Stock Trading Tips for Investors

How do banks make money?

2012-01-21T03:29:00.001-08:00

How do banks make money?

Banks are just like other businesses. Their product just happens to be money. Other businesses sell widgets or services; banks sell money -- in the form of loans, certificates of deposit (CDs) and other financial products. They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts.
The interest rate a bank charges its borrowers depends on both the number of people who want to borrow and the amount of money the bank has available to lend. As we mentioned in the previous section, the amount available to lend also depends upon the reserve requirement the Federal Reserve Board has set. At the same time, it may also be affected by the funds rate, which is the interest rate that banks charge each other for short-term loans to meet their reserve requirements.

Loaning money is also inherently risky. A bank never really knows if it'll get that money back. Therefore, the riskier the loan the higher the interest rate the bank charges. While paying interest may not seem to be a great financial move in some respects, it really is a small price to pay for using someone else's money. Imagine having to save all of the money you needed in order to buy a house. We wouldn't be able to buy houses until we retired!
Banks also charge fees for services like checking, ATM access and overdraft protection. Loans have their own set of fees that go along with them. Another source of income for banks is investments and securities.

How do credit card issuing banks make money?

2012-01-21T03:25:00.000-08:00

Credit cards are ubiquitous substitutes for cash. Ever wondered in how many different ways banks make money through credit cards issued by them?

1. Commission: When we use our credit card at a shop, the shop keeper gets paid by the bank who issued that credit card. But the bank reduces a certain percent (generally 2%) from the transaction amount before paying the money to the shopkeeper. That’s why some shopkeepers give discounts when you use cash instead of credit card for payment, especially on high value purchases such as gold.

2. Interest Charges: Interest charges are levied by the bank from its credit card owner for the revolving credit they maintain. This interest is one of the highest, and in India it can be up to 49%. According to the Reserve Bank of India, the outstanding credit on all the credit cards issued in India stands at Rs. 29,359 Crore at the end of December 2008. This amount, coupled with the high interest rate will give you an idea how much money the banks get from interest charges.

3. Fines & Penalties: Various fines such as late payment fee, check bounce penalty etc. are levied by the bank on its credit card customers. These amounts are also huge (more than 500 bucks).

Bank also gives a n offer to the customer to convert the O/S balance into EMIs for which they may charge a processing fees plus a regular interest rate between 1 to 2 %.

In addition to that bank also gives a balance transfer option. To avail that option customer has to pay charges. Again an income for the bank

China's accounting flaws open up an opportunity for India

2011-12-15T08:49:00.001-08:00

A limping horse may still have a chance to win the race. How is that possible, you may ask. The answer is Einstein's theory of relativity. In a relative world, it does not matter if you are a bad horse as long as the other horses are in an even worse shape. Think of the global currencies and this analogy comes in pretty handy. With the limping horse we were referring to the US dollar. The greenback had everything going against it. Yet the US dollar has regained its safe haven status in recent times. How come? Because the Euro is in an even worse shape. Moreover, even China's growth has slowed down and many fear that the dragon economy is heading for a hard landing.

An economist by the name of Mr Gary Shilling even goes further to say that the US dollar would survive the global gloom and would continue to remain the primary international trading and reserve currency for decades. According to Mr Shilling, there are quite a many positives that the US economy has on its side such as its entrepreneurial bent, open economy, rapid productivity growth, superior technology and relatively open immigration. Besides these positives, the lack of alternatives to the greenback will aid its dominant global position.

Crouching Tiger Wounded Dragon', a modified title for the Academy Award winning Mandarin movie, has often been used to denote the one-upmanship of Indian economy to its Chinese counterpart. Although China has proven to be a difficult competitor in every aspect, investors often benchmark India's performance against the dragon economy. Of late reports about the Chinese GDP growth rate slowing down, banks accumulating huge NPAs and real estate bubble threatening to burst have diverted investor focus from the juggernaut.

The latest to catch their attention is accounting flaws in large Chinese firms. Auditors expressing concerns over the irregularities and falsification of financial records in Chinese firms have left a bad taste in investors' mouth. As a result, FIIs have turned to Indian markets for better returns than the near zero interest rates back home. That the Indian capital market regulator SEBI has adopted more stringent laws for accounting disclosure seem to have added to their confidence. Smaller Indian companies looking to get themselves listed on the exchanges are also keen to tap this opportunity. It is now for the government and India Inc to ensure that investors looking for long term opportunities here do not get disappointed. Else most of the BRIC story will be gone for good.

Why bankers may remain unpopular

2011-12-15T08:47:00.001-08:00

Bankers the world over have been a maligned lot simply because they had a key role to play in creating the global financial crisis in the first place. Most of them (especially those in investment banks) focused on 'financial engineering' and creating complex products rather than stress on the basic sound principles of banking. Huge amounts of money were pocketed as bonuses for profits generated. But the bubble burst (as it was bound to) and the rest they say is history. Recession, bloated debt, large scale unemployment have all hampered the developed world and threatened the health of the global economy. But bankers do not seem to have learnt a lesson.

Indeed, rich bankers can today be exposed as a huge drain on society costing it £8.4 for every £1 they produce. A study by think-tank the New Economics Foundation found that the average banker destroys £42 m a year in value while creating just £5 m. As a result of the credit crunch, most big banks had to be bailed out and this has been a heavy drain on the tax payers' money. This is in contrast to public sector workers such as nursery workers and bin men who are lowly paid but produce more value than what they earn as wages. As long as bankers continue to pocket big salaries without contributing much to the economy, they are going to be extremely unpopular not just with the government but also with the public.

IIP numbers don't matter in long run

2011-12-15T08:46:00.001-08:00

The famous economist John Maynard Keynes once said that in the long run, we are all dead. It appears that the most of the investment community and financial media seems to have taken this comment rather seriously. What else will explain their fascination behind employing an entire battalion of analysts and economists in order to study the short term impact of an economic event of note? The end result? Extremely volatile share price movements and swings of the magnitude of 20%-30% becoming a common occurrence.

But is this approach correct? Certainly not if one realizes where does the value of stocks really come from and their longevity. There cannot be any ambiguity with respect to the fact that stocks are worth the present value of future cash flows they will deliver to their owners. But do they have an expiry date? Well, individual stocks may decline and the business models behind them disappear altogether. But if considered together as a group, their duration is extremely long and the dividends they pay out do certainly grow with time.

Thus, if we assume, like the famous asset management firm GMO has done, that half of the returns from stock in a given year come from dividends and half from growth in dividends, it becomes clear that most of the value of stocks comes from cash flows in the distant future. This is because dividend in any year will only be a very small fraction of the overall value accumulated over a very long term horizon.

Well, we will spare you the math here but the broad conclusion that comes out is that the first 11 years of dividend account for only 25% of the value of stock market. Thus, even if dividends are a whopping 50% below the trend over a period of 10 years, the value of the stock market will come down only by 10%. Contrast this with the 30%-40% corrections that stock markets regularly witness over a small downward revision in earnings or dividends and one understands why the markets are so irrational.

It is extremely important to add that if India's GDP grows by 6% instead of 8%, this does not mean that India's capacity to grow GDP by 8% has been impaired completely. It is just that demand for goods and services has grown by 6%. Thus, when the demand returns, the economy will certainly be in a position to absorb the higher production needed. In view of this, whenever events like fall in industrial output, which we have demonstrated to have no sizeable impact on overall valuation of stocks lead to market panicking and pushing down value of stocks by 30%-40%, rational, long term investors can take advantage of the same. They will thus benefit from the attractive above trend returns that lie in waiting for them.

L&T Infra Bond

2011-12-11T07:48:00.001-08:00

Grow your savings by aiding India’s growth.

The Indian economy is on a robust growth trajectory and the best way to be a part of India’s growth story is to invest in its lifeline – its infrastructure. L&T Infrastructure Finance Company Ltd. has played an important role in financing projects, funded through long term investment instruments for Infrastructure development and construction across the country.

L&T Infra is proud to bring to you, for the second year running, the Long term Infrastructure Bonds. These tax-saving bonds let you invest indirectly on a long term basis, in infrastructure projects across the country and aid in the growth of India. By investing in L&T Infra 2011B Bond Series, investors can save tax and earn an annual interest rate of 9%. The 2011B series provides investors buyback options at the end of 5 years and 7 years. In addition to this, 2011B Bond Series provides investors the option of holding the bonds in Physical or Demat form.

Currency fluctuation and your investment!

2011-12-09T23:51:00.001-08:00

Currency fluctuation

There are mainly two ways by which currency rates are managed. Firstly, countries fix their currency against dollar. Hence the exchange rate doesn't change. Government takes action to manage any fluctuation that may happen. Secondly, countries leave it to the market to decide their exchange rate. In such a system, countries follow policy of non-interference.

India doesn't have a fixed value of rupee against dollar but it also doesn't keep its currency completely floating against dollar. We have a system where the central bank allows rupee to fluctuate within a specified range.
Usually, rupee appreciation is taken as economy gaining strength while depreciation is taken as Indian economy losing strength.

How it impacts investors

Let's look at how rupee fluctuation impacts investors' decisions. Let's look at appreciation first.

Rupee appreciation -

Rupee appreciation is considered bad for companies where major part of their revenue comes from export. Appreciation of rupee makes products more expensive for export. When the products become expensive, importing nations either reduce the import or look out for other nations that can produce the same product at cheaper prices. Hence, any appreciation in rupee is often accompanied with clamour by export companies to devalue the currency.

Rupee appreciation is good for companies that depend on import from other countries. For example, oil companies, Parma, Engineering, and medical device companies will be fine with rupee appreciation. The machinery, oil, and engine used in such industries will be cheaper to buy. Investors can consider investing in such companies when rupees appreciate.

Let's take an example. Suppose the rupee dollar exchange rate is 50 (i.e. Rs 50 - $1). A company in export sector earns a profit margin of 15% from export. If the rupee appreciates and the new exchange rate is Rs 40 = $1. In this case, the company has lost 20% of the income.

This impacts investors in sectors that depend on export for their income. The typical examples are software industry and textile. Their dependence on export is heavy. Any rupee appreciation will hit software and textile industries hard. We have seen what happened in 2008 when America went into recession, dollar lost value and rupee appreciated against dollar. There were lay-offs, increased hours, flat revenues, and reducing profit. Investors in export oriented sector will be hit by any appreciation in rupee.

Rupee depreciation -

Rupee depreciation is when it loses value against dollar. For a nation like India where import is more than export, rupee depreciation makes things worse because imports get expensive. This increases the deficit. Rupee depreciation is not a good signal except for export driven companies.

For Indian economy, which depends on oil import, any fall in rupee will impact its oil bill. This will increased inflation because of increased oil bill. Increased inflation eats into the returns of investors. Moreover, a high inflation reduces the economic activity and consumption.

Software companies, textile companies, and many other export driven sectors such as tourism are the ones where investors can think of investing. Their export becomes cheaper and hence they can sell more to the overseas clients. These companies will do well.

Important points to keep in mind

Since the global crisis is yet to stabilize, there will be extreme fluctuation of currency or rupee. Greek crisis, Eurozone, America's growth, and many other factors will impact the currency rate. The most recent example is rupee's fall from Rs 44 a dollar to Rs 48 a dollar within a month. This happened because Euro went down against dollar as a result of Greek crisis. As a consequence dollar improved not only against euro but against many currencies. Investors are requested to trade based on currency fluctuation only when they have some expertise in this.

There will be times when rupee fluctuation may not impact individual companies or sectors because of other factors present. For example, if rupee depreciates against dollar further, there is not much chance that software industry will improve its income as they did in the past. They have become quite matured and going from here to the next level will require different ways to develop software.

Finally, the rupee dollar exchange rate will remain volatile till the crisis persists. Hence investors should practice caution when investing in exchange rate sensitive sectors.

Stock Investing – Short Term Strategies

2011-12-09T23:50:00.001-08:00

There was a research conducted in United States on the average number of days investors hold the stock. The number was 187 (about 6 months) in 1991-1996 period. The median was worse with just 90 days. With internet boom era and overpriced IPOs in 2000s, this came down to about 3 months. There is no data available for Indian market but looking at the volatility of our stock market, the numbers will be very close or even less.

This tells us there are mostly short term traders in the market. Is there anything wrong with short term trading? Absolutely not, but investors should know the rules of the game before they trade short term. Apart from knowing the rules, investors should also understand that short term trading mostly relies on luck and on study, which at best can be termed speculative.

In the current volatile market scenario, you could be tempted to try your luck in some short term investment strategies to make the best out of a bad situation. Here is an understanding of some short term trading strategies usually followed by short term traders. Knowing these strategies will make you aware of your own actions. However, do proceed with caution.

Day-trade in stocks

In this trading style, traders buy and sell the stocks on the same day or in a very short period of time. The traders take advantage of daily market volatility to profit. They buy when the stock prices go down hoping the prices to appreciate in the day. They square-off by the end of the day. This can result in profit or loss depending on whether the price they sold at was higher or lower than their buy price. This is a very popular way to trade. The popularity stems from the fact that this looks exciting. Even if traders lose money, the loss doesn't seem big as daily variation is not very volatile.

Day-trading, however, is the most popular way to lose money. Majority of day-traders either lose money or do not make better than a long term investor. Investors look at daily loss and assume that this is not a big loss but accumulate the losses for the year and they can see the big picture.

Take an example. If I have 1 lakh and I gamble, I will be happy to earn Rs 2000 from my gamble. However, I will not be too worried if I lose Rs 2000. This psychology works against traders. The happiness to get marginal profit is more than the sorrow of suffering a marginal loss. Take another example. A buyer goes to a showroom and to buy a car worth 3 lakh. At the last moment, he comes to know that the seller is giving Rs 6000 coupon free to be spent in lifestyle. At the same time, another buyer goes to another shop and buys the car at 2 lakh and 94000 rupees. Both come out of the shop. Whom do you think will have bigger smile?

Risk mitigation

Investors should not put all their money in day-trading. If you are too excited by daily price volatility and want to try your hands in day-trading, put at most 10% of your total investment for this and play with this. Do not gamble more.

Trading on margin

In margin trading, the investor spends some part from his or her pocket and borrows the rest from the broker at an interest. In this context, investors have to understand the concept of initial and maintenance margin. Initial margin is the % of total investment that investors have to put. When the prices go down, your contribution in terms of percentage will go down. After it goes below a certain percentage, the broker will ask you to put more money to take it to the initial margin. This "certain percentage" is called maintenance margin.

Take an example. Let's say an investor, Rakesh buys 100 stock of Airtel at Rs 400 a share. The initial margin is 25% and maintenance margin is 10%. This means Rakesh has to put 10,000 (25% of total investment of 40,000). The rest 30,000 is borrowed by broker. Suppose the prices start going down and goes to Rs 330 a share. In this case, the total value is 330*100 = Rs 33,000. Let's calculate what the contribution by investor at this point is. The investor contribution is (33000-30000)/33000. This is less than 10%. Hence investor will get a call to put more money so that his or her contribution is 25% of Rs 33000 which is Rs 8250. Since his amount is 3000, he will have to deposit another 5250.

This is high risk high return strategy. The advantage is that if the prices go up, you earn all the profit minus the interest you pay to the broker on his contribution. However, the loss is equally yours because the broker will anyway charge the interest. This is a double whammy.

Risk Mitigation

The only risk mitigation strategy is that the investors should never put more money when margin call is given by the broker. The investor, instead, should ask the broker to square off the position with whatever loss has happened. Avoid the temptation to put more money after the margin call.

Selling short

In this short term strategy, investors borrow and sell the shares and later they have to buy this from open market and give it back to the lender. The idea is to benefit from decreasing prices. Investors short-sell stocks because they assume that prices will go down and when it goes down they buy it cheaper and give it back. The difference is the profit to investors.

Take an example. An investor Rakesh expects the price of Airtel with current market price @400 to go down. Since he has no stocks, he borrows 100 Airtel stocks from the market and sells it immediately earning 40,000. After sometime, as he expected, the Airtel price went down to 350. He buys 100 stocks back at 35,000 and gives it back. He earns Rs 5000 from this transaction. We are ignoring transaction costs and other charges for the sake of simplicity.

Short term is tempting to investors. Short term trading offers excitement, action, and instant gratification. Compared to this, long term is boring, tedious, and requires extreme patience. However, there is no way to build wealth but by using long term strategies. This is true for most of the investors. There are short term investors who have done tremendously well but they are few and far between. Hence investors should put their major portion of investment corpus for long term wealth building assets and segregate a minor portion for short term speculation.

Vedanta completes Cairn India deal

2011-12-09T23:49:00.003-08:00

Vedanta Resources Plc (LSE:VED.L -NewsVED.L) completed its long-delayed $8.7 billion purchase of a majority stake in Cairn Energy Plc's (LSE:CNE.L - NewsCNE.L) Indian unit, more than a year after the deal was first announced, in a move that turns India-focused Vedanta into a diversified resources group.

London-listed Vedanta now holds 58.5 percent of Cairn India (:CAIL.NSCAIL.NS), it said on Thursday, of which 20 percent is held through its Sesa Goa (:SESA.NSSESA.NS) unit.

Cairn Energy, which will retain a 22 percent stake in Cairn India, confirmed it would return around $3.5 billion to shareholders.

Cairn Energy agreed in August last year to sell a majority stake in Cairn India to Vedanta. But the sale, one of the largest in India's energy sector, was delayed for months due to a disagreement over royalty payments.

"Today marks a key milestone for Vedanta as it puts to bed a deal drawn out for well over a year that has contributed to underperformance on fears of deal terms uncertainty and balance sheet stress," analysts at Liberum said in a note.

"Oil has been a solid performer over the course of 2011 ... we see the Cairn India inclusion as the key factor in repairing Vedanta's balance sheet and boosting bottom-line performance."

(Reporting by Clara Ferreira-Marques; Editing by David Holmes)

Food inflation rate falls to near 3-1/2 yr low

2011-12-09T23:49:00.001-08:00

India's annual food inflation eased to its lowest in nearly three-and-a-half years in late November, driven by a sharp fall in prices of vegetables and protein-rich food, bolstering the case for a pause in rates when the RBI reviews policy next week.

Food inflation sharply eased to 6.60 percent in the year to November 26, government data on Thursday showed, from an annual 8.00 percent in the previous week.

New crop arrivals in the market have broadly pushed down vegetable prices, with potatoes leading the fall with a more than 4 percent drop in the latest week. Prices of protein-rich items like eggs, meat and fish also fell by more than 1 percent.

The annual fuel inflation remained unchanged at 15.53 percent in the latest week, data showed.

"There are seasonal advantages in place which explains the declining trend in food inflation. This was expected, but the only issue is this could partly be offset by the impact of the weak rupee on core inflation," said Shubhda Rao, chief economist with Yes Bank.

India Debt Crisis vs Euro Crisis

2011-12-09T23:47:00.001-08:00

The European debt crisis seems never ending with both Germany and France lowering expectations for a deal to save the Euro at the upcoming European Union summit. The European Central Bank (ECB) has agreed to act as a lender of last resort only on the condition that governments show credible fiscal consolidation. A similar situation might be arising in India.

India's fiscal situation is getting out of hand. The country's fiscal deficit reached almost 71% of its full-year target in the first half of the year. This cast doubts over the government's ability to meet budget goals as federal finances feel the pressure of squeezed revenues and slowing growth. The government is set to fall short of its fiscal deficit target of 4.6% of GDP for 2011-12 by at least 1% and this will take the deficit to 5.6%, higher than the 5.1% deficit seen in 2010-11. The Reserve Bank of India (RBI) has been consistently warning the government about the worsening fiscal situation. But the government has so far ignored the RBI's warning and has failed to implement any kind of reforms with respect to food, fuel, fertiliser and power subsidies. It has also made no progress in improving the tax to GDP ratio. The government subsidy bill in the current fiscal is likely to go up by a massive Rs 1 trillion from Rs 400 bn on account of higher outlays towards fertiliser, food and oil.

But what is more worrying is the worsening fiscal situation of states. The states' fiscal position is also getting into a mess with expected losses of Rs 1 trillion of SEBs (State Electricity Boards) having to be borne by state governments. State level fiscal deficit will exceed 2.2% of GDP projected for 2011-12 if the SEB losses are taken into consideration. As a result India's total debt to GDP ratio is expected to increase from 65% to more than 70% in FY12.

So unless urgent reforms are undertaken by the government, the fiscal situation is not likely to improve any time soon. In fact with economic growth slowing down, revenues to the government might also take a hit, thus adding to the fiscal woes. It is time for the government to end policy paralyses and take some hard decisions. Any slippage on the fiscal gap target has the potential of worsening India's inflationary woes and choking private investment.

step by central banks is not a lasting solution

2011-12-01T12:34:00.001-08:00

Recently, the central banks of some developed countries like the US, Canada, Japan, Switzerland, Britain and the European Central Bank (ECB) have agreed to lower the cost of existing dollar swap lines by 50 basis points. Sounds Greek? Well, we don't want to confuse you more by getting into the nitty-gritty of the matter. The important point here is that this will make it easier and cheaper for the troubled European banks to make dollar loans. So far, they were finding it expensive to do this and had little choice but to sell euros. This in turn hammered the value of the euro and also restricted credit in Europe. And now, this new development will make dollars easily accessible to European banks. The central banks seem to think that this measure will prevent a credit crunch from striking the global economy.

But will this solve the European debt crisis? Not at all. The problem with central banks across the globe is that they have been trying in vain to solve a problem of excess leverage by more leverage. But homoeopathy doesn't work in the world of economics. By infusing more liquidity into the system, one can only expect to delay and worsen a looming crisis and fuel inflation. There is not going to be any real solution for the Eurozone economies without some painful touch reforms. And that calls for a lot of political will which seems to be totally lacking.

Buy Chemfab Alkalies: Ashish Chugh

2011-11-27T23:58:00.001-08:00

Buy Chemfab Alkalies at current levels, says Ashish Chugh, Investment Analyst & Author of Hidden Gems.

Chugh told CNBC-TV18, "Chemfab Alkalies manufactures caustic soda. Incidentally this was the first company in the country to have introduced the membrane cell technology which they did way back in 1985. Now there was a small incidence of gas leak in this company in the month of January. Though this was a small incidence but it was probably blown out of proportion and the plant remained closed for more than 3 months. Only after they filed litigation in the high court the plant got reopened in the month of May."

He further added, "Now the effect of closure of plant was reflected in both the March quarter and June quarter numbers wherein it reported a loss of about Rs 1.3 crore in the March quarter and about Rs 2 crore in the June quarter. Now looking at a full year number this company in spite of a loss of Rs 1.3 crore in the March quarter, ended the year with a profit after tax of close to Rs 9.7 crore as against Rs 7.2 crore in FY10."

"In Q2 also this company has reported sales of about Rs 24.25 crore which was up by about 4% and the profit before tax was up by 40% but profit after tax was down by 30% on account of an additional tax provision of Rs 2.5 crore pertaining to the previous years. Now if that provision had not been made, the quarter profit would have been more than Rs 4 crore."

"This company had a debt of about Rs 25 crore 5 years back. The company has been purling its debt and today it's a debt free company. Now looking at the valuations of the company currently the stock trades at about Rs 40 and the market cap is about Rs 37 crore. This is a totally debt free company and as on 31st March 2011 this company had cash and cash equivalents of close to Rs 23 crore which means that you have this business which is available at a business valuation of about Rs 14 crore."

"If you see the numbers of FY11 closely, the cash profit alone was about Rs 17 crore. In a normal year this company is able to make a profit after tax of about Rs 12-13 crore and a cash profit of close to Rs 20 crore. Gross block is about Rs 150 crore. So given all these things of course the numbers for first 3 quarters – the 3 quarters have not been very good but these are because of certain reasons which are not recurring in nature."

"Going forward we can see this company report good profit for the coming quarters and I think at a business valuation of Rs 14 crore, debt free, this company paid a dividend of about 50% for the last two years. Before that some years it had also paid about 100% dividend. It is a Rs 5 paid up stock and dividend yield at the current price comes to about 6.5%. So given all these factors I think this stock looks to be a value buy at the current price and I think it has got minimum downside from these levels."

Idea Cellular can test Rs 104: Anu Jain

2011-11-27T23:57:00.001-08:00

Idea Cellular can test Rs 104, says Anu Jain, Sr. Vice President - IIFL Private Wealth Management.

Jain told CNBC-TV18, "I like the way Idea has moved up. It could hold on and pull back to Rs 96 which has been close to its 20 day and 50 day moving average. I think if it were a bad day I would keep a stop loss close to Rs 94."

She further added, "On a good day like this I think closer to Rs 95 should be where my stop loss would be placed. I think for a trading perspective it’s moving close to Rs 100. If it can manage to hold on there then we look at higher targets of Rs 104. But for trading perspective, for right now, I think a 4% kind of a move on the target is looking good."

The company touched its 52-week high Rs 103.65 and 52-week low Rs 55.65 on 06 Sep, 2011 and 28 Feb, 2011, respectively. Currently, it is trading -4.68% below its 52-week high and 77.54% above its 52-week low. Market capitalisation stands at Rs 32,666.36 crore.

The company's trailing 12-month (TTM) EPS was at Rs 2.12 per share. (Sep, 2011). The stock's price-to-earnings (P/E) ratio was 46.60. The latest book value of the company is Rs 37.16 per share. At current value, the price-to-book value of the company was 2.66

How technology can bring cost of services down

2011-11-27T11:05:00.001-08:00

Why does your medical bill cost more than your monthly groceries? Or why does your child's education cost more than a plasma TV? According to a famous claim in economics, the cost of services tends to increase as compared to the cost of goods. This definitely rings true as one can barely afford the costs of rising healthcare and education anymore. They seem to be rising faster than overall inflation. Will we be doomed to continue paying exorbitant rates for these necessities? Columbia University professor Jeffrey D. Sachs, seems to have an answer. He believes that a sharp decline in these costs may soon be possible due to the tech revolution. The disruptive forces of technology have changed our lives in many ways. And further development of this field can actually help reduce the costs of highly expensive services. Various educational videos are now being put online for free so that anyone in the world can learn subjects like math and physics. Similar breakthroughs can happen in healthcare space as well to help empower individuals. Investment in technology is without doubt the only way forward.

The manner in which Euro crisis is affecting Indian realty

2011-11-27T10:59:00.001-08:00

What has the debt crisis in Europe and the US got to do with office space prices in India? Quite a lot, it seems. According to Jones Lang Lasalle, a real estate consultancy, nearly 50% of the demand for investment grade office space in India is contributed by the information technology (IT) and the IT services sector. And companies from this space derive a significant chunk of their revenues from the US and Europe. Thus, with both these regions struggling with high debt and recession, the reverberations have been felt in India as well. As a result, the demand for office space in India has slackened.

Besides IT companies, even firms headquartered overseas have been major drivers of the demand for office space. And with the high level of uncertainty in the global markets, these firms are now cautious on buying more office space. All of which means that demand for office space is expected to remain subdued in 2012. So, while 2009 saw around 19.6 m sq. feet of office space leased out across the top 7 cities in India, this figure soared to 31 m sq. ft in 2010. This calendar year is likely to see a modest growth to around 35-36 m sq ft. But in 2012, this number is likely to drop to around 31 m sq. ft of office space. As far as the IT sector is concerned, a deadly cocktail of recession in the developed world and heavy volatility in the rupee has made it wary of investing in office space. All in all not a very bright scenario for the real estate sector in India.

The world markets had a disappointing performance over the week. The equity markets across the globe saw their worst week in two months. Main culprit for this is that there seems to be no end and no solution for the Eurozone crisis which has dragged for so many months now. Further, Germany's inability to sell its 10 year bonds, France's deteriorating rating and Italy's rising cost of borrowing worsened the situation.

Indian stock markets witnessed a fall of nearly 4% this week. The markets were very volatile on concerns of weakening rupee, euro zone crisis and poor fundamentals. Amongst the other world markets, Germany led the losses (down by 5.3%). The German debt agency failed to find buyers for its 10-year bonds. All other markets were on the losing end too with China losing the least (down by 0.8%).

Has infrastructure sector turned attractive?

2011-11-27T10:56:00.001-08:00

Once touted as the sunrise sector of India, the infrastructure sector has been getting everything wrong for quite some time. The second quarter ended September, 2011 (2QFY12) saw the infrastructure players posting dismal numbers. Most companies reported significant year-on-year decline in profit after tax (PAT). The poor show was attributable to a steep incline in interest costs, which escalated in the range of 200 to 500 basis points (2-5%). One reason for this was the slew of hikes in key lending rates by the Reserve Bank of India (RBI) to battle the high inflation. The other reason was the high debt burden coupled with a significant increase in working capital requirement. But this is just one part of the story. The other concerns plaguing the sector include regulatory hurdles, land acquisition problems, delays in project execution and such other structural bottlenecks.

So there is no denying that there are ample reasons for the negativity surrounding the infrastructure sector. But we believe that in times of panic, investors have a tendency to be shortsighted. The reactions at such times are often extreme and disproportionate to what the events call for. You could say that such is the current situation of the infrastructure companies, as many of them trading quite below their book value. Value investors may want to scoop up some fundamentally stronger ones amongst them for the long term.

There was no other way to deal with the crisis!

2011-11-27T10:55:00.001-08:00

How many times has it happened that we have tried to do an in depth analysis of an issue only to find out later that the solution was not only simple but also right before our eyes all along? Many a times, isn't it? The current situation in Europe can serve as a very good example of this phenomenon at work. Reams and reams of paper have been spent in trying to find out what went wrong and what corrective measures can be taken. But to say that all of these steps have come unstuck would be to state the obvious. The situation is getting worse by the day with still no foolproof action plan being mooted by the member nations.

Amidst all this chaos, an article in the businessinsider.com points out how almost all the policymakers and economic experts seem to be showing hardly any realism at all. It talks about how it would be next to impossible for Germany, the saviour of last resort to come to the rescue of troubled nations as well as financial institutions as the sum involved would be too large. And what about funding from China? Well, with the Chinese banking system showing signs of trouble, even that option looks like a remote possibility.

Thus, life seems to have come full circle as far as the Euro zone is concerned. Restructuring and bankruptcy, the very phenomena which the region wanted to avoid all along looks like the only feasible option worth undertaking. In fact, the path which was being followed by policymakers had a dead end from the very beginning, the only difference being that right now, it is smack in front of their faces. Thus, be it a nation or a company, a period of high leverage beyond a certain threshold will have to be followed by a period of deleveraging. Anything else just doesn't work. It is one of those unwritten rule of nature perhaps. This is also the reason why we insist onbuying companies with bare minimum debt and some strong competitive advantages.

Roubini's warning on the US economy in 2012

2011-11-26T00:04:00.001-08:00

The recent failure of the US super committee to approve programs to help reduce deficit has not gone down well with the economists. Noted economist Nouriel Roubini is no exception to this. Roubini says that the political impasse will lead US into another major recession in 2012. He opines that if the measures to reduce US' debt burden of US$ 1.2 trillion are not extended, then it would lead to a 'fiscal drag'. This could amount to nearly US$ 350 bn on account of higher payroll taxes as well as higher burden on account of unemployment benefits. This amounts to nearly 2.3% of total US GDP (Gross Domestic Product). As a result, by doing simple math, if the US economy grows by 2% and the fiscal drag brings it down by 2.3%, then the growth is actually negative. And this drag would continue to spiral, thus making sure that the recession gets worse with each passing year. Therefore, it is high time that the US politicians get their act together and come up with logical and im plementable solutions to the problems. Otherwise, the world's largest economy will sink deep into recession.

India Inc once again exposed to the risk of FCCBs

2011-11-26T00:02:00.001-08:00

The perils of foreign currency convertible bonds (FCCBs) have come to haunt India Inc once again. Readers would do well to recall that these bonds had become a fad in 2006 when buoyancy in the stock markets and the lure of zero coupon rates had led to many corporates rushing to cash in on these bonds. Since then, the risks that these bonds pose have come to the fore time and again. And they are once again set to hurt the fortunes of some Indian companies. FCCBs get converted into equity shares at a predetermined price when the bonds are issued. If the prevalent share price is lower than the predetermined price then the chances of conversion get reduced and the pressure of redemption on the company mounts. This is what is happening now. Indian stock markets have been hammered in recent times as a result of which the stock prices of around 28 companies with FCCBs are lower than the agreed price. These FCCBs amount to Rs 245 bn. 25 of these 28 are most likely to face rede mption in the next financial year, which will result in an outflow of as much as Rs 330 bn. This means that they will have to ensure that there are sufficient funds at their disposal to redeem these bonds. If not, borrowing more to fund these redemptions will only increase interest costs and dampen profits. What has further made matters worse is the sharp depreciation of the rupee to a level of 52/US$ which has exacerbated the forex losses on their books and hurt profitability. No wonder then that these are trying times for India Inc. indeed!

Microfinance industry loses its most visible face

2011-11-26T00:00:00.001-08:00

Many will recall a much-hyped IPO (initial public offering) that hit the Indian markets in August last year. It had a quite a few renowned names on its list of investors- George Soros' Quantum (M) Ltd, venture capitalist Vinod Khosla and Infosys founder N R Narayana Murthy. Then things turned sour, the stock tanked and the rest is now history. Any guesses which stock we are talking about? In case you have forgotten, the company was SKS Microfinance, a Mumbai-based micro financing institution and the only listed company in the sector. From a high of Rs 1,151 after the listing, the stock has lost about 90% of its market capitalisation since then. The company faced severe headwinds after the state of Andhra Pradesh laid restrictions on collections and also capped lending rates. As a result, the company reported a loss of Rs 3.85 bn in 2QFY12, against a net profit of Rs 805.5 m in the corresponding quarter of the previous fiscal. And now, the founder and chairman of SKS Microfinance, Mr Vkiram Akula has announced his resignation. This again raises the old question: Should the microfinance industry be run for profit or should it be a social service run by non-governmental organisations (NGOs)? Akula's resignation is sure to add more fuel to the fire of this all important argument.

Wall Street Thrashed in Worst Week in Two Months

2011-11-25T23:56:00.001-08:00

FOX Business: The Power to Prosper
Despite a sleepy performance on Friday, Wall Street was pounded by European debt fears in the worst week since September.
Today's Markets
The Dow Jones Industrial Average slid 25.6 points, or 0.23%, to 11,232, the S&P 500 skidded 3.1 points, or 0.27%, to 1,159 and the Nasdaq Composite fell 18.5 points, or 0.75%, to 2,442.
The Dow, S&P and Nasdaq all finished the shortened trading week by more than 4.7% to the downside, and have now been down for two weeks in a row. Indeed, the Dow has plunged close to 1000 points in that time, while the Nasdaq has shed more than 10%. All three have now fallen deep into the red for the year after a short-lived Fall rally.
The markets have been captivated by worries over Europe's sovereign debt crisis. Financial stocks have taken a particularly strong beating over the past week as worries have stirred over the global financial systems' exposure to the debt crisis. For example, JPMorgan Chase (JPM: 28.48, +0.10, +0.35%) and Bank of America (BAC: 5.17, +0.03, +0.58%) -- America's two biggest banks by assets -- were both pummeled, far under-performing the broader markets.
Many economically-sensitive energy and materials stocks were slammed on the week too.
Adding to the fears on Friday, Belgium's credit rating was sliced one notch to AA from AA+ by Standard & Poor's, while Moody's slashed Hungary's debt rating into junk status late Thursday.
"While not really a market-moving event, the downgrading of Hungarian bonds to junk status still served to highlight that the same old European debt problems remain," David Jones, chief market strategist at IG Index wrote in an e-mail.
Meanwhile Italy -- Europe's third-largest Economy -- was forced to pay an average yield of 6.5% on a roughly $10.7 billion auction of six-year bonds, far higher than the 3.5% it paid at its October auction, signaling a much higher risk premium.
As a result, the yields on its 10-year bond moved even higher above the 7% level. While the 7% mark does not have any technical significance, it is symbolically important because countries like Greece needed bailouts around that level as borrowing costs spiked, and refinancing on the private market became difficult.
European blue chips jumped 1%, while the euro fell 0.76% to $1.324.
On the corporate front, AT&T (T: 27.41, -0.14, -0.51%) said Thursday it would take a $4 billion charge to its fourth-quarter earnings as a preparation for a potential failure of its $39 billion acquisition of Deutsche Telekom's T-Mobile.
There are no major U.S. economic releases slated for release on Friday.
Energy markets were mixed.
The benchmark crude oil contract traded in New York rose $1.03, or 1.1%, to $97.20 a barrel. Wholesale RBOB gasoline slipped less than a penny, or 0.15%, to $2.51 a gallon.
In metals, gold dropped $2.30, or 0.14%, to $1,697 a troy ounce. The yield on U.S. government debt ticked higher. The benchmark 10-year note yields 1.939% from 1.883%.
Foreign Markets
European blue chips jumped 1.4%, the English FTSE 100 climbed 1.4% to 5,198 and the German DAX rose 1.7% to 5,421.
In Asia, the Japanese Nikkei 225 edged lower by 0.06% to 8,160 and the Chinese Hang Seng tumbled 1.4% to 17,689.

Profiting From Panic Selling

2011-11-25T23:48:00.001-08:00

Panic selling occurs when a stock price rapidly declines on high volume. This often happens when some event forces investors to re-evaluate the stock's intrinsic value, or when short-term traders are able to force the stock price down far enough to trigger long-term stop-losses. The entire process creates a tremendous opportunity for bottom-fishers to initiate long positions, especially if the event behind the panic selling was non-material or speculative in nature (such as an SEC investigation or an analyst opinion). Here we shed light on the panic-selling process and introduce a model that can help you predict the right time to take a long position after panic selling occurs.
The Process Panic selling happens in several phases. Figure 1 illustrates a typical panic selling scenario that occurred as a result of an SEC investigation. The company in this example is Doral Financial (NYSE:DRL), a corporation whose primary business is mortgage banking, but this chart can be read as a general illustration of what happens in panic selling situations.

Figure 1

Source: Tradecision

Let's break down what happens at each numbered step in the chart:

Step 1 - Something occurs that causes the stock price to rapidly decline on high volume.

Step 2 - Eventually, a high volume day occurs when buyers and sellers fight for control of the trend. The winner then takes the trend on low follow-up volume.

Step 3 - If no significant trend change occurs at point 2 (i.e. a continuation), then there is typically another point of high volume in which a substantial reversal (long or short term) may occur.

Step 4 - This process continues until a long-term trend is established and confirmed with technical or fundamental factors.

Now we'll look at how we can predict when a trend change is going to occur.
The Exhausted Selling Model (ESM) The exhausted selling model (ESM) was developed to determine when a price floor has been reached. This is done by using a combination of the following trend, volume and turnaround indicators:

Figure 2 illustrates how this model works.

Figure 2: Exhausted selling model

Source: ChartSetups.com

Notice that a variety of indicators are used to confirm that the trend has changed. As a trader, you may choose how many confirmation indicators you wish to use. The fewer confirmation indicators used, the higher the risk and the higher the reward (in the sense that, the longer you wait for confirmation, the less potential gain there will be for you to capture), and vice versa.
The rules to using the ESM are as follows:

The stock price must first rapidly decline on high volume.
A volume spike will occur, creating a new low, and appear to reverse the trend. Look for candlestick patterns showing a struggle between buyers and sellers here (i.e. cross patterns or engulfings).
A higher low wave must occur.
A break of the predominant downward trendline must occur.
The 40 and/or 50-day moving averages must be broken.
The 40 and/or 50-day moving average must then be retested and hold.

Note that you may use other moving averages - ideally, ones that connects highs or lows. Typically, a break of a larger moving average is more indicative of a trend break than smaller moving averages.
As you can see, the ESM combines several techniques to ensure that the trend has changed for the long term.
Example
Now let's take a look at Figure 3, which will show the ESM in practice
Chicago Bridge & Iron (NYSE:CBI) announced that its earnings would be delayed, which sent the stock down 16% in a matter of hours. First, we can see that the low was made on high volume just before 11.26am. Next, the price moves up slightly, but eventually forms a descending triangle, from which we drew a trendline (indicated here by the red line). Next, the price breaks through the trendline and moving averages (indicated by the green dot on the left). It then retraces to the moving averages (shown by the green dot on the right) before moving upwards.

Figure 3

Source: ChartSetups.com

Finally, we can see that CBI turns around and returns to its previous levels after all of the confirmations are present. Note that if you would have entered after just one or two of the indicators, you would have made more profit, but increased the risk of the trade.

Conclusion
Panic selling naturally creates great buying opportunities for well-informed traders and investors. Those who know when the selling is over can benefit from the retracements/turnaround that often occur afterwards. The exhausted selling model explained here provides a safe and effective method to determine where the best entry point is, and the ESM's use of multiple indicators can help you avoid costly mistakes.

Read more: http://www.investopedia.com/articles/trading/06/ESM.asp?partner=basics112511#ixzz1enOEJ0ao

Black Friday

2011-11-25T23:46:00.001-08:00

What Does it Mean?
1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.

2. The day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season. It's common for retailers to offer special promotions and to open early to draw in customers.

Why tax saving mutual funds?Why tax saving mutual funds?

2011-11-25T23:43:00.001-08:00

Why tax saving mutual funds?

Get upto Rs.1,00,000 exempted from tax under section 80c.
Lowest lock-in period - just 3 years - of all tax saving investments.
100% equity market exposure - best return potential of all investment classes
Easy and free - no demat account required, no entry load, no transaction fees to invest

So, tax saving mutual funds are easy to invest in, offer the best return potential, and has the lowest lock-in period of all tax saving investments!

For example, if you had invested Rs. 20,000 in HDFC Tax Saver fund (one of our current recommended funds) in the year 2008, not only would you have saved upto Rs. 6000 in taxes in the same year, your investments would have grown to Rs. 30,592 now (*as of September 22, 2011) - an annual return of 15.22%! . What's more, the profit of Rs. 10,592 would be tax free as well!

Possibility for 5500 is getting better: IIFL's Anu Jain

2011-11-05T06:03:00.000-07:00

The Nifty has multiple resistances from 5,350 levels to 5,500-5,600 levels, said Anu Jain, senior vice president of IIFL Private Wealth Management in an interview. However, she further indicated that the possibility for Nifty to touch 5,500 levels is getting better with the current scenario.
According to Jain, the high beta sectors like real estate and metal have a positive bias. She mentioned that the metals space did well globally too and might do another 5-8% more.
Jain suggested a buy on Kotak Bank and ICICI Bank at current price as they have possibility of sharp moves. "Currently, the private sector banks are leaders against public sector banks," she added.

RComm Q1 net profit down 79.42% at Rs 251 cr

2010-08-15T06:29:00.000-07:00

Anil Dhirubhai Ambani Group company - Reliance Communications has announced its results for the quarter ended June 2010. It has reported net profit of Rs 251 crore as against Rs 1220 crore, a de-growth of 79.42% (QoQ). The fall was due to notional provisioning on forex.

Revenues declined 1.53% to Rs 5015 crore from Rs 5092.8 crore, (QoQ).

Numbers were below the expectations; CNBC-TV18 expected net profit at Rs 612.67 crore and net sales at Rs 5273.3 crore.

Earning before interest, depreciation, tax and amortisation (EBIDTA) margin improved at 32.54% versus 31.46%.

Stock that rallied 55.6% in 7 days

2010-08-14T08:55:00.000-07:00

Raymond jumped 55.59% in 7-days to end at Rs 374.90 on Friday. Rallying 19.99%, the stock hit 52-week high today. There were pending buy orders of 40,371 shares, with no sellers available.

In the April-June quarter of this fiscal, it has posted a loss of Rs 24.88 crore compared to loss of Rs 31.60 crore (YoY) while income was at Rs 244.26 crore vs Rs 239.94 crore (YoY).

Is Germany driving growth in Europe?

2010-08-14T08:52:00.000-07:00

The gross domestic product (GDP) numbers for the Eurozone expanded by 1% in the second quarter, ie from the first and by 1.7% versus the second quarter of 2009 that is year-on-year (YoY).

Germany seems to be the engine of growth. And that, is quite expected with 2.2% growth in the second quarter. That is the fastest since the country’s reunification in 1990. So is the worst over for Europe?

Is this the right time to start investing in equities

2010-08-14T08:51:00.000-07:00

The markets are looking good at this point of time, volatility is less. So, is this the time for you to start investing before the market runs up even more?

In an exclusive interview with CNBC-TV18, PN Vijay, Portfolio Manager, says in this environment, if a person is looking at two-three year time frame, equity is a great place to invest and build assets and beat inflation.

Vedanta-Cairn conclude negotiations

2010-08-14T08:48:00.000-07:00

Vedanta Resources Plc will acquire 51% stake worth around USD 8-8.5 billion in UK-based Cairn Energy’s Indian entity. CNBC-TV18 learns that the negotiations have concluded and Cairn has agreed to sell part stake in its Indian unit. This signalling a strategic shift by mining company Vedanta into oil and gas.

However, Petronas, which holds almost 15% in Cairn India, is unlikely to sell its stake to the Anil Agarwal company.

Nintendo 3DS Impresses

2010-06-20T03:46:00.000-07:00

For gamers, this is the most wonderful time of the year. It's the week of the Electronic Entertainment Expo (E3), where developers unveil their upcoming software and hardware offerings to the public. Forbes caught up with GamePro editor John Davison to get the scoop on what's caught his eye so far at E3.

Exports jump 35% to $16.1 bn in May

2010-06-19T03:57:00.001-07:00

India's May exports rose an annual 35 per cent to $16.1 billion, flattered by low year-ago numbers, the trade secretary said on Friday.

Imports for the month were at $27.4 billion, Rahul Khullar said, widening the country's trade deficit to $11.3 billion.

Asia's third-largest economy is targeting close to 15 per cent export growth in the current fiscal year, following an annual drop of 4.7 per cent in the 2009/10 fiscal year as the global slowdown crimped demand.

"It is a huge base effect kicking in," said Khullar.

India has exported $33 billion worth of goods in April and May, the first two months of the current fiscal year, he said.

April exports had risen 36 per cent to $16.9 billion as demand picked up for India's gems and textiles, while imports rose 43 per cent from a year earlier to $27.3 billion and the trade deficit stood at $10.4 billion.

RIL mulls $9-bn investmen

2010-06-19T03:46:00.001-07:00

Mumbai: Reliance Industries Ltd (RIL) plans to invest USD nine-billion in expansion of its polyester and petrochemicals business, Chairman Mukesh Ambani said today.

"In the next five-years, our total investment in all the new polyester and petrochemical manufacturing facilities will be the largest investment in this sector to be made anywhere in the world at any given point of time," RIL's Chairman, Mukesh Ambani, told shareholders at the company's AGM here.

RIL is executing a 1.4-million tonnes of paraxylene capacity at Jamnagar. It is also setting up an integrated 2.3-million tonnes of purified terephthalic acid (PTA), 5,40,000-tonnes of polyethylene terephthalate complex at Gandhar and 3,60,000-tonnes of polyester filament yarn plant at Silvassa.

These initiatives translate to the single largest capacity addition in polyester in the history of Reliance.

This expansion will strengthen India's position as a leading textile and fibre producer in the world, Ambani said.

With the next phase of large-scale investments, combined with value-added products, the polyester business would contribute in greater measure to Reliance's growth and profitability and maintain its global leadership, he said.

"In our recent past, the petrochemical business went into a consolidation phase. This was a sequel to the large capacity additions in Jamnagar and integration of manufacturing facilities of the erstwhile IPCL," he said.

"We are committed to creating competitive capacity in petrochemicals to cater to the next decade of growth in India and Asia," Ambani said.

The refinery provides Reliance with extremely competitive feedstock. Reliance will leverage its superior technical and project execution skills in building additional global scale capacities.

Ambani pointed out that currently, due to the on-going economic crisis, capacity-building in this sector globally is at a low. This provides Reliance with a unique opportunity to build world-scale capacity at competitive capital costs. All these augur well for rapid growth and profitability of the petrochemical business of Reliance, he said.

"We are accelerating the implementation of an off-gas cracker at Jamnagar. This off-gas cracker with over 1.5 million tonnes per annum of olefins capacity with matching downstream capacities will be one of the largest facilities in the world. MEG from cracker will add to our leadership position in the polyester business," he said.

Reliance is also the largest player in the synthetic rubber business in India.

"We want to build on this leadership to become one of the top ten elastomer companies in the world. Reliance will create additional capacities of poly butadiene rubber at Baroda and styrene butadiene rubber at Hazira...

Pipavav denies stake sale to Reliance

2010-06-19T03:45:00.001-07:00

Pipavav Shipyard is not in talks with Reliance Industries for a stake sale, Nikhil Gandhi, chairman of SKIL Infrastructure, which controls Pipavav it was revealed today.

Earlier this week, media reports had said Reliance could buy a 26 percent stake in the shipbuilding firm.

Gold regains Rs 19,000 level on firm global cues

2010-06-19T03:41:00.000-07:00

NEW DELHI: Gold prices extended gains for the second day on Friday by adding Rs 25 to Rs 19,000 per 10 grams at the bullion market here on sustained buying by traders.

Silver shot up by Rs 200 to Rs 29,800 per kg.

Domestic prices gained after the precious metal rose in the overseas markets which normally set the price trend at the domestic front.

In the global markets, investors indulged in buying the metal after growing concerns that the economic recovery is not as strong as expected.

Standard gold of 99.9 purity and 99.5 purity rose further by Rs 25 each to Rs 19,000 and Rs 18,900 per ten grams, respectively. They had gained Rs 75 in the previous trading session.

Sovereign also traded higher by the same margin at Rs 14,700 per piece of eight gram.

In line with the general firming trend, silver ready rose Rs 200 to Rs 29,800 per kg and weekly based delivery by Rs 300 to Rs 29,520 per kg.

Silver coins also went up by Rs 100 to Rs 34,600 for buying and Rs 34,700 for selling of 100 pieces. — PTI

Consolidated Construction Consortium Stock Split approval

2010-01-30T10:24:00.000-08:00

The Consolidated Construction Consortium Ltd (CCCL) board has approved the stock split (sub division of shares) of the face value of Rs. 10 each to Rs. 2 each, that is 1:5 ratio.
Consequent to the shareholders approval, the current paid-up share capital of the company will be Rs. 36,95,54,450 consisting of 18,47,77,225 equity shares of Rs. 2 each. This was approved at the extraordinary general meeting held on 27 January 2010.

Could this trigger second round of recession?

2010-01-30T10:16:00.000-08:00

US Federal Reserve, the most important monetary body in the world concluded its two day meeting yesterday. No one was expecting any surprises on the interest rate front. And the script unraveled as per expectations. The Fed maintained interest rates at near zero levels and vowed to do so for an extended period of time. But there was another important development. The Fed signaled its intention of unwinding the massive monetary stimulus that it had undertaken during the peak of the crisis.

In other words, it restated its intention to stop buying US$ 1.25 trillion worth of mortgage backed securities in March. Now, this is likely to be a watershed event in global financial history. It should be remembered that stimulus unwinding of this magnitude has never taken place in history before. And hence, the US Fed may not be quite aware of how to go about it. The Fed has certainly not given any indications of how or when it plans to start pulling back the enormous money it has pumped into the economy over the last two years.

But there is every chance that a mistake could be made. The money involved is huge and the economic recovery still fragile. So, is the transition going to be smooth or will the world's largest economy head into another recession on account of the US Fed not injecting any more liquidity in the system? Our bet is more on the latter than the former. And if it indeed does happen then what happens to Indian stocks? Well, there could be impact no doubt. But it will be restricted to Dalal Street and not impact Main Street a great deal. In other words, it could turn out to be a good opportunity to invest in the Indian long term growth story.

Gold is the ultimate asset bubble'

2010-01-30T07:55:00.000-08:00

George Soros is one of the most successful modern day speculators. He has amassed most of his wealth by identifying bubbles and participating in them until they become ripe for bursting. Thus, it can be concluded quite safely that he indeed knows a thing or two more about bubbles than the average Joe out there. Hence, we were all ears when Soros recently proclaimed that gold is the ultimate asset bubble. Gold has certainly appreciated in the region of 40% in 2009. And interest rates were also quite low in 2009. These two conditions have to be met for an asset class to be declared a bubble. And indeed they were met in the case of gold.

However, it should be noted that on a long term basis, gold has still not reached the inflation adjusted high of 1980. By some estimates, it will have to double from here to reach those levels. Moreover, the inflation adjusted high mostly takes into account a trend line inflation. Not the type that is staring us in the face in view of the enormous money printing that is being done. Now, there is no doubt Soros has said that Gold is the ultimate bubble. But even he has not mentioned whether the bubble is about to burst or will continue to make new highs. Thus, there may not be a big gold price correction at all.

We are of the view that there will be pullbacks along the way. Some big and some small. But as long as central banks, most notably the US Fed continue to print money, Gold will be an important asset class to have in one's portfolio. Like we always mention, please do not go overboard with it.

IVRCL Bonus Issue

2010-01-29T08:12:00.001-08:00

IVRCL Infrastructures and Projects Limited (IVRCL) on Thursday declared bonus issue of equity shares in the ratio of 1:1 capitalising Rs 26.70 crore out of its free reserves. IVRCL recorded a turnover of Rs 3613 crore for the nine month period ending December 2009 against Rs 3312 crore for the same period last year, the company said.

SREI Infra bonus issue approved

2010-01-29T08:11:00.001-08:00

SREI Infra board has approved a bonus issue of four shares for every five shares held in the company, it said in a statement to the stock exchange. It’s the ratio of 5:4.

Crompton Greaves bonus issue approved

2010-01-29T08:08:00.000-08:00

Crompton Greaves jumped 6.72% as net profit rose 60% to Rs 135.43 crore on a 14% increase in total income to Rs 1240.47 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 28 January 2010.
Meanwhile, the company’s board recommended issuing three bonus shares for every four held (4:1). This is Crompton Greaves’ third bonus issue. Earlier, the company had issued 1:1 bonus in January 1990 and a 2:5 bonus in December 2006.

US Fed Chairman Bernanke gets second term

2010-01-29T08:06:00.001-08:00

Warren Buffett and Nouriel Roubini have said that this man saved the US economy from going to the dogs. Others like Marc Faber have been against his policies. His critics had a strong case against him - of postponing the pain for the US economy into the future. But most of them still feared that his rejection as the head of US central bank for a second term could make the Fed's policies worse, not better.

So there you are. Ben Bernanke, the Chairman of the US Federal Reserve, has been confirmed for a second term by the US Congress. This vindicates the stand taken by his supporters. They thought that the US economy was badly injured during the crisis and required radical surgery. Hence, it made no sense to change the surgeon now that the patient was starting to recover.

With Bernanke back in the hot seat, and for the next four years, it would be interesting to see how he acts to sustain growth for the US economy. After all, now is the time that he and his team would need to begin reversing a record monetary expansion. And this without undercutting the fledgling recovery in the world's biggest economy

Auto sector to remain robust

2010-01-29T08:05:00.001-08:00

We all know what a cracking year 2009 turned out to be for the Indian auto sector. Pickup in economic growth and the government stimulus program emerged as the key demand boosters. So, will the sector be able to do an encore in 2010? Indeed, if a leading daily is to be believed. The Indian auto sector is likely to witness an overall growth of 10%-12% in the current calendar year. Passenger vehicles are expected to log in a growth of 12%-14%, while commercial vehicles are expected to grow at a lower rate of 5%-6%. It should be noted that growth for April-December period for these two segments has come in a lot higher at 25% and 23% respectively on a YoY basis. And hence, to that extent there could be some slowdown in growth. Furthermore, not all segments are expected to rake in similar growth rates, especially amongst CVs. It is the light commercial vehicles and high tonnage vehicles that are likely to steal the show.

So, with a robust growth in volumes, is the performance on the stock markets expected to follow suit? We do not think so. For one, the fight for market share is going to intensify, thus affecting profitability and secondly, the stock prices have run up to such an extent that the upside in volumes seem to be already reflected in the share prices. So, while Main Street will continue to chug along nicely as far as the auto sector is concerned, Dalal Street may just not follow suit.

RBI hikes CRR by 0.75%

2010-01-29T08:04:00.001-08:00

Speaking of central banks, the Reserve Bank of India (RBI) released its third quarter review of the Monetary Policy today. It has hiked the cash reserve ratio (CRR), the ratio at which banks maintain cash with RBI (as a percentage of their deposits) by 0.75%. It is meant to suck out liquidity to the tune of Rs 360 bn. Interesting to note that the RBI believes that its monetary measures will be of little consequence unless the government mends its ways. In our view, this watershed event marks the bottoming out of the easy liquidity scenario which unfolded since late 2008. However, the reversal of accommodative monetary stance cannot be effective unless there is also a roll back of government borrowing.

Obama fears India's rise.

2010-01-29T08:02:00.000-08:00

No matter what the hype and the pedigree; most politicians know how to appease their voters when pushed to a corner. In recent times, US president Barack Obama has faced political setbacks and increasing criticism over his leadership. Hence, the content of his annual State of the Union address does not come as a surprise.

The key takeaway for us here in India is his statement, "To encourage ... businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America." That clearly has implications for the Indian IT industry. Little wonder then, the top losers among the index heavyweights in India today were from the software pack. So far, the mood among the Indian software giants seems optimistic. US tax breaks aside, American companies will continue to need cost effective services. The key question is whether Indian service providers can remain competitive even after taking into account the higher taxes their clients must pay. In our view, Indian IT companies will still get business. They continue to provide compelling value. They have also taken steps like increasing their presence overseas and hiring locals there.

On a broader note, Obama also noted that countries like India were "not standing still... They are putting more emphasis on math and science. They're rebuilding their infrastructure. They're making serious investments in clear energy because they want those jobs." In our view, this is an admission of the progress we have made in the past several years. There is no mistaking that we have years of catching up to do. But we can take heart that things are moving in the right direction.

IIP for Nov at 11.7% Vs 2.5% (YoY)

2010-01-13T09:26:00.000-08:00

IIP for Nov at 11.7% Vs 2.5% (YoY), Vs 10.3% (MoM); CNBC-TV18 poll saw Nov IIP at 10.2%; Capital Goods growth at 12.2% Vs 0.5% (YoY)
November IIP stood at 11.7% Vs 2.5% (YoY), Vs 10.3% (MoM). CNBC-TV18 poll saw November IIP at 10.2%. October IIP remained unchanged at 10.3%.
November Manufacturing Sector growth stood at 12.7% Vs 2.7% (YoY). Basic Goods growth stood at 6% Vs 2.2% (YoY). Capital Goods growth stood at 12.2% Vs 0.5% (YoY). Mining Sector growth stood at 10% Vs 0.7% (YoY). Electricity Sector growth stood at 3.3% Vs 2.6% (YoY). Intermediate Goods growth stood at 19.4% Vs -3.9% (YoY). Consumer Goods growth stood at 11.1% vs 9.4% (YoY). Consumer Durable Goods growth stood at 37.3% Vs 0.3% (YoY).

Infinite Computer Solutions IPO subscribe 2.85 times

2010-01-13T09:24:00.000-08:00

The initial public offering (IPO) of Infinite Computer Solutions (India), a global service provider of Infrastructure Management, Intellectual Property (IP) leveraged solutions and IT services, focused on the Telecom, Media, Energy, Manufacturing, and Healthcare industries, has been subscribed to approximately around 2.84 times (Source: NSE and BSE website) on Day 2 (January 12). As of 4 pm on January 12, 2010, Total Bids Received was 27,861,480 as against the Total Issue Size of 9,777,550.
Infinite entered the capital market on January 11, 2010, with an Initial Public Offering of 11.5030 million Equity Shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The price band has been fixed between Rs. 155 and Rs. 165 per Equity Share. The Issue closes on January 13, 2010.
Nine anchor investors such as T. Rowe Price International Inc., Carlson Fund India, Lloyd George Investment Management (Bermuda) Limited A/C L. G. India Fund and India Plus Fund, Alden Global (Mauritius) Ltd. Credit Suisse (Singapore) Ltd., BATSPL A/C Bharti Axa Equity Fund, Reliance Capital Trustee Co. Ltd. A/C Reliance Regular Savings Fund – Balanced Option and Citigroup Global Markets Mauritius Pvt. Ltd. have been allocated 1,725,450 shares at a price of Rs 165 per equity share (upper end) on January 8, 2010.

Read more: http://www.sathyamurthy.com/finance/2010/01/infinite-computer-solutions-ipo-subscribe-2-85-times/#ixzz0cVwrQcqi
Under Creative Commons License: Attribution Non-Commercial

Axis IT&T Board approves Rights Issue

2010-01-13T09:13:00.000-08:00

Axis IT&T Board approves Rights Issue to raise upto Rs 50 crores. Axis-IT&T Ltd has announced that the Board of Directors of the Company at its meeting held on January 12, 2010, has been decided to raise further capital by issue of Equity Shares on rights basis for an amount upto Rs. 50 (fifty) crores, subject to the necessary approvals, if any. The Board has also constituted a Committee and delegated the necessary powers to the Committee to decide about the size, timing, basis of offer, premium and other modalities of the proposed rights issue.

Sanraa Media Board approves 5:4 Bonus Issue

2010-01-13T09:10:00.000-08:00

Sanraa Media had made an bonus issue announcement on 4th Jan. It has announced that the Company is marching into its 15th Year of incorporation. To mark this entry into the 15th year, the board has Considered and proposed, subject to the approval of the Shareholders and other statutory authorities, issue of Bonus Shares in the ratio of five equity shares of the Company of Re 1/- each for every four equity shares held by the Shareholders of the Company as on the Record Date to be fixed later for this purpose.

Record date - Winsome Yarns Stock Split

2010-01-13T09:07:00.000-08:00

Winsome Yarns has fixed 22 January 2010 as the record date for sub-division of denomination of paid up equity shares from Rs. 10 each to Re. 1 each.

Atco Corporation hits Upper Circuit on Stock Split plan

2010-01-13T09:06:00.000-08:00

Atco Corporation was locked at 5% upper circuit at Rs 356.85 on BSE, after the company said its board will meet on 19 January 2010 to consider stock-split. The company announced the board meet after market hours on Monday, 11 January 2010. The stock opened with an upward gap, surging by the maximum 5% daily circuit and remained locked at the 5% level so far in the day. The stock hit a lifetime high of Rs 389.95 on 20 November 2009 and a 52-week low of Rs 50 on 14 July 2009. The company is engaged in production and sale of bottled drinking water/mineral water. The company markets its bottled mineral water under ‘Brilliant’ brand.

Murli Industries Stock Split Plan

2010-01-13T09:05:00.001-08:00

Murli Industries surged around 5% on BSE, after the company said its board will meet on 18 January 2010 to consider stock-split. The company announced the board meet after market hours on Monday, 11 January 2010. The company is engaged in manufacturing and marketing paper. The company also manufactures and markets soya de-oiled cake, refined edible oil and paper products like duplex, newsprint, printing paper, cream wove, map litho paper and copier. The company operates in nine segments namely: solvent extraction unit, duplex paper, newsprint, writing & printing, power, pulp and cement.

Sterlite Technologies Bonus Issue and Stock Split plan

2010-01-13T09:03:00.000-08:00

Sterlite Technologies jumped around 10% on BSE, after the company said its board will meet on 18 January 2010 to consider issue of bonus shares and stock split. The company announced the board meet after market hours on Monday, 11 January 2010. Sterlite Technologies provides transmission solutions for telecom and power sectors.

Lanco Infratech fixes Record Date for Stock Split

2009-12-18T08:49:00.000-08:00

Lanco Infratech Ltd has announced that consequent upon the approval of the members for the sub-division of the equity shares by passing the Resolutions through Postal Ballot and Minutes of the same recorded on December 14, 2009, the Board of Directors of the Company vide Resolution passed by Circulation, approved and fixed January 05, 2010, as the record date for giving effect to the Sub-division of One Fully paid up Equity Share of Face Value of Rs. 10/- (Rupees Ten only) each into Ten Equity Shares of Face Value of Re. 1/- (Rupee One only) each fully paid up.

The stock closed the day at Rs.536.35, down by Rs.14.60 or 2.65%. The stock hit an intraday high of Rs.558.65 and low of Rs.532.

The total traded quantity was 423049 compared to 2 week average of 366438.

Wells Fargo Common Stock Offering Raises $12.25 Billion through offer of 489.9 million shares

2009-12-18T08:48:00.000-08:00

SAN FRANCISCO: Wells Fargo & Company (NYSE: WFC) said today that underwriters in Wells Fargo's public offering of 426 million shares of common stock have fully exercised their option to purchase an additional 63.9 million shares. This represents 15 percent of the shares purchased in the original offering.

The combination of the original offering of 426 million shares of common stock plus the additional 63.9 million shares results in a total offering of 489.9 million shares of common stock valued at $12.25 billion.

"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," said Wells Fargo Chief Financial Officer Howard Atkins.

Under terms of the TARP redemption agreement approved by U.S. banking regulators, this increase in size eliminates the requirement to execute asset sales to generate $1.5 billion in equity.

The offering is expected to be complete and proceeds received December 18, 2009. The original offering was announced December 14 and priced December 15. Wells Fargo will use the proceeds of this offering to redeem its series D preferred stock from the U.S. Treasury for $25 billion, repaying in full the government's TARP investment.

Wells Fargo Securities and Goldman Sachs & Co. are acting as lead underwriters for the offering.

Copies of the registration statement (including the base prospectus), the prospectus supplement and other documents Wells Fargo has filed with the SEC containing more complete information about Wells Fargo and the offering are available for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Wells Fargo, any underwriter or any dealer participating in the offering will arrange to send investors the prospectus if requested by contacting Wells Fargo Securities, LLC, 375 Park Avenue, New York, NY 10152-4077, toll-free telephone: 1-800- 326-5897, or by emailing equity.syndicate@wachovia.com or Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004, toll-free telephone: 1-866-471-2526, facsimile: 1-212-902-9316, or by emailing prospectus-ny@ny.email.gs.com.

This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Wells Fargo, including statements about when and how the Company will repay TARP. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from forward-looking statements including our ability to access capital markets on favorable terms. For a discussion of factors that could cause actual results to differ from expectations, refer to our reports filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended by our Current Report on Form 8-K filed May 11, 2009.

Citi Partners with India Post for Landmark Remittances Solution

2009-12-18T08:45:00.002-08:00

Hong Kong â€“ Citi has announced a landmark partnership with the Department of Post, Government of India (India Post) to enhance its recently launched MO Videsh remittance product. This international remittance service is powered by Citi's innovative WorldLink® Payment Services, and provides India Post the ability to send payments in more than 130 currencies globally through its existing Eurogiro payments platform.

Under the partnership, India Post will provide global remittance services to its customers in more than 800 head post offices across the country within three months. India Post plans to extend the service to more than 8,000 post offices nationwide within one year.

This deal is significant for both Citi and India Post, leveraging the Citi and Eurogiro partnership to provide India Post with the widest range of currencies globally. Citi's partnership with Eurogiro was established in August 2007 to enable members of Eurogiro, a low value payments network of postal organizations and financial institutions, access to Citi's existing distribution capacity and payment solutions.

With more than 25 years of experience, WorldLink Payment Services is at the forefront of the cross-border payments industry with its powerful and flexible multicurrency platform. Processing more than US$750 billion in transactions annually, WorldLink is the entrusted provider of cross border payment solutions to more than 2,700 client relationships globally, including the public sector, financial institutions, corporations and third party administrators.

Anthony Nappi, Managing Director, Regional Head of Global Transaction Services, Asia Pacific, Citi, said, "This innovative service launch between Citi Global Transaction Services and India Post represents a landmark in the Indian remittances space and clearly sets a new market standard. We are proactively taking a unique approach to meeting the needs of key client segments and remain committed to creating partnerships with post offices regionally and globally based on their future business needs."

"The payments partnership between India Post and Citi demonstrates Eurogiro's strength to bring together the postal and the banking world through the Eurogiro payments platform and global community," notes Juanita Woodward, Director, Customer Relations Asia Pacific, Eurogiro A/S. India Post is the most recent postal organization to join the Eurogiro payments network community, which has members located in more than 50 countries, and illustrates an increased focus by postal organizations around the globe to expand international payment services to the local community through the Eurogiro payments network and community.

McDonough to retire from Bank of America Merrill Lynch

2009-12-18T08:45:00.001-08:00

NEW YORK - Bank of America (NYSE:BAC) announced the retirement of William J. McDonough, effective December 31. The former president of the Federal Reserve Bank of New York and former chairman of the Public Company Accounting Oversight Board, McDonough joined Merrill Lynch & Co. nearly four years ago as vice chairman and special advisor to the chairman and continued in this role at Bank of America Merrill Lynch. McDonough advised senior management and was actively involved in business development efforts with governments and financial institutions around the world.

While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.

"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."

"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."

Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.

McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.

McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.

McDonough to retire from Bank of America Merrill Lynch

2009-12-18T08:44:00.000-08:00

Aurobindo Pharma gets final approval for Cetirizine Hydrochloride Syrup (Rx)

2009-12-18T08:43:00.000-08:00

Aurobindo Pharma Ltd is pleased to announce that it has received the final approval for Cetirizine Hydrochloride Syrup 1mg/mL (ANDA No 090751) from the US Food & Drug Administration (USFDA). This approval of Cetirizine Hydrochloride Syrup is under Prescription drug product category.

Cetirizine Hydrochloride Syrup 1mg/mL is the generic equivalent of McNeil Consumer Healthcare Zyrtec Syrup 1mg/mL. Cetirizine Hydrochloride Syrup is indicated for the relief of symptoms associated with seasonal allergic rhinitis in adults and children above 2 years of age and falls under the Anti-Allergic segment.

Aurobindo has a total of 110 ANDA approvals (82 Final approvals and 28 Tentative approvals) from USFDA.

The stock was trading at Rs.891, up by Rs.11.65 or 1.32%. The stock hit an intraday high of Rs.894.20 and low of Rs.875.15.

The total traded quantity was 20109 compared to 2 week average of 41335.

KEC International secures six new projects worth Rs 550 crores

2009-12-18T08:42:00.000-08:00

KEC International Ltd. (KEC), a global leader in the power transmission EPC business and a part of the Rs. 15,000 crore RPG Group, has won major orders in Algeria and Abu Dhabi worth Rs. 474 crore and Rs. 76 crore respectively, against international competition.

In Algeria, for CEEG Spa, KEC will undertake five turnkey projects of 400 KV, 200 KV and 60 KV covering both single and double circuit transmission lines worth Rs. 474 crore. The total length of these five projects is 858 km and the completion period ranges from 12 to 18 months.

In Abu Dhabi. KEC will execute a project of modification and realiocation on existing lines with design and supply of Emergency Line Restoration System (ERS) in Ruwais & Shuweihat for Abu Dhabi Transport Authority / Ghantoot Transport & Gen. Cont. Est. This project is to be completed within 12 months. The value of this order is Rs. 76 crore.

"In Abu Dhabi we are diversifying our client base and we will perform our first International ERS (Emergency Line Restoration System) project," said Mr. Ramesh Chandak, MD & CEO, KEC International Ltd.

The stock was trading at Rs.583.05, up by Rs.15.55 or 2.74%. The stock hit an intraday high of Rs.589.90 and low of Rs.571.

The total traded quantity was 47221 compared to 2 week average of 28258.

ONGC Board declares Interim Dividend of 180% for 2009-10

2009-12-18T08:41:00.000-08:00

Oil & Natural Gas Corporation Ltd (ONGC) has announced that the Board of Directors of the Company at its meeting held on December 18, 2009, have declared an Interim Dividend of Rs. 18 (Rs. Eighteen) per equity share of Rs. 10 each for the Financial Year 2009-10.

The stock closed the day at Rs.1185.50, down by Rs.14.10 or 1.18%. The stock hit an intraday high of Rs.1205 and low of Rs.1182.

The total traded quantity was 44294 compared to 2 week average of 76016.

Websol Energy to approve allotment of bonus shares on Dec 30, 2009

2009-12-18T08:36:00.002-08:00

Websol Energy Systems Ltd has announced that a meeting of the Board of Directors of the Company will be held on December 30, 2009 to approve the allotment of Bonus Shares to the Members of the Company whose names appear on the Register of Members as on the Record Date.

The stock was trading at Rs.365, up by Rs.0.70 or 0.19%. The stock hit an intraday high of Rs.370 and low of Rs.360.10.

The total traded quantity was 4881 compared to 2 week average of 3629.

Jaiprakash Hydro-Power

2009-12-18T08:36:00.001-08:00

With reference to the earlier announcement dated December 14, 2009 regarding (Sanction of Scheme of Amalgamation of Jaiprakash Power Ventures Ltd. with Jaiprakash Hydro Power Ltd), Jaiprakash Hydro Power Ltd has informed BSE that formal order dated December 14, 2009, has been received from Hon'ble High Court of Himachal Pradesh at Shimla and the same has been filed with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh on December 14, 2009 making the Scheme of Amalgamation effective from December 14, 2009. Necessary formalities of change of name of the Company to Jaiprakash Power Ventures Ltd., in terms of the Scheme, are being carried out with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh.

Goldman likely to pay annual bonus in stock

2009-12-05T04:01:00.000-08:00

Goldman Sachs Chief Lloyd Blankfein is weighing plans to increase the share of compensation paid out in equity to executives in a bid to quell public anger over the probability of large pay-outs, the Financial Times said.

Senior executives, including Blankfein, could be awarded all annual bonus in company stock, the Financial Times said, citing people familiar with Goldman's thinking.

On Wednesday, the Wall Street Journal had reported that the company was meeting with major investors in an effort to head off a possible backlash over its record bonuses.

Goldman officials said the meetings were an effort to explain why the company's pay levels are reasonable in light of its performance and to get feedback from key stakeholders.

The Financial Times said on Friday that Goldman's board, however, seemed hesitant to grant shareholders a non-binding, advisory vote on pay policy as it could lead to investors pushing for a bigger say on other policies.

Goldman Sachs could not be contacted by Reuters outside regular US. business hours to confirm the Financial Times report.

UK bank bailout cost hits £850 billion

2009-12-05T04:00:00.000-08:00

The price tag for bailing out UK banks has hit 850 billion pounds (USD1.4 trillion) but Britain's spending watchdog says the final cost to taxpayers will not be known for years.

The independent National Audit Office (NAO) said on Friday the government was justified in asking the public to shore up the shaken sector at the height of last year's financial crisis -- although lending to businesses was likely to miss targets.

"It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse," said the NAO's head Amyas Morse."But the big question is what all of this will eventually cost the taxpayer.

"As the crisis begins to subside ... the authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers."

Britain, along with other countries, partly nationalised some banks and offered quarantees, insurance and loans to the industry after the credit crisis pitched the world into recession in the wake of the collapse of Wall Street giant Lehman Brothers last year.

The UK government has put the potential loss to the taxpayer at between 20 billion and 50 billion pounds, depending on losses on bad assets held by Royal Bank of Scotland and the price at which the state sells stakes in RBS and Lloyds Banking Group.

And the costs keep mounting. The finance ministry expects to have spent 107 million pounds on advisers alone by next April, with Credit Suisse and Deutsche Bank each appointed on retainers of 200,000 pounds per month for a year, the NAO said. Success fees could reach 5.8 million pounds.

RBS and Lloyds have agreed to lend more to consumers and businesses as part of their bailout. But although both are on target for mortgage lending, lending to businesses is likely to fall short of targets, the NAO said.

RBS agreed to lend an additional 25 billion pounds in 2009-2010, while Lloyds agreed to lend an additional 14 billion to help businesses and consumers weather the credit crisis.

The NAO is an independent body funded by parliament, rather than the government of the day. But it has limited powers and its role is largely to draw attention to cases where it feels public money has been misused.

No engineer in India good enough for Infy prize?

2009-12-05T03:48:00.001-08:00

New Delhi: India churns out around seven lakh engineers every year. And yet how many of them are actually good enough to win some of the prestigious domestic and global awards? The issue has come to the forefront with Infosys Technologies reportedly having failed to find a worthy candidate for its Infosys Engineering Science Prize 2009.

The company has decided not to give the prize in that category to anyone this year. Infosys' Chief Operating Officer (COO), SD Shibulal, told that there were 34 nominees for the engineering and computer science prize but even after relaxing the age limit to 55 years, the jury could not find anyone who met all the criteria of the Infosys Prize. So, the jury took the unanimous decision to not award the prize for the engineering sciences discipline this year.

Infosys Science Foundation is a not-for-profit trust set up by Infosys Technologies. The company has named three scientists and two academic experts as winners of Infosys Prize 2009 for outstanding contributions to scientific research.

The winner in physical sciences is Thanu Padmanabhan of Inter-University Centre for Astronomy and Astrophyics, Pune, in recognition of his contribution to a deeper understanding of Einstein's theory of gravity in the context of thermodynamics. For mathematical sciences, Ashoke Sen of Harish Chandra Research Institute at Allahabad was given the prize in recognition for his contributions to mathematical physics. For life sciences, K VijayRaghavan of National Centre of Biological Sciences in Bangalore got the award.

The winner in the social sciences and economics category is Abhijit Vinayak Banerjee of Massachusetts Institute of Technology for his contributions to the economic theory of development. Upinder Singh of the University of Delhi won an award for her contributions as an outstanding historian of ancient and early medieval India.

CAT goes online, students go offline

2009-12-05T03:45:00.000-08:00

Bangalore: After a disappointing start to the online CAT, the authorities have given different theories to the problem ranging from a virus attack to server crash. However, in the eyes of students who are left in the lurch, things seem to be different.

With his eyes set on the top B-schools in the country, Srinath R.P. had prepared hard to bell the Common Admission Test (CAT) this year. His exam was scheduled to be held at R.V. College of Engineering, Bangalore at 10 am on 28 November. But, after reaching the centre, during the process of checking, Srinath got the shock of his life when he was informed by the authorities that his name was not downloading in the Prometric site.

"The authorities got in touch with Prometric/IIM authorities for more than three hours, but could not solve the problem. Then they told me that I can't take my CAT exam since my name is not downloading into the test site Roster," says Srinath. After the poor response, the authorities gave him Prometric Candidate Care contact number and asked him to call them for rescheduling the exam.

With a shimmer of hope left in his heart to take the exam this time, Srinath tried contacting Prometric, but this didn't put an end to his misery. "Even though I have tried contacting the number more than 20 times. There is no response and it only goes for redialing," says a dismayed Srinath, who is among thousands of candidates facing similar kinds of problem after the CAT went online. The students are also unsure about the rescheduled dates for their exam. The irony is that though India is touted as a technology hub, the dream of one of the prestigious exams in the country to go online is short-lived and the students are left in the dark.

Students who arrived at Garden City College in Bangalore were shocked when officials told them that the test had been called off because of a faulty server. There was complete confusion at the venue as none of the administrative officers knew what was happening and why the server was not working. Students held a dharna inside the exam hall.

Around 5,000 students will now have to take the CAT afresh at new dates throwing the original 10-day schedule into disarray. Technical experts blamed U.S. based Prometric - the agency entrusted with carrying out the first online version of CAT - for underestimating the magnitude of the task. "They didn't even have a Plan B," said a top official of another firm that runs online examinations, on condition of anonymity. Prometric said it has quarantined 50 labs across 14 centres on Sunday, and blamed the fiasco on a virus attack that went undetected.

The agency said that the problem was being sorted out, and the test was being rescheduled for the several affected candidates who would be informed through SMS and emails. A new date however, brings in new set of problems for the aspirants many of whom are employed and find it difficult to reschedule.

The seven IIMs and about 150 top B-schools base their admissions on CAT scores, and this year the exams were moved online hoping that it would speed up the process for the institutes and the 2.4 lakh candidates. IIMs' CAT panel gave the task to Prometrics, which runs online exams like GRE and TOEFL. However, with the situation taking a chaotic turn, IIM directors took stock of the situation and held a video conference on Sunday.

IIM Ahmedabad Director Samir Barua said computer labs were being sanitized. "We need to find out from where the virus attack happened," he said. Around 100 Prometric engineers have been pressed into service, said IIM Bangalore Director Pankaj Chandra.

"We, along with Prometric and NIIT, are trying to figure out where the problem lies. Since these computers were located in institutes, their backbone was used to download the software. In some places there were serious virus attacks. So we blocked some affected centres and others which we felt might get affected to clean up the computer system, remove viruses and reload the software," he said.

Create 10 jobs in U.S., get green card for family

2009-12-05T03:44:00.000-08:00

New Delhi: The Obama administration extended the regional centre investment EB-5 program, which entitles investors who put in $1 million into regional centre real estate projects and create at least 10 jobs in the U.S., to green cards along with their families.

Simply put, this program allows investors a fast-track to U.S. green cards and permanent residency. If investors are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000, reports Economic Times.

The EB-5 program is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the U.S. Many of the Gujarati hotel entrepreneurs also have strong family links in the U.S.

"The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40 percent discount. This is definitely the time to buy as the U.S. real estate market is slowly recovering," says Sachin U Patel, Managing Principal of real estate development company American Life, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett.

The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest.

Most immigration experts are seeing a growing interest in the EB-5 category of visas. Mumbai-based Immigration Attorney Sudhir Shah says, "This is certainly a good time to apply for the EB-5 programme. There are several schemes on offer wherein you merely have to invest money and in return you get a green card without having to actively participate in the business. For those who are looking at moving to the U.S. to run a motel or store there, the reduced property prices are a big attraction too, as they can get more value for their dollar investments."

The EB-5 scheme, though proving to be very attractive, is however not without glitches. Proving that the funds available for investment are from lawful sources can be a challenge for some Indian investors.

Major Events

2009-12-05T02:04:00.000-08:00

HDFC Ltd. launched a dual rate home loan product where it offers fixed rate of interest of 8.25% valid for two years (i.e. upto March 31, 2012) and thereafter applicable floating rate for the balance term.

The National Stock Exchange’s (NSE) Mutual Fund Service System (MFSS) started on Monday – November 30, 2009 with UTI schemes making its debut onto the new mutual fund trading system with a turnover of Rs 78 lakh. Birla Sunlife Mutual Fund was the second one to join the NSE’s MFSS platform. The rest of the fund houses are expected to join later since they are in the process of creating their technology infrastructure to list their schemes on the exchange.

The Bombay Stock Exchange (BSE) launched its mutual fund trading platform today (Friday – December 4, 2009) named BSE StAR MF (Bombay Stock Exchange Platform for Allotment and Redemption of Mutual Fund units), with Tata Mutual Fund schemes making its debut onto the mutual fund trading system from Friday. Big fund houses such as HDFC, ICICI Prudential, DSP BlackRock too have signed up for this platform.

The start of the tax saving season has seen some of the mutual fund companies stepping up commissions. Some of the mutual fund companies are offering as high as 5% commissions to distributors, which are mostly on tax saving schemes. This initiative by the mutual fund companies is despite the fact that SEBI banned commissions to be deducted from investors’ money.

The Pension Fund Regulatory & Development Authority (PFRDA) unveiled its Tier II account for its New Pension Scheme. Under this account investors will be allowed to enter and exit at will (just like savings account). However, the account will be available for investors of NPS who already hold Tier I account.

With gold making waves, it is turning out to be an important asset for wealth managers. Religare Mutual Fund has sought the approval from SEBI to launch a gold Monthly Income Plan (MIP). The fund will be a first of its kind in the country.

Gold prices hit a record high breaching the Rs 18,000 mark. In the Mumbai market standard (99.5 purity) gold closed at Rs 18,220 (for 10 gm) on Wednesday, Dec 2, 2009.

Employers may soon be required to make mandatory provident fund contribution to their employees with a salary upto a sum of Rs 15,000 a month, instead of Rs 6,500 at present.

SMS tariff war

2009-12-05T02:03:00.000-08:00

The battle continues - will the customer win the war? The tariff war in the mobile telecom industry has now extended and shifted its focus to the Short Messaging Services (SMSes). Dual technology player Reliance Communications (RCom) has triggered a tariff war in the SMS segment. The company has launched two SMS plans which are available to both pre-paid and post paid users of the GSM and CDMA service.

SMSes under one plan will be charged at 1 paisa per SMS, but in order to avail of the same, users would have to pay a monthly fee of Rs 11. In another plan the users can avail of 15,000 SMSes free, by paying Re 1 per day as a fee. In other words it means 500 SMSes per day for a rupee charged; a great offer.

The above plans will be appealing to customers with high SMS usage – typically youth and professionals across India.

The tariff war is likely to continue till consolidation sets in the mobile telecom industry.

Since the mobile telecom industry is more voice driven, the move may not have too much impact on the industry. However, it will indeed be pro-customer as it will lead to increase in savings.

IPO subscription to be made easy for HNIs & firms

2009-12-05T02:02:00.000-08:00

From January 2010, HNIs and firms will be eligible to use the banking channel called Application Supported by Blocked Amount (ASBA) to buy stocks in the primary (IPO) market.

Under this channel, when an investor applies to an IPO, the funds do not immediately flow out from his account. The bank blocks the value of the shares applied for and the funds are not disbursed till the shares are allotted. Customers cannot use this money, since it is blocked.

Earlier in July 2008, SEBI allowed only retail investors to subscribe to IPOs through this channel, but capped the maximum amount of bid at Rs 1 lakh.

As a second phase, the channel will now be thrown open to a wider group of investors who will be able to make multiple applications at different prices within the price band of an IPO.

SEBI has asked banks to be ready with their software and to make necessary changes in their software.

We believe that the move will reduce the time taken between the public issue and listing. This will be in the interest of investors as it will make IPO subscriptions easy and ensure hassle-free transactions. Investors will no longer have to wait for the receipt of refund cheques.

Dubai debt trap

2009-12-05T02:01:00.002-08:00

Dubai, which is seen as the global financial hub, got into a debt trap with Dubai World struggling with liabilities to the tune of USD 59 billion. The Dubai Government too hasn’t guaranteed the debt of Dubai World. As per a government statement, the company has received financing based on a project schedule basis and not on government guarantees.

This sent shock waves across the financial markets, significantly impacting stock prices across the globe. S&P too has cut the credit ratings of six Dubai government-linked companies, including ports operator DP World, to junk status. S&P also placed the ratings of four Dubai-based banks on negative outlook, due to their exposure to Dubai World.

Banning insurance commissions

2009-12-05T02:01:00.001-08:00

The panel constituted last year, chaired by D Swarup, the Chairman of the Pension Fund Regulatory and Development Authority (PFRDA) presented its report to the Government. The panel was asked among other things:

How to stop mis-selling of financial products
How to raise financial literacy among citizens

With respect to the insurance industry, the panel has recommended in its report, that the up-front commissions embedded in the premium should be done away in a phased manner as under:

Year	Commissions
2009	15%
2010	7%
2011	0%

The main intention of the panel is to stop mis-selling of products as agents and financial advisors often push financial products where they can earn more, without the investors in mind.

The move has been opposed by the Insurance Regulatory & Development Authority (IRDA) and Life Insurance Council, the industry lobby for the insurance sector.

We believe that if the recommendations to do away with insurance commissions go through government approvals, it will be in the interest of the investors.

Banking made easy?

2009-12-05T02:00:00.001-08:00

PersonalFN Impact Indicator

In a move to make banking transactions more easy and convenient, the Reserve Bank of India (RBI) permitted banks to adopt the ‘Business Correspondents Model’ from Monday – November 30, 2009.

It means banks will now be able to appoint ‘Business Correspondents’ (BCs) enabling them (banks) to deepen the banking system. RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as BCs of banks.

The principle for appointing such BCs are:

Experience of these individuals in cash handling (cash inflow and outflow)
Being residents of the area in which they propose to operate

According to RBI, the charges for services provided by the BCs, will be levied in a transparent manner and BCs will not be allowed to charge customers directly.

The model has evolved after experiencing limitations in the traditional ‘brick and mortar' banking model. As per RBI notification, the new model (Business Correspondents Model) will enable banks to accelerate their goal of financial inclusion.

However, we believe that though the move seems to make banking easier and convenient, there are some serious operational glitches like cash management, security and technology, which need to be considered for safe banking.

India's GDP beats forecast

2009-12-05T01:57:00.000-08:00

India's GDP (Source: Bloomberg)

The Gross Domestic Product (GDP) expanded during the second quarter (July – September) of the fiscal year 2010 by 7.9%. The key drivers for this strong figure are:

Pickup in manufacturing sector
Increased government expenditure
Robust investments
Lower interest rates
Higher government salaries & pay commission arrears
Increased incomes especially in the rural areas due to greater social spending and high farm goods prices
Modest growth in farm output despite drought

In the first quarter (April – June) of the present fiscal year, the economy had expanded 6.1%. Interestingly now, the growth is close to the same level (i.e. 7.7%), of the second quarter (July – September 2008) of the fiscal year 2009, thus indicating that the economy is back on the health track. The stock market too has cheered this news during the week.

Given the attractive GDP numbers, we believe there are likely chances of:

Government withdrawing stimulus – certainly beginning the phasing out over next few months
RBI tightening interest rates soon

How to select a mutual fund?

2009-12-05T01:53:00.000-08:00

Mutual funds offer the most convenient way of investing in equity, debt and money markets. The increased participation of Indian investors bears testimony to the fact that there is a widespread realisation of the same. Also over the years, the Indian mutual fund industry has grown manifolds, not only in terms of size but also in terms of offerings. While on one hand that is good; the increased number of offerings has also given rise to a state of dilemma in the mind of investors. They often get confused when it comes to selecting the right fund from the plethora of funds available. And even worse, many investors think that 'any' mutual fund can help them achieve their desired goals.

The fact is, not all funds are the same. There are various aspects within a fund that an investor must carefully consider before short-listing it for making investments. In this article we highlight some of those aspects.

Performance: The past performance of a fund is important in analysing a mutual fund. However, one must remember that simply because a fund has performed well in the past does not mean that it will perform well in the future as well. It simply indicates the fund’s ability to clock returns across market conditions. And if the fund has a well-established track record, the likelihood of it performing well in the future is higher than a fund which has not performed well.

The following factors should be considered while evaluating a fund’s performance:

1) Comparisons: A fund’s performance in isolation does not indicate anything. Hence, it becomes crucial to compare the fund with its benchmark index and its peers, so as to deduce a meaningful inference. Again, one must be careful while selecting the peers for comparison. For instance, it doesn’t make sense comparing the performance of a midcap fund to that of a largecap.

‘Don’t compare apples with oranges’

2) Time period: It’s pertinent for investors to have a long term (atleast 3-5 years) horizon if they wish to invest in equity oriented funds. Hence, it becomes important for them to evaluate the long term performance of the funds. This does not imply that the short term performance be ignored. Performance over the short term should also be evaluated; however, the focus should be more on the long term performance. Besides, it is equally important to evaluate how a fund has performed over different market cycles (especially during the downturn). During a rally it is easy for a fund to deliver above-average returns; but the true measure of its performance is when it posts superior returns than its benchmark and peers during the downturn.

Choose a fund like you choose a wife – one that will stand by you in sickness and in health

3) Returns: Returns are obviously one of the important parameters that one must look at while evaluating a fund. But remember, although it is one of the most important, it is not the only parameter. Many investors simply invest in a fund because it has given higher returns. In our opinion, such an approach for making investments is flawed. In addition to the returns, investors must also look at the risk parameters, which in-turn explain how much risk the fund has taken to clock higher returns.

4) Risk: Risk is normally measured by Standard Deviation. It signifies the degree of risk the fund has exposed its investors to. Higher the Standard Deviation, higher the risk taken by the fund to clock returns. From an investor’s perspective, evaluating a fund on risk parameters is important because it will help them to check whether the fund’s risk profile is in line with their risk profile or not. For example, if two funds have delivered similar returns, then a prudent investor will invest in the fund which has taken less risk.

5) Risk-adjusted return: This is normally measured by Sharpe Ratio. It signifies how much return a fund has delivered vis-à-vis the risk taken. Higher the Sharpe Ratio, better is the fund’s performance. From an investor’s perspective it is important because they should choose a fund which has delivered higher risk-adjusted returns. Infact, this ratio tells us whether the high returns of a fund are attributed to good investment decisions, or to higher risk.

6) Portfolio Concentration: Funds that have a high concentration in particular stocks or sectors tend to be very risky and volatile. Hence, investors should invest in these funds only if they have a high risk appetite. Ideally, a well diversified fund should hold no more than 40% of its assets in its top 10 stock holdings.

Make sure your fund does not put all its eggs in one basket

7) Portfolio Churning: The portfolio turnover rate measures the frequency with which stocks are bought and sold. Higher the churning, higher the volatility. The fund might not be able to compensate the investors adequately for the higher risk taken.

Invest in funds with a low turnover rate

Fund Management: The performance of a mutual fund scheme is largely linked to the Fund Manager and his team. Hence, it’s important that the team managing the fund should have considerable experience in dealing with market ups and downs. Also, investors should avoid fund’s that owe their performance to a ‘star’ fund manager. Even if the fund manager is present today, he might quit tomorrow, and then the fund will be unable to deliver its ‘star’ performance without its ‘star’ fund manager. Therefore, the focus should be on the fund houses which are strong in their systems and processes.

Fund house should be process-driven and not 'star' fund-manager driven

Costs: If two funds are similar in most contexts, it might not be worth buying the high cost fund if it is only marginally better than the other. Simply put, there is no reason for an AMC to incur higher costs, other than its desire to have higher margins.

The two main costs incurred are:

1) Expense Ratio: Annual expenses involved in running the mutual fund include administrative costs, management salary, overheads etc. Expense Ratio is the percentage of assets that go towards these expenses. Every time the fund manager churns his portfolio, he pays a brokerage fee, which is ultimately borne by investors in the form of an Expense Ratio. Therefore, higher churning not only leads to higher risk but also higher cost for the investor.

2) Exit Load: Due to SEBI’s recent ban on entry loads, investors now have only exit loads to worry about. An exit load is charged to investors when they sell units of a mutual fund within a particular tenure; most funds charge if the units are sold before a year. As exit load is a fraction of the NAV, it eats into your investment.

Try investing in a fund with a low expense ratio and stay invested in them for longer duration.

Among the factors listed above, while few can be easily gauged by investors, there are others on which information is not widely available in public domain. This makes analysis of a fund difficult for investors and this is where the importance of taking the help of a mutual fund advisor comes into fore. At Personal FN, we spend a lot of time and effort in short-listing funds which are best for investors, by using various qualitative and quantitative techniques.

Commercial real estate loans to get costlier

2009-10-27T08:53:00.000-07:00

RBI has tightened the screws on bank lending to the real estate sector - a move that did not go down favourably with the stocks of real estate companies. The BSE realty index fell by over six per cent.

All the realty stocks ended in the red. Sensex stock, Unitech plunged 7.5 per cent to Rs 86 after toucing a low of Rs 84. DLF tumbled 6.5 per cent to Rs 402. Omaxe crashed 10 per cent to Rs 107. HDIL tanked 8.6 per cent to Rs 341. Ansal Infrastructure shed 8.5% to Rs 69. Parsvnath, Phoenix Mills, Peninsular Land, Ackruti City and Orbitco slumped 5-7 per cent each.

Last December, real estate developers heaved a sigh of relief when the RBI allowed restructuring of loans up to June 30, 2009 as a part of its stimulus package. Since then, all major companies rescheduled loans worth crores to avoid default. but now, the RBI has had a change of heart.

Today the RBI says, “In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances, it would be prudent to build cushion against likely NPAs.”

The central bank has concerns on the ability of developers to repay loans even at a later date. So, the provisioning requirement for advances to the sector has been increased from its present 0.4 to 1 per cent. This means the interest cost for developers is set to increase. DLF and Unitech have an average interest cost of about 12 per cent which is set to rise to about 12.75 or 13 per cent.

Developers are yet to get clarity on whether this provisioning will increase on existing bank loans. In fact, in the past six months, very few fresh loans have been sanctioned to real estate companies. So the RBI is sending out a clear signal for banks to be cautious even before the cycle of fresh lending begins

Brokerages point out that RBI's move may trigger a second round of equity funding for listed players. Listed companies have lapped up more than Rs 13000 crore rupees via qualified institutional placements in the past seven months. Some of these funds have been directed towards working capital needs. What’s more, about $ 3 billion is waiting in the wings to be raised via the IPO route by six companies. But for unlisted companies, funding options may be far lesser. for consumers, this move seals all possibilities for a further dip in prices. In fact, it is all set to increase

Sarang Wadhawan, Managing Director, HDIL, said, “You have to understand that the sector was just recovering, this will definitely affect developers in a way that projects which were under execution. Now we will have to increase prices to compensate for this cost that will be incurred, at the same time, affordable housing segment will be hit because of this.”

Even as companies have clocked in good volume in sales over the past two quarters, it remains to be seen whether an imminent price increase will sustain the recent uptick in demand.

Tata Steel India Q2 net down 49.5 pct, lags forecast

2009-10-27T08:50:00.000-07:00

MUMBAI, Oct 27 (Reuters) - Tata Steel Ltd (TISC.BO: Quote, Profile, Research), the world's No. 8 steel maker by output, on Tuesday reported a 49.5 percent fall in September quarter profit from its Indian operations, as prices tumbled on the back of the global economic crisis. The company, which acquired Europe's second-largest steelmaker Corus in 2007, said standalone net profit fell to 9.03 billion rupees ($192 million) for the fiscal second quarter, from 17.88 billion reported a year earlier. Net sales fell to 56.3 billion rupees from 67.3 billion. A Reuters poll of 11 analysts had estimated a standalone net profit of 10.2 billion rupees on net sales of 60.67 billion rupees. Tata Steel bought European steel maker Corus in 2007. The Indian operations account for about a quarter of the group's annual global capacity of 30 million tonnes. Global steel production has tumbled this year, as demand from key industries such as construction and automotive shrank. But as macroeconomic data improves and inventories deplete, demand is gradually coming back, encouraging steelmakers to restart some idled capacity. Shares in Tata Steel, valued at about $10.1 billion, fell as much 7.3 percent to 501.35. The shares rose 30.6 percent in the September quarter, outperforming the benchmark index that improved 18.2 percent. ($1=47 rupees) (Reporting by Prashant Mehra; Editing by Jarshad Kakkrakandy)

Kotak Mahindra net surges 86% to Rs 299 cr

2009-10-27T08:48:00.000-07:00

Private sector lender Kotak Mahindra Bank today reported 86.22 per cent rise in its net profit at 299.76 crore for the second quarter ended September 30, 2009, over the same period last year.

Total income rose to Rs 2,312.91 crore in the latest quarter ended September 30, 2009, up 25.05 per cent from Rs 1,849.51 crore in the same period corresponding fiscal, Kotak Mahindra Bank said in a filing to the Bombay Stock Exchange(BSE).

On standalone basis, the bank reported a net profit of Rs 125.90 crore for the July-September quarter, jumped over two-folds to Rs 47.86 crore in the same period last fiscal.

Shares of Kotak Mahindra Bank were trading at Rs 764.10 on the BSE, down 2.18 per cent from its previous close.

Rupee ended down at a three-week low against the US dollar

2009-10-27T08:47:00.001-07:00

Rupee ended down at a three-week low against the US dollar today because banks bought the greenback noting the decline in local share indices and also to meet importers' month-end dollar demand, dealers said.
The Indian unit ended at 46.9200 rupees compared with 46.6500 per dollar Monday. Rupee swayed in the 46.7700-47.0050 per dollar band intraday today.
"The fall in local shares today triggered some FII outflows today. There was no direct impact of the RBI policy on rupee. Intraday, rupee purely tracked local share," said a dealer with a large UK bank.
Today, the Bombay Stock Exchange's Sensex and the National Stock Exchange's Nifty ended down 2.31% and 2.50%, respectively, on disappointment over the Reserve Bank of India's mid-term monetary policy review for 2009-10
(Apr-Mar).
RBI kept the Repo, Reverse Repo, and Cash Reserve Ratio unchanged as per market expectations, Statutory Liquidity Ratio was hiked to 25%. Gross domestic product growth projection for 2009-10 (Apr-Mar) was kept unchanged
at 6.0% with an upside bias.
RBI also discontinued the refinance windows for banks and foreign exchange swap facility for banks today.
"It (foreign exchange swap facility) was a measure introduced last year when market faced the problem of dollar crunch. Not many banks used it. So it may not have an impact on the forex market," said S. Rajendran, general manager treasury, Union Bank of India.
"Importers were persistently buying dollars in the market today to meet their month-end needs that added to the fall and dragged rupee to the 47 level," said a dealer with a state-owned bank.
Banks also purchased the greenback noting its rise against other Asian currencies, dealers said.
Euro's fall below the $1.5000 mark in the overnight market also added to the Indian units' woes, dealers said.
However, dollar sales from exporters prevented a further decline in the Indian currency, dealers said.
"Exporters had to step in to sell dollars with rupee weakening to 47.00 today. Those exporters who had missed a chance to sell dollars in the past few days, sold it today," said a dealer with a US bank.
Bouts of profit booking also limited the slide in the Indian currency today, dealers said.

Mahindra Renault clarifies on 'Sandero' brand

2009-10-27T08:45:00.000-07:00

Hyundai Motor India has taken Mahindra Renault to the Delhi High Court objecting to the latter's plan to launch a compact car in the country with the name 'Sandero' alleging that the rival was trying to cash in on its popular brand Santro with a similar sounding product. They (Mahindra Renault) are planning to launch Sandero, which is very similar sounding to our Santro. Both are hatchbacks and Santro is an established trademark and they are trying to get mileage out of it," a senior Hyundai Motor India (HMIL) official told PTI.

HMIL's plea requests the court not to allow Mahindra Renault to launch the car under the name Sandero, he added.

Neither a call made to Mahindra Renault Chief Executive Officer Nalin Mehta nor an e-mail sent to Mahindra & Mahindra group spokesperson seeking comments on the development got a reply.

'Santro' is HMIL's flagship brand and a total of over 15 lakh units have been sold both in the domestic and the overseas markets since its launch in September 1998.

On the other hand, Mahindra Renault has been struggling to mark its presence in the Indian car market with its sole product Logan failing miserably sparking speculations of a break-up of the joint venture between Mahindra & Mahindra and French auto major Renault.

Market analysts pointed out that the firm desperately needs another product to keep the JV alive.

GMR Energy drags Ministry of Power, REC, PFC to Delhi HC

2009-10-27T08:44:00.000-07:00

GMR Energy has filed three petitions against the ministry of power and two PSUs — Rural Electrification Corporation and Power Finance Corporation — which had invited bids from the private sector to set up three transmission projects.

According to the petition, GMR Energy was disqualified on the ground that the formula for calculation of Internal Resource Generation (IRG), one of the criteria for qualification, was not correct.

In its petition filed through law firm Link Legal, GMR submitted before the court that it had sought an opinion from the Institute of Charted Accountants (ICAI) on the issue.

The ICAI said the formula adopted by it for calculation of IRG is correct and acceptable, and in fact, compliant with well-established accounting standards, GMR Energy submitted in the petition.

The company submitted that it was disqualified on a faulty criteria adopted for calculating the IRG and requested the court to stay the tendering process.

Admitting it, a division bench comprising Justice B D Ahmed and Justice Veena Birbal has issued notice to the Centre, REC and PFC directing them to file their replies.The court has listed the matter for next hearing in November.

Stock-split plan electrifies Bajaj Electricals

2009-10-14T09:47:00.001-07:00

Bajaj Electricals gained 4.38% to Rs 762 at 13:58 IST on BSE, after the company’s board approved a 5-for-1 stock split.
The company made this announcement during trading hours today, 12 October 2009.
Meanwhile, the BSE Sensex was up 303.17 points, or 1.82%, to 16,945.83.
On BSE, 57,310 shares were traded in the counter as against an average daily volume of 11,938 shares in the past one quarter.
The stock hit a high of Rs 780.20 so far during the day, which is a record high for the counter. The stock hit a low of Rs 735 so far during the day. The stock had hit a 52-week low of Rs 135 on 6 March 2009.
The stock has risen 24.36% in just five trading sessions from a recent low of Rs 612.75 on 5 October 2009.
The mid-cap stock outperformed the market over the past one month till 9 October 2009, rising 19.69% as compared to the Sensex’s 2.84% rise. It had also outperformed the market in the past one quarter, soaring 94.34% as compared to the Sensex’s return of 20.97%.
The company’s equity capital is Rs 17.44 crore. Face value per share is Rs 10.
The current price of Rs 762 discounts the company’s Q1 June 2009 annualized EPS of Rs 37.85, by a PE multiple of 20.13.
The board has also decided to raise Rs 175 crore through qualified institutional placements (QIPs). If one assumes that the company raises Rs 175 crore at the current market price of Rs 762, there will be a equity dilution of 13.17%.
Bajaj Electricals’ net profit surged 63.4% to Rs 16.36 crore on 15.1% rise in net sales to Rs 365.38 crore in Q1 June 2009 over Q1 June 2008.
Bajaj Electricals manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures. The company also manufactures consumer durables like small electrical appliances.
Promoters have pledged 2.50 lakh shares representing 1.45% of the equity capital of the company (as on 30 June 2009). Total promoters shareholding in the company is 74.14% (as on 30 June 2009).

Buying gold? Consider this instead...

2009-10-14T09:44:00.002-07:00

Meanwhile, the yellow metal gold continues to flirt with its all time high levels. Last heard, it was comfortably perched well above the US$ 1,000 per ounce mark. And it may not be done yet by any stretch of imagination. Experts are of the opinion that it could easily double from here. And that includes Jim Rogers, one of the world's most respected commodity investors. Speaking to Moneynews, the fiery Rogers opined, "If you go back and adjust . . . for inflation back in 1980, gold should be over $2,000 an ounce. In my view it will get there again sometime in the next decade." Please note the last few words. He believes that gold would double sometime in the next decade. In other words, it may have started to look stretched from a near term perspective. In fact, even Rogers is not buying at current levels. But he also mentioned that if it goes down from here, he could once again start buying.

While awaiting a dip in gold prices could be the best thing to do right now, you may not want to do the same for silver and instead start buying today itself. Yes, you've read that right. Taking into account the fundamentals, silver is looking more attractive than gold from a long term perspective. In fact, it has already beaten the yellow metal so far this year, rising three times more than the 17% returns earned by gold. Moreover, the fundamentals of silver seem to be more compelling than that of the yellow metal. As per DNA Money, the amount of silver out there is just 20% of the gold and secondly, silver due to its best in class heat and electrical conductivity and versatility could be used into a lot of applications, thus making it far more useful than just being a storehouse of value. In view of these factors, silver definitely needs to be considered seriously if one has to diversify away from fiat currencies.

IPOs are trading below their offer price

2009-10-14T09:44:00.001-07:00

IPOs in India, which were pushed under the carpet when the stock markets plunged, have started resurfacing now that markets have rallied. Given the buoyant mood in the markets, we are hardly surprised at companies wanting to capitalize on this opportunity. The interesting thing, however, is that many of the recent IPOs that have come in the market are trading below the offer price. And this could probably be because the underlying businesses do not have much to offer that can be justified by the price asked for. Investors are also getting savvier and are not interested in investing in IPOs merely for listing gains. This is a wakeup call for other companies lining up to be listed on the bourses as it highlights the fact that a mere revival in the stock markets is not a good enough reason to expect investors to invest in their issues.

Pipavav Shipyard to bid for defence, oil and gas projects

2009-10-14T09:40:00.001-07:00

Pipavav Shipyard ended its first trading session at a discount of 1.72% to its issue price of Rs 58. The share closed at Rs 57 on the NSE. It touched an intraday high of Rs 61.10 and intraday low of Rs 53.85. The total traded quantity was 8,11,64,726 shares and turnover was at Rs 46685.95 lakh.

Talking on the listing, Pipavav Shipyard’s Chairman Nikhil Gandhi said the company was in the process of putting bids for defence and oil and gas projects.

The company, he said, had put tenders worth Rs 7,500 crore for defence projects. Gandhi added that he saw FY10 revenues at Rs 800–1,000 crore.

Ravi Kapoor, Managing Director and Head, Equity Capital Markets, Citigroup, said that the company may see additional USD 15 billion fund raising by FY10.

Here is a verbatim transcript of the exclusive interview with Nikhil Gandhi, Luv Chhabra, Director-Corporate Affairs, Punj Lloyd and Ravi Kapoor on CNBC-TV18. Also watch the accompanying video.

Q: We heard yesterday about the two large deals that you were in conversations with, with naval forces both in Oman and in India- what are the chances at this point that they fructify and what would that mean to your order book?
Gandhi: It is always our endeavour to put in the best possible bids which would satisfy the clients and also make sure that our EBITDA margin is not compromised. Having build world-class infrastructure, we will have slight upper hand over several other international companies of our stature and size. I believe that Pipavav has good chance to put in competitive bids.

Q: Which ones do you think have higher chances of coming through because the Oman orders totally the bids are about USD 4 million and the Indian naval order is about 1.3? These are the kind of orders that investors would like you to book now from the naval and the defence side, which do you think you have a better shot at?

Gandhi: We are the first company in the private sector approved by the Oman Ministry of Defence. They have looked at our facilities and this is a world class infrastructure, and hopefully, they may want to use these facilities and that is one of the reasons they have approved our company. So we are very positive about these developments. And it’s a nice situation to be in on the first day to be starting business with some of the top Indian entities like Navy and Coast Guard. Royal Navy in the Oman has also approved us as a warship builder, primarily, because of experience of our partner Punj Lloyd and the infrastructure that we have build here, would perhaps be a point which might tilt the decision in our favour.

Q: Are you expecting to see a bit of supply pressure though in the first few days before Pipavav finally settles down?
Kapoor: It is quite imminent. In every listing’s first two-three days there are huge volumes and I am sure this is going to be no different. Investors would like to sell and buy quite heavy volumes. I guess the volumes will settle and the stock will find its rightful place, and thereafter, obviously, it will have to perform as per the potential which is huge.

Q: You will be more at liberty now to talk about growth as you see it, not so much for FY10 what kind of target can you hold out for FY11 and FY12 now to your investors?
Gandhi: First and foremost we are right now in the receipt of extremely large tender from both national and international defence agencies. We are in the process of putting in the tenders together. We have already put in worth about Rs 7,500 crore plus to the Indian Naval authorities. We are in the process of putting in rest of the bids to the different potential client both in oil and gas sector, defence sector and international potential customers.

Since we have built first of its kind in the country, a most modern state of art engineering complex, fabrication complex and dry dock attached to it, people are not only excited about building their assets here. It is because of the kind of infrastructure we have set up for example loss of wastage of steel, etc. which will be very less compared to any other similar facilities in the country. We are quite upbeat about ramping up the revenues. The current year revenue is likely to be in the region of Rs 800–1000 crore. The ramping-up would be pretty rapid because we do have the capacity and the potential clients want fast forward the deliveries of their requirements and there is a huge pent up demand in the country. I think we would be in for a significant excitement going forward.

Q: What's in your eyes the possibility of Pipavav bagging the Oman or the Indian Naval order?

Chhabra: I would leave that to Mr. Gandhi to reply. I think there is much or equally large opportunity that we have spoken about and that’s really the offshore oil and gas opportunity. If you look at the spends, just by ONGC, that are planned on the offshore side over the next five–years it is likely to be in excess of USD 20 billion. The combination of Pipavav and Punj Lloyd will be a formidable combination to address this market. The facilities in Pipavav are world-class. They are one of a kind; certainly unmatched in India. The ability to construct and fabricate platforms, jackets and then the ability of Punj Lloyd to lay the offshore pipelines, erect the platforms is a huge opportunity here.

So the opportunities will be on the naval side as Nikhil Gandhi mentioned. There will be an equally large opportunity that Pipavav will address on the offshore oil and gas side and then going forward as the shipyard develops and gets more experience there will be another opportunity which is really on static equipment and on the nuclear side which is really to fabricate nuclear components for reactors and other pressure vessels.

Q: Last we spoke you said you were expecting to see a USD 12–15 billion by way of paper that will hit the primary market in whatever form for the rest of this year. Do you think that figure might actually get surpassed and how much of this is impacting what is happening in the currency markets because you are in a good place to talk about that?
Kapoor: I still maintain that USD 12–15 billion or maybe the way it is looking like the pipelines are building up on capital raising programmes on a daily basis, IPOs are queuing up with Sebi. Therefore, the number could be in excess of USD 15 billion by the time we finish this year. We have already raised about USD 16–16.5 billion in the first 4–5 months ever since you have seen these markets moving back and liquidity coming back into the country, so I still maintain that number.

I would imagine that it would primarily comprise of QIPs and IPOs, essentially, from the real estate sector, power sector infrastructure construction sector. The QIP also the pipeline is quite heavy and you have seen new structures are coming up to clear the QIP pipeline.

Finally, as I have been maintaining on your programme that the government disinvestment is inevitable you must have seen RECs going through the process and couple of other companies will come up for disinvestment in the next six months of this financial year. So there would be a fairly busy pipeline. The flows are coming in and needless to say it is going to help the currency upwards, the currency is likely to appreciate in the short-term because lot of liquidity is coming in.

REC board meet on October 16 to mull follow on public offer

2009-10-14T09:39:00.001-07:00

A meeting of the board of directors of Rural Electrification Corporation (REC) will be held on October 16, 2009, inter alia, to consider the proposal for issue of fresh Equity Shares through Follow on Public Offer (FPO), pending receipt of approval of the Government of India, and to seek approval of shareholders for the same by convening Extra Ordinary General Meeting (EGM), as per BSE announcement.

Euro Multivision to list on Oct 15

2009-10-14T09:38:00.001-07:00

Euro Multivision, manufacturer of compact disc recordables (CDRs) and digital versatile disc recordables (DVDRs), will list its equity shares issued via public issue on the exchanges on October 15, 2009.

It came out with an initial public offering (IPO) of 88 lakh equity shares during September 22-24, 2009. The company fixed the issue price at Rs 75 per share which was subscribed 1.81 times. The company raised Rs 66 crore via this issue.

Promoters' shareholding has been reduced to 51.12% from 81.11% post the issue.

Euro Multivision is the second largest company among few companies that are into manufacturing of CDRs and DVDRs (Source: Optical Disk Manufacturers Welfare Association). The other companies in the existing business are MoserBaer, Jupitar Innovations, Optek Disc manufacturing and Lizer Technologies etc. It is a part of EURO group which was promoted by Shri Nenshi Shah.

IL&FS to list transport network arm, raise Rs 700cr

2009-10-14T09:36:00.000-07:00

IL&FS wants to raise around Rs 700 crore by taking its surface transportation arm, IL&FS Transportation Network, to the bourses. Anumeet Kaur Bisen reports.

IL&FS Transport Network, India's largest private sector player engaged in the build-operate-transfer (BOT) model for roads and highways wants to raise Rs 700 crore. For this, it plans to list on the stock exchanges. The move will involve private equity fund Trinity Capital selling its entire 2.5% in the company.

Of the proceeds, Rs 500 crore will be used to repay part of the Rs 1,854 crore consolidated debt on its books.

The loans that will be paid off are: a Rs 100-crore short-term unsecured loan from Allahabad Bank, Rs 100 crore unsecured loan from Canara Bank, Rs 100 crore from group company IL&FS Securities Services. And two loans of Rs 100 crore rupees each from United Bank of India.

Paying off this debt will serve two purposes. One, it will bring the company's debt-equity ratio down from the current 1.9. Two, it will improve its debt leveraging capacity and provide better opportunity for funding future projects.

The issue is expected to hit the markets by late 2009 or early 2010. The company says it may also go in for a pre-IPO placement exercise.

Some of the proceeds may also be used to expand low-margin overseas operations. That's because its overseas operations under Spanish arm Elsamex provides ITNL with the bulk of its revenues.

However, there is a question over the company's revenue generation capacity. Considering Elsamex has been generating losses in the past and may continue to do so for a while yet.

Man Infraconstruction files DRHP for IPO

2009-10-14T09:34:00.000-07:00

Man Infraconstruction has filed a draft red herring prospectus (DRHP) for its proposed 100% book built public issue of 5,625,150 equity shares of face value of Rs 10 each.

It has been promoted by Parag Shah and Mansi Shah and is headquartered in Mumbai. The company provides construction services for port infrastructure, residential, industrial, commercial and road infrastructure projects.

The book running lead managers to the proposed IPO are IDFC-SSKI Ltd and Edelweiss Capital Ltd.

Should you subscribe to I'bulls Power IPO?

2009-10-14T09:32:00.000-07:00

Indiabulls Power's initial public offer (IPO) has received an overwhelming response from the first day itself. The issue has been subscribed 7.2 times so far with the QIB (qualified institutional investors) portion being subscribed 13.3 times. The price band has been fixed at Rs 40-45 per equity share. The minimum bid lot is 150 equity shares and in multiples of 150 shares thereafter. The issue will close on October 15, 2009.

However, Bhargav Vuddhadev of Noble Group advises investors not to subscribe to Indiabulls Power issue. He cites uncertainty over the power purchase agreement for Amaravati Phase 1, doubts on commerciality of Bhaiyathan plant, value creation, and equity dilution as reasons.

SP Tulsian of sptulsian.com doesn't see the fair price for Indiabulls Power above Rs 40. He advises investors to subscribe at Rs 40. "Retail investors should be cautious."

Here is a verbatim transcript of the exclusive interview with Bhargav Vuddhadev and SP Tulsian on CNBC-TV18. Also see the accompanying video.

Q: From your assessment of the issue and its valuations do you think it’s an attractive one or you would rather pass?

Vuddhadev: We are recommending clients not to subscribe to Indiabulls Power mainly because of three reasons, (1) we anticipate equity dilution risk in the near-term because we do not think there would be any operational capacity until FY12 and hence there won’t be any internal accruals to meet the USD 12 billion equity requirement for the Bhaiyathan power project (2) there are uncertainties over power purchase agreements (PPA) for Amravati Phase-I and Nashik power project. Also, the pricing for the former is not known. The PPAs is still not signed and (3) there is little value creation that we see from the Bhaiyathan power project given that 65% of the capacity is sold at 81 paise per unit as against cash operating cost of 65 paise per unit. Because of these three reasons we are recommending clients not to subscribe for this initial public offering (IPO).

Q: What is your call on the Indiabulls Power IPO?

Tulsian: I do not think that the issuers or the merchant bankers have really leant the lessons. If we see the four issues which have hit the capital market in last maybe three months or so, 75% have disappointed the in the form of two power IPOs being Adani and National Hydroelectric Power Corporation (NHPC) and third Pipavav. Only the Oil India Ltd (OIL) has awarded shareholders.

If one compares Indiabulls Power with Adani Power, the latter has a capacity of 6,600 MW while Indiabulls Power has been talking of 6,600 MW. However, Indiabulls Power has only two power projects of 1,320 mw each, which means the real capacity or the serious creation is in respect to 2,640 MW.

If I go by the same parameters of Adani Power in terms of the marketcap, Rs 22,000 crore because financing pattern has been broadly on the lines of 70:30 which we have seen in case of Adani Power, same here in case of Indiabulls Power. I go by the marketcap parameters Rs 22,000 crore market cap has been given to Adani Power. So, 40% of that gives 8,800 crore. If I go by the total number of issue share, that gives me a valuation of Rs 43 per share.

Since the price band has been fixed at Rs 40-45, I don’t think there is any justification for the share price or the book to get discovered more than Rs 40. In the case of the retail category, we see that all of them go for the cut off and for some reason we have seen that the issue has subscribed by about 7.2 times on an overall basis. But entire contribution is coming from qualified institutional buyers (QIB) category.

In any situation, firstly there is no compulsion on part of the investors to go for the issue. If they opt to and make a strict comparison with Adani Power, the right price at which it should get discovered is Rs 40 since they have already fixed the price band of Rs 40-45 because otherwise there are all the chances of prospective investors making losses in the issue.

Q: How would you put or ascribe a valuation given the two points that you made about the PPA concerns and the pricing issues. Given cash flow expectations from FY12 to FY14, what is a fair value in your eyes?

Vuddhadev: We have done a discounted cash flow (DCF) valuation for all the three power projects Amravati phase-I, Nashik power project, and Bhaiyathan power project and our DCF valuation comes to approximately Rs 36 per share.

Q: What you have worked in by way of a merchant power capacity and a merchant power price per unit as well?

Vuddhadev: We are assuming a merchant power price per unit of roughly Rs 5 per unit starting FY13 and we are reducing that by 50 paise per unit every year until FY17. From FY17, we will have a constant merchant power price of roughly Rs 3 per unit.

Q: In terms of capacity and price for merchant power, how does it compare with Adani Power?

Tulsian: I don’t think one can take a price of more than Rs 3.50 for merchant power if you take the project completion time after FY12 which is happening in case of Indiabulls Power. When I compare that with Adani Power, the same thing has got factored in because you have the correct indication of Adani Power in the form of the share having listed and that’s the reason I have compared that with the market cap of the company and given 40% of that because you do not see any big jump happening in case of merchant power realisation from FY12 onwards.

Bonuses on LIC policies are taxable: Revenue Secy

2009-10-09T08:32:00.000-07:00

The new Direct Tax Code does not seem friendly towards investors of LIC policies. Revenue Secretary PV Bhide today indicated that bonus amounts received on maturity of LIC policies will be liable to tax. "The broad principle is whatever has accrued by March 31 will remain with you as benefit. But that does not apply to bonuses paid after that."

He also ruled out any tax concession for special economic zones under the new Direct Tax Code. "We are looking at long gestation period projects separately."

Unitech delays project delivery; homebuyers see red

2009-10-09T08:31:00.000-07:00

Even though Unitech succesfully raised nearly USD 900 million via two qualified institutional placement (QIP) issues, the country's second largest realty firm is lagging behind in construction. This resulted in nearly 250 angry home-buyers of the Unitech Habitat in Greater Noida gathered today outside the company's headquarters to protest against late delivery.

Unitech Habitat, a residential development, was supposed to be delivered by June 2009. Construction is still on and will take some time before apartments here are handed over to the buyers.

Pipavav Shipyard to bid for defence, oil and gas projects

2009-10-09T08:29:00.000-07:00

MoneyMorning.com/India_stocks

Pipavav Shipyard ended its first trading session at a discount of 1.72% to its issue price of Rs 58. The share closed at Rs 57 on the NSE. It touched an intraday high of Rs 61.10 and intraday low of Rs 53.85. The total traded quantity was 8,11,64,726 shares and turnover was at Rs 46685.95 lakh.

Talking on the listing, Pipavav Shipyard’s Chairman Nikhil Gandhi said the company was in the process of putting bids for defence and oil and gas projects.

The company, he said, had put tenders worth Rs 7,500 crore for defence projects. Gandhi added that he saw FY10 revenues at Rs 800–1,000 crore.

Ravi Kapoor, Managing Director and Head, Equity Capital Markets, Citigroup, said that the company may see additional USD 15 billion fund raising by FY10.

Here is a verbatim transcript of the exclusive interview with Nikhil Gandhi, Luv Chhabra, Director-Corporate Affairs, Punj Lloyd and Ravi Kapoor on CNBC-TV18. Also watch the accompanying video.

Q: We heard yesterday about the two large deals that you were in conversations with, with naval forces both in Oman and in India- what are the chances at this point that they fructify and what would that mean to your order book?
Gandhi: It is always our endeavour to put in the best possible bids which would satisfy the clients and also make sure that our EBITDA margin is not compromised. Having build world-class infrastructure, we will have slight upper hand over several other international companies of our stature and size. I believe that Pipavav has good chance to put in competitive bids.

Q: Which ones do you think have higher chances of coming through because the Oman orders totally the bids are about USD 4 million and the Indian naval order is about 1.3? These are the kind of orders that investors would like you to book now from the naval and the defence side, which do you think you have a better shot at?

Gandhi: We are the first company in the private sector approved by the Oman Ministry of Defence. They have looked at our facilities and this is a world class infrastructure, and hopefully, they may want to use these facilities and that is one of the reasons they have approved our company. So we are very positive about these developments. And it’s a nice situation to be in on the first day to be starting business with some of the top Indian entities like Navy and Coast Guard. Royal Navy in the Oman has also approved us as a warship builder, primarily, because of experience of our partner Punj Lloyd and the infrastructure that we have build here, would perhaps be a point which might tilt the decision in our favour.

Q: Are you expecting to see a bit of supply pressure though in the first few days before Pipavav finally settles down?
Kapoor: It is quite imminent. In every listing’s first two-three days there are huge volumes and I am sure this is going to be no different. Investors would like to sell and buy quite heavy volumes. I guess the volumes will settle and the stock will find its rightful place, and thereafter, obviously, it will have to perform as per the potential which is huge.

Q: You will be more at liberty now to talk about growth as you see it, not so much for FY10 what kind of target can you hold out for FY11 and FY12 now to your investors?
Gandhi: First and foremost we are right now in the receipt of extremely large tender from both national and international defence agencies. We are in the process of putting in the tenders together. We have already put in worth about Rs 7,500 crore plus to the Indian Naval authorities. We are in the process of putting in rest of the bids to the different potential client both in oil and gas sector, defence sector and international potential customers.

Since we have built first of its kind in the country, a most modern state of art engineering complex, fabrication complex and dry dock attached to it, people are not only excited about building their assets here. It is because of the kind of infrastructure we have set up for example loss of wastage of steel, etc. which will be very less compared to any other similar facilities in the country. We are quite upbeat about ramping up the revenues. The current year revenue is likely to be in the region of Rs 800–1000 crore. The ramping-up would be pretty rapid because we do have the capacity and the potential clients want fast forward the deliveries of their requirements and there is a huge pent up demand in the country. I think we would be in for a significant excitement going forward.

Q: What's in your eyes the possibility of Pipavav bagging the Oman or the Indian Naval order?

Chhabra: I would leave that to Mr. Gandhi to reply. I think there is much or equally large opportunity that we have spoken about and that’s really the offshore oil and gas opportunity. If you look at the spends, just by ONGC, that are planned on the offshore side over the next five–years it is likely to be in excess of USD 20 billion. The combination of Pipavav and Punj Lloyd will be a formidable combination to address this market. The facilities in Pipavav are world-class. They are one of a kind; certainly unmatched in India. The ability to construct and fabricate platforms, jackets and then the ability of Punj Lloyd to lay the offshore pipelines, erect the platforms is a huge opportunity here.

So the opportunities will be on the naval side as Nikhil Gandhi mentioned. There will be an equally large opportunity that Pipavav will address on the offshore oil and gas side and then going forward as the shipyard develops and gets more experience there will be another opportunity which is really on static equipment and on the nuclear side which is really to fabricate nuclear components for reactors and other pressure vessels.

Q: Last we spoke you said you were expecting to see a USD 12–15 billion by way of paper that will hit the primary market in whatever form for the rest of this year. Do you think that figure might actually get surpassed and how much of this is impacting what is happening in the currency markets because you are in a good place to talk about that?
Kapoor: I still maintain that USD 12–15 billion or maybe the way it is looking like the pipelines are building up on capital raising programmes on a daily basis, IPOs are queuing up with Sebi. Therefore, the number could be in excess of USD 15 billion by the time we finish this year. We have already raised about USD 16–16.5 billion in the first 4–5 months ever since you have seen these markets moving back and liquidity coming back into the country, so I still maintain that number.

I would imagine that it would primarily comprise of QIPs and IPOs, essentially, from the real estate sector, power sector infrastructure construction sector. The QIP also the pipeline is quite heavy and you have seen new structures are coming up to clear the QIP pipeline.

Finally, as I have been maintaining on your programme that the government disinvestment is inevitable you must have seen RECs going through the process and couple of other companies will come up for disinvestment in the next six months of this financial year. So there would be a fairly busy pipeline. The flows are coming in and needless to say it is going to help the currency upwards, the currency is likely to appreciate in the short-term because lot of liquidity is coming in.

JV with M&M, Bajaj Auto on track, says Renault India Head

2009-10-09T08:27:00.000-07:00

Marc Nassif, Head, Renault India, has clarified that its joint venture with M&M is on track, reports CNBC-TV18's Swati Khandelwal Jain. He says Renault is looking forward to future products from the partnership with M&M.

This is the first interview ever since he took over the reigns of Renault India. Nassif spoke exclusively to us about how he was surprised with the speculative reports that the M&M-Renault JV is facing some trouble.

He has clarified that there is no breach between M&M and Renault JV. On product strategy, they said they have to slowdown because there is an overall slowdown in the economy. When they launched in the first year itself, they sold about 2,000 cars a month, but now they have come down to about 400-600 units only. To that, he said he is still optimistic about Indian market and that they will revive it back,. They are already working on a facelift version of Logan and that should be out sometime soon.

He also gave an example of how they entered Brazil and it took about ten years for them to come up in that market and then they emerged as winners. Now, they see the same future for the Indian market. They said that tying up with M&M is a very positive thing that has come in. On the MoU, they say it is very much on track and both parties are discussing how to take it forward.

Talking about the Renault-Bajaj JV, he clarified that it is also on track and there has been a lot of speculation about whether Bajaj is planning to pull out or there could be some problem there. He clarified once again that both parties are discussing some issues and things are on track for both JVs.

Indian-origin shares Nobel Prize for Chemistry

2009-10-08T08:56:00.000-07:00

London: Indian-origin Scientist Venkatraman Ramakrishnan shares the Nobel Prize in Chemistry this year with Thomas A. Steitz and Ada E. Yonath, it was announced in Stockholm Wednesday.

The Royal Swedish Academy of Sciences said that the Nobel Prize in Chemistry for 2009 awards studies of one of life's core processes: the ribosome's translation of DNA information into life. Ribosomes produce proteins, which in turn control the chemistry in all living organisms. As ribosomes are crucial to life, they are also a major target for new antibiotics, it said in a statement.

Born in 1952 in Chidambaram, Tamil Nadu, Ramakrishnan did his B.Sc. in Physics (1971) from Baroda University in Gujarat and later migrated to the U.S. to continue his studies where he later got settled and attained U.S. citizenship. He earned his Ph.D in Physics from Ohio University in the U.S. and later worked as a graduate student at the University of California from 1976-78. Ramakrishnan, now a Senior Scientist at the MRC Laboratory of Molecular Biology in Cambridge has authored several important papers in academic journals.

Ramakrishnan and Steitz are U.S. citizens while Yonath is from Israel. Ramakrishnan joins an illustrious list of Indians and people of Indian origin, who have won the Nobel Prize in various disciplines - including Rabindranath Tagore, C.V. Raman, Hargobind Khorana, Mother Teresa, S. Chandrashekhar and Amartya Sen.

Ramakrishnan, Steitz and Yonath have been awarded for showing what the ribosome looks like and how it functions at the atomic level. All three have used a method called X-ray crystallography to map the position for each and every one of the hundreds of thousands of atoms that make up the ribosome.

"Inside every cell in all organisms, there are DNA molecules. They contain the blueprints for how a human being, a plant or a bacterium, looks and functions. But the DNA molecule is passive. If there was nothing else, there would be no life," a statement from the academy of sciences said.

The blueprints become transformed into living matter through the work of ribosomes.

An understanding of the ribosome's innermost workings is important for a scientific understanding of life. This knowledge can be put to a practical and immediate use; many of today's antibiotics cure various diseases by blocking the function of bacterial ribosomes. Without functional ribosomes, bacteria cannot survive. This is why ribosomes are such an important target for new antibiotics, the statement added.

This year's three Laureates have all generated 3D models that show how different antibiotics bind to the ribosome. These models are now used by scientists in order to develop new antibiotics, directly assisting the saving of lives and decreasing humanity's suffering.

Google's PowerMeter to boost energy efficiency

2009-10-08T08:55:00.000-07:00

Los Angeles: Google is partnering with privately held firm Energy, to provide households with free energy management software called PowerMeter, which will boost energy efficiency, the company said on its blog.

Google had launched PowerMeter, which is a web tool, in February to let consumers monitor how much electricity they use at home. But in order to use PowerMeter consumers needed a smart meter installed. Many customers have already tested and used this application. Now, consumers can buy Energy's power-usage measuring device called TED 5000 which costs around $200, and use Google's software on top of it, without ever needing a smart meter.

Even though many companies are now trying to propagate smart meters they still account for a small percentage of all U.S. electricity meters. Technology giants like Google and IBM are shifting into the world of building a smart grid, envisioning a more efficient electricity grid that uses more renewable energy and powers up 'smart' appliances.

Google's partnership with Energy does not include any financial terms. Google is already working with Sempra Energy's San Diego Gas and Electric and Germany's Yello Strom. Google is also trying to develop clean technology. Some of its projects include ways to write software to connect plug-in hybrid vehicles to the power grid and a mirror technology that could reduce the cost of building solar thermal plants by more than a quarter.

EROS international plans IPO….

2009-10-08T08:43:00.001-07:00

AIM-listed integrated studio operator Eros International plc is planning to list its wholly-owned Indian subsidiary on the Bombay Stock Exchange in the current financial year.

Eros International plc, has firmed up its plans to list Eros International Media Ltd, its wholly-owned subsidiary company in India, on the BSE, the company said in a regulatory filing to the London Stock Exchange.

“It is expected that the transaction would conclude within the current financial year ended March 2010,” the filing added.

Enam, Kotak and RBS (Royal Bank of Scotland) has been appointed to act on the Indian IPO.

“It is currently intended that any new funds raised by Eros India in the Indian IPO will not result in a dilution of the company’s ownership in excess of 25 per cent.

The company has also made a few changes in its management and has appointed A P Parigi as group CEO for the Indian operations and Naresh Chandra as the non-executive Chairman of the Indian board.

“It is expected that the intended IPO and the recent appointments, would drive the group’s growth and consolidation within India.

Eros International plc has experienced a strong second quarter of the financial year and continues to trade in line with management’s expectations.

The cash generation during the July to September period was in line with expectations and net debt on September 30 2009 was at a similar level to that of March 31 2009.

“Given the strong release schedule and anticipated cash generation in the second half, net debt is expected to show a material reduction by the financial year-end.

Indiabulls Relaty IPO opens on 12th October

2009-10-08T08:42:00.001-07:00

The initial public offering (IPO) of Indiabulls Power, a subsidiary of Indiabulls Realty will open for subscription on October 12, 2009 and will close on October 15, 2009.

The company is expected to raise around Rs 2,000 crore.

The proceeds of the issue will be used to part finance the construction and development of the 1,320 MW Amravati Power Project Phase – I (Rs 775 crore from the issue) and for funding equity contribution in the company’s wholly owned subsidiary, IRL, to part finance the construction and development of the 1,335 MW Nashik Power Project (Rs 660 crore from the issue).

Indiabulls Power will offer 33.98 crore equity shares via this IPO. There will also be a green shoe option of up to 50,900,000 equity shares, which will take the issue size to 39.07 crore shares. Before the green shoe option, the issue will constitute 16.98% of the fully diluted post issue paid-up capital of the company and post the green shoe option - 19.06%.