sales Hindalco Industries skidded 5.67% reports it may sell a part of its Rs 2,081.34-crore stake in group companies, including Grasim Industries, Idea Cellular and Aditya Birla Nuvo, to raise funds to repay a part of the $3-billion bridge loan it obtained to buy Novelis.

Telecom stocks fell on reports telecom firms may have to shell out Rs 6,000 crore for failing to verify their customers. India's largest telecom services provider by market share Bharti Airtel fell more than 7.5%. India's second largest telecom services provider by market capitalisation Reliance Communications fell more than 8.5%. The government on Monday, 20 October 2008, announced that it would impose a fine of Rs 1,000 for every unverified subscriber.

Banking majors fell after recent gains on hopes lower rates will boost lending. ICICI Bank, HDFC Bank and State Bank of India fell by between 3.64% to 8.04%. The BSE's banking sector index Bankex declined 5.57%. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively, in the Bankex.

Yes Bank was almost fell 2.92% in an otherwise weak market, as net profit jumped 40.50% to Rs 63.62 crore in Q2 September 2008 over Q2 September 2008.

Bank of India declined 6.41% after providing for Rs 108.60 crore on account of exposure to troubled US investment bank Lehman Brothers, in Q2 September 2008.

Power Finance Corporation fell 0.09% even on 16.70%rise in net profit to Rs 329.33 crore in Q2 September 2008 over Q2 September 2007.

The Reserve Bank of India cut repo rate by 100 basis points to 8% on 20 October 2008. The repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days.

IT stocks slumped on overnight fall in American depository receipts (ADRs) and on cautious outlook by IT major Wipro. Weak rupee which augurs well for the sector did not stem the slide. The BSE IT index fell 4.37%.

India's fourth largest IT exporter by sales Wipro fell 5.79% after it said the outlook is cautious in the near term given the extent of strain on the global economy. Wipro ADR fell 2.87% on Tuesday, 21 October 2008, ahead of the results. Wipro reported 56.13% spurt in net profit to Rs 852.50 crore on a 15.48% increase in total income to Rs 5551.60 crore in Q2 September 2008 over Q1 June 2008.

India's third largest IT exporter by sales Satyam Computer Services lost 2.93%. Its ADR skidded 1.63% overnight. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008.

India's second largest IT exporter by sales Infosys fell 3.56%. Infosys ADR lost 5.21% overnight. India's largest IT services provider by sales Tata Consultancy Services lost 2.63%, ahead of Q2 results today.

Infosys, Satyam Computer Services, Tata Consultancy Service and Wipro have a weightage of 55.06%, 16.01%, 10.45% and 7.09%, respectively, in the BSE IT index.

Tech Mahindra rose 1.3% as net profit rose 16.36% to Rs 295.98 crore in Q2 September 2008 over Q1 June 2008.

Compucom Software surged 4.93%, on proposal to consider issue of bonus shares.

Geodesic rose 2.93% as net profit jumped 23.54% to Rs 48.95 in Q2 September 2008 over Q1 June 2008.

Educomp Solutions tumbled 11.47% on BSE, on profit taking, as net profit soared 51.40% to Rs 25.39 crore in Q2 September 2008 over Q1 June 2008.

The rupee weakened to a record low against the dollar on Wednesday as losses in the stock market fuelled concerns more foreigners would likely pare their risk exposure and repatriate investments. At the Interbank foreign exchange (Forex) market, the rupee, which ended steady at 49.00/49.01 yesterday, fell by 25 paise to 49.25 against the greenback.

PSU OMCs fell despite crude oil falling nearly $3 to hit a one-week low below $70 a barrel and extending a 4% slide in the previous session, on mounting worries that output cuts by Organisation of Petroleum Exporting Countries (OPEC) will not be enough to offset slackening energy demand. BPCL, HPCL and Indian Oil Corporation fell by between 2.09% to 8.15%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price

Bongaigaon Refinery & Petrochemicals slumped 7.23%, on slipping into the red in Q2 September 2008

Most realty stocks declined today after yesterday's rise despite hopes cut in lending rates will spur demand for residential properties. The BSE Realty index fell 7.57% and was the second major loser from the sectoral indices on BSE. Realty majors, DLF, Indiabulls Real Estate Unitech fell by between 5.05% to 12.75%.

BSE FMCG index rose 1.26% and was the only gainer from the sectoral indices on BSE. United Spirits, Hindustan Unilever and REI Agro rose by between 0.05% to 5.08%. India's largest cigarette maker by sales ITC rose 3.05%. The company will announce the Q2 September 2008 result on 24 October 2008.

Rate sensitive auto stocks fell despite hopes rate cuts would spur auto demand which is largely driven by finance. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors declined between 1.95% to 7.14%.

India's largest commercial vehicle maker by sales Tata Motors declined 4.94% on reports of missing its original Nano rollout deadline of October-December 2008.

Ashapura Minechem dropped 19.7% on reports the company faces three lawsuits in New York federal court seeking a total of more than $47 million.

Reliance Natural Resources declined 3.43% on BSE on muted growth in net profit in Q2 September 2008.

Kirloskar Brothers jumped 7.41% on its consortium winning an order worth Rs 1446 crore, with the company's share pegged at Rs 270 crore.

Pantaloon Retail India gained 0.07% as net profit surged 21.90% to Rs 36.18 crore in Q1 September 2008 over Q1 September 2007.

Champagne Indage was locked at lower limit of 5%, a 52-week low on plan to raise up to Rs 120 crore.

Max India provisionally ended down 6.57% as net profit declined 30.67% to Rs 11.73 crore in Q2 September 2008 over Q2 September 2007.

Piramal Healthcare fell 7.57% as net profit fell 14.2% to Rs 69.44 crore on 19.7% rise in total income to Rs 636.9 crore in Q2 September 2008 over Q2 September 2007.

Housing Development & Infrastructure clocked the highest volume of 99.89 lakh shares on BSE. Chambal Fertilisers & Chemicals (79.51 lakh shares), IFCI (65.13 lakh shares), Reliance Petroleum (61.34 lakh shares), Reliance Natural Resources (59.23 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 189.32 crore on BSE. Reliance Capital (Rs 169.53 crore), ICICI Bank (Rs 149.63 crore), Housing Development & Infrastructure (Rs 148.64 crore) and State Bank of India (Rs 135.48 crore) were the other turnover toppers in that order

A Bad year for IPOs

2008-10-19T23:40:00.001+05:30

Even as late as June this year, investors in initial public offers (IPOs) continued to be better off than those who dabbled in the secondary market. Smaller IPOs continued to deliver good listing gains, even while selecting stocks in the secondary market became a much more difficult proposition.

But the vicious downswing in the market over the past three months has well and truly blown the froth off the IPO market. Not just the new ones, but even ones that were listed over the past year have all plunged below their offer price. Seventy-six of the 83 IPOs that listed between March 2007 and March 2008 are now available below their offer price.

Here are the lessons from those 83 IPOs (recent ones were excluded as the time window would be insufficient to draw conclusions).

Of the total 96 initial public offers in the period, 13 were withdrawn. The remaining 83 IPOs were considered for this analysis. For performance study, price movement from the listing date to October 15 was considered.
Should have sold on first day

One common lesson for investors from IPOs in this period is that, irrespective of the quality of the issuer, you would have fared better had you booked gains on the listing day. Holding these stocks in expectation of better gains in the secondary market would have resulted in sharp erosion in value. Fifty-two of the 83 stocks that debuted in the period closed in the green on listing day. Of these, 22 listed at a price which clocked a 50 per cent gain over their issue price.

However, of the 83 stocks only one (Allied Digital) currently trades at a price higher than its listing price; all others have fallen from their Day One prices. On the other hand, of those that had a bad listing, only three Koutons Retail, Page Industries and Bang Overseas made gains in the days following listing. The wait was not worth it for the others.

If stocks gave away much of the gains made on listing, a good number of them also plunged below their issue prices. As many as 76 IPO stocks are trading below their offer price now. When it comes to the extent of losses, the quality of the business didn't matter much IPOs from quality businesses, such as BGR Energy, Transformers and Rectifiers and Edelweiss Capital, were among the worst performers their prices beaten down by over 70 per cent.

The extent of decline in stock prices shows that the pricing for IPOs in a bull market tends to factor in premium valuations and probably assume best scenarios for these businesses, resulting in high downside risk.

Better bet than listed peers

Would investors have been better off picking stocks from the secondary market as compared to the IPO? The answer is still 'no'. Though IPOs have put up a dismal performance, they have still fared marginally better than peers from the same sector in the secondary market. A study of 30 prominent IPOs in this period suggests that newly listed stocks fared better than their listed peers since their offer date.

Of the 30 IPOs, 18 recorded a lower percentage fall than a listed peer from the same sector, from the time of their offer. In fact, select stocks such as Maytas Infra (up 22 per cent) and Religare Enterprises (up 76 per cent) actually delivered hefty gains from their offer price, even as listed companies from the sector fell sharply. Nagarjuna Construction (down 79 per cent) and Geojit Financial Services (down 47 per cent), loosely comparable to the above, declined sharply over the same period.

But do note that it is only the listing gains that have ensured better performance from the debutants.

Religare Enterprises, a financial services firm focussed on broking services, was sold at Rs 185 in its IPO. But on the day of listing, the stock closed at Rs 525.30, a straight 183 per cent gain. In one year from the month it listed (October 2007), the stock lost nearly 38 per cent, but the gains made on listing are still holding the stock above its issue price. This further supports the logic for selling stocks on the day of listing.

Maytas Infra, Power Grid Corporation, Everonn Systems, Allied Digital Services and ICRA are the other stocks that held on to gains over their offer price, thanks to strong listing performance.

So, if you were to make a decision on the day of the offer, the IPO would have been the better buy. But if you were to look for secondary market options, an older peer would have been a better buy than a newly listed stock.
The subscription figures delude

As in the preceding year, overwhelming response to an IPO was no guarantee of the stock's performance. Of the IPOs in this period, Everonn Systems was in the top place, over-subscribed 145.5 times, followed by Future Capital (131.79 times), Mundra Port and SEZ (115.32 times) and BGR Energy (115.13 times).

However, from the date of listing to now (October 15), Everonn Systems has fallen by 55 per cent, Future Capital by 77 per cent, Mundra Port and SEZ by 60 per cent and BGR Energy by 81 per cent. The best performing IPO Allied Digital Services was subscribed by a little over 59 times and Indian Bank, another good performer, by 32 times.
No sector orientation

Last year's IPO returns numbers showed a distinct trend, with those from financial services, software and infrastructure faring relatively well. But this year's performance tally shows no sector-specific trend in the returns. In every sector an equal number of IPOs performed better than their listed peers as those that did worse.

The stocks that topped the listing gains list were Everonn Systems, Vishal Retail, Religare Enterprises, Nitin Fire and Mundra Port, hailing from diverse sectors. But the common thread that ran through them all was the time of their debut.

All these stocks were listed between June and December last year, a period when the Sensex rallied from 14K to 20K levels. And of all the IPOs, only seven are still holding above their issue price Religare Enterprises, Maytas Infra, Koutons Retail, Everonn Systems, Time Technoplast, ICRA and Page Industries. Again, all of them listed between March and December 2007.

The performance of the IPOs was thus a function of market conditions at the time of the offer, more than company-specific or sector-specific factors. Of the 17 stocks that listed in the choppy markets between January and March this year only Bang Overseas is still in the green (up 54 per cent from the issue price). However, at current levels a few of them are really attractive 'buys' Maytas Infra, Consolidated Construction Consortium, Mundra SEZ, Onmobile Global and MindTree Consultancy. Given the change in the earnings outlook, the ones in the financial sector are better avoided as concerns over the financial turmoil in broader markets persist.

Clearly this has been a bad year for greenhorns, whether they were investors or companies seeking to make a debut in the market!

Global markets recover, but worst may not be over

2008-10-19T23:36:00.001+05:30

Global stock markets were quite volatile this week, and the bias remained negative, as investors continued to be skeptical of the series of measures taken to shore up the banking system and unclog the credit markets. Sure, the money market rates did improve from last week, but still remained much above the levels just before the Lehman Brothers' bankruptcy filing. Also, the logjam in credit markets put several large scale M&A deals in jeopardy. On the whole though, this week was much better after last week's carnage, which was one of the worst ever for the global equity markets.

Britain led the way this week's government initiatives to lift troubled banks out of a deep hole, unlock the credit markets and stop the bloodletting in stocks. The UK unveiled a plan partially to nationalise some of its biggest banks. £20bn (US$35bn) of public money will be injected into Royal Bank of Scotland and £17bn into HBOS and Lloyds TSB (which have announced a merger) in return for substantial stakes - around 60% in RBS and 40% in Lloyds TSB-HBOS.

The US followed suit by providing US$250bn for bank recapitalisation; half of which will go to nine banks, including Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley. In return, the government will get non-voting preference shares that pay a 5% dividend, rising to 9% after five years. In a sign of growing tensions among policymakers, Sheila Bair, head of the US Federal Deposit Insurance Corporation, criticised the $700bn rescue package for banks for not doing more to help homeowners avoid foreclosure.

Germany said it would guarantee bank debt to the tune of 400bn (US$540bn) and supply an extra 100bn to stabilise financial markets; France unveiled a 360bn package of measures, including 40bn of capital funding for banks; and the Netherlands guaranteed 200bn in interbank lending. Austria, Italy, Spain and others also produced proposals.

UBS also got a bail-out. The Swiss government took a 9% stake in the bank and created a fund that allows UBS to offload US$60bn in toxic assets. Credit Suisse said that it won't follow compatriot UBS in transferring bad assets to a mostly Swiss National Bank-funded entity. However, it increased its Tier 1 capital base to 13.7% from 10.4% by raising 10 billion Swiss francs of new capital from major investors, including a subsidiary of the Qatar Investment Authority.

The Bank of Japan held an emergency meeting and decided to loosen up companies' access to cash. Hong Kong provided a blanket guarantee on all bank deposits. And Australia introduced a stimulus bill to boost the economy, including funding for first-time homebuyers. South Korea's policy makers held an emergency summit, seeking steps to restore confidence after shares plunged to a three-year low and the won declined by the most since the 1997 Asian crisis.

The United Arab Emirates (UAE) pledged an extra US$19bn for its banks. Qatar said it would take stakes of up to 20% in banks so that they could continue to fund regional infrastructure projects. Some questioned whether the Gulf states' sovereign-wealth funds still had an appetite to invest abroad, a lifeline to many earlier in the credit crunch.

Concerted efforts by governments around the world to unfreeze the short-term credit markets started to bear some fruit. The cost of borrowing dollars in London for three months was headed for a weekly decline, the first one since July, after central banks injected billions of dollars into money markets and governments guaranteed loans. Money-market rates jumped after Lehman Brothers went bankrupt on Sept. 15.

The dollar rate will drop about 10 basis points to 4.4% on Friday. It was 4.82% a week ago. Global money market rates fell this week after central banks joined forces to offer lenders an unlimited supply of dollars and the ECB did the same with euros. Still, lending costs among banks remain near record highs relative to the Federal Reserve's benchmark rate of 1.5%.

Meanwhile, European leaders called for an overhaul of the global financial system to avert another major crisis. Europe demanded a global summit to discuss the creation of a new form of capitalism, based on moral values, and the effective regulation and supervision of all corners of the financial world, including hedge funds and rating agencies.

The proposed global summit has been described as the starting point for a new "Bretton Woods", the 1944 meeting of Western leaders that led to the foundation of the World Bank and the IMF. It would probably happen in November or December. Britain's prime minister, Gordon Brown, said the world needs more transparency, integrity and systems of global governance. He wants to see cross-border colleges of national supervisors to assume oversight of the 30 largest financial institutions in the world, by the end of the year, and to see the IMF become an early warning system for problems looming in the world economy.

Nifty October 2008 futures below 3100

2008-10-19T23:34:00.000+05:30

Turnover drops

Nifty October 2008 futures were at 3068, at a discount of 6.35 points as compared to spot closing of 3074.35. NSE's futures & options (F&O) segment turnover was Rs 43,767.13 crore, which was lower than Rs 55,892.72 crore on Thursday, 16 October 2008.

Reliance Industries October 2008 futures were at premium at 1310 compared to the spot closing of 1306.05.

Bharat Heavy Electricals October 2008 futures were at premium at 1217 compared to the spot closing of 1191.55.

DLF October 2008 futures were at discount at 289.90 compared to the spot closing of 291.90.

In the cash market, the S&P CNX Nifty lost 194.95 points or 5.96% at 3074.35.

RBI policy review, global markets to dictate trend

2008-10-19T23:33:00.001+05:30

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

Foreign institutional investors (FIIs) continue to press sales. They have sold shares worth Rs 46,661.20 crore in the calendar year 2008 so far (till 16 October 2008).

Investors now await the mid-term monetary policy review by the Reserve Bank of India (RBI) due on 24 October 2008. Some reports suggest that RBI is set to cut the repo (repurchase) rate by a steep 50 basis points, to signal a strong shift in policy focus to growth from inflation. Repo rate is the rate at which RBI provides funds to banks against the collateral of government bonds for a day to three days.

On the inflation front, experts feel that the wholesale price index is expected to move downward, and will eventually come down to single-digit numbers by January 2009. Inflation based on the whole price index rose 11.44% in year through 4 October 2008, lower than previous week's 11.8% rise, data released on 16 October 2008, showed.

Index bellwether Reliance Industries (RIL) will declare its Q2 September 2008 results on 23 October 2008. According per media reports, RIL's gross refining margins, or GRMs, are expected to decline significantly in Q2. As per research report published by foreign brokerage houses, RIL may report a 4.3% fall in its gross refining margins (GRM) to $13 per barrel in Q2 September 2008 over Q2 September 2007. The GRM is the difference between the selling price of the finished products and raw material cost.

Reliance Industries has 13.64% weightage in Sensex and therefore any sharp fall in the stock may drag the key indices further lower.

Other September 2008 quarter results due next week include Jaiprakash Associates, Reliance Natural Resources, Reliance Petroleum, Idea Cellular, Jet Airways (India), MIC Electronics, Chambal Fertilisers & Chemicals, MRF, Pantaloon Retail (India), Federal Bank, Allahabad Bank, Bank of Rajasthan, Rolta India, United Phosphorus, Titan Industries, Ashok Leyland, Chennai Petroleum Corporation, Emami, Finolex Industries, Geodesic, Hero Honda Motors, Hindustan Motors, Hindustan Zinc, Indiabulls Securities, and Marico, among other will declare their September ended quarter results next week.

Inflation coming down slightly

2008-10-13T00:47:00.003+05:30

India's inflation, based on the wholesale price index (WPI), slowed to a 15-week low towards the end of September, as prices either declined or remained stable, the Government said. The annual point-to-point inflation stood at 11.8% in the week ended September 27 as against 11.99% in the previous week, the Commerce & Industry said in a statement. The rate was below a median forecast of 11.98%. The annual inflation rate was 3.36% during the corresponding week of the previous year. The WPI for 'all commodities' declined by 0.1% to 240.7 from 241.0 in the previous week. Inflation for the week ended Aug. 2 was revised up to 12.91% from a provisional estimate of 12.44% while the WPI for the same period was increased to 241.4 from the preliminary forecast of 240.4.

The index for Primary Articles group declined by 0.2% to 250.9 from 251.3 in the preceding week, while the annual point-to-point inflation declined to 11.17% from 11.29% reported in the previous week. The index for Fuel & Power group remained unchanged at its previous week's level of 375.3. The rate of inflation remained unchanged at 16.52% for this commodity group. The index for Manufactured Products declined by 0.1% to 207.2 from 207.5 in the previous week. The rate of inflation declined to 10.33% from 10.55% in the previous week. Inflation for 30 essential commodities increased marginally to 7.74% in the week ending September 27 from 7.7% in the previous week.

Industrial output plummets in August

2008-10-13T00:47:00.001+05:30

The turmoil in the global financial markets now seems to have started affecting the Indian economy in a really bad way. India's industrial production plunged to its worst level in more than a decade in August, the Government said. The index of industrial production (IIP) fell sharply to 263.6 in August from 273.8 in July, with the corresponding growth rate sliding to a paltry 1.3% from a healthy 7.4% in July. Economists had expected IIP growth at 6% in August. The mining sector grew by 4% in August versus 3% in July, while manufacturing grew by 1.1% in August as against 8% in July, and electricity rose by 0.8% in August compared to 4.5% year ago. The Government also said that it has revised the July industrial production growth to 7.4% from a provisional figure of 7.1%. For the first five months of the current fiscal year, industrial output growth stood at 4.9% versus 10% in the corresponding period of the last fiscal year.

Expect global slowdown - IMF

2008-10-13T00:46:00.000+05:30

The world economy is decelerating quicklybuffeted by an extraordinary financial shock and by still-high energy and commodity pricesand many advanced economies are close to or moving into recession, the IMF says in its latest World Economic Outlook (WEO).

The October 2008 report which was released two days prior to the IMF-World Bank Annual Meetings in Washington, said that growth in emerging economies is also weakening after years of strong growth, though it will still drive global growth.

Speaking at the WEO press conference, IMF Chief Economist Olivier Blanchard emphasized the importance of implementing joint financial and macroeconomic policies at this point "to stem the negative momentum on multiple fronts." On the financial side, "this implies the design of comprehensive programs to deal with systemic problems," while on the macroeconomic side, "this implies the use of monetary and fiscal policies to support growth and break negative feedback loops between the financial and real sectors," he said.

"With the right macro and financial policiesand these policies are availablewe ca

Global markets continue to singe...

2008-10-13T00:44:00.001+05:30

The mayhem in global markets continued this week, as the financial contagion deepened in Europe, and even spread to Japan later in the week. Equity markets across the globe plunged badly amid mounting fears that the worst financial crisis since the Great Depression would result in a prolonged and painful global recession. The incessant carnage prompted governments and regulators to take more emergency steps to try and stop the bloodshed.

But, all the efforts yielded little results, as the MSCI World Index suffered its worst week in more than three decades. The Nikkei in Japan lost a fourth of its value while the Hang Seng dropped 16%. The FTSE 100 in London fell below 4,000 for the first time in more than five years. The Dow Jones Industrial Average sank under 9,000 for the first time since 2003. The Nasdaq fell below 1,700 and the S&P 500 plunged into triple digits.

Russian stock exchanges delayed the opening of trading and Indonesia extended a two-day halt. Iceland suspended equity trading until Oct. 13 after the government seized Kaupthing hf, the country's biggest bank. Russia's government said it will start buying stocks of domestic companies next week to help support prices. Consob, Italy's securities-market regulator, banned all short sales on the country's stocks.

The cost of borrowing in dollars in London for three months rose as cash injections and interest-rate cuts by 10 major central banks failed to unlock the frozen money markets. The cost to protect corporate bonds from default soared to records around the world on investor concerns that the deepening credit crisis will trigger more failures as companies struggle to finance their businesses.

What if .. ICICI goes bust ?

2008-10-13T00:43:00.000+05:30

Frequently Asked Questions

What will happen to my account ?

Will I get my money back ?

Is my money INSURED ?

Will RBI give the money I have in ICICI ?

READ more ...

The deposit insurance system in India is subject to the Provisions of Deposit Insurance Act (enacted in 1961). Deposit Insurance and Credit Guarantee Corporation (DICGC) is the body that operates the deposit insurance system.

Q1 Which banks are insured by the DICGC?

Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the Reserve Bank are covered under the Deposit Insurance Scheme. At present all co-operative banks other than those from the States of Meghalaya, Mizoram, Nagaland, and the Union Territories of Chandigarh, Lakshadweep and Dadra & Nagar Haveli are covered under the deposit insurance scheme of DICGC.

Primary cooperative societies are not insured by the DICGC.

Q2 What does the DICGC insure?

In the event of a bank failure, DICGC protects bank deposits that are payable in India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits (i) Deposits of foreign Governments; (ii) Deposits of Central/State Governments; (iii) Inter-bank deposits; (iv) Deposits of the State Land Development Banks with the State co-operative bank; (v) Any amount due on account of deposit received outside India; (vi) Any amount, which has been specifically exempted by the Corporation with the previous approval of Reserve Bank of India.

Q3 What is the maximum deposit amount insured by the DICGC?

Presently, deposits of each depositor in a bank is insured upto a maximum of Rs.1,00,000 (Rupees One Lakh) for both principal and interest amount held by him "in the same right and same capacity" as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

Q4 How will I know whether my bank is insured by the DICGC or not?

The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the bank's officials in this regard or visit DICGC website on the web address www.dicgc.org.in.

What is the ceiling on amount of Insured deposits kept by one person in

Q5 different branches of a bank?

The deposits kept by one person in different branches of a bank are aggregated for the purpose of insurance cover and presently a maximum amount upto Rupees one lakh is paid.

Q6 Does the DICGC insure just the principal deposit amount or both principal and
accrued interest?

The DICGC insures principal and interest upto a maximum amount of Rs. One lakh. For example, if an individual had deposit(s) with principal amount of Rs.95,000 plus accrued interest of Rs.4,000, the total amount insured by the DICGC would be Rs.99,000. If, however, the principal amount were Rs. One lakh, the accrued interest would not be insured, not because it was interest but because the amount was over the insurance limit.

Q7 Can deposit insurance be increased by depositing funds into several different
accounts all at the same bank?

No. All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks they would then be separately insured.

Q8 What is a single ownership account?

A single (or individual) ownership account is an account owned by one person. Such accounts include those in the owner's name; those established for the benefit of the owner by agents, nominees, guardians, custodians, or conservators; and those established by a business that is a sole proprietorship.

Q9 Are deposits in different banks separately insured?

Yes. If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each bank.

Q10 If I have deposits at two different banks, and those two banks are closed on
the same day, are my funds added together, or insured separately?

Your funds from each bank would be insured separately, regardless of the date of closure.

Q11 What is the meaning of deposits held in the same right and capacity and
different right and capacity?

If a person opens in his name more than one account in a bank, for example Mr. K.A.Pandit opens one savings account and one or more fixed deposit accounts, all the accounts are considered in the same right and same capacity and insurance coverage is limited to a maximum of Rupees one lakh. But if Mr. K.A.Pandit opens a joint account, the joint account is considered in a different right and different capacity and insurance coverage is provided separately. Each joint account is insured separately from any deposits individually owned by the joint depositors. Each joint account owned by a combination of different persons is insured upto Rupees one lakh. All joint accounts owned by the combination of same persons are added together and the combined total is insured upto Rupees one lakh.

Illustrations
Deposits held in different capacities
	Savings	Current	FD	Total	Deposits
	A/C	A/C	A/C	Deposits	Insured
Shri S. K. Pandit	17,200	22,000	80,000	1,19,200	1,00,000
(Individual)
Shri S. K. Pandit		75,000	50,000	1,25,000	1,00,000
(Partner of ABC & Co.)
Shri S. K. Pandit	7,800		80,000	87,800	87,800
(Guardian for Master Ajit)
Shri S. K. Pandit		2,30,000	45,000	2,75,000	1,00,000
(Director, J.K. Udyog Ltd.)

Deposits held in joint accounts
Account (i)	First a/c holder- "Shri A. K. Sharma"	Maximum insured amount upto
	Second a/c holder - "Smt. B. Sharma"	Rs.1 lakh
Account (ii)	First a/c holder - " Shri A. K. Sharma"	Maximum insured amount upto
	Second a/c holder - "Shri P. Sharma"	Rs.1 lakh
Account (iii)	First a/c holder - "Smt. B. Sharma"	The a/c will be clubbed with the
	Second a/c holder-"Shri A. K. Sharma"	a/c at (i)
Account (iv)	First a/c holder - "Shri A. K. Sharma"	Maximum insured amount upto
	Second a/c holder - "Smt. B. Sharma"	Rs.1 lakh
	Third a/c holder - "Shri P. Sharma"
Account (v)	First a/c holder - "Smt. B. Sharma"	The a/c will be clubbed with the
	Second a/c holder - "Shri P. Sharma"	a/c at (iv)
	Third a/c holder - "Shri A. K. Sharma"

Q12 Can the bank deduct the amount of dues payable to it by the depositor?

Yes. Banks have the right to set off their dues from the amount of deposits. The deposit insurance is available after netting of such dues.

Q13 Who pays the cost of deposit insurance?

Deposit insurance premium is borne entirely by the insured bank.

Q14 When is the DICGC liable to pay?

If a bank goes into liquidation: The DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit upto Rupees one lakh within two months from the date of receipt of claim list from the liquidator.

If a bank is reconstructed or amalgamated / merged with another bank: Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent authority and the said scheme provides for each depositor being paid or credited with, on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay to every such depositor in accordance with the provisions of section 18 of DICGC Act an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less:

Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force.

Q15 Does the DICGC directly deal with the depositors of failed banks?

No. In the event of a bank's liquidation, the liquidator prepares depositor wise claim list and sends it to the DICGC. After scrutiny the DICGC pays the money to the liquidator who is liable to pay to the depositors. In the case of amalgamation / merger of banks, the amount due to each depositor is paid to the transferee bank.

Q16 Can any insured bank withdraw from the DICGC coverage?

No. The deposit insurance scheme is compulsory and no bank can withdraw from it.

Q17 Can the DICGC withdraw deposit insurance cover from any bank?

The Corporation may cancel the registration of an insured bank if it fails to pay the premium for three consecutive half year periods. In the event of the DICGC withdrawing its cover from any bank for default in the payment of premium the public will be notified through newspapers.

Registration of an insured bank stands cancelled if the bank is prohibited from accepting fresh deposits; or its licence is cancelled or a licence is refused to it by the Reserve Bank; or it is wound up either voluntarily or compulsorily; or it ceases to be a banking company or a co-operative bank within the meaning of Section 36A(2) of the Banking Regulation Act, 1949; or it has transferred all its deposit liabilities to any other institution; or it is amalgamated with any other bank or a scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit acceptance of fresh deposits. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation.

Q18 What will be the Corporation's liability on de-registration of banks ?

The Corporation has deposit insurance liability on liquidation etc. of "insured banks" i.e. banks which have been de-registered (a) on account of prohibition on acceptance of fresh deposits or (b) on cancellation of license or where it is found that license can not be granted. The liability of the Corporation in these cases is limited to the extent of deposits as on the date of cancellation of registration of bank as an insured bank subject to the monetary ceilings applicable.

On liquidation etc. of other de-registered banks i.e. banks which have been de-registered on other grounds such as non payment of premium or their ceasing to be eligible cooperative banks under section 2(gg) of the DICGC Act, 1961, the Corporation has no liability.

Sensex off 48% in calendar 2008

2008-10-13T00:41:00.001+05:30

There is fear and panic on the stock markets. The bourses suffered heavy losses today on the back of global sell-off and on data showing dismal industrial production growth in August 2008. The BSE 30-share Sensex lost 800.51 points. IT stocks suffered on downward revision in guidance in dollar terms by IT bellwether Infosys Technologies.

Banking stocks were volatile reacting to a slew of news such as cut in cash reserve rate, slowdown in industrial production and fall in inflation. Reliance Communications declined 21.02%, Reliance Infrastructure and ICICI Bank lost more than 19% each and Jaiprakash Associates shed 16.27%.

Securities & Exchange Board of India (Sebi) chief C B Bhave today said there was no unusual activity in the stock market. He further said there has been no shorting by institutions in cash markets.

Inflation based on the whole price index rose 11.8% in 12-months to 27 September 2008, lower than previous week's 11.99% rise, data released by the government during trading hours today, showed.

Stocks fell across the globe despite worldwide central bank measures to stave off a crisis. Bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety with Asian stocks tumbling today, following overnight setback in US stocks.

Back home, the Reserve Bank of India (RBI) toady cut the cash Reserve Ratio (CRR) second time in the week. The central bank cut CRR by 100 basis points after 50 basis point cut earlier in the week.

Trading in US index futures suggested the Dow would fall 227 points at the opening bell.

The BSE 30-share Sensex ended down 800.51 points or 7.07% to 10,527.86. The index plunged 1,088.50 points at the day's low of 10,239.76 at the onset of the trading session, its lowest level since 24 July 2006. The Sensex fell 424.33 points at day's high of 10,904.13, in early trade.

The S&P CNX Nifty was down 233.70 points or 6.65% to 3,279.95. Nifty hit a low of 3,198.95 in early trade, its lowest level since 9 August 2006.

From the recent high of 13,055.67 on 1 October 2008, the Sensex has lost 2,527.81 points or 19.36%. The barometer index is down 9,759.13 points or 48.1% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 10,678.91 points or 50.35% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 5,073 crore today as compared to a turnover of Rs 5,135.12 crore on 8 October 2008.

Nifty October 2008 futures were at 3295, at a premium of 15.05 points as compared to spot closing of 3279.95. NSE's futures & options (F&O) segment turnover was Rs 48,279.24 crore, which was lower than Rs 57,666.95 crore on Wednesday, 8 October 2008.

The BSE Mid-Cap index ended down 8.34% at 3,676. The BSE Small-Cap index was down 7.31% at 4,355.45. Both the indices underperformed the Sensex.

The market breadth was extremely weak. On BSE, 382 shares advanced as compared to 2,189 that declined. 48 shares remained unchanged.

All the sectoral indices on BSE were in the red. BSE Realty index (down 11.3% to 2,523.07), BSE Consumer Durables index (down 10.11% to 2,139.50), BSE Metal index (down 9.25% to 6,542.27), BSE Capital Goods index (down 9.22% to 7,983.04), BSE Power index (down 8.8% to 1,855.04), BSE Bankex (down 7.84% to 5,319.50) underperformed the Sensex.

BSE HealthCare index (down 3.92% to 3,213.28), BSE IT index (down 4.33% to 2,584.25), BSE FMCG index (down 4.46% to 1,860.56), BSE PSU index (down 4.47% to 5,535.99), BSE Auto index (down 5.43% to 3,255.68), BSE Oil & Gas index (down 6.72% to 7,272.31), BSE Teck index (down 6.74% to 2,112.03), outperformed the Sensex.

Among the major Sensex losers were, Jaiprakash Associates (down 16.27% to Rs 76.15), Reliance Infrastructure (down 19.25% to Rs 515.30) and Reliance Communications (down 21.02% to Rs 237.40) slumped.

India's largest private sector company by market capitalization and oil refiner Reliance Industries slumped 7.43% to Rs 1,527. The stock recovered from the session's low of Rs 1,480.

India's largest drug maker by sales Ranbaxy Laboaratories spurted 4.71% to Rs 292.40 after the US government withdrew a motion against Ranbaxy Laboratories after the drugmaker submitted a comprehensive set of audit documents to the authorities.

India's biggest private sector bank by net profit ICICI Bank lost 19.71% to Rs 364.10. The stock came off session's low of Rs 326.70. India's second-largest bank, has very small exposure to the global financial crisis and there should be no concerns about liquidity, its joint managing director Chanda Kochhar said. Her comments came after the bank's stock fell as much as 28% today as panic-stricken investors dumped the shares in a weak market.

India's second biggest private sector bank by market capitalisation HDFC Bank was down 5.35% at Rs 1,046.35, off the session's low of Rs 975.55.

India's largest state-run lender by market capitalisation State Bank of India rose 2.27% to Rs 1,352.16, off a low of Rs 1181.15.

IT stocks recovered after earlier fall on Infosys's weak outlook. India's second largest IT exporter by sales Infosys fell 2.2% to Rs 1,226.70. The stock recovered from the session's low of Rs 1,040. Infosys said it has revised the US dollar guidance downwards to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar.

Infosys expects earnings per American depository share at $2.23 for the year ending March 2009, a growth of 12.6%. At the time of Q1 June 2008 results, the company had forecast earnings per American depository share at $2.31 to $2.35 for the year ending March 2009, a growth of 16.7% to 18.7%.

Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6% growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June 2008. The company announced the results before trading hours today, 10 October 2008.

Tata Consultancy Services, Wipro and Satyam Computer Services tumbled between 4.32% to 6.69%.

The Indian rupee fell to a record low past 49.07 per dollar today as the spreading global financial crisis hurt sentiment in Asian stock markets, leading to concerns of a large outflow of foreign funds from India. IT exporters benefit from the weaker rupee as they derive most of their revenues in dollars.

India's largest steel maker by sales Tata Steel slumped 14.49% to Rs 287.50. ArcelorMittal SA and Tata Steel have reportedly shown interest in mining coal in collaboration with Coal India from the latter's 18 abandoned underground mines.

India's largest aluminum maker by sales Hindalco Industries slumped 11.18% to Rs 80.65 even as the company said IGH Holdings, a promoter of the company has acquired 8.94 lakh shares or 0.05% of equity capital of the company by way of open markets purchases.

Tata Power Company declined 3.72% to Rs 774.70. The company is reportedly exploring the option of raising its stake in Indonesia's Bumi Resources Tbk, the world's second largest coal company, after a sharp erosion in the value of the shares pledged by Bumi's parent firm, Bakrie & Brothers, with various lenders.

ICICI Bank clocked the highest volume of 1.16 crore on BSE. Reliance Natural Resources (94.27 lakh shares), Apollo Tyres (85.85 lakh shares), IFCI (85.41 lakh shares) and Jaiprakash Associates (83.93 lakh shares) were the other volume toppers in that order.

ICICI Bank clocked the highest turnover of Rs 428.25 crore on BSE. Reliance Industries (Rs 325.90 crore), Bharti Airtel (Rs 283.21 crore), Reliance Capital (Rs 230.99 crore), State Bank of India (Rs 186.57 crore) were other turnover toppers in that order.

Sintex Industries dropped 13.85% to Rs 195.70, even as the company reported 62.54% growth in net profit to Rs 68.24 crore in Q2 September 2008 over Q2 September 2007.

Era Infra Engineering slipped 7.24% to Rs 75.55, even as the company said its joint venture company has bagged a contract from Airport Authority of India for construction of a new terminal at Devi Ahilya Bai Holkar Airport, Indore

Aurobindo Pharma declined 7.56% to Rs 195, even as the company said it has received US Food & Drug Administration approval to manufacture and market Cyclobenzaprine hydrochloride tablets in multiple strengths.

Cairn India plunged 11.38% to Rs 151.40, on reports the Rajasthan government is yet to grant the crucial Right of Use (ROU) to Cairn India for the part of the pipeline that will pass through the state.

Ashok Leyland tumbled 8.01% to Rs 22.40 at 11:41 IST on BSE, after the company reported 14.57% fall in total sales to 6,186 units in September 2008 over September 2007.

JSW Steel rose 1.42% to Rs 296.80, having recovered from a 52-week low of Rs 244, after the company posted 14% growth in net crude steel production to 10.01 lakh tonnes in Q2 September 2008 over Q2 September 2007.

Biocon slipped 2.44% to Rs 134.15, even as the company said on Friday, 10 October 2008, its joint venture company NeoBiocon has launched Arbaxane in United Arab Emirates for the treatment of breast cancer.

India's industrial production rose at a dismal 1.3% in August 2008 compared to a 10.9% growth in August 2007. Manufacturing grew a poor 1.1% in August 2008 versus 10.7% growth in August 2007. Consumer durables production rose 5.1% in August 2008 verses 6.2% growth in August 2007. Capital goods prodcution rose 2.3% in August 2008 verses 14.7% growth in August 2007. Meanwhile, industrial production growth for July 2008 was revised upwards to 7.4% from 7.1%.

European markets which opened after Indian market were sharply lower. France's CAC 40, Germany's DAX and UK's FTSE 100 were down between 7.49% to 8.41%.

Overnight, US stocks slumped more than 7% on fears that credit markets would stay frozen, paralysing the world's financial system and slowing economies to a standstill.

US light crude for November delivery fell $4.16, or 4.8%, to $82.43 a barrel today, 10 October 2008, just above its earlier low of $82.00, in its biggest two-week decline since the start of the Iraq war in 2003. Oil slipped on fears that market turmoil will send demand for fuel slumping.

The Indonesian stock exchange suspended trading for a third day, and exchanges in Bangkok and Vienna halted trading after shares fell more than 10 %, triggering circuit-breaker rules.

In Moscow, the Russian Duma, or Parliament, approved a financial sector bailout package valued at more than $80 billion. Trading on Russian stock exchanges was suspended until further notice.

Domestic bourses to track weak global stocks

2008-10-08T09:46:00.001+05:30

A fresh setback in global markets will result in a further fall on the domestic bourses today, 8 October 2008. Investors are unlikely to build large positions as the market remains closed tomorrow, 9 October 2008, on account of Dasara. Some of the equipment makers for the nuclear power plants may rise on reports India and United States are likely to sing the civilian nuclear deal on Friday, 10 October 2008.

US stocks plunged on Tuesday, 7 October 2008, amid escalating worries about credit markets and the financial sector. The Dow lost more than 500 points and all the major indexes slid more than 5 percent. The Standard & Poor's 500 index saw its first close below 1,000 in five years. Steps by the Federal Reserve to reinvigorate the dormant credit markets ultimately weren't enough to calm nervous investors.

Key benchmark indices in Asia were down by between 2.9% to 5.7% today, 8 October 2008, even as central banks across Asia stepped up to offer more support to commercial banks on to try to ease painful pressure on funding costs from a vicious global credit squeeze.. The troubles that started with an overheated housing market in the US have infected financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers.

Back home, after Monday's (6 October 2008) heavy slide, the market witnessed highly choppy trade on Tuesday, 7 October 2008. While the 30-share BSE Sensex slid 106.46 points, the S&P CNX Nifty rose 4.25 points.

Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 8278.10 crore last month. The outflow has reached Rs 39159.10 crore in calendar year 2008 (till 6 October 2008).

As per provisional data released by the stock exchanges, foreign funds sold worth a net Rs 680.42 crore on Tuesday, 7 October 2008. Domestic funds bought shares worth a net Rs 548.29 crore.

Meanwhile, with the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is no data available on the quantum of hedge funds' investment in India.

The barometer index is down 8,591.75 points or 42.35% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 9,511.53 points or 44.85% below its all-time high of 21,206.77 struck on 10 January 2008.

Meanwhile, as per reports, United States and India plan to sign a potentially lucrative agreement on Friday, 10 October 2008, to open up nuclear trade between the two countries for the first time in three decades. The pact will provide India with access to US nuclear fuel, reactors and technology, overturning a ban on such trade instituted after India first conducted a nuclear test in 1974.

Daily News Roundup - Oct 8 2008

2008-10-08T09:42:00.001+05:30

ONGC-Mittal Energy plans to set up its first refinery in Nigeria with an investment of ~US$4bn. (ET)
Tata Group to set up Mother Plant of Nano car in Sanand in Gujarat. (DNA)
Bharti Airtel to launch its DTH services in 62 cities from October 9, 2008. (FE)
RNRL to produce sections of Reliance MoU in High Court today. (BL)
Infosys is looking to expand its consulting business through acquisitions. (BL)
IOC gets a credit allowance of Rs1.5bn from New Delhi for uninterrupted supply of petroleum products to Kathmandu. (FE)
Kumar Mangalam Birla, promoter has increased his stake in Hindalco to 31.59%. (Mint)
Tata Sons sells 1% stake in TCS for Rs7.01bn. (ET)
IVRCL Infrastructure secures order worth Rs4.99bn from Andhra Pradesh Government. (FE)
United Spirits plans to offer 500 shares for each acre to grape growers. (BL)
NHPC defers IPO till market conditions improve. (ET)
United Phosphorus plans to spin off its fledgling toxic gas detection instrument business. (Mint)
ITC's Wills Lifestyle to open 50 more outlets in next two years. (BL)
ICICI Bank, Dish TV launches interactive banking service. (Mint)
Spanco and Omnia BPO to form 50:50 JV for domestic BPO. (ET)
Opto Circuits drops plans to acquire company in Europe. (Mint)
Monnet Ispat plans to enter service sector and provide total solution for setting up coal washeries. (BL)
Tata Group to set up agri, marine biology research institute. (ET)
M&M to bring its car service business in Pune in next 12-15 months. (FE)
Everonn Systems has bagged Rs68.5mn project from Nagpur Municipal Corporation. (FE)
GVK Power & Infra divests entire stake in GVK Aviation. (FE)
Essar Oil signs a product purchase and infrastructure sharing MoU with IOC. (BL)
Bajaj Electricals plans to set up lighting unit in Saudi Arabia in next 15-18 months. (FE)
Bajaj Electricals secures Rs90mn Bandra Worli Sea-Link order. (BL)
Consolidated Construction Consortium is planning to enter into nuclear power projects sector. (ET)
Consolidated Construction Consortium secures Rs12.12bn order from Airport Authority of India to expand Chennai airport terminal. (BL)
Strides Arcolab gets USFDA approval for its oral dosage manufacturing unit in Bangalore. (DNA)
REcap partners LLC to acquire HOV services for ~Rs9.5bn. (BS)
Marksans Pharma is looking for more acquisition targets in US and Europe. (BL)
Country Club launches new clubbing concept to increase its presence globally. (FE)
Essar Group may drop plan to set up wind-turbine JV. (BS)
Provogue India plans to foray into food and grocery retailing sector. (BS)
Premji Invest picks up 3% stake in NSE for US$100mn. (BS)

Economic Front Page

The Government asks states to exempt local taxes on coal transfers by JV firms from captive coal blocks. (ET)
Exploration, refiners and miners gets permission to raise US$500mn per year from ECBs. (ET)
The Ministry of Shipping to propose on the revival of the ship building subsidy to the cabinet in the next week. (FE)
GSM based mobile operator's approaches government to seek permission to separate their non-voice revenues. (BL)
The Government is considering overseas dollar bond float to ease Indian banks and companies access to liquidities. (BS)

Investor wealth eroded

2008-10-08T09:41:00.003+05:30

Amid the financial crisis in the US, Indian investors have witnessed an erosion of about Rs 2.3 lakh crore in their wealth in September, says a report.

Domestic equity market continued to be battered following negative global cues with the benchmark Nifty registering a fall of about 10 % in the last month.

"It is estimated that Rs 2.3 lakh crore of shareholders' wealth eroded in the background of the situation in the US financial markets," Crisil Research said in a report.

On the contrary, the fall in the US markets was lower with the S&P 500 and Dow Jones both declining by around nine % and six %, respectively, while emerging markets lost around 18 % during the month.

Pessimism in the financial markets following the filing for bankruptcy by Lehman Brothers, Merrill Lynch's sell-off, the bail out of AIG and perceived uncertainty around the US bail-out package added to investor fears.

Investor sentiment was also affected on news of the possibility of Fortis filing for bankruptcy, indicating problems in the European financial markets as well, the report added.

"The BSE Realty Index and the BSE Metal Index were the most severely affected during the month, dropping by 32 per cent and 25 %, respectively. Concerns over slowing demand in the real estate market due to a liquidity crunch and increased cost of funding weighed in on investor sentiment in the realty sector," Crisil Research Head-Equities Chetan Majithia said.

Bullion metals continue to rise

2008-10-08T09:41:00.001+05:30

Gold gains more than $50 in the past two days

Despite a relatively stronger dollar, bullion metals continued to rise and once again ended higher on Tuesday, 07 October, 2008. The yellow metal gained after the stocks at Wall Street continued to plunge on global economic worries thereby strengthening the yellow metal's demand as a safe haven for investment. Chances of another interest rate cut by Federal Reserve by at least 50 bps to 1.5% also imparted further shine on the yellow metal. Silver prices also gained today. Investors tend to seek safety in gold when the economy falls into turmoil.

On Tuesday, Comex Gold for December delivery gained $15.8 (1.8%) to close at $882 an ounce on the New York Mercantile Exchange. In the past two days, gold has gained more than $50. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.

For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%. This year, gold prices have gained 5.3% till date.

On Tuesday, Comex silver futures for December delivery slightly rose 9.5 cents (0.8%) to $11.38 an ounce. Silver had ended month and quarter of September 2008 with a loss of 10%. It ended August with a loss of 2.4% and July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. Till date, silver has lost 24% this year. The metal also had gained for seven straight years.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

At the currency markets on Tuesday, the dollar gained against the yen but remained under pressure after the Federal Reserve said it would buy commercial paper in an attempt to revive frozen credit markets and ease overall borrowing costs. The yen rallied against both the dollar and the euro as investors fled to safe-haven currencies on ongoing worries about credit markets and the impact of the financial crisis on institutions in the U.S. and Europe. The dollar index, which measures the U.S. unit against a basket of major currencies, remained under pressure, trading at 81.093, down from 81.300 in morning trade and 81.593 on late Monday.

At the crude market on Tuesday, crude-oil futures closed higher to score their first gain in five sessions as prices bounced back after touching an eight-month low. Prices found support as traders looked for fresh indications on global energy demand and digested reports of renewed tension in the Middle East, but crude finished off the day's high as U.S. stocks weakened. Crude for November delivery rose $2.25, or 2.6%, to close at $90.06 a barrel on the New York Mercantile Exchange.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for December delivery closed higher by Rs 177 (1.3%) at Rs 13,513 per 10 grams. Prices rose to a high of Rs 13,599 per 10 grams and fell to a low of Rs 13,192 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 157 (0.82%) higher at Rs 19,585/Kg. Prices opened at Rs 19,007/kg and rose to a high of Rs 19,585/Kg during the day's trading.

Crude gains after four sessions of drop

2008-10-08T09:40:00.001+05:30

Crude prices gain on fresh Middle East tensions

After four sessions of drop, crude oil prices rose for the first time today, Tuesday, 07 October, 2008. Prices rose after fresh Middle East tensions resurfaced and investor worries fell a bit as they thought that global energy demand will not drop drastically in the coming months. Crude finished off the day's high as U.S. stocks weakened.

Crude-oil futures for light sweet crude for December delivery closed at $90.06/barrel (higher by $2.25 or 2.6%) on the New York Mercantile Exchange. Prices rose to a high of $90.6 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 50% since then. Till date this year, prices have dropped by 6.2% till date.

As per reports today, Iran claimed that it forced down a Western aircraft on Sunday that accidentally entered its airspace, then allowed it to continue the next day to Afghanistan after questioning the passengers. This perked up crude prices partly today.

At the currency markets on Tuesday, the dollar gained against the yen but remained under pressure after the Federal Reserve said it would buy commercial paper in an attempt to revive frozen credit markets and ease overall borrowing costs. The yen rallied against both the dollar and the euro as investors fled to safe-haven currencies on ongoing worries about credit markets and the impact of the financial crisis on institutions in the U.S. and Europe. The dollar index, which measures the U.S. unit against a basket of major currencies, remained under pressure, trading at 81.093, down from 81.300 in morning trade and 81.593 on late Monday.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.

Against this background, November reformulated gasoline closed at $2.0628 a gallon, up 0.4 cent, while November heating oil gained 3.2 cents to end at $2.5057 a gallon.

Natural gas for November delivery declined by 6.7 cents to finish at $6.768 per million British thermal units.

At the MCX, crude oil for October delivery closed at Rs 4,205/barrel, lower by Rs 47 (1.09) against previous day's close. Natural gas for October delivery closed at Rs 328.2/mmbtu, lower by Rs 5.8/mmbtu (1.7%).

The U.S. Energy Department's Energy Information Administration will issue a weekly update on petroleum supplies tomorrow. Expectations for the data were mixed.

Bullion metals register big drop

2008-10-03T09:22:00.001+05:30

Strong dollar pushes precious metals to lowest levels in two weeks

Bullion metals ended lower on Thursday, 02 October, 2008. The yellow metal dropped today after the dollar strengthened once the US Senate passed the revised $700 bailout plan. Silver prices also fell today.

On Thursday, Comex Gold for December delivery lost $43 (4.8%) to close at $844.3 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.

Gold prices ended 5.5% higher for month of September, 08. Prior to this, gold had lost 8.8% in August, 2008. In July, 2008, it ended lower by $11 (1.1%). For the year, gold has lost 2.9% till date in FY 2008.

For the third quarter, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Thursday, Comex silver futures for December delivery fell $1.65 (12.9%) to $11.12 an ounce. Silver had ended month and quarter of September 2008 with a loss of 10%. It ended August with a loss of 2.4% and July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. Till date, silver has lost 7% this year. The metal also had gained for seven straight years.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.

The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.

Among economic news of the day at Wall Street, the Commerce Department at US reported today, Thursday, 02 October, 2008 that demand for U.S. factory goods dropped at the fastest rate in two years in August, 2008. The drop was due to the much lower orders for metals, machinery and vehicles. Factory orders fell 4%, worse than the 3% drop expected. Actual Orders had risen 0.7% in July, revised down from the 1.3% estimate given a month ago.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

Crude continues to plunge

2008-10-03T09:21:00.000+05:30

Strong dollar and demand concerns push crude prices further lower

Crude oil prices fell by almost $5 on Thursday, 02 October, 2008 after the dollar strengthened putting pressure on several dollar denominated commodities across the market. Prices also softened on overall global energy demand concerns and after energy department yesterday reported buildup in crude supplies for the first time in six weeks..

Crude-oil futures for light sweet crude for November delivery closed at $93.97/barrel (lower by $4.56 or 4.6%) on the New York Mercantile Exchange. Prices fell to a low of $93.88 during intra day trading. Prices reached a high of $147 on 11 July but have dropped 40% since then.

At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.

The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.

Yesterday, the EIA wing of the Energy Department had reported that at US, crude supplies rose for the first time in six weeks, by 4.3 million barrels for the week ended 26 September. They stood at 294.5 million barrels. Crude supplies had fallen a total of 15.7 million barrels in the prior five weeks. Refinery activity climbed as the Gulf of Mexico continued to recover from Hurricanes Gustav and Ike. Refinery utilization was at 72.3% compared with 66.7% of capacity a week earlier.

The report also showed that demand for petroleum products over the last four weeks has averaged 19 million barrels per day, down 7.1% from the same time a year ago. Of that, motor gasoline demand has averaged almost 8.9 million barrels per day, down 4.5% from the same time a year ago.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.

Against this background, November reformulated gasoline fell 10.5 cents to end at $2.255 a gallon and November heating oil dropped 13.7 cents to finish at $2.7095 a gallon.

Prices for natural gas sank after the EIA reported a bigger-than-expected climb in last week's supplies in storage. Natural-gas inventories rose by 87 billion cubic feet for the week ended 26 September. November natural gas futures fell 24.7 cents, or 3.2% to close at $7.481 per million British thermal units.

RBI to Banks - tell us how much you are losing!

2008-10-03T09:20:00.001+05:30

The Reserve Bank of India (RBI), concerned over the crisis in overseas markets, has asked commercial banks to provide data on their exposure to "troubled financial entities", two newspapers said on Thursday.

The RBI has asked banks to furnish details of their exposure to Wachovia Corporation, Fortis, American International Group Inc, Washington Mutual and Lehman Brothers Holdings Inc, the newspapers said.

"We have sent letters to the chief executive officers of all banks seeking information on their exposure to the troubled financial entities," a senior Reserve Bank of India official said, according to one daily.

It said the RBI was also planning a special audit of ICICI Bank, the country's largest private sector bank, to assess whether it has any exposure to these entities and the possible impact on its profit and loss account.

On Tuesday, the RBI joined ICICI Bank to reassure investors and customers about the financial health of India's second biggest lender, saying ICICI was well capitalised and has enough cash to meet depositor demand.

Separately, another daily reported that some large foreign institutional investors (FIIs) told the Securities and Exchange Board of India (SEBI), the country's stock market regulator, that they have not been aggressively short-selling ICICI's stock.

At a meeting convened by SEBI Chairman C B Bhave, quite a few of the FIIs said they had been buying ICICI's stock, it quoted a person familiar with the development as saying.

ICICI Bank's shares ended up 3.1 per cent at 551.45 rupees on Wednesday after hitting its lowest in more than two years on Tuesday. The markets are shut on Thursday for a local holiday.

SEC extends ban on short selling

2008-10-03T09:19:00.002+05:30

With the Senate passing the USD 700-billion bailout package, American market regulator Securities and Exchange Commission has extended the ban on short selling to allow time for the rescue Bill to be enacted into a legislation.

The current ban would expire on the third business day after enactment of the legislation. However, the order would expire in no case later than October 17, SEC said in a statement on Wednesday.

In September, the American regulator had taken a temporary emergency action to prohibit short-selling in financial companies to protect the integrity and quality of the securities market as well as strengthen investor confidence.

"We have carefully re-evaluated the current state of the markets and we remain concerned about the potential of sudden and excessive fluctuations of securities prices generally and disruption in the functioning of the securities markets that could threaten fair and orderly markets," SEC said in the latest statement.

This order would be extended beyond its currently scheduled expiration, to allow time for completion of work on the anticipated passage of legislation, it added.

Short-selling means borrowing a security from a broker and selling it with the understanding it must be bought back and returned to the broker. Investors use this to make profit from falling price of the stock.

Last month, in a move to strengthen investor confidence, the market regulators in the UK and the US had halted short-selling in 799 financial stocks with effect from September 19.

Approval Of U.S Bailout Plan Failed To Cheer Asian Markets

2008-10-03T09:19:00.001+05:30

Nikkei Touch 3 Year Low While Sydney Came Back In Red

The stock markets across the Asian region closed mixed after the U.S. Senate approved a revised bailout package to rescue the U.S. financial system. However, concerns about a global slowdown persisted after the Institute for Supply Management said Wednesday that activity in the U.S. manufacturing sector contracted at a much faster pace than expected in September, with the index of activity in the sector falling to its lowest level in almost seven years. Additionally, major automakers around the world reported sluggish U.S. sales in September.

U.S. stocks closed yesterday's volatile session modestly lower after seeing considerable weakness early in the day. The Dow closed down 0.2% at 10,831, the S&P 500 dropped 0.5% to 1,161, and the Nasdaq shed 1.1% to 2,069.

Oil prices eased US$0.29 to trade at US$98.24 a barrel by 3:08 a.m. ET. The contract for November delivery finished Wednesday's U.S. session at US$98.53 a barrel, down US$2.11 on higher U.S. inventory data. November crude-oil futures rose as much as $1.53 to $97 a barrel in electronic trading, after falling $1.78 to $98.89 a barrel Wednesday on the New York Mercantile Exchange.

In the currency market, the U.S. dollar eased to the upper 105-yen levels in late Tokyo deals, down from the lower 106-yen range seen in early trade and late Wednesday.

The Australian dollar closed at a 14-month low. The Aussie finished the session at US$0.7867-0.7871, down almost one U.S. cent from Wednesday's close of US$0.7962-66, marking the first session finish below US$0.79 in two weeks.

The New Zealand dollar gave away some of its gains after the U.S. Senate passed the revised U.S. bank bailout package. The kiwi finished the local session at US$0.6725, down from US$0.6746 in early trade, but was up from US$0.6703 late Wednesday.

The South Korean won tumbled to a 65-month low against the U.S. dollar. The won finished the local session at 1,223.5 a dollar, down 36.5 won from Wednesday's close of 1,187.0 a dollar, as offshore investors and importers bought the dollar.

The Japanese stock market closed sharply lower after it rebounded yesterday, ending a four-day losing streak. The market started off higher, but turned lower soon after the U.S. Senate approved a revised rescue package for the beleaguered U.S. banks.

The benchmark Nikkei 225 Average ended the day 1.9% lower at 11,154.76, its lowest finish in more than three years, while the broader Topix index lost 2.2% to 1,076.97. Both benchmarks had advanced earlier in the day.

On the economic front, the monetary base in Japan climbed 0.9% on year in September to 88.37 trillion yen, the Bank of Japan said Thursday. That followed a 0.2% annual decline in August and a 0.7% fall in July. On a seasonally adjusted basis, the monetary base soared 15.8% on year in September, standing at 89.398 trillion yen. That followed a 5.7% annual increase in August.

Meanwhile, the Ministry of Finance said that Japanese investors purchased a net 114.8 billion yen in foreign stocks for the week ended 26 September 2008. They also bought a net 361.0 billion yen in foreign bonds and notes during the same period. Meanwhile, foreign investors sold a net 236.8 billion yen in Japanese stocks, and they also unloaded a net 1.1 trillion yen in Japanese bonds and notes.

In Hong Kong, the Hang Seng Index finished 1.1% higher at 18,211.11, after sliding as low as 17,631.70 earlier in the day. The Hang Seng China Enterprises Index ended up 2.9% at 9,331.05.

The Australian stock market finished volatile trading session lower after it ended a four-day losing streak on Wednesday. The market started off firm, but turned lower after the U.S. Senate passed a revised rescue plan.

The benchmark S&P/ASX 200 index closed down 33.5 points or 0.7% at 4,761.1 after surging 4.22% on Wednesday. The broader All Ordinaries index lost 40.4 points or 0.8% to finish at 4,774.1.

On the economic front, Australia's trade surplus was A$1.36 billion in September, far above the consensus forecast that called for a surplus of A$200 million. It also represented the largest surplus since June 1997. Exports rose 6% to A$24.61 billion, while imports declined 2% to A$23.25 billion.

The New Zealand stock market closed higher, extending gains for the second consecutive trading session. The market started off higher, despite a weak lead form Wall Street, and finished the session in positive territory though most of the regional markets turned weak following news that the U.S. Senate has voted in favor of a bailout plan. The benchmark NZX 50 index closed up 44.68 points or 1.38% at 3,232.64 and the broader NZX All Capital index advanced 45.75 points or 1.40% to finish at 3,260.62.

On the economic front, New Zealand's commodity export price index fell by the most in 21 years in September, led by dairy, aluminium and beef, ANZ National Bank said in a report. The index dropped 4.9% from August when it fell 3.3%. Prices declined 1.9% from a year earlier.

The South Korean stocks closed lower for the fifth straight trading session on Thursday, as growing concerns over the global economy offset the positive outcome of a vote Wednesday in the U.S. Senate on the revised U.S. financial sector bailout bill. The benchmark Korea Composite Stock Price Index or KOSPI fell 20.02 points or 1.39% to finish at 1,419.65.

Stock markets on mainland China are closed this week for National Day holidays, while Indian markets were also closed on the account of National holiday.

Elsewhere, Taiwan's Taiex gave up 1.1% to 5,703.72 while Singapore's Straits Times Index also wavered between gains and losses, and was recently up 0.2% at 2,363.60.

In other regional market, European shares climbed after the U.S. Senate approved a revised $700 billion rescue plan for the financial sector and UBS said that it would report a quarterly profit, as investors wait for a decision on interest rates from the European Central Bank.

In the opening trade, the U.K. FTSE 100 index rose 0.9% to 5,005.91, the French CAC-40 index advanced 1.1% to 4,100.63 and the German DAX 30 index traded up 0.9% at 5,856.43.

IT Spending to fall

2008-10-03T09:17:00.001+05:30

IT spending by global financial institutions may shrink by a fifth in 2009 as large entities such as Bear Stearns, Lehman Brothers, Merrill Lynch and Wachovia Corp become victims of the worsening credit crisis in the US.

The financial services sector is the biggest spender on technology worldwide and Indian service providers rely on the sector to earn over a third of their revenues.

Research firm Celent estimates IT spending on products and services by global financial institutionss to grow at 5.9 per cent to $362.4 billion in 2008 and to $386.8 billion in 2009.

"As of today, 20 per cent of the IT budgets for 2009 will be cut," said Mr Sudin Apte, analyst and head of for Forrester Inc's India operations. Consolidation and disappearance of some large entities from the financial services arena would lead to budget cuts.

"There will be immediate scrutiny of new discretionary projects and compliance will become a key as government plans a bail-out package. As a result, there will be more spending on compliance," Mr Apte said.

Recently Forrester said 40 per cent of the large businesses in North America and Europe have reduced their overall IT budgets for 2008 in reaction to a slowing economy.

About half of the financial services clients surveyed by Forrester have slashed their IT budgets for 2008.
'Worse than expected'

"The crisis is turning out to be worse than expected and I guess that some 600-800 small and medium banks in the US will go out of business as the credit flow dries up," said Mr Phaneesh Murthy, CEO of iGATE Corp.

"As a result of this credit squeeze and consolidation, I think there will be a 15-20 per cent cut in IT budgets of financial services sector for 2009," Mr Murthy added.
Slowdown

Celent estimates indicate that IT spending by financial institutions has already slowed down in past two years. IT spending stood at $342.1 billion in 2007, a year-on-year increase of 5.9 per cent, but lower than 8.7 per cent growth achieved in 2006.

"I guess there would be a moderate cut of 10-15 per cent because of consolidation and reduction in scale" Mr S.Sabyasachi, research director at neoIT, an offshore advisory firm.

Transformational and business process reengineering projects could take a back-seat as financial institutions look to efficiency to cut their costs, Mr Sabyasachi added

Sensex garners 460 points in two days

2008-10-03T09:16:00.001+05:30

The key benchmark indices extended yesterday's gains as investors bet US lawmakers would approve a bailout package for the US financial sector. The BSE 30-share Sensex advanced 195.24 points. With today's rise, Sensex has gained 459.82 points in last two trading sessions. The market remains closed tomorrow, 2 October 2008, on account of Gandhi Jayanti

IT pivotals surged as the rupee dropped to a fresh five-year low against the dollar. Banking stocks gained. Satyam Computer Services and Jaiprakash Associates rose more than 7% each. HDFC Bank rose more than 5%. The market breadth was positive on BSE.

European shares were mixed France's CAC 40 and UK's FTSE 100 rose between 0.04% to 1.35%. Germany's DAX fell 0.53%.

The BSE 30-share Sensex rose 195.24 points or 1.52% to 13,055.67. The index shed 163.13 points at the day's low of 12,697.30, hit in mid-morning trade. The Sensex rose 343.43 points at day's high of 13,203.86, in mid-afternoon trade.

The S&P CNX Nifty was up 29.55 points or 0.75% to 3,950.75.

BSE clocked a turnover of Rs 4,315 crore today as compared to a turnover of Rs 5,179.86 crore on 29 Setember 2008.

Nifty October 2008 futures were at 3969, at a premium of 18.25 points as compared to spot closing of 3950.75. NSE's futures & options (F&O) segment turnover was Rs 47,733.85 crore, which was lower than Rs 56,549.63 crore on Tuesday, 30 September 2008.

The BSE Sensex is down 7,231.32 points or 35.64% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8,151.10 points or 38.43% below its all-time high of 21,206.77 struck on 10 January 2008.

As per the provisional figures on BSE, the foreign institutional investors (FII)s sold shares worth Rs 274.90 crore and domestic funds bought shares worth Rs 48.65 crore today, 1 October 2008.

The BSE Mid-Cap index was up 0.54% at 4,824.16 and BSE Small-Cap index was up 0.53% at 5,606.80.

BSE IT index (up 3.97% to 3,217.90), BSE Bankex (up 3.23% to 6,688.28), BSE Consumer Durbles index (up 2.95% to 3,015.45), BSE Teck index (up 2.6% to 2,612.17) outperformed Sensex.

BSE Realty index (down 2.32% to 3,427.21), BSE Oil & Gas index (down 1.1% to 8,939.55), BSE Capital Goods index (up 0.11% to 10,592.91), BSE Auto index (up 0.35% to 3,687.73), BSE Metal index (up 0.66% to 9,051.65), BSE HealthCare index (up 1.05% to 3,710.89), BSE Power index (up 1.08% to 2,284.70), BSE Power index (up 1.08% to 2,284.70), BSE PSU index (up 1.11% to 6,315.43) and BSE FMCG index (up 1.4% to 2,190.94) underperformed Sensex.

The market breadth was positive on BSE with 1476 shares advancing as compared to 1123 that declined. 73 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries fell 2.01% to Rs 1,907.25. The stock came off from the session's high of Rs 1,986.50.

IT stocks gained. The BSE IT index rose 3.97% to 3,217.90. Satyam Computer Services (up 7.47% to Rs 318.75), Infosys (up 4.03% to Rs 1,453.90), Wipro (up 2.78% to Rs 349.10), Tata Consultancy Services (up 1.24% to Rs 671) edged higher.

The Indian rupee dropped to a fresh five-year low in early trade today, 1 October 2008 on worries foreign investors would continue to sell their local investments amid a spreading global financial crisis.

Banking stocks rose. BSE Bankex rose 3.23% to 6,688.28. HDFC Bank (up 5.26% to Rs 1,293.65), ICICI Bank (up 3.1% to Rs 551.45) and State Bank of India (up 2.44% to Rs 1,501.45) edged higher.

Jaiprakash Associates (up 7.02% to Rs 118.90), Tata Power Company (up 4.46% to Rs 946.50), Grasim Industries (up 4.63% to Rs 1,765.70), edged higher from the Sensex pack.

DLF (down 2.03% to Rs 345.25), Tata Motors (down 1.44% to Rs 339.25), Reliance Infrastructure (down 1.11% to Rs 781.50) edged lower from the Sensex pack.

India's largest tractor maker by sales Mahindra & Mahindra fell 0.53% to Rs 506.55. The stock came off from the session's high of Rs 506.55. The firm has reportedly created a trust, which would hold 8.7% stake in the company after the merger of two of its subsidiaries - Punjab Tractors and Mahindra Holding Finance - with itself. The trust has already acquired 4.96% stake in the parent company, added reports.

India's largest car maker by sales Maruti Suzuki India gained 1.54% to Rs 697.70 after the company reported 5.3% rise in sales to 71,000 units in September 2008 over September 2007.

Reliance Natural Resources clocked the highest volume of 1.23 crore shares on BSE. IFCI (81.85 lakh shares), Jaiprakash Associates (71.52 lakh shares), Chambal Fertilisers & Chemicals (55.87 lakh shares) and Ispat Industries (49.59 lakh shares) were the other volume toppers in that order.

Reliance Capital clocked the highest turnover of Rs 400.63 crore on BSE. Reliance Industries (Rs 280.48 crore), ICICI Bank (Rs 246.37 crore), Axis Bank (Rs 235.23 crore) and State Bank of India (Rs 178.03 crore) were the other turnover toppers in that order.

The US Senate will vote on Wednesday, 1 October 2008, on a new version of the $700 billion financial sector bailout package, rekindling hopes that the credit crisis can be stemmed before claiming yet more banks and causing further damage to the global economy. US stock futures were in red. Nasdaq futures were down 14.50 points and Dow Jones futures were down 86 points.

Meanwhile, the US accounting regulators lent a hand Tuesday, 30 September 2008, to struggling financial institutions facing the possibility of big write-downs on mortgage assets. The Securities and Exchange Commission, in junction with the Financial Accounting Standards Board, issued guidelines under "fair value" accounting rules for financial firms trying to peg the value of hard-to-trade assets on their balance sheets.

Fair value accounting has been blamed for exacerbating the meltdown in the US banking system, forcing investment and commercial banks to write down well over $100 billion in assets.

Asian markets were trading mixed today, 1 October 2008. Japan's Nikkei and Taiwan's Taiwan Weighted Average rose between 0.78% to 0.96%. Taiwan stocks rose after Taiwan's government announced a two-week ban on all short selling to support the market. However, South Korea's Seoul Composite was down 0.58%. Stocks markets in China, Hong Kong and Singapore were closed today, 1 October 2008 for various holidays.

Global money markets remained in near paralysis after London interbank offered rates shot to record levels on Tuesday, 30 September 2008, as banks remained wary of lending to each other. The central banks of Japan and Australia kept injecting extra funds into their markets on Wednesday, 1 October 2008, and overnight dollar borrowing costs stayed near 6% in Asia -- three times the Federal Reserve's target for overnight rates.

France, Belgium and Luxembourg have this week poured 6.4 billion euros ($9 billion) into Franco-Belgian bank Dexia to avoid defaults on its loans, and France promised new bank measures to help depositors. Dutch-Belgian banking and insurance group Fortis, partially nationalized earlier this week, halted $4 billion worth of asset sales to China's Ping An and Deutsche Bank.

Meanwhile, with the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India.

The United States Senate will take up the India-US nuclear deal bill for a debate and vote after on Wednesday (early Thursday morning IST).

India's current account deficit jumped to $10.72 billion in Q1 June 2008 as compared to a deficit of $6.3 billion Q1 June 2007, as oil import bill has grown faster than income from software services exports and remittances from the Indian diaspora. The current account in the balance of payments measures the net position of a country's exports and imports of goods and services.

The Bombay Stock Exchange (BSE) will launch exchange-traded rupee futures today, 1 October 2008. In August 2008, the National Stock Exchange of India (NSE) kicked off exchange-traded currency futures trading.

US light crude for November 2008 delivery rose 81 cents to $101.45 a barrel today, 1 October 2008 buoyed by hopes that Washington would find a way to pass a rescue plan to head off a deep recession in the United States and abroad.

Bullion metals fall with strong dollar

2008-10-01T10:06:00.001+05:30

Gold registers first quarterly drop in almost a year

Bullion metals ended considerably lower on Tuesday, 30 September, 2008 after dollar rallied against the euro and other major currencies reducing the precious metal's appeal as a hedge against inflation. Silver prices also declined. With today's fall, gold also registered the first quarterly drop in price in almost a year.

On Tuesday, Comex Gold for December delivery fell $13.6 (1.5%) to close at $880.8 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.

Gold prices ended 5.5% higher this month of September, 08. Prior to this, gold had lost 8.8% in August, 2008. In July, 2008, it ended lower by $11 (1.1%). For the year, gold has gained 6.3% till date in FY 2008.

For the third quarter that ended today, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Tuesday, Comex silver futures for December delivery fell 75 cents (5.8%) to $12.275 an ounce. Silver ended month and quarter of September 2008 with a loss of 10%. It ended August with a loss of 2.4% and July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. Till date, silver has gained 7.4% this year. The metal also had gained for seven straight years.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for December delivery closed lower by Rs 288 (2.1%) at Rs 13,272 per 10 grams. Prices rose to a high of Rs 13,690 per 10 grams and fell to a low of Rs 13,235 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 847 (4.04%) lower at Rs 20,109/Kg. Prices opened at Rs 21,000/kg and fell to a low of Rs 20,019/Kg during the day's trading.

Crude manages to climb back to $100

2008-10-01T10:05:00.003+05:30

Prices drop by more than 28% during the third quarter

Crude oil prices managed to climb back to the $100 level on Tuesday, 30 September, 2008 but registered substantial losses for the third quarter that ended today. Prices rose today after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package that may avert an economic slowdown.

Crude-oil futures for light sweet crude for November delivery closed at $100.64/barrel (higher by $4.27 or 4.4%) on the New York Mercantile Exchange. Prices fell to a low of $97.8 during intra day trading. Yesterday, prices had slipped by almost $11 on overall global meltdown. Prices reached a high of $147 on 11 July but have dropped 32% since then.

For the third quarter of the year that ended today, crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Prior to today, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%. For the year, prices are still up by 5.2%.

Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.

At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.

Against this background, November reformulated gasoline rose 9.6 cents to finish at $2.4577 a gallon, but it was 18.4% lower for the month. November heating oil gained 10.6 cents to end at $2.8947 a gallon, losing 9% for the month.

Natural gas futures advanced on speculation U.S. lawmakers will pass a $700 billion government bailout plan for the financial industry, preventing a further weakening of the economy and preserving energy demand. Natural gas for November delivery gained 21.7 cents (3%) to settle at $7.438 per million British thermal units. It was 6.4% lower for the month. Gas fell 44% in the third quarter, the first decline since the second quarter of 2007 and the biggest quarterly drop since the three months ended March 2001.

At the MCX, crude oil for September delivery closed at Rs 4,744/barrel, higher by Rs 106 (2.3%) against previous day's close. Natural gas for October delivery closed at Rs 354.5/mmbtu, higher by Rs 10.2/mmbtu (2.9%).

US Markets gain

2008-10-01T10:05:00.001+05:30

Market sentiments improve on increased optimism about the government relief plan

US market gained back part of its losses on Tuesday, 30 September, 2008 after it incurred huge losses a day before after the $700 billion bailout plan had got rejected. The Dow had suffered its worst one day loss in twenty-one years yesterday. Market registered gains today on increased optimism that the government will reach an agreement on a financial relief plan before the end of the week. Couple of better than expected economic reports also helped stocks made a U turn today at Wall Street. All ten sectors ended in the green led by the financials and the energy sector.

The Dow Jones industrial Average ended the day with a gain of 485 points at 10,850. The Nasdaq Composite Index, finished higher by 98.6 points at 2,082.3. S&P 500 finished higher by 58.3 points at 1,164.74.

Among economic news of the day at Wall Street, the Conference Board reported on Tuesday, 30 September, 2008 that U.S. consumer confidence rose in September for the third straight month, even as consumers' assessment of the current economy plunged to the lowest level in 15 years. Lower energy prices were responsible for most of the improvement in the confidence index in September.

As per the report, the September consumer confidence index rose to 59.8 from a revised August reading of 58.5.The present situation index fell to 58.8 from 65.0 in August. That's the lowest since 1993. The expectations index rose to 60.5 from 54.1 in August.

It was also reported today that manufacturing in the Chicago region continued to expand in September. Regional manufacturing survey, Chicago PMI fell 1.2 to 56.7, which was better than the forecast of 53. A reading above 50 is intended to represent growth.

In another report, home prices retreated in major metro areas in the month of July, marking the 25th consecutive month of price declines. According to the S&P/Case-Shiller 20-City Composite, July prices were down 16.3% compared to last year and fell 0.9% from June.

At the crude market on Tuesday, crude oil prices managed to climb back to the $100 level but registered substantial losses for the third quarter that ended today. Prices rose today after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package that may avert an economic slowdown. Crude-oil futures for light sweet crude for November delivery closed at $100.64/barrel (higher by $4.27 or 4.4%) on the New York Mercantile Exchange. Prices fell to a low of $97.8 during intra day trading. For the third quarter of the year that ended today, crude prices ended lower by 28%. This was the biggest quarterly drop since 1991.

At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.

For tomorrow, economic data will take center stage. September auto sales are expected to flow across the wires tomorrow. Providing a precursor for the government's official nonfarm payroll report, which is due later in the week, the September ADP employment report is due before market opens. Construction spending data for August and the September ISM Index are due simultaneously as soon as market opens followed by the crude inventories report.

US plans for a new bailout plan

2008-10-01T09:59:00.001+05:30

Top Congressional and White House officials, stunned when the House rejected a massive rescue plan for the nation's economy, scrambled to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets.

"Doing nothing is not an option," House Majority Leader Steny Hoyer, D-Md, said after seeing the USD 700 billion emergency package for the nation's financial systems fail 228-205 on Monday.

With the House not scheduled to meet again until Thursday, Congressional leaders and Bush administration officials promptly sought to assess what types of changes could win over enough votes to guarantee success. President Bush planned to make a statement on the rescue plan at 8:45 am EDT Tuesday.

The outcome of Monday's vote fed a huge sell-off in the stock market, sending the Dow Jones Industrial Average into its biggest single-day plunge, 777 points. The House vote and the market's terrified reaction shook Washington and New York centers of power even overseas markets but no immediate solution seemed at hand.

The bill's failure came despite furious personal lobbying by Bush and support from House leaders of both parties. But the legislation was highly unpopular with the public, ideological groups on the left and the right organized against it, and Bush no longer wielded the influence to leverage tough votes. Even pressure in favour of the bill from some of the biggest special interests in Washington, including the US Chamber of Commerce and the National Association of Realtors, could not sway enough votes.

The legislation the administration promoted would have allowed the government to buy bad mortgages and other deficient assets held by troubled financial institutions. If successful, advocates of the plan believed it would help lift a major weight off the already sputtering national economy.

Treasury Secretary Henry Paulson emerged after the vote and warned of a credit crunch that would affect American businesses and said families would find it harder to get student loans and car loans.

"We need to work as quickly as possible," he said gravely. "We need to get something done."

The sense of urgency was not universal. Many opponents of the bill argued that the package amounted to a too-costly commitment of taxpayer money to bail out financial institutions for their own mistakes.

Rep Dean Heller, R-Nev, offered a typical sentiment. "I cannot with good conscience put Nevada's taxpayers on the hook for the foolish excesses of Wall Street," he said. "Congress should pass legislation that protects the taxpayer, assists with bad assets and allows the market to correct itself."

Immediately following the vote, Republican leaders blamed their failure to secure more votes on the partisan tone of Speaker Nancy Pelosi's pre-vote speech on the House floor. "There were a dozen members who we thought ... we had a really good chances of getting on the floor," said Minority Leader John Boehner of Ohio. "And all that evaporated with that speech."

Rep Barney Frank, D-Mass, the gruff but quick-witted chairman of the House banking committee, countered, "Give me the names of those 12 people and I'll go talk uncharacteristically nice to them."

Behind the bluster, lawmakers pledged to work again. Hoyer met with House Republican Whip Roy Blunt of Missouri, one of the lead GOP negotiators from the House.

Blunt, noting that the House would break for the Jewish holidays until Thursday, said, "We are going to have a couple days to see how the marketplace reacts to all this, and maybe that's a good thing."

House members weren't going home to campaign for re-election "until this is addressed," Hoyer vowed.

Both Blunt and Hoyer suggested that the Senate could vote first on a bill then send it to the House, but Senate leaders showed no inclination to take up a bill without being certain of its fate in the House.

"What would be wrong, I think, would be to act without some kind of clear indication from the House about how they're going to proceed," said Sen Christopher Dodd, D-Conn, the chairman of the Senate Banking Committee. "We don't need to start all over."

The two men campaigning to replace Bush watched the situation closely from afar and demanded action.

In Iowa, Republican John McCain said his rival Barack Obama and Congressional Democrats "infused unnecessary partisanship into the process. Now is not the time to fix the blame; it's time to fix the problem."

Obama said, "Democrats, Republicans, step up to the plate, get it done."

The burden for votes fell more strongly on Republican leaders. About three out of five House Democrats voted for the legislation; only a third of Republicans backed it.

Republicans, already seeking possible votes, floated several ideas. One would double the USD 100,000 ceiling on federal deposit insurance. Another would end rules that require companies to devalue assets on their books to reflect the price they could get in the market.

ICICI Bank - UK investment has zero exposure to US

2008-09-30T09:42:00.001+05:30

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.

Am-Bushed.Time to bid Good Buy!

2008-09-30T09:40:00.002+05:30

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)

Gold rallies

2008-09-30T09:40:00.001+05:30

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.

ICICI FII Holdings

2008-09-30T09:39:00.003+05:30

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 Mauritius Ltd, Growth Funds of America Inc., Dodge and Cox International Stock Fund and FID Funds Mauritius.

Real Estate Stocks at 52 week lows

2008-09-30T09:39:00.001+05:30

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

Bailout shattered, House rejects US financial-rescue plan

2008-09-30T09:38:00.003+05:30

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.

Bloodbath on Wall Street

2008-09-30T09:38:00.001+05:30

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.

A day to remember/forget ?

2008-09-30T09:37:00.001+05:30

The failure of the bailout package in Congress literally dropped jaws on Wall Street and triggered a historic selloffincluding 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.

The Era of Leverage is over

2008-09-30T09:36:00.002+05:30

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

Asian Markets Remain Cautious On Concerns Of Bailout Plan

2008-09-30T09:36:00.001+05:30

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.

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

2008-09-30T09:34:00.001+05:30

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.

Indian banks post Rs 410 cr MTM losses

2008-09-28T22:50:00.001+05:30

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.

Govt clears 27 new SEZs

2008-09-28T09:32:00.001+05:30

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.

Why global markets are fluctuating

2008-09-28T09:31:00.003+05:30

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.

HCL Tech makes counterbid for Axon

2008-09-28T09:31:00.001+05:30

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.

Tremors continue to rattle Wall Street

2008-09-28T09:30:00.000+05:30

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.

Market tanks on uncertainty over US bailout deal

2008-09-28T09:29:00.001+05:30

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.

Nifty falls below 4,000

2008-09-28T09:28:00.001+05:30

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.

Gold Falls Below $ 900

2008-09-24T09:40:00.001+05:30

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.

FDIC data hints at more financial trouble in US

2008-09-23T22:31:00.001+05:30

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

PFC to wire up with PE firms to finance power plants

2008-09-23T22:28:00.002+05:30

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

ChrysCap raises equity exposure in Amtek group

2008-09-23T22:28:00.001+05:30

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

Asian Markets Follows Wall Street Losses

2008-09-23T22:22:00.001+05:30

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.

Indian Banks exposure to failed investment banks

2008-09-23T09:54:00.003+05:30

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.

Gold Surpasses $ 900 Mark Again

2008-09-23T09:54:00.001+05:30

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.

India's trade deficit balloons

2008-09-23T09:50:00.001+05:30

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.

Chinese Banks exposure to Lehman

2008-09-23T09:49:00.001+05:30

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.

Major indices register handsome gains in Asia

2008-09-23T09:48:00.001+05:30

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.

Reliance Communications out of elite club

2008-09-22T09:49:00.003+05:30

Anil Ambani Group company Reliance Communications has lost its position in the elite club of country's top 10 most valued firms amid meltdown in the stock market following the global financial turmoil.

Engineering and construction major Larsen & Toubro moved ahead of RCom to enter the list of top 10 firms with a market capitalisation of Rs 77,375.03 crore, while the ADA Group firm has a valuation of Rs 77,204 crore as on the week ended September 19.

RCom suffered a fall of Rs 3,529.47 crore in its market capitalisation in the past five trading sessions and is at the 11th place in terms of market value.

Reliance Industries has maintained its position as the country's most valued firm, with an increase of Rs 17,510.41 crore in its marketcap, which stood at Rs 2.98 lakh crore last week.

Public sector ONGC, country's second most valued firm, recorded the second biggest gain of Rs 10,544.63 crore, while PSU power utility NTPC saw a jump of Rs 7,627.05 crore in its market cap.

Leading telecom firm Bharti Airtel gained Rs 3,872.12 crore in the same period, while country's largest lender SBI gained Rs 3,320.42 crore. BHEL increased Rs 682.88 crore in its valuation.

State-run NMDC bore the brunt of the meltdown on the bourses facing maximum loss of Rs 24,224.32 crore in its market capitalisation thereby sliding to the eighth position on Friday from sixth place in the previous week.

The valuation of another PSU MMTC also declined by as much as Rs 5,328.50 crore, while IT major Infosys saw its marketcap sinking by Rs 1,158.99 crore.

Meanwhile, the country's top 10 firms, in terms of market capitalisation, gained Rs 9,486.59 crore from its total in the previous week.

At the end of Friday's trade, the total market value of the 10 most valued firms, comprising six public sector firms and four private sector entities, stood at about Rs 13.78 lakh crore, up from Rs 13.69 lakh crore a week ago.

RIL (2.98 lakh crore) tops the list, followed by ONGC (Rs 2.29 lakh crore), Bharti Airtel (Rs 1.51 lakh crore), NTPC (Rs 1.50 lakh crore), MMTC (Rs 1.08 lakh crore), SBI (Rs 99,333 crore), Infosys (Rs 92,939 crore), NMDC (Rs 86,430 crore), BHEL (Rs 83,742 crore) and L&T (Rs 77,375 crore).

India property prices to come down

2008-09-22T09:49:00.001+05:30

Indian property prices, which had taken off like jet planes, appear to be losing altitude after bad debts owing their origin to real estate brought down the US financial market to its knees.

Marketmen see prices cooling and projects being held up for want of cheap funds, but don't expect the market to crash.

Raising funds from American and Western European investors, who accounted for a bulk of overseas money coming to India, will be difficult. "Developers will have to look at new avenues like middle-east and Korea," said Global realty consultant Jones Lang LaSalle Meghraj country head Anuj Puri.

The first to be hit would be commercial property prices, although a correction in residential segment too is expected. Rates had almost doubled in the three years leading to 2007, when interest rates started hardening.

"Negative sentiments from events like these (collapse of Lehman Brothers, Merrill Lynch and others) will have a bearing on the banking and financial services' real estate requirement in India," Puri said.

"It is not a big exposure considering 50 million sq ft of office spaces transacted every year in India," Puri said, adding that there would not be much of a direct impact because of the two firms going down under.

Prices of properties in a good location would not be affected much, said Amit Sarin, Executive Director of Anant Raj Industries, in which Lehman held 1.8 percent stake.

However, those in less prime areas could feel the pinch, said Sarin, whose company is predominantly into building IT space.

Lehman bust - job impact

2008-09-22T09:47:00.000+05:30

Collapse of the Lehman Brothers in the world's biggest ever bankruptcy story may have sent thousands of its employees flocking the job market, but the 158-year-old American investment bank giant still seems to be in hiring mood.

Once known as one of the favourite places to work in the financial services space, especially due to its fat pay packages, Lehman Brothers had a workforce of close to 26,000 employees at the last count. But its filing for bankruptcy protection on September 15 saw nearly all its employees on a lookout for new employers.

However, Lehman Brothers seems to be continuing with its hiring activities, as it has posted at least four new job vacancies for the US after its bankruptcy filing. These vacancies are for positions like Investor Accounting Specialist, Foreclosure Specialist and Default Supervisor, and they seem to have been posted on the bank's website a day after the bankruptcy filing or later.

In addition, Lehman Brothers has over a dozen recruitment events lined up across the world through September, October and November.

The interested candidates, if any, can register for these recruiting events and presentations in the career section of Lehman's website.

"These events are intended for those who are applying for early years programmes, internships or first year Full Time Analyst/Associate programme hires," it says on its website.

One such event, "Equities and Fixed Income PhD Recruiting Presentation", is scheduled for as early as September 23 in Massachusetts and is for Harvard and MIT students in their penultimate or final year of their PhD programme.

Ten such recruitment events are lined up for the UK, while there are three others for Italy through October and November.

While two vacancies -- Investor Accounting Specialist and Supervisor Default positions -- were posted on September 16, it posted one vacancy each on September 17 and 18 for Foreclosure Specialist and Investor Accounting Specialist posts, respectively.

However, there have been no new job postings after its bankruptcy filing for Asia-Pacific and Europe and Middle East regions. Lehman has posted at least four job vacancies in September for India, where it employs over 2,500 people, but all of them were posted before the bankruptcy filing.

However, a number of job portals continue to have close to 20 recruitment ads for Lehman's India operations for positions like Test Engineer (QA), Java Senior Developer, Prime Services Analyst, Project Manager, Capital Resource Analyst and Vice President - Global Sales & Banking Technology.

One of Indian job portals, naukri.com, vacancies are also there for the posts of Recruitment Manager and Recruitment Executives at Lehman Brothers. However, these job website postings are believed to have been put before the bank's collapse.

Lehman set up BPO operations in India in 2005 and according to the fact-sheet of the firm, the centre saw the number of employees going up by eight times by the middle of this year and had declared its plans to grow the operations. In fact, it was recruiting till as recently as couple of months back.

The company has in all about 2,500 people working for it in India, including those in the BPO unit. Recent news reports have said the company had asked a section of its BPO staff to quit.

In its new job postings for the US, Lehman says that the job profile of a "Foreclosure Specialist" would involve monitoring "the actions of the Foreclosure Attorneys... to ensure that all paperwork needed by the Attorneys is completed timely and accurately. To update internal systems for checks and balances and to apply money as appropriately directed."

Besides, the Investor Accounting Specialist would be responsible for the monthly reconciliation of investor custodial accounts and clearing accounts, while Supervisor (Default) would be responsible for the overall operation of the Collection Department.

Lehman has filed for Chapter 11 bankruptcy protection, which allows a company to restructure while creditor claims are held at bay.

A number of the company's employees are already said to have joined other companies, including its Mergers Advisor Group Chairman and co-head Mark Shafir, who has joined Citigroup.

Sharif continued at Lehman through its bankruptcy filing and is said to have helped negotiate the USD 1.75-billion sale of its US investment banking business to British banking major Barclays.

Hundreds of Lehman investors protest in Hong Kong

Hundreds of angry Lehman Brothers investors rallied in Hong Kong today to demand the government help secure their money after the US investment bank collapsed this past week.

The investors, many of them nearing or at retirement age, waved investment papers and chanted slogans outside the territory's government headquarters as they accused regulators of not doing enough to safeguard their interests.

Weekly Gold Review: Economic Turmoil Levitates Gold

2008-09-22T09:46:00.001+05:30

Gold prices were spooked by the economic turmoil last week. The prices saw a major spark coming in a single day by Rs 994 to Rs 12746 per 10 grams on 17th Sep 2008. During the start of the week prices were hovering at 11640 levels, which moved towards 12709 at the end.

The Comex division of the New York Mercantile Exchange raised margin payments on gold and silver futures by as much as 47 % after price swings accelerated. The margin rate for Comex members advances to $ 5500 per contract. The new rate for non-members is $ 7425, from $ 5063. Members will pay a margin rate of $6000, compared with $ 5000 previously. Non-members will pay $ 8100, from $ 6750.

Last trading day of the week saw dollar edging higher, rising above the 106-figure versus the yen and pushing the euro lower toward the 1.42-region. The advance in the greenback and stocks was prompted by discussions for the creation of a government-sponsored entity that would remove the illiquid assets on bank balance sheets that are the underlying source of the current stresses in financial institutions and financial markets.

Global central banks announced coordinated efforts to pump massive amounts of liquidity into the financial system to alleviate "continued elevated pressures in the US dollar short-term funding markets. The FOMC has approved a $180 billion expansion of its swap lines, with the facility while the ECB increased by $55 billion to up to $110 million and the Swiss National Bank by $15 billion to up to $27 billion.

In major economic reports last week, US new residential construction fell by much more than expected in the month of August, according to a report released by the Department of Commerce on Wednesday, with housing starts falling to their lowest level in over seventeen years. The report showed that housing starts fell 6.2 percent to an annual rate of 895,000 from the revised July estimate of 954000. Economists had expected housing starts to fall to an annual rate of 950000 from the 965000 originally reported for the previous month.

Crude Oil Jumps Beyond $ 100

2008-09-22T09:44:00.001+05:30

Pressure Persists

Light, sweet crude for October delivery rose last week by $ 6.67 to settle at $ 104.55 a barrel on the New York Mercantile Exchange, after earlier rising as high as $ 105.25. It was oil's first close above $100 in a week. MCX Crude Oil for October expiry closed the week at Rs 4647 per barrel up Rs 204.

Crude climbed over $13 in the last three days as the government carries out a historic intervention into the financial system. But analysts say prices could resume their downward trend, noting that demand for energy will likely remain weak as a slumping economy leads Americans to drive less and businesses to scale back operations.

In economic front, Global central banks announced coordinated efforts to pump massive amounts of liquidity into the financial system to alleviate continued elevated pressures in the US dollar short-term funding markets. The BoC, BoE, ECB, SNB, BoJ and Federal Reserve increased their swap lines to provide improved liquidity in both term and overnight operations. The FOMC has approved a $180 billion expansion of its swap lines, with the facility while the ECB increased by $ 55 billion to up to $ 110 million and the Swiss National Bank by $ 15 billion to up to $ 27 billion.

Rakesh Jhunjunwala - Interview with CNBC

2008-09-22T03:29:00.001+05:30

Rakesh Jhunjhunwala is India's most successful investors; one of the stock market's most successful stories. The sometimes maverick, often mercurial but always a respected voice. He is a wealth creator and a man who anyone who enters the stock market wants to be.

Q: You are the first Individual Wealth Creator we are chronicling. I am curious to know, what does the term mean to you?

A: I don't know when I started on in life, I had some ambitions. My parents never liked the idea that I should go to the stock market. I started life financially with just USD 100 or only Rs 5000 and my first thought was that when I went to the markets, I had just come from Chartered Accountancy; used to earn Rs 150 a month. So my first concept in life was that I should be financially independent. I never started with the idea that I will be a great wealth creator and I will have some great wealth or anybody will know me. I thought I must be able to earn my daily bread. I loved the markets. I thought India was in a very initial stage and this would be one of the places which will develop and the opportunity would be huge.

Q: Do you also find it odious sometimes because you are a wealth creator in your own right and I don't think you have taken on the mantle of leading a lot of people with you. But you get that. A stock that you would pick up will be picked up by others. They would want to know why Rakesh bought it - why he is buying so much or why he wants to buy more?

A: I think these are all misconceptions. When you buy stocks, you should be ensured that other people will buy stocks. Then only you should buy the stocks. I have a different concept in life. If a stock is beautiful, the suitor will come. If a girl is beautiful a suitor will come. If a stock is beautiful, a suitor will come. So I don't search for suitors when I buy the stock.

Q: Tell me where you have to be the most patient with the market?

A: I think my greatest patience with the market was in 2001 September to April 2003. That was because I was a lone bull. I wrote an article in the Economic Times in June 2002 that India is on the threshold of a structural secular bull market and people said, he has bought stocks and he is caught and now he is asking us also to come into the cage. People didn't just believe what I thought or what my opinion was. That was a testing period.

Q: Did it bring confidence down to its knees for you?

A: You have your conviction and I always staked what I could afford. So say, when markets went down in August 2002, I had no problems there. In spite of my opinion, I did not stake so much that if markets did not go up in the manner that I thought, I would be on the roads. I was well-off absolutely. So you know it was a trying time. But then there was a great dividend; the kind of bull market we had - 3000 to 21000.

Q: And you really rode it didn't you? There are so many terms people use about you - The young tiger, pin up boy of the bull market, India's Warren Buffet. Do you find it pointless? Do you find it flattering? How do you take it?

A: I don't know. I have learnt two things about the press and wives. When they something don't react.

Q: Are you the same guy that you were? Are you the same guy you were 15-years back?

A: Why are you asking me? Ask my friends, if I have changed in any way.

Peer View:

N Jayakumar, CEO, Prime Securitie says, "As earthy as it comes, he is as raw as it can be and he is as direct as it can hurt. He is all of this and I think at the end of the day it is not because he is a wealth creator, he is all of this, but he has been that since the time I have known him and he has just remained much of the same."

Q: Is It tough to be tight with people from the same community - the stock markets? Can you be close to some one who is part of the same?

A: I am close to a lot of people from the stock market. Actually, my best friend and whom I consider my guru, Mr. Radhakrishna Damani - he is from the stock market. Actually he has taught me so much in life and we are the best of friends. We can discuss anything. We go on holidays together. We've done so many things together and my other friends - they are from the stock market. Also let me not pretend. I don't have much interest in life other than the stock market.

Did you know:

The name of Rakesh's organisation is actually a combination of his initials and his wife's initials. So, Rakesh plus Rekha equals RARE Enterprises. As Rakesh says, she is the only one he likes being answerable to.

Peer View:

Samir Arora, Helios Capital says, " I am very impressed with Rakesh not because he has done so well in the stock market which itself is very impressive but to have done that without raising any controversy, without creating enemies, which is a problem in India for successful people."

Q: You are very much into the individual behind the business. Who runs it and how well it is run. Tell me how carefully you look at that when you look at a business that you wanted to be a part of?

A: I look at the situation. I look at the possible outcomes and then I think what could be the outcome? For example, when I invested in Titan, my thinking was, can Titan become India's largest specialist retailer? That was the question I asked myself. Will it always occupy a 50-60% share in branded jewellery? Will it always remain a leader in Indian watch industry? Will it enter into other areas of retailing? I asked myself all these questions and the answer I thought was yes.

So this is the basic analysis I did. Then I went to the office - Titan office was like a young advertising agency. So I thought marketing is in their blood. I met their management team including their Managing Director. I was thoroughly impressed by them. I took the decision. I put my life behind it.

Q: What impressed you?

A: Their sheer approach. The Managing Director told me that the task is difficult. But we'll overcome it. We have to suck the capital and increase the profits and that's what they have done. So, when I take a decision there are three-four matters that I consider - opportunity. I am from the investment thought which says nobody can be bigger than the opportunity. Second, I look at the competitive ability. In a capitalist society, you cannot deliver product and make a profit unless you do it in a competitive manner and competitive does not mean the most expensive. Then I look at scalability. Scalability is very important. When I invested in Pantaloons, the biggest idea was can ten stores become five-hundred? It was written behind a Maruti -- when I grow will I be a Mercedes? Great are the challenges of scalability.

Then what I look at is valuation. It's important what you buy. It is more important what price you buy. Somebody bought Hindustan Lever at an Index of 2900 - the price was Rs 320. When the Index was 7000 - the price was Rs 145. You bought Hindustan Lever - best quality company, best pedigree and everything and I made lot of money by buying United Breweries and McDowell's at a valuation of Rs 200 crore. There was no corporate governance. People told you you're down the drain. I made five-times my money in two-years.

Q: Sometimes there are tough lessons to learn as well? Just on the subject of valuations, you would be watching the media space and there are a couple of howlers over there by way of stock performance, for example, MiD DAY (Multimedia) - have there been more tough lessons to learn?

A: Every mistake teaches you a lesson. There is always a risk in investing in midcap stocks because if they succeed, the gains are huge. If they don't succeed and scalability does not come, then the losses are also huge. I don't regret having invested in MiD DAY because I always allocate my assets and I don't do it in a planned manner. I don't put more than a certain percentage of my wealth in incomplete situations. So, I might have made a mistake. The decision is tough, but okay, the good comes with the bad.

Peer View:

Atul Suri, Rare Enterprise says,"I have known Rakeshji for over five-years and I have traded on his behalf. I use technical analyses but not once has he interfered in a single trade of mine and that is very special. For a very accomplished trader to see a different approach in trading and not interfere with him and that really comes from the basic thing I have noticed in him is that he respects other disciplines also to the markets."

Q: You're very patient, though?

A: What is the choice?

Q: The choice is to book out.

A: Well, its not that I'm not booking out because I'm afraid to take a loss. I'm not booking out because I still think there is reason to believe that things can change.

Q: Were you surprised Rakesh - could anybody have seen where we are right now in January this year?

A: I have made presentations to show in October, that this is going to be an unprecedented fall. And I have reasoned out how much is the lending to subprime, and that this problem cannot be stopped by reducing interest rates. The American bull market has come to an end. It may be a long correction.

I've made these presentations in writing. I have them on record. I don't say I foresaw the failure of any particular organisation but I thought it'll be very tough and I didn't rule out in my mind that some organisations can fail.

Q: Is there any question in your mind that we as well are in a bear market?

A: In India?

Q: Yes.

A: What is a bear market, what is a bull market, I don't know. Numerically - surely, since we have broken the last lows that we had in August 2007, we'll have to term it as a bear market. But I don't think the long-term Indian stock bull market has ended. I think it's in interruption mode.

This bull market is based on two factors. One is economic growth of India, which I think is based on factors that are irreversible, whether democracy, whether skills, whether demographics, whether cultural factors. They are irreversible. I think India's economic growth will always trend upwards.

Then it is based on the platforms that we have created to attract money into the Indian markets -- the trading strategies, the regulation and the under-exposure of Indians to equity. I will surely say that it's an interruption. How long? Nobody knows.

Q: You've been cautious, though, Rakesh, right till since last Samvat you've been striking a cautious note?

A: If the Index instead of going from 3,000 to 21,000 had gone from 3,000 to 13,000, and then back to 11,000 - would that not have been a bull market? Then it would have been termed a bull market correction. So at levels, where you saw the participation, the valuations, you saw what was coming in the Western world, you saw the sheer corporate greed in India; you saw the senselessness with which people in India just wanted to buy anything. They were all indicators - so what is wrong in being cautious?

Q: Are you feeling better about all those indicators? Do you think things have cooled down now?

A: I think now we've begun to reverse slowly. Now things will be overdone but that's the way markets are. As I told you, markets are like the weather. Whether you like it or not, you have to bear it.

Q: There is courage of conviction as well, to be a wealth creator? If someone were to sit you down and ask you, do you think that over the next five years, Indian equities is still the place where you'll see the most significant wealth creation, would you say yes?

A: I would think so, as far as Indian assets are concerned. I don't have much knowledge about global assets. My good friend Mr. Shankar Sharma has said, equity has one quality - it is always an asset which trends upwards. India will remain in a phase of very good economic growth for the next 30 years.

Q: Do you feel we will have to be a lot more patient with it though, this time around?

A: As I told you markets are like women, you have to be patient.

Q: No, but you know we've had a fantastic run. We've had the mother of all bull runs in the past three years.

A: I disagree with you.

Q: You do?

A: The mother of bull runs is still to come

Q: Really?

A: In my opinion, yes. But it could start after one-year. It could start after eighteen-months or after six-months. But the next high and the next bull market will be far bigger and have far more participation and far more excesses than we had in the last one-year.

Peer View:

Ramesh Damani, Member, BSE says, "He is so free with his information. He will willingly share with you his ideas. He will willingly share with you his investment style or his thought processes with the market and there is almost leisurely number of young men or Turtles as we call them on the street who've benefited enormously and handsomely from his advice including myself. Earlier in my career he really helped open my eyes, showed me how to dream and allowed me how to take position with the market. So above all, we respect that the ability to share that information in a business that is so secretive - he is an open book, always willing to help."

Q: Do you see a lot of people who are part of the stock market, returning back some of the wealth creation? I know that you have a Jhunjhunwala Foundation. You're actually actively part of a lot of NGOs and you donate significantly amounts over there. Is that an important part of being a wealth creator for you - to spread it as well?

A: I cannot forget my late father, who has never asked me ever that what is your wealth? The only thing that he would ask is how much charity have you done this year, and are you going to continue it or not? So, I'm making my own efforts towards some good social cause that I'm supporting. I've built a Home for 400 boys in New Bombay. God has given me one daughter and I'm going up 400 children. I cannot give them absolutely what I've given my daughter but I'll send them to English medium schools. I'll see that they have all the needs of life and I want to bring them to a stage where they can get good jobs and they can contribute back to the Home.

I think the greatest wealth is giving the person ability to learn. Then I'm supporting lots of causes with children like girls' education. I'm supporting other small causes for street children. We're building a temple in Lonavala. It is my target in life. This year by budget is Rs 10 crore, next year it should be Rs 12.5 crore and on my twenty-fifth wedding anniversary, which is on February 21, 2012, the gift I want to give my wife is - I'm going to give Rs 500 crore to her foundation.

Q: Is this a bigger high than being part of the stock market?

A: I don't think it is a high. It is a duty. To donate and to help others are very good attributes.

Urmila Jhunjhunwala, Rakesh Jhunjhunwala's Mother says," When he was a little boy, whenever our friends used to come, he used to tell them which shares are good to buy.

Rekha Jhunjhunwala, Rakesh Jhunjhunwala's Wife, says, "I think the market is only first priority for him. His first wife is only market. When he started, he had nothing, absolutely nothing. Everyone used to say, what will you do in stock market? But he wanted to do that only."

Q: What's your biggest faith?

A: Myself. I am confident of myself and I don't rely on anybody.

Q: What's the big dream for Rakesh Jhunjhunwala - the wealth creator because we have had entrepreneurs who say I want my business to go to XYZ level, I want my turnover to double, triple, four-times?

A: I have two-three dreams in life. The first dream is that when I die and only truth of life is death, how many people come to my funeral and say, a good man has died. That is the greatest ambition in my life. Second thing is I want to earn the greatest wealth of the world in the most legitimate manner; practical legitimate manner and leave the largest part of it to charity.

Rapid Fire:

Q: Favourite trade long or short?

A: Long.

Q: Rank the following companies on a scale of 1 to 10:

Q: Reliance.

A: I would rank it 2.

Q: Infosys

A: 1.

Q: RNRL

A: 9.

Q: Titan.

A: 8.

Q: Answer the following questions with just bullish or bearish:

Q: Crude.

A: Bearish.

Q: Gold.

A: Neutral.

Q: The S&P 500.

A: Bearish.

Q: The Indian bond market.

A: I expect the yields to go down. I am bullish on the bond market.

Q: The Nifty 50

A: I am bullish.

Q: If you weren't a man of the market, what would you be?

A: I never think about it because being man of the market is so good and exciting.

Q: The worst advice someone has ever given you about the market.

A: You can never earn money in the market. You will go bankrupt.

Q: And the best advice someone has ever given you about the market.

A: Be careful. Be responsible. It's fire.

Q: You have told me what you want to be remembered as. But what's the one piece of advice you would give someone who wants to get into the stock market?

A: First advice is respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible.

VIA MONEYCONTROL

Wall Street Nightmares

2008-09-22T03:26:00.001+05:30

For those of us who had only a nodding acquaintance with Wall Street, news this week has been bafflingly littered with the big Wall Street names. Lehman Brothers filed for bankruptcy, the venerable Merrill Lynch was taken over by Bank of America and AIG, bailed out by the US Fed.

So, how has the housing crisis in the US impacted Wall Street? What were the repercussions on the Indian markets?
The (sub)prime crisis

Taking advantage of the housing boom in the US, mortgage banks disbursed loans to many sub-prime (less credit worthy) borrowers.

To compensate for the risk undertaken, these loans were given at higher interest rates. To raise more money, banks packaged these loans into securities and sold them to investment banks.

These highly leveraged positions paid off as long as the housing market continued its upward move, with rising property prices.

When recession set in, borrowers began to default. The banks seized properties and foreclosures rose. But, by then, the fall in the housing market was so steep that the foreclosed properties were difficult to sell.

The mortgage banks began to make huge losses on the outstanding loans and foreclosed assets. In the process, investment bankers who bought securities based on these loans too were hurt.
Bear Stearns flagged it off...

Bear Stearns, the US mortgage giant, was the first of the large investment institutions to fail on sub prime related issues, after it declared losses on mortgage lending in March 2008. Unable to sustain operations, the institution was sold to JP Morgan Chase.

Many other small and mid-sized firms in the US too declared losses on sub-prime mortgages. This triggered a lowering of interest rates by the US central bank- the Fed- to ease the credit crunch in the economy.

Following the Bear Stearns episode, there were similar problems at Fannie Mae and Freddie Mac, the two other mortgage giants of the country. This prompted the Fed to infuse $200 billion to shore up these institutions.

Just when the markets thought the worst was over, came the news of Lehman Brothers' filing for bankruptcy on huge mortgage-related losses.

And even before the market could absorb this shock, came similar news from Merrill Lynch and AIG (US' largest insurer). The stock markets plummeted. As the week drew to a close, the US Fed, with other central banks, assured the markets that the impact of the credit crunch would be contained.

Bailouts have been put together for the troubled banks with AIG taken over by the Fed and other investment banks in takeover talks with the stronger firms. The names that you just read are not of some neighbourhood bankers. All are renowned global bankers which served some of the largest corporations, governments and high net worth investors worldwide.

Also, several banks of other nations have invested in funds of these bankers.

Impact on the Indian market

FIIs, who are the key source of liquidity in Indian stock markets, continue to dominate , with sizeable holdings in many stocks. A weak stock market also makes foreign PE (private equity) funds hesitant to bring in money. In a scenario where the cost of borrowing is already high, poor foreign inflows (both FII and FDI) worsen the funding situation making fund availability tougher for corporates.

Given the size of FII holdings in stocks, bulk selling by foreign institutions has the potential to severely impact individual stocks as well broader markets. The Sensex lost 6 per cent off its value on the day the Bear Stearns collapse came to light.

But Lehman had already liquidated a significant part of its India holdings when its troubles came to light. However what worsened the initial falls this week were fears that other foreign institutions that run similar risks may also sell their holdings.Banking stocks were in the limelight, as they are most vulnerable to the credit crunch. A leading domestic bank that had exposure to the bonds of the Lehman Brothers faced tough times last week. Until reports clarifying that the bank expected recovery of the investments made came in, rumours had triggered huge selling in the stock.

The Banking Index too was in the red until the Finance Minister gave the assurance that the public sector banks had limited exposure to Lehman's assets and that the Indian financial sector was well-placed to handle the crisis.

Lessons from Lehman

Are there lessons for Indian investors from the events on Wall Street? Here are a few. If the housing collapse in the US was triggered by ordinary borrowers being unable to repay loans, interest rates back home too have been rising. The Indian housing market has been showing signs of slowdown with property prices correcting in many markets. This should set the alarm bells ringing for borrowers, as also bankers. As banks become more cautious in offering credit to individuals, it is time for us to take stock of whether we have enough of a safety margin on our borrowings, be they home loans, credit cards or any other kind of credit. Stock market investors obviously should brace for choppy markets ahead!

via Businessline

HP Job cuts to affect over 24000

2008-09-22T03:20:00.001+05:30

Hewlett Packard (HP) said it is planning to cut around 24,600 jobs over the next three years as it integrates enterprise technology firm Electronic Data Systems Corp. (EDS), which it acquired for US$13.9bn in August. Before the acquisition, HP had 178,000 employees and EDS 142,000, a total of 320,000, making this cut equal to 7.5% of the company's combined workforce. HP would take a one-time charge of about US$1.7bn in the fourth quarter, but says it will save US$1.8bn a year from the job cuts. HP said it plans to eventually add about half the positions back in new areas. About half the layoffs will be in the US, with more than half affecting EDS employees.

Rupee makes a comeback

2008-09-22T02:54:00.003+05:30

The rupee bounced back against the US dollar, as stocks surged across the world in the wake of multiple regulatory actions to revive confidence in financial markets and defuse tension in the global credit markets. On Friday, the Indian currency had the biggest intra-day rally in nearly two months after the US government stepped up efforts to ease the strain in the credit markets and the world's leading central banks continued to boost liquidity in money markets. The rupee rose 1.4% to 45.83 per dollar, its biggest gain since July 23 after the benchmark BSE Sensex had its biggest gain in almost two months. The index rallied by nearly 5.5% to 14,042 while the NSE Nifty jumped 5.1% to 4,245. The rupee touched an intra-day high of 45.76 and a low of 46.41, reflecting the underlying volatility in the foreign exchange markets. Four of the 10 most-active Asian currencies, excluding the yen rose against the dollar. Earlier in the week, the rupee almost fell below the 47 per dollar mark on sustained buying by foreign banks and a sharp drop in the stock market. The rupee dropped 0.3% on the week. Gains in the Indian currency were tempered by speculation that importers, including state-run oil refiners will purchase dollars to pay for crude oil, as the commodity rebounded from a seven-month low.

Telecom sector still growing

2008-09-22T02:54:00.001+05:30

The worldwide telecommunications market is on pace to reach US$2 trillion in 2008, a 7.6% increase from 2007 revenue of US$1.8 trillion, according to Gartner, Inc. The industry does face challenges as growth in the fixed voice sector and in the most developed countries has slowed or even begun to shrink.

"Revenue from telecom services has traditionally dominated the market, accounting for four out of every five dollars earned in the sector," said Will Hahn, principal research analyst at Gartner. "We forecast that this historic proportion will now shrink, an indication that legacy revenue is no longer sufficient for carriers to justify their investments and that the growing equipment sector is being deployed to support new and converged services, as well."

Revenue in the telecom service segment is expected to reach US$1.6 trillion in 2008 and account for 81% of overall telecom revenue. In 2007, total telecom service revenue was US$1.49 trillion, four times higher than total telecom equipment revenue at US$353bn. Gartner forecasts that by 2012, the service segment will have a CAGR of 4.4%, compared with 8.7% for the equipment segment. As a result, the relative proportions of the two segments will finally begin to move downward, closer to 3-to-1.

Gartner predicts that by 2012, the ratio of mobile to fixed connections will exceed 4-to-1. "We now forecast that revenue in the mobile sector will top US$1 trillion by 2010," said Hahn. "Our breakdown of services clearly shows that fixed voice is in decline, but mobile voice, though currently growing, will also stagnate as a proportion of the market by 2012. The baton has clearly been passed to data services in the legacy sector."

Is this the great depression of modern era ?

2008-09-22T02:44:00.001+05:30

Wall Street, which for long has been the symbol of the US' superpower status, came crashing down, as two of its storied financial firms became history, and another one was rescued by the government from the brink of a collapse. The shocking events, which sent global financial markets into a tailspin, came just a few days after Washington's bailout of Freddie Mac and Fannie Mae, and could change the financial landscape in the US. Put on the backfoot by the alarming and disastrous developments on Wall Street, the Bush regime launched a multi-pronged assault to salvage the rapidly deteriorating situation. By the close of trading on Friday, Washington was still putting together a mega rescue package to get to the root of the credit crisis and restore sanity in financial markets. And, though stock markets across the world cheered the efforts of governments and regulators to stem the financial firestorm, doubts persisted over the fate of Wall Street and its larger ramifications for the global economy.

It all started with the 158-year old Lehman Brothers filing for bankruptcy as it failed to find any buyers and Washington refused to lend a helping hand. Fearing a similar fate, Merrill Lynch decided to sell itself to Bank of America. It didn't stop there, as insurance giant AIG too almost blew up. But, unlike Lehman, it was a little more fortunate, as the Federal Reserve lent it $80bn for two years in return for an 80% stake. Amid all the gloom, Morgan weighed its options, and kicked off merger talks with Wachovia and China's sovereign wealth fund. Washington Mutual too put itself on the block. The contagion was not restricted to the US alone. Across the Atlantic, the British government too had to engineer the rescue of HBOS, the biggest housing mortgage lender in the UK, by asking Lloyd TSB to acquire it. Another British bank Barclays agreed to purchase Lehman's core US businesses after dropping a plan to buy the whole of it. Similar deals were being contemplated for buying Lehman's various businesses in Asia and Europe.

One of the biggest money market funds imposed a seven-day freeze on investor redemptions after the net asset value of its shares fell below $1. The rates on loans that banks charge each other rapidly rose in the turmoil. The London interbank offered rate, or LIBOR, jumped by 3.33 percentage points, to 6.44%, on its overnight dollar rate, its biggest increase ever. Yields on three-month Treasury bills fell to their lowest level since daily records began in 1954. Trading was suspended on Russia's stock markets when they went into a free-fall that was not halted even by a government injection of $44bn into the country's three biggest banks.

In the midst of it all, the central banks swung into action to inject billions of dollars in liquidity to unclog the stress in credit markets. The world's top 10 banks and financial firms formed a mega fund to ease the credit crunch. But, the Fed decided to keep interest rates unchanged, pledging to take action when the need arises. The Bank of Japan too left its benchmark interest rate steady. However, China cut interest rates and lowered the reserve requirement for small banks. China also took a series of other steps to bolster its sagging stock markets. In India, the RBI too had to move in to boost liquidity, which worsened due to the outflows towards advance tax numbers. The Finance Minister threw his weight behind Indian banks, saying that they are well regulated and were largely unaffected by the western financial turmoil. ICICI Bank's share took a hit amid news of $80mn exposure to Lehman, but the bank's top management said the bank was safe and sound.

Stocks across the world took a severe beating in the early part of the week, but staged a smart rebound after regulators in the US and UK banned short selling in financial companies. AIG's rescue and talk of a comprehensive program to cleanse the US financial system also helped in the turnaround. Crude oil and gold were highly volatile. Gold initially rallied as investors rushed to safe-haven assets like precious metals and government bonds, as equities remained under pressure. The dollar weakened early on in the face of the crippling financial mess. But, by the end of the week, trend across these markets reversed amid growing optimism that the US government's move to come out with a wider bailout plan for its battered financial markets will prevent further pain and restore confidence among global investors. As a result, crude oil had its biggest three-day rally in almost a decade, while gold futures dropped the most in a week and the dollar rose the most against the yen since April.

How the Subprime crisis began

2008-09-22T02:43:00.001+05:30

If you lost your money in the market crash of January 2008, here's the route to your loss, in chronological order.

2001-2005: House prices in the US begin to rise rapidly. Banks lend aggressively and create a subprime industry.

Sub-prime lending refers to lending (at slightly higher interest rates) to people who may not be eligible for a loan under normal circumstances. Maybe they don't have a regular job or income, or have defaulted in the past.

Banks traditionally did not lend to such people due to high risk of default. But since these loans were mortgaged against property and property prices were rising continuously, banks started doing so. If customers defaulted, they good sell the mortgaged property.

2005: The booming housing market halted abruptly in many parts of the US.

2006: Prices are flat, home sales fall.

February 2007: Sub-prime industry collapses in the US; more than 25 sub-prime lenders declare bankruptcy, announce significant losses, or put themselves up for sale.

While they were lending, banks did not factor in the possibility of a fall in property prices. When the Federal Bank (the US equivalent of RBI) started increasing interest rates, the sub-prime borrowers started defaulting and banks started selling off the mortgaged properties. As more and more properties came into the market for selling, the property prices fell.

August 2007: Many leading mortgage lenders in the US filed for bankruptcy

March 2008: Bear Sterns falls.

September 2008: Lehman Brothers file for bankruptcy. Merrill Lynch sells off to Bank of America.

Between 2001 and 2006, the US financial markets had developed a new product - a bond securitised against the mortgages.

In simple terms it means that the mortgage banks borrowed money against the mortgages on the condition that they would repay to lenders as soon as they recovered their mortgages. The lenders in this case were financial institutions (like Bear Sterns, Lehman and Merrill Lynch) who in turn sold retail bonds to individuals.

Sadly, the repayment never happened. And institutions like Bear Sterns, Lehman, Merrill Lynch and AIG were the casualties. Since the mortgages were not honoured, the banks could not repay these financial institutions who in turn could not repay retail investors.

US Govt Rescue Plan - What it means ?

2008-09-22T02:37:00.001+05:30

The US Govt has come to the rescue of the financials - here is what it means

- Govt will give hundreds of billion $ to buy bad debt/mortgages the financials are stuck with. That means that mess is as big as most thought (1 trillion $)

- At what price the bad debt will be bought is not known - unclear

- Will use Tax Payers' money to fund this bail out

- Also will use the $50 billion Exchange Stabilization Fund created to protect the $ - They need all the money that they can

- Can print extra $ ? Dollar to fall ?

What it means for US citizens

- May get home loans again ;-) - would anyone qualify for such a loan anymore

- You are screwed, because there is not going to be any CHANGE - be it from Obama or McCain - they are gonna tax you higher for sure

- Temporary relief - many can still get to keep their jobs

- Interest rates won't come down - because your govt has bought all this mess and they want to recover that money from the existing owners

- Paulson doesn't have a clue as of now how this plan is going to work otherwise he would have answered lot more questions

Feel free to leave a comment of what you think!

Sharp fall in global indices indicate negative open

2008-09-18T09:50:00.001+05:30

Weakness across the global markets and rising global crude oil prices may drag down the local indices. Nervousness in the market is likely to continue following a slump in the overnight US market, escalating global crude oil prices and weak Asian indices in the morning trades. All the leading Asian indices like the Nikkie, the Hang Seng, the Straits Times, the Kosps index and the Jakarta index are down over 2-4% each. Although the domestic indices moved up sharply in the last couple of sessions, intra-day volatility remains the major concern. Among the local indices, the Nifty may slip to 3950 while on the upside it could test the 4040 level. The Sensex has a likely support at 13100 and could test higher levels at 13400.

US indices tumbled as the government's emergency rescue of AIG amplified fears about the stability of financial markets, as result the Dow Jones slumped 449 points to close at 10610 while the Nasdaq ended 109 points lower at 2099 on Wednesday.

All the Indian ADRs fell in tune with the broader market. Rediff led the slump and tumbled 8.16% followed by ICICI Bank down by 7.66%, Satyam, Infosys, Wipro, HDFC Bank and MTNL slipped over 5-6% each. Dr Reddy, Tata Motors, VSNL and Patni Computers dropped over 2-4% each.

Crude oil prices moved up sharply as Wall Street's precipitous decline sent investors scrambling to find other places to park their money. The Nymex light crude oil for September series rising by $6.01 at $97.16 a barrel. In the commodity space, the Comex gold for December delivery flared up by $70 to settle at $850.50 a troy ounce.

Asian markets open negative

2008-09-18T09:32:00.001+05:30

Asian stocks tumbled to the lowest in three years while gold and US Treasuries surged as concerns mounted more financial firms will collapse.

US Treasury three-month bill rates dropped to the lowest since World War II as a loss of confidence in credit markets worldwide prompted investors to abandon higher-yielding assets for the safety of the shortest- term government securities.

Japanese benchmark index Nikkei dropped 374.224 points, or 3.18%, to trade at 11,375.57.

Hong Kong`s Hang Seng index fell 659.58 points, or 3.74%, to trade at 16,977.61.

China`s Shanghai Composite slipped 88.74 points, or 4.60%, to trade at 1,840.31.

Taiwan`s Taiex index fell 221.35 points, or 3.82%, to trade at 5,579.52.

South Korea`s Kospi index declined 42.53 points, or 2.98 %, to trade at 1,382.73.

Singapore`s Straits Times lost 83.31 points, or 3.44%, to trade at 2,335.98. (8.25 a.m., IST)

RBI comes to Rupee's rescue

2008-09-18T01:02:00.001+05:30

Ends at 46.33/35

Rupee rose more than 1 percent in volatile trade on Wednesday, boosted by the central bank's move to keep selling dollars and lift deposit rates for non-resident Indians, but stock market losses remained a weight.

Rupee ended at 46.33/35 per dollar, off a high of 46.25, and 1.2 percent stronger than 46.89/90 at the close on Tuesday. It fell to a low of 46.99 on Tuesday, its weakest since July 2006, according to Reuters data.

Asian Market Shows Some Recovery

2008-09-18T01:01:00.001+05:30

Kospi, Nikkei Lead The Advance In Mixed Regional Market

The stock markets across the Asian region closed mixed after a firm start following the Fed's move to provide $85 billion bridge loan to American International Group in exchange for an 80% stake in the insurance giant. On Wall Street, the markets finished sharply higher after the Federal Reserve left its key interest rates unchanged at 2%. The Dow closed up 141 points or 1.3% at 11,059, the broader S&P 500 rose 20.9 points or 1.8% to finish at 1,213, and the Nasdaq advanced 28 points or 1.3% to close at 2,207.

Crude oil futures were higher in late Asian trade, rebounding from the seven-month low hit on Tuesday. In late Asian deals, oil was quoted at $93.83 a barrel.

In the currency market, the U.S. dollar was quoted in the mid 105-yen levels, down from the mid 106-yen range in early trade, but up from Tuesday's late quotes in the upper 103-yen levels in Tokyo.

The Australian dollar recovered from recent lows against the U.S. dollar after the U.S. government bailed out the beleaguered American Insurance Group. In late local trade, the Aussie edged up to US$0.8005 from an intra-day low of US$0.7910, and off 13-month lows of US$0.7852 hit in the previous session. The Aussie finished Tuesday's session at US$0.7886-0.7890.

The New Zealand dollar rose against the U.S. dollar, but gave away some of the gains before finishing the local session at US$0.6599, down from US$0.6603 in early trade. However, it closed higher compared to Tuesday's late quotes of US$0.6490.

The South Korean won rallied against the U.S. dollar. The won finished Wednesday's session at 1,129.9 a dollar, up 30.1 won from Tuesday's 49-month-low finish of 1,160.0.

Coming back to Asian equities the relief rally fizzled out as lingering concerns about the banking sector weighed on the stock markets in Australia, China, Hong Kong and Singapore. Asian financial stocks fell, as a U.S. bailout of American International Group failed to ease concerns that credit-related losses will cause more financial failures. Macquarie Group slumped in Sydney, despite denying a newspaper report that it might face difficulty in refinancing debt.

The Japanese market rebounded on bargain hunting following Tuesday's sharp losses. The benchmark Nikkei 225 index closed up 140.07 points or 1.21% at 11,749.79 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 3.86 points or 0.35% to finish at 1,121.43.

Tokyo stocks traded in positive territory throughout the day but gave up some of their early sharp gains in the afternoon as investors became anxious about the outlook for the U.S. financial sector and falls in Shanghai and Hong Kong shares dampened investor sentiment to some extent.

In a widely expected move, the Bank of Japan left its overnight call rate target unchanged at 0.5% by a unanimous vote and maintained its assessment of the economy, which it said was still sluggish.

The Chinese market closed sharply lower for the second straight session after China Merchants Bank announced a large exposure to Lehman Brothers. The benchmark Shanghai Composite Index closed down 2.90% at a 22- month low of 1,929.05.

The Hong Kong market closed sharply lower, falling for the sixth straight session, as China banks fell on concerns about narrowed interest-rate spreads and worries about their exposure to the troubled U.S. financial institutions. The benchmark Hang Seng index closed down 663.42 points or 3.63% at the day's low of 17,637.19.

The Australian market closed lower Wednesday, extending its losses for the third consecutive trading session. The market started off higher, but pared gains in the afternoon session as Australia's biggest investment bank, Macquarie Group, fell to its lowest level in more than four years on speculation about a potential funding shortfall.

The benchmark S&P/ASX 200 index closed down 28.6 points or 0.6% at 4,722.2 after losing 1.4% on Tuesday. The broader All Ordinaries index dropped 30.1 points or 0.6% to finish at 4,847.

On the economic front, a private sector projection of Australia's economy is forecasted an annualized growth of 3.7%. The July Leading Index, published by Westpac Bank and the Melbourne Institute, rose 0.5% for the month. The full-year rate was down from the revised reading of 4.0% reported in June. The index, which projects economic activity three to nine months in the future, was well below the long-term trend of 4.2%.

Meanwhile, the Australian Bureau of Statistics said that the value of Australia's August imports totaled A$18.455 billion, down 6% or A$1.15 billion from July. The bureau's preliminary figures showed that imports of goods decreased 3% in seasonally adjusted terms for the month. Intermediate and other merchandise goods were down 7%, while fuels and lubricants imports fell 25%.

The New Zealand stock market closed higher, ending a two-day losing streak. The market opened weak, but soon moved into positive terrain following the U.S. Federal Reserve's plan to rescue beleaguered American International Group. The benchmark NZX 50 index closed up 1.30% at 3,269.93 after plunging 2.8% on Tuesday. The broader NZX All Capital Index advanced 45.79 points or 1.39% to finish at 3,301.69.

The South Korean market closed sharply higher on bargain hunting following Tuesday's 6% plunge. The benchmark Korea Composite Stock Price Index or KOSPI closed up 2.7%, at 1,425.26.

In India, intense-selling pressure in key index pivotal dragged the key benchmark indices lower in volatile trade. The BSE Sensex, extended losses for the seventh straight day, declining 255.90 points. The S&P CNX Nifty settled just above the psychological 4,000 level. The BSE 30-share Sensex lost 255.90 points or 1.89% at 13,262.90. The Sensex opened with a upward gap of 101.94 points at 13,620.74, which is also its day's high so far, boosted by Fed's rescue plan for AIG. At the day's low of 13,127.96 hit mid-afternoon trade, the Sensex lost 390.84 points. The S&P CNX Nifty lost 66.65 points or 1.64%, to settle at 4008.25. At the day's low of 3,974.60,

Elsewhere, Taiwan's Taiex closed up 0.8% at 5,800; Singapore's STI fell 1.7% to 2,419; Malaysia's KLCI closed down 0.9% at 1,002 and Indonesia's Jakarta Composite index closed up 2.0% at 1,769.

In the other part of the world, European shares rose on Wednesday but were off the session's highs, with more uncertainty about the health of financials such as U.K. mortgage lender HBOS contributing to a volatile session.

Of national indexes, the U.K. FTSE 100 index rose 0.6% to 5,058.50, the German DAX 30 index edged up 0.1% to 5,972.64 and the French CAC-40 index inched down 0.1% at 4,082.25. At 11.38 GMT continued to gain further as U.K. FTSE 100 index increased by 1.1% to 5,082.20. The German DAX 30 index increased by 0.7% to 6, 007.18, while the French CAC-40 index was up by 0.4% to 4,103.07.

Looking ahead the day is scheduled to release the data on building permits from US for the month of August, which will be followed by second quarter current account detail. It will be also accompanied by housing starts for the month of August, which will be followed by the EIA's weekly update on crude oil stock.

Goldman, Morgan Stanley profits fall

2008-09-18T01:00:00.000+05:30

The two largest US investment banks, Goldman Sachs Group Inc and Morgan Stanley, reported lower quarterly profits, but beat expectations on Tuesday even as the worst market slump in decades rattled Wall Street.

Goldman Sachs, the largest securities firm, said third quarter earnings fell 70 percent on weaker-than-expected revenues, knocking its shares to nearly three-year lows.

Later, No 2 Morgan Stanley, which reported a day ahead of schedule after US markets closed, trounced expectations paced by one-time gains, robust equity and commodities trading results and record prime brokerage fees.

Morgan's earnings fell 3 percent even as the year-old credit crunch slowed deal activity and created one of the toughest trading environments in decades. Its shares fell 11 percent on Tuesday in regular trading, though they pared most of those losses in electronic trading after New York markets closed.

Goldman shares also climbed after the bell, up 4 percent.

"Between Goldman Sachs and Morgan Stanley, we are getting some modest positive news in what has been an otherwise dark five-day period," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management.

Tough Times

The results come a day after No 4 investment bank Lehman Brothers Holdings Inc filed for bankruptcy, swamped by mortgage losses. No 3 broker Merrill Lynch & Co Inc meanwhile rushed into the arms of Bank of America Corp to avoid a similar fate.

These moves had prompted questions about the viability of investment banks. Several analysts predicted these firms would merge with commercial banks, which can tap pools of deposits.

Yet Morgan Stanley and Goldman dismissed those concerns.

"It's not the business model. It's performance that matters," said Goldman chief financial officer David Viniar. "We've been able to compete just fine."

Morgan Stanley CFO Colm Kelleher also played down the need to merge with a deposit-taking bank: "I'm very confident about the business model, said in a phone interview.

Goldman

Goldman's quarter was marked by sharply lower banking, trading and investment results. It was the investment bank's biggest earnings decline since it went public in 1999.

Still it beat expectations, despite USD 1.1 billion in write-downs and losses from principal investments. Some investors said Goldman deserved credit for reporting any profit at all when rivals go bust or bleed red ink.

"For them to perform in this manner, in this environment, is nothing short of heroic," said Holland & Co Chairman Michael Holland.

Goldman's investment banking revenue dropped 40 percent amid a dearth of deals. Debt trading revenue fell by two-thirds, primarily on weak credit and mortgage markets, while equities trading revenue fell by one-half.

The latest quarter included USD 1.1 billion in losses on corporate loans, residential and commercial mortgages, and USD 453 million of principal investment losses, showing the downside of making aggressive bets with house money. Asset management revenue fell 6 percent as clients withdrew a net USD 7 billion.

"People were hoping for some good news in a sea of gloom and I don't think they got it," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel.

Analysts said Goldman beat expectations because it paid unusually low taxes, an effective rate of 12 percent compared with 34 percent last year.

Morgan Results

Morgan easily out-earned its archrival and generated a higher return on equity.

"This is great news for the whole financial sector," said Marshall Front, chairman at Front Barnett Associates. "I think the key to this whole thing was that they looked better than Goldman Sachs' earnings earlier in the day."

The results included a USD 745 million one-time gain from its sales of MSCI Inc stock and USD 1.4 billion of gains recorded because the credit spreads on its own debt widened.

And while the banking and trading division posted strong results, wealth management results and asset management results both fell. The ranks of brokers grew, rising 2 percent to 8,500.

Morgan also absorbed nearly USD 1.1 billion of losses and charges from mortgage trades, investments, leveraged buyout loans and repurchase of illiquid auction rate securities.

Over the past year banks and brokers have recorded more than USD 500 billion in write-downs as the mortgage crunch expanded into a sprawling crisis that continues to claim new and larger victims.

Goldman acknowledged its earnings follow the global economy and that conditions will remain challenging. The company said it is increasing capital and cash while shedding risky assets.

"We've become even more cautious in our approach," Viniar told reporters. "There's a lot of fear in the marketplace."

Sensex tanks 1682 points in seven trading sessions on US financial turmoil

2008-09-18T00:59:00.001+05:30

Intense selling pressure in key index pivotals dragged the key benchmark indices lower in volatile trade. The BSE 30-share Sensex, extended losses for the seventh straight day today, 17 September 2008, declining 255.90 points. The S&P CNX Nifty settled just above the psychological 4,000 level.

ICICI Bank shed over 4.5% and Reliance Industries shed over 3%. Sterlite Industries tumbled a little under 9% and ITC lost over 5%. The market breadth was weak. All BSE sectoral indices ended in red.

The US Federal Reserve in a meeting on Tuesday, 16 September 2008 announced a $85 billion rescue plan to help American International Group in exchange for a 79.9% stake. The deal would avoid the biggest corporate bankruptcy ever and follows a government bailout of mortgage lenders Freddie Mac and Fannie Mae earlier this month

Meanwhile, the US Federal Reserve at its policy meet on Tuesday, 16 September 2008, kept its target for the federal funds rate at 2%. Fed said that the strains in financial markets have increased significantly and labour markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending.

European markets, which opened after Indian market, were mixed. Key benchmark indices in Germany and France were up 0.32% and 0.63% respectively. However UK's FTSE 100 lost 2.13%. Asian markets were trading mixed today, 17 September 2008. Key benchmark indices in China, Hong Kong and Singapore, were down by between 2.90% and 3.63%. However indices in Japan, Taiwan, and South Korea rose by between 0.77% and 2.70%.

In US, Dow futures were down 31 points and the Nasdaq futures were down 8 points, pointing to a lower start of the US markets on Wednesday, 17 September 2008.

The BSE 30-share Sensex lost 255.90 points or 1.89% at 13,262.90. The Sensex opened with a upward gap of 101.94 points at 13,620.74, which is also its day's high so far, boosted by Fed's rescue plan for AIG. At the day's low of 13,127.96 hit mid-afternoon trade, the Sensex lost 390.84 points.

The S&P CNX Nifty lost 66.65 points or 1.64%, to settle at 4008.25. At the day's low of 3,974.60, the Nifty lost 100.30 points in afternoon trade. Nifty September 2008 futures were at a marginal 0.75 premium as compared to spot closing. NSE's futures & options (F&O) segment turnover was Rs 58,546.48 crore, which was higher than Rs 56,509.60 crore on Tuesday, 16 September 2008.

The BSE Sensex has lost 1682.07 points or 11.25% in seven consecutive trading sessions from a recent high of 14,944.97 on 8 September 2008. The barometer index is down 7024.09 points or 34.63% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7943.87 points or 37.45% below its all-time high of 21,206.77 struck on 10 January 2008.

National Stock Exchange (NSE) on Tuesday, 16 September 2008, said there are no outstanding open positions/settlement obligations of Lehman Brothers Securities currently in the cash market segment and derivatives segment of NSE. Lehman Brothers Securities can operate only in the cash market segment on pre-funding of their trades, NSE said.

The Reserve Bank of India (RBI) on late Tuesday, 16 September 2008 stepped in with measures to support the rupee which has been battered to almost 47 against the dollar and supply cash in the money market. The move will increase dollar supply and lower banks' borrowing cost in the overnight call money market. RBI has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits.

The market breadth was weak on BSE with 1760 shares declining as compared to 881 that advanced. 82 remained unchanged.

The total turnover on BSE amounted to Rs 5795 crore as compared to Rs 5,208.35 crore yesterday, 16 September 2008.

The BSE Mid-Cap index fell 1.49% to 5,139.63 and the BSE Small-Cap index slipped 1.19% to 6,214.75.

Among the 30-member Sensex pack, 24 slipped while the rest gained.

India's top copper producer by sales Sterlite Industries plunged 8.89% to Rs 435.25 on 11.02 lakh shares. It was the top loser from Sensex pack.

India's largest private sector bank in terms of net profit ICICI Bank plunged 4.75% to Rs 563.25, off day's low of Rs 530. The sell-off was on reports the bank will have to take a hit of $28 million on account of the additional provisioning that ICICI Bank's UK subsidiary will have to make after Lehman Brothers Holdings, the fourth-largest investment bank filing for bankruptcy.

Meanwhile, the bank denied rumours of top management selling shares over the last few days.

Other banking shares were also weak ahead of the release of the weekly inflation figures after trading hours on Thursday, 18 September 2008. HDFC Bank (down 3.83% to Rs 1183), and State Bank of India (down 4.12% to Rs 1520.25), edged lower. The Bankex fell 3.79% to 6,592.96.

Ranbaxy Laboratories, India's top drug maker by sales slumped 4.41% to Rs 388. The stock tumbled on reports the US government has banned more than 30 generic drugs made by the company citing poor quality in two of its Indian factories. The stock was already on a sustained downtrend ever since the Japanese drug maker Daiichi Sankyo's open offer to acquire an additional 20% stake at Rs 737 a share in the company ended on 4 September 2008.

India's largest private sector firm in terms of market capitalization and oil refiner Reliance Industries fell 3.31% to Rs 1864.70 on 14.05 lakh shares. The stock had hit a 52-week low of Rs 1800 in intra-day trade on Tuesday, 16 September 2008. As per reports, the company is expected to start pumping gas from November 2008 from its deep-water field off the east coast.

Real estate shares slipped. DLF (down 4.12% to Rs 405.20), Unitech (down 9.32% to Rs 127), Indiabulls Real Estate (down 7.92% to Rs 205.70), and Ansal Infrastruture (down 2.10% to Rs 77), declined. The BSE Realty index lost 4.13%, to 3,991.93.

India's largest private sector steel maker by sales, Tata Steel was down 3.48% to Rs 470.60. It had touched a 52-week low of Rs 467.95 in intra-day trade. As per reports, the company paid lower advance tax to Rs 300 crore in Q2 September 2008 as compared to Rs 350 crore in Q2 September 2007. The BSE metal index plunged 3.55%, to 9,814.93.

ITC (down 5.48% to Rs 183.60), and Jaiprakash Associates (down 3.58% to Rs 134.80), edged lower from the Sensex pack.

India's top truck maker by sales Tata Motors advanced 4.46% to Rs 416.15 and was the top gainer from Sensex pack. The company reportedly paid lower advance tax to Rs 75 crore in Q2 September 2008 as compared to Rs 190 crore in Q2 September 2007.

Mahindra & Mahindra, the country's top tractor maker by sales gained 0.14% to Rs 534. The company reportedly paid higher advance tax of Rs 116 crore in Q2 September 2008 as compared to Rs 83 crore in Q2 September 2007.

India's top oil exploration firm by market capitalisation Oil and Natural Gas Corporation (ONGC) gained 2.86% to Rs 979.90, after the company said it has agreed to give Rocksource ASA, a Norwegian company, 10% participating interest in deep water block in the eastern offshore. It was the top gainer from Sensex pack.

India's second largest software services firm Infosys Technologies rose 1.01% to Rs 1580, off its day's high of Rs 1647.90. Its American depositary receipt soared 4.60% in the US market yesterday, 16 September 2008.

Other IT pivotals showed mixed trend. Satyam Computer Services (down 1.87% to Rs 349.70), and TCS (down 2.88% to Rs 728), slipped. The BSE IT index lost 0.58% to 3,524.32.

However India's third largest software services firm Wipro rose 1.15% to Rs 396.25 on reports the company's software business arm Wipro Technologies and Copal Partners have expressed interest to bid for the Indian back-office unit of Lehman Brothers.

State-run oil refiners slipped after crude oil price rebounded from a 7-month low. Indian Oil Corporation (down 5.30% at Rs 396), BPCL (down 7.02% at Rs 336.20), and HPCL (down 5.45% at Rs 235.25), slipped. However Cairn India galloped 4.28% to Rs 207.

ICICI Bank was the top traded counter on BSE with a turnover of Rs 401.80 crore followed by United Spirits (Rs 341.76 crore), Reliance Capital (Rs 307.75 crore), Reliance Industries (Rs 265.54 crore) and Educomp Solutions(Rs 249.06 crore), in that order.

Reliance Natural Resources led the volumes chart on BSE clocking volumes of 1.41 crore shares followed by IFCI (1.05 crore shares), ICICI Bank (72.12 lakh shares), Austral Coke & Projects (62.27 lakh shares) and Chambal Fertilisers (60.31 lakh shares) in that order.

Jaipan Industries was locked at upper limit of 5% of Rs 168.10, a lifetime high, extending gains for the 24th trading session in a row. The Jaipan stock has surged 220.49% in past 24 trading session to Rs 168.10 today from Rs 52.45 on 12 August 2008.

US light crude for October 2008 delivery gained $3.15 to $94.30 a barrel today, 17 September 2008, following a $85 billion bailout of American International Group sparked a relief rally on Wall Street.

US markets rallied on Tuesday, 16 September 2008, on growing optimism that US authorities may finance a rescue of insurer American International Group (AIG). The Dow Jones Industrial Average surged 141.51 points, or 1.30%, to 11,059.02, the Standard & Poor's 500 Index rose 20.87 points, or 1.75%, to 1,213.57 and the Nasdaq Composite index climbed 22.45 points, or 1.03%, to 2,202.36. The US government announced rescue plan for AIG after trading hours.