Indian Stock News by Experts

Market may take a break

<DIV>Overnight fall in US markets and weak Asian indices in current trades likely to weigh on the local indices in early trades. The sentiment is likely to remain subdued on weak global indices. However, the FIIs remaining net buyers of equities in the domestic market and the yesterday's smart rally despite the hike in CRR rates by Reserve Bank of India could release some pressure. Among the local indices, the Nifty could test higher levels at 4600 and has a support at 4440. The Sensex on the downside may slip to15000 and may face resistance at 15450. US indices finished weak on Tuesday amid concerns of credit and subprime mortgage market worries and record-high oil prices. While the Dow Jones declined 146 points at 13212, the Nasdaq dropped 37 points to close at 2546 on weakness in tech stocks. Most of the Indian ADRs battered on the US bourses. ICICI Bank tumbled 3.69% and Tata Motors by 3.33% , while Infosys, Satyam, Dr Reddy's, HDFC Bank, MTNL and Rediff fell around 1-2% each. However, VSNL and Patni computer gained marginally. Crude oil prices gained marginally, with the Nymex light crude oil for September delivery advanced by $1.38 at $78.21 a barrel. In the commodity segment, the Comex gold for December series was up by $2.70 to settle at $679.30 a troy ounce.</DIV>

Market may take a break

Overnight fall in US markets and weak Asian indices in current trades likely to weigh on the local indices in early trades. The sentiment i...

Daily Result Updates

<DIV> <TABLE align='"center"'> <TBODY> <TR> <TD align='"center"'><IFRAME name=google_ads_frame marginWidth=0 marginHeight=0 src="http://pagead2.googlesyndication.com/pagead/ads?client=ca-pub-5322055375948774&dt=1185940763078&lmt=1185940626&format=336x280_as&output=html&correlator=1185940762828&channel=6904968019&url=http%3A%2F%2Fwww.deadpresident.blogspot.com%2F&color_bg=ffffff&color_text=000000&color_link=bb3300&color_url=bb3300&color_border=ffffff&ad_type=text_image&cc=100&flash=9&u_h=768&u_w=1024&u_ah=738&u_aw=1024&u_cd=32&u_tz=330&u_his=1&u_java=true&u_nplug=24&u_nmime=94" frameBorder=0 width=336 scrolling=no height=280 allowTransparency></IFRAME></TD></TR></TBODY></TABLE>Reliance Communications: In-line 1QFY08 results, low increase in costs a positive surprise; fine-tuned estimates Tata Steel: 1Q 2008 results'Volumes, dilution disappoint; maintain U Tata Motors: 1Q net profit at Rs4.7 bn grows 22% yoy; margins under pressure Cairn India: 2QCY07 results hit by forex loss; strong otherwise in line with high crude prices i-flex solutions: Another weak quarter'de-listing expectations supporting expensive valuations. Maintain Underperform rating Bharat Electronics: Disappointing results with low execution and margins decline Aditya Birla Nuvo: Standalone results below expectations, but does it really matter? HPCL: Another wasted quarter but probably a good time to buy when nobody is looking Jet Airways: Results miss expectations, near-term outlook remains challenging Oriental Bank of Commerce: Lower provisioning support profit growth, retain IL India Cements: 1QFY08- Targeting 15 mn tpa capacity by FY2010; retain IL with target price of Rs200/share HT Media: Slightly weaker-than-expected 1QFY08 results; reduced estimates moderately India Infoline: Operating in line, raising estimates but downgrade to Underperform Godrej Consumer Products: 1QFY08: Price hikes aid revenues growth and retain margins Dredging Corporation of India: Better-than-expected numbers led by in-chartered dredgers SREI Infrastructure Finance: Growth on track, profit in-line, retain IL Change in recommendations Reliance Energy: Sasan in the bag'4,000 MW capacity addition on fast track Updates Infosys Technologies: Key takeaways from Infosys analyst meet; Reiterate outperform rating Banks/Financial Institutions: RBI quarterly credit policy a net negative for the banking sector 1QFY08 operational performance disappoints</DIV>

Daily Result Updates

Reliance Communications: In-line 1QFY08 results, low increase in costs a positive surprise; fine-tuned estimates Tata Steel: 1...

Imerys is close to acquiring ACE

<DIV>French major Imerys is close to acquiring ACE Refractories, erstwhile ACC Refractories, for nearly Rs 550 crore.    ICICI Ventures, the country's largest private equity fund, had purchased the refractory division of the cement major ACC two years ago for Rs 257 crore and rechristened it as ACE Refractory. Through this deal, ICICI Ventures would be able to double its investment in the company in two years.    Sources close to the development said Euronext-listed Imerys, which is the world's largest industrial metals company, would acquire the entire shareholding of ICICI Ventures in ACE Refractory. A deal to this effect is likely to be announced shortly. Imerys is listed with Euronext Paris.    They said the investment vehicle for Imeys for the deal would be Calderys, the refractory solutions company of Imerys. Calderys, one of the major players in the global refractory space, was created through the merger of Plibrico International and Lafarge Refractories.    ACE is the country's second largest player with an estimated profit of Rs 30 crore and over 50 per cent market share. It supplies refractories to steel, sponge iron, cement, petrochemicals and fertiliser sectors.    ACC sold off its refractory business as it was not a part of the company's core area of operations. Profit on sale of undertaking amounted to Rs.174.05 crore. It was for the first time that a venture fund got into managing a manufacturing business through a 100 per cent buyout.</DIV>

Imerys is close to acquiring ACE

French major Imerys is close to acquiring ACE Refractories, erstwhile ACC Refractories, for nearly Rs 550 crore. ICICI Ventures, the co...

The bitter truth of Indian sugar

<DIV>In April this year, food minister Sharad Pawar said in Pune that sugarcane farming was eating into arable land, causing the country to make imports of oilseeds and pulses at high prices. The minister's comment came after the government revised upward its sugarcane output estimate by 40 million tonnes (MT) to 322.94 MT. It was then becoming clear that the 2005-06 season witnessed a major glut in sugar production. The estimate was later revised to an even higher 345.31 MT. And the glut cost farmers dear. In 2006, the cotton farming sector in Maharashtra received Rs 2,000 crore in a bailout package from the state government. There is a strong possibility that the state's sugarcane farming community, dominated by cooperatives, would now demand a similar package to ensure that the mills pay them at the right time, that is, before they go bankrupt. In turn, the package might also keep the mills themselves from downing shutters. However, with its several hasty remedial measures showing little impact on plummeting sugar prices, a helpless government appears ostrich-like, waiting for the 2007-08 sugar season to rectify the situation. It therefore wants to bring down the sugarcane acreage significantly. But not before it imposed heavy costs on the economy. An agri-sector analyst from Maharashtra said, "The policy the government appears to be banking on now for the sugar sector is ad-hoc." The sector's cyclicity often dupes the farmer and lure him into bringing more land under sugarcane. Maharashtra has around 105-odd cooperative sugar mills and seven mills in the private sector. More than 50 cooperative mills were forced to down shutters last year when sugarcane production outdid estimates. With several hundreds tonne of levy sugar still lying in mills and no government directive allowing them to offload this in the open market despite poor prices there, sugar mills are facing bankruptcy this year. "It is quite likely that these mills will renege on paying even the Statutory Minimum Price (SMP) to the farmers, leave alone clear last year's loans from the cooperative banks," the analyst said. Farmers, having put more area under sugarcane each year, are in fact compounding the problems. According to an ICRA study, the progress of sugarcane acreage showed a 3.9% (year on year) increase to 4.45 million hectare up to July 2006, with increase in acreage reported from all key states. To boot, sugarcane is an all year crop, allowing little possibility of an inter-crop or rabi and kharif inter-changeability. Overall, at an average 4 m ha covered, sugarcane actually accounts for only 2.75% of the country's cropped area. But its attractions for the farmer in Maharashtra, UP, Tamil Nadu, Karnataka, Gujarat and MP, lie elsewhere. According to the the Commission for Agricultural Costs and Prices (CACP) on Price Policy for Kharif Crops of 2006-07 season, the gross return per ha on sugarcane is an impressive Rs 49,742, higher by leaps and bounds, compared to the returns on other key crops such as paddy and wheat, even pulses such as arhar and oilseeds such as groundnut. The share of sugar in the value of output from agriculture has declined in recent years from 7.1% (1994) to 4.9% (2004) but, in an average to good year, the returns are very attractive. The sugar output this year is pegged at close to 28 MT against a consumption of only 19.5 MT, leaving a surplus of 8.5 MT (including a 4 MT carryover stock). Despite fall in acreage in states like UP, this sugar year's cane acreage is still a significant 106.4% of the normal area sown (4.17 m ha). In comparison to the hike in the total area under kharif pulses (down by 16%) and oilseeds (up by 0.4 m ha), this is still better. What makes sugar, the country's largest agro-based industry, crucial is its key contribution to socio-economic development in rural areas. The sector provides livelihood either directly or indirectly to around 40 million people and so. A significant chunk of the sugar industry — about 56% — is in the cooperative sector. The industry contributes an estimated Rs 1,700 crore annually to the national exchequer and treasuries of various state governments by way of excise duty and purchase tax on sugar cane. That shows how much a skewed sugar economy perspective or a myopic State policy that refuses to transcend the mofussil mindset can have serious implications for Indian economy. According to EID Parry's P Rama Babu who is also president of the Indian Sugar Mills Association (ISMA), the root cause of the problem is the persistently sharp increase in the statutorily enforced sugarcane price. "Currently, the Indian sugar industry pays the highest cane price in the world while realising the lowest sugar price. This situation is quite unique as sugarcane price is generally determined based on sharing of sugar sales realisation the world over. To avoid recurrence of such problems, we need a long-term sugar policy linking the price of sugarcane to the price of sugar, as is the global practice," he holds. Even in normal years, the SAP paid by mills in Punjab, Haryana, Uttar Pradesh, Uttaranchal and Tamil Nadu are much higher than the SMP announced by the Centre but high cane prices are likely to be the least alien to the sugar mills in Uttar Pradesh, where, in a historic first, the Mayawati government has hiked up the State Advised Price (SAP) for cane to over the price of sugar. The SAP for 2006-07 has been pegged at a good Rs 45 over the SMP for cane per quintal, at Rs 130 whereas the SMP is only Rs 82 per quintal. Mills estimate losses at Rs 6,000 crore plus (Rs 6/kg) if cane price is maintained at SAP. The SAP represents the cost of sugar at Rs 13.60 per kg at 9.6% recovery rate (excluding purchase taex, society commission and transport). Bringing down the SAP to SMP levels is the only way, according to experts, that the sugar industry in UP can hope to recover even some of the costs and avoid a total shutdown in the coming crushing season. But even that slender grace may not be accorded to the non-private sector sugar mills in UP. Around 50 of the 131-odd sugar mills in the state are in the cooperative sector and state-owned sectors and many of these mills have been put up for sale by the Mayawati government. This sugar year threatens to jeopardize more livelihoods and trigger off widespread farmer agitations. The industry is pitching hard for de-regulation. A key part of this is the push for the government to maintain an all-year round strategic stock of sugar to regulate domestic prices in times when it shoots up, replicating the China model. That buffer should be used by the government in the place of the monthly release mechanism to keep prices in "a sustainable band." The industry has suggested that instead of imposing a levy sugar obligation, the government should source levy sugar from the open market. These policy measures, an industry supported KPMG study says, "will ensure the steady growth of the sugar industry not only to meet the rising demand for sugar in the country but also to harness the potential for regular export of sugar." Says ISMA secretary general S L Jain, "Notwithstanding every measure the government has taken so far, the only way forward now is to ship out as much of the sugar as we can and as urgently as we can. According to a recent study, "A new Sugar Industry Policy is required in order to ensure that the industry is de-politicised and gets into a position where chemical products from molasses will give the major value-addition and sugar will become a byproduct." It is said that the government refuses to coin a policy that will tap the industry's potential to cater to 6% of the additional power supply the country needs, through co-generation.</DIV>

The bitter truth of Indian sugar

In April this year, food minister Sharad Pawar said in Pune that sugarcane farming was eating into arable land, causing the country to make...

FM hints at tax cuts, yields to area-wise incentives

<DIV>Finance minister P Chidambaram on Tuesday reiterated his intent to trim tax rates, thanks to better compliance by taxpayers and the broadening tax base. He also held out a special dispensation for "promising" sectors like food processing, electronic hardware, hotels and tourism and leather goods while admitting that area-based tax exemptions—of the kind enjoyed, for example, by the hill states—would have to continue for the time being. These exemptions are considered inefficient by tax experts. The FM said a larger tax base coupled with better compliance augurs well for a rate cut. "We should not hesitate to reduce rates further in an environment of a rapidly-growing economy; we ought to be prepared to act on the premise that revenues would nevertheless be more buoyant," he said in his convocation address at the University of Hyderabad. Mr Chidambaram also plumped for sparing small entrepreneurs from tax. "To allow small entrepreneurs to flourish, a threshold has to be provided only above which taxes may be imposed," he said. Though he admitted that such sops could drain the exchequer, the FM's rationale was that area-wise sops would remove past inequities while incentives to promising sectors would fuel growth. Although the government has been talking of pruning exemptions, it may not be ready yet. Area-specific tax holidays exist in regions like Baddi in Himachal Pradesh and North-East, which have seen heavy investments. Similarly, the IT industry grew scale, backed by Software Technology Parks of India (STPI) benefits. The government has budgeted gross tax collections at Rs 5,48,122 crore in FY08, which is 17% higher than the revised estimate for FY'07. With the economy growing at a fast clip, tax revenues have been buoyant over the last two years. The highest tax rate for individuals is 30%. The statutory corporate tax rate for domestic companies is 33.99%. But the actual payout is lower for many companies as they enjoy tax exemptions. Tax experts say a lowering the corporate tax rates to what is prevalent in countries such as Singapore and Hong Kong could pull in more investments. The FM said temporary area-based incentives may be unavoidable to offset past inequities among different regions in the country. Such measures are needed to ensure equity, though it could drain resources. According to him, there was also a case for special dispensation to select sectors—such as food processing, electronic hardware, leather products, hotels and tourism—to sustain the growth momentum. "We should not shy away from selecting leading sectors of growth and offering them encouragement," he said. These sectors were given a few sops in this year's budget and more could be in the offing, next budget. In the past, sectors such as steel and textiles enjoyed a special dispensation which aided their growth. It's the same story for small automobiles: India is on its way to become an auto hub, thanks largely to the cut in indirect taxes, he said. Chidambaram was also confident that the proposed goods and services tax (GST) will improve the country's competitive edge vis-à-vis international competitors that do not have overbearing taxation at two levels of government and whose burden of indirect taxes is not so high as in India. The GST, which would integrate state and central taxes on goods and services, is set to be introduced in April 1, 2010. The spadework has already begun, said Chidambaram.</DIV>

FM hints at tax cuts, yields to area-wise incentives

Finance minister P Chidambaram on Tuesday reiterated his intent to trim tax rates, thanks to better compliance by taxpayers and the broaden...