Friday, February 29, 2008
Budget positive for investors: Analysts
Notwithstanding the 246 points decline in the BSE benchmark index, following a hike in capital gains tax, experts said this year's budget is positive for investors and markets will continue to follow global cues in the future. "Overall it is a positive budget given the political compulsions. However, the increase in short-term capital gains tax and no reduction in corporate tax are sentimentally negative for capital markets," domestic brokerage firm Sharekhan Head Research Gaurav Dua said. Sensex dipped by 245.76 points in today's trading session, after Finance Minister P Chidambaram proposed a hike in short-term capital gains tax from 10 per cent to 15 per cent. Besides, no reduction in corporate tax rates and a loan waiver package worth Rs 60,000 crore announced for farmers also contributed to the plunge, market observers said. "Budget is positive for companies in the auto, infrastructure and pharma space and would positively affect the corporate bottom-lines," Sharekhan Senior Vice President Hemang Jani said. However, analysts said that increased capital gains tax would deepen the market by cutting down on the speculative part of the trading, as a higher tax would impact mostly the traders and not the investors. Kotak Mahindra Bank Managing Director Uday Kotak said global cues would continue to be the biggest driver for the Indian markets. Domestic inflation and interest rate regime would be the second biggest driver, followed by growth trend of the Indian economy. "I am not worried (about impact of Budget on stock markets).... Market will stabilise and Budget would prove to be a non-event," domestic investment banking major J M Financial's Nimesh Kampani said.
Cheaper food on breakfast table
The breakfast food like corn flakes, sharbat, coffee and tea pre-mixes and packaged tender coconut will cost less as the Budget for 2008-09 has either exempted or reduced excise duties on a number of processed food items. Finance Minister P Chidambaram has totally exempted from excise duty packaged tender coconut water, paws, puffed rice, milk containing edible nuts and tea and coffee pre-mixes. The duty has been halved to eight per cent on muesli, corn flakes and sharbat. It has been done so even on the packaging material like open top sanitary (OTS) cans, aseptic packaging paper and aseptic bags. Total exemption has also been given on specified refrigeration equipment for the installing of a cold storage, cold room or refrigerated vehicle, on end-use basis.
Taxpayers may gain up to Rs 44,000 per year
The increase in tax slabs in undoubtedly great news for the salaried. The news gets even better for those in the higher tax brackets. The adjustment for the income tax slabs has been done in such a way that people in the high income category – say above Rs 2.5 lakhs per annum - stand to gain even more. To put this in numbers, a person who had a taxable income of Rs 5 lakhs would have be paying a tax of Rs 99,000 – before any cess on his income in the income tax slabs that prevailed till now. However, under the new income tax slabs, his tax liability would come down to Rs 55,000 translating into cool tax savings of Rs 44,000 per year. That is a huge amount of money. So, how has this magic come about? To consider this, look at the tax slabs. The minimum exemption limit has gone up by Rs 40,000. That’s good enough. What is better is that the next slab of 20% which earlier kicked in from Rs 1, 50,000 and extended till Rs 2, 50,000 will now only kick in from Rs 3 lakh onwards. The good news does not end here; in the prevailing regime the 30% tax bracket started from Rs 2.5 lakh onwards. In the latest budget, the 30% tax bracket only starts from Rs 5 lakhs onwards. This is the revision that will do the magic for the high income earners. And, all this is not taking into account the impact of deduction on account of Section 80C. The huge jump in interim slabs means that many people will just fall out of the highest tax slab into the tax slab below after they start claiming deductions they are entitled to under Section 80C. This is one budget middle class salary earners are unlikely to forget. So what does the revision in the tax slabs mean for various tax payers. For a person whose taxable income after all deductions was Rs 2.5 lakh, tax savings could be around Rs 14,000; for someone with an income of Rs 5 lakh, it could be around Rs 45,000; for someone with a salary income of Rs 7.5 lakh, tax saving would be Rs 44,000. Taxpayers having salary of above 10,00,000 will have to pay the surcharge of 10% and the education cess of 3%. When these are put together the gain will come to Rs.49,852.
Thursday, February 28, 2008
Citi India arms feel sub-prime pinch
May close branches, bank relocates ATMs.
The sub-prime loss-hit Citigroup is on a cost-cutting exercise in its Indian operations.
CitiFinancial, its consumer finance unit, which is also reeling under the burden of rising bad loans, is considering closing about 100 of its 450 branches in India.
Meanwhile, Citibank, the commercial banking arm, has begun shifting its ATMs from prime locations to less expensive ones. Banking sources said private sector banks like Yes Bank and HDFC Bank have bought some of the locations.
“In terms of cost-cutting, the bank is relocating ATMs. Citibank is relocating around 30 ATMs from high-cost locations to low-cost areas,” said banking sources.
These steps are in tune with Citigroup’s global efforts at substantially reducing costs according to plans drawn up by Vikram Pandit, who took charge as CEO of the world’s largest financial services group after Chuck Prince exited following a $17.4 billion write-down on sub-prime related exposures.
In response to a mail sent by Business Standard, a Citigroup India spokesperson preferred not to comment on the closure of branches,
“CitiFinancial is not exiting the consumer finance business. We are committed to growing it further by adding new products to its portfolio. To service customers better, we are in the process of relocating some branches in select geographic locations,” the response said.
The spokesperson added that CitiFinancial has not sold any ATM locations. “We have relocated some ATM premises, which is an ongoing process to better serve larger numbers of customers. We will continue to operate 480 ATMs across the country.”
CitiFinancial India saw a 64 per cent drop in net profit in the first half of 2007-08. For the whole of 2006-07, CitiFinancial’s net profit was at Rs 220 crore against Rs 170 crore in 2005-06.
In its rating rationale, rating agency CRISIL has said the decline in CitiFinancial’s net profit in the first half of 2007-08 was largely due to higher delinquencies in the unsecured personal loans segment.
Spreads have also been under pressure due to increased borrowing costs and a shift in its loan portfolio towards a higher proportion of mortgage products, which have a lower yield than unsecured personal loans.
To contain credit costs in the unsecured personal loan segment, CitiFinancial is shifting focus to customers with better credit profiles but lower yields.
It is also increasing its focus on fee-based income through insurance distribution. However, the rating agency said the initiatives will benefit the company in the medium term and the pressure on profitability will continue in the near future.
According to reports, Citigroup is also in the process of closing its CitiFinancial unit in Japan and scaling down operations of the consumer lending arm in Mexico. CitiFinancial Japan has already reduced its branches to 51 from 324 in 2006.
Recently, GE Money, another US-based consumer lender, expressed its intentions to exit the personal loans and housing loans business in India.
Anil Ambani-promoted Reliance Capital, Kishore Biyani’s Future Capital, Birla Group and Fullerton are believed to be potential buyers. Private equity players like JP Morgan and Goldman Sachs are also in the race. HDFC Bank, which has set up its own non-bank finance company, is also keen to acquire the business.
GE Money had exited the consumer durable and auto loan business in India earlier.
The sub-prime loss-hit Citigroup is on a cost-cutting exercise in its Indian operations.
CitiFinancial, its consumer finance unit, which is also reeling under the burden of rising bad loans, is considering closing about 100 of its 450 branches in India.
Meanwhile, Citibank, the commercial banking arm, has begun shifting its ATMs from prime locations to less expensive ones. Banking sources said private sector banks like Yes Bank and HDFC Bank have bought some of the locations.
“In terms of cost-cutting, the bank is relocating ATMs. Citibank is relocating around 30 ATMs from high-cost locations to low-cost areas,” said banking sources.
These steps are in tune with Citigroup’s global efforts at substantially reducing costs according to plans drawn up by Vikram Pandit, who took charge as CEO of the world’s largest financial services group after Chuck Prince exited following a $17.4 billion write-down on sub-prime related exposures.
In response to a mail sent by Business Standard, a Citigroup India spokesperson preferred not to comment on the closure of branches,
“CitiFinancial is not exiting the consumer finance business. We are committed to growing it further by adding new products to its portfolio. To service customers better, we are in the process of relocating some branches in select geographic locations,” the response said.
The spokesperson added that CitiFinancial has not sold any ATM locations. “We have relocated some ATM premises, which is an ongoing process to better serve larger numbers of customers. We will continue to operate 480 ATMs across the country.”
CitiFinancial India saw a 64 per cent drop in net profit in the first half of 2007-08. For the whole of 2006-07, CitiFinancial’s net profit was at Rs 220 crore against Rs 170 crore in 2005-06.
In its rating rationale, rating agency CRISIL has said the decline in CitiFinancial’s net profit in the first half of 2007-08 was largely due to higher delinquencies in the unsecured personal loans segment.
Spreads have also been under pressure due to increased borrowing costs and a shift in its loan portfolio towards a higher proportion of mortgage products, which have a lower yield than unsecured personal loans.
To contain credit costs in the unsecured personal loan segment, CitiFinancial is shifting focus to customers with better credit profiles but lower yields.
It is also increasing its focus on fee-based income through insurance distribution. However, the rating agency said the initiatives will benefit the company in the medium term and the pressure on profitability will continue in the near future.
According to reports, Citigroup is also in the process of closing its CitiFinancial unit in Japan and scaling down operations of the consumer lending arm in Mexico. CitiFinancial Japan has already reduced its branches to 51 from 324 in 2006.
Recently, GE Money, another US-based consumer lender, expressed its intentions to exit the personal loans and housing loans business in India.
Anil Ambani-promoted Reliance Capital, Kishore Biyani’s Future Capital, Birla Group and Fullerton are believed to be potential buyers. Private equity players like JP Morgan and Goldman Sachs are also in the race. HDFC Bank, which has set up its own non-bank finance company, is also keen to acquire the business.
GE Money had exited the consumer durable and auto loan business in India earlier.
Chidambaram projects 8.70% growth in Economic Survey
Projecting an 8.7 per cent growth in the current fiscal, the Economic Survey on Thursday said the government should ensure a non-inflationary growth along with speeding up of reforms for sustaining nine per cent expansion in GDP.
"Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one,'' Economic Survey for 2007-08 presented in Parliament said.
The survey, tabled by the Finance Minister, Mr P Chidambaram in Lok Sabha, said that while the Gross Domestic Product (GDP) is expected to grow by 8.7 per cent in 2007-08, "this represents a deceleration from the unexpectedly high growth of 9.4 per cent and 9.6 per cent, respectively, in the previous years''.
"Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one,'' Economic Survey for 2007-08 presented in Parliament said.
The survey, tabled by the Finance Minister, Mr P Chidambaram in Lok Sabha, said that while the Gross Domestic Product (GDP) is expected to grow by 8.7 per cent in 2007-08, "this represents a deceleration from the unexpectedly high growth of 9.4 per cent and 9.6 per cent, respectively, in the previous years''.
Wednesday, February 27, 2008
Buy--Tantia Construction
North East and eastern India are considered to be underdeveloped. Investments are required towards construction of roads, ports, power and other infrastructure facilities. The Centre has already indicated that it intends to spend Rs 50,000 crore towards construction of roads and another Rs 2,000 crore for rail connectivity in the North-East over the next five years.
Tantia, which generates about 96 per cent of its revenue from the eastern and north eastern region by undertaking roads and railway projects, will be the key beneficiary.
To further capitalise on this, the company is foraying into other segments of infrastructure and BOT projects. Its relatively smaller size and limited presence is reflecting in the lower valuation it enjoys vis-à-vis its peers, which should hopefully correct as the market gains confidence in the company. What is currently playing in its favour are opportunities and relatively less competition in the North East.
Considering the industry outlook and healthy order book to be executed over the next 30 months, the company may maintain revenue growth of over 50 per cent in the next two years.
Tantia, which generates about 96 per cent of its revenue from the eastern and north eastern region by undertaking roads and railway projects, will be the key beneficiary.
To further capitalise on this, the company is foraying into other segments of infrastructure and BOT projects. Its relatively smaller size and limited presence is reflecting in the lower valuation it enjoys vis-à-vis its peers, which should hopefully correct as the market gains confidence in the company. What is currently playing in its favour are opportunities and relatively less competition in the North East.
Considering the industry outlook and healthy order book to be executed over the next 30 months, the company may maintain revenue growth of over 50 per cent in the next two years.
Satyam, Infosys in pursuit of large railway deals
Welcoming the Railway Budget presented today, IT services provider Satyam Computer said that it was in pursuit of at least four Rs 1,000 crore to Rs,2,000 crore technology outsourcing deals in the Indian Railways.
Mr Ranjan Tayal, India-Head, Satyam Computer, said the company was in talks with the Indian Railways for such large IT outsourcing deals. They include asset management services, enterprise resource planning (ERP), RFID (radio frequency identification) and commercial portals.
In a statement, he said the Railway Ministry was looking at information technology as a strategic tool where IT partners need to engage not just at the service but at the solution level. The scope of work now goes beyond just implementing IT frameworks. It involves also post-deployment services such as enterprise-wide roll-out and maintenance through call centres for internal and external touch points.
Some of these deals are to be awarded to companies that participated in the request for proposal (RFP), in the first half of the fiscal year which starts April 1.
Dow Jones reports: Infosys Technologies Ltd said it plans to pursue deals arising from Railways’ decision to modernise its information technology infrastructure.
“The gamut of opportunities within IT could cover digitisation, freight management, ticket processing over the mobile/alternative delivery systems, optimising and upgrading IT-infrastructure. This is a great opportunity for Indian IT players such as Infosys,” the Chief Financial Officer, Mr V. Balakrishnan, said in a statement. The company’s India business unit “will be actively participating in some of these opportunities,” he added.
Mr Ranjan Tayal, India-Head, Satyam Computer, said the company was in talks with the Indian Railways for such large IT outsourcing deals. They include asset management services, enterprise resource planning (ERP), RFID (radio frequency identification) and commercial portals.
In a statement, he said the Railway Ministry was looking at information technology as a strategic tool where IT partners need to engage not just at the service but at the solution level. The scope of work now goes beyond just implementing IT frameworks. It involves also post-deployment services such as enterprise-wide roll-out and maintenance through call centres for internal and external touch points.
Some of these deals are to be awarded to companies that participated in the request for proposal (RFP), in the first half of the fiscal year which starts April 1.
Dow Jones reports: Infosys Technologies Ltd said it plans to pursue deals arising from Railways’ decision to modernise its information technology infrastructure.
“The gamut of opportunities within IT could cover digitisation, freight management, ticket processing over the mobile/alternative delivery systems, optimising and upgrading IT-infrastructure. This is a great opportunity for Indian IT players such as Infosys,” the Chief Financial Officer, Mr V. Balakrishnan, said in a statement. The company’s India business unit “will be actively participating in some of these opportunities,” he added.
Tuesday, February 26, 2008
Reliance strikes 8th gas discovery in block NEC–25
RIL had earlier struck six consecutive commercial discoveries in this block
Reliance Industries announced a gas discovery in NEC-OSN 97/2 (NEC-25) block located in the NEC-Mahanadi offshore basin, off the Orissa coast in Bay of Bengal. This shallow water block covering an area of 10,755 sq km in water depths ranging between 20-600 m was awarded under the bidding round of NELP I. RIL holds 90% participating interest (PI) and NIKO (NELPIO) Ltd. holds 10% of PI in the block.
This is the eighth discovery in the block. RIL had earlier struck six consecutive commercial discoveries in this block, for which the development plan has been submitted to the Directorate General of Hydrocarbons (DGH) for approval.The well NEC 25-J1 was drilled with the objective of exploring upper Miocene slope sands in the deeper part of the block. This well was drilled at a water depth of 478 m to the target depth of 2926 m. For the first time in this basin, the well encountered high quality multi-darcy gas bearing reservoir sands in the interval 2484 – 2495.5 m based on the interpretation of the wire-line logs. Subsequently, the presence of gas in the above interval was confirmed by carrying out Modular Dynamic Testing (MDT).
This discovery, named ‘Dhirubhai–40’ has been notified to Government of India and DGH. RIL is currently evaluating the potential commercial interest of the discovery through additional data collection and analysis.This discovery establishes the hydrocarbon potential towards the deeper part of NEC-Mahanadi Basin and opens up more acreage for further hydrocarbon exploration efforts.
Reliance Industries announced a gas discovery in NEC-OSN 97/2 (NEC-25) block located in the NEC-Mahanadi offshore basin, off the Orissa coast in Bay of Bengal. This shallow water block covering an area of 10,755 sq km in water depths ranging between 20-600 m was awarded under the bidding round of NELP I. RIL holds 90% participating interest (PI) and NIKO (NELPIO) Ltd. holds 10% of PI in the block.
This is the eighth discovery in the block. RIL had earlier struck six consecutive commercial discoveries in this block, for which the development plan has been submitted to the Directorate General of Hydrocarbons (DGH) for approval.The well NEC 25-J1 was drilled with the objective of exploring upper Miocene slope sands in the deeper part of the block. This well was drilled at a water depth of 478 m to the target depth of 2926 m. For the first time in this basin, the well encountered high quality multi-darcy gas bearing reservoir sands in the interval 2484 – 2495.5 m based on the interpretation of the wire-line logs. Subsequently, the presence of gas in the above interval was confirmed by carrying out Modular Dynamic Testing (MDT).
This discovery, named ‘Dhirubhai–40’ has been notified to Government of India and DGH. RIL is currently evaluating the potential commercial interest of the discovery through additional data collection and analysis.This discovery establishes the hydrocarbon potential towards the deeper part of NEC-Mahanadi Basin and opens up more acreage for further hydrocarbon exploration efforts.
How to 'read' the market? 4 indicators
Here are some assorted examples of sentiment indicators
Fund manager surveys - Many print and electronic media organisations conduct such surveys during the beginning of every calendar year. Usually, it is observed that, in case a vast majority of the responses are on any particular side (either bullish or bearish), it is very likely that exactly the opposite will happen during the course of the next year.
In fact investment professionals (as a group, rather than as individuals) often eclipse the weather department in terms of inaccurate predictions. In the US, the Yale School of Management Stock Market Confidence Index is based on investor surveys.
Fund manager surveys - Many print and electronic media organisations conduct such surveys during the beginning of every calendar year. Usually, it is observed that, in case a vast majority of the responses are on any particular side (either bullish or bearish), it is very likely that exactly the opposite will happen during the course of the next year.
In fact investment professionals (as a group, rather than as individuals) often eclipse the weather department in terms of inaccurate predictions. In the US, the Yale School of Management Stock Market Confidence Index is based on investor surveys.
Monday, February 25, 2008
Reliance Energy to consider buy-back of shares
REL to consider buy back of shares on March 05, 2008
Reliance Energy Ltd informed that a meeting of the Board of Directors of the Company will be held on March 05, 2008, inter alia, to consider, buy back of equity shares of the Company
Reliance Energy Ltd informed that a meeting of the Board of Directors of the Company will be held on March 05, 2008, inter alia, to consider, buy back of equity shares of the Company
How to 'read' the market? 4 indicators
Here are some assorted examples of sentiment indicators:
Put/call ratio - A put option gives the purchaser the right, but not the obligation, to sell a security for a certain price by a specific time. Conversely, a call option gives the buyer the right, but not the obligation, to buy a security for a certain price by a specific time.
An extremely high put/call ratio indicates fear in the market, since more investors are betting on a downturn rather than an upturn.
On the other hand, an extremely low put/call ratio indicates an abundance of optimism, as investors are aggressively betting on future stock market gains.
Put/call ratio - A put option gives the purchaser the right, but not the obligation, to sell a security for a certain price by a specific time. Conversely, a call option gives the buyer the right, but not the obligation, to buy a security for a certain price by a specific time.
An extremely high put/call ratio indicates fear in the market, since more investors are betting on a downturn rather than an upturn.
On the other hand, an extremely low put/call ratio indicates an abundance of optimism, as investors are aggressively betting on future stock market gains.
How to 'read' the market? 4 indicators
Here are some assorted examples of sentiment indicators:
Put/call ratio - A put option gives the purchaser the right, but not the obligation, to sell a security for a certain price by a specific time. Conversely, a call option gives the buyer the right, but not the obligation, to buy a security for a certain price by a specific time.
An extremely high put/call ratio indicates fear in the market, since more investors are betting on a downturn rather than an upturn.
On the other hand, an extremely low put/call ratio indicates an abundance of optimism, as investors are aggressively betting on future stock market gains.
Put/call ratio - A put option gives the purchaser the right, but not the obligation, to sell a security for a certain price by a specific time. Conversely, a call option gives the buyer the right, but not the obligation, to buy a security for a certain price by a specific time.
An extremely high put/call ratio indicates fear in the market, since more investors are betting on a downturn rather than an upturn.
On the other hand, an extremely low put/call ratio indicates an abundance of optimism, as investors are aggressively betting on future stock market gains.
How to 'read' the market? 4 indicators
Negative sentiment is sweeping through the bourses" is a very common line that you hear in television channels. If anyone were to ask what does it exactly mean? The reply, most likely, would construe lines like, "Since the world markets are doing badly, India has to follow."
Reading the signs
Put and call ratio is a good indicator. High PCR means fear and Low PCR implies optimism
Fund Surveys give pointers on what the investors believe. Majority responses towards any particular trend means the reverse is likely to happen
Mutual Fund Data reflects optimism or pessimism
Buoyant markets, whether primary or secondary, are often attributed to good market sentiment. Conversely, whenever the market pours ice-cold water on the hopes of many a day-trader and futures and option speculator, it is attributed to poor market sentiment.
In fact most market experts clearly say that markets are driven by both fundamentals and sentiment. And the latter is as important as the former.
So, given that the usual suspect in any short-term movement is ascribed to the "sentiment", it might be worth spending some time on the meaning of this word, and more importantly, what are the elements that make up this word in the stock market context.
Investopedia.com defines it as "The feeling or tone of a market (that is, crowd psychology). It is shown by the activity and price movement of securities".
As is apparent from this definition, there is an element of intuition or psychology involved. This can be summarised in just two words: greed and fear.
This aspect is completely neglected by the 'Efficient Market' theorists who propound that all market participants are rational human beings. Behavioural Finance practitioners, however, accord a lot of importance to such psychology.
Though 'sentiment' can be written-off as being largely short-lived, there have been attempts to quantify and pictorially depict these periodic emotional outpourings, through the medium of 'Sentiment Indicators'.
Such indicators attempt to gauge the composite market mood. However, unlike certain trend-following indicators (such as moving averages or trend-line breakouts), sentiment indicators generally are used to signal trend reversals.
Generally speaking, it means that when a sentiment indicator shows an abundance of optimism, investors would be wiser if they approach the market with a higher degree of caution.
The reasoning behind this is rather simple. If the vast majority of investors are very optimistic, then it follows that this positive outlook is getting translated into direct investment by them.
That implies that it would become more difficult progressively to find newer investors that provide an exit route to the existing investors. Therefore, sentiment indicators can point to major turning points in the markET.
Iwill give some assorted examples of sentiment indicators in 2morow edition
Reading the signs
Put and call ratio is a good indicator. High PCR means fear and Low PCR implies optimism
Fund Surveys give pointers on what the investors believe. Majority responses towards any particular trend means the reverse is likely to happen
Mutual Fund Data reflects optimism or pessimism
Buoyant markets, whether primary or secondary, are often attributed to good market sentiment. Conversely, whenever the market pours ice-cold water on the hopes of many a day-trader and futures and option speculator, it is attributed to poor market sentiment.
In fact most market experts clearly say that markets are driven by both fundamentals and sentiment. And the latter is as important as the former.
So, given that the usual suspect in any short-term movement is ascribed to the "sentiment", it might be worth spending some time on the meaning of this word, and more importantly, what are the elements that make up this word in the stock market context.
Investopedia.com defines it as "The feeling or tone of a market (that is, crowd psychology). It is shown by the activity and price movement of securities".
As is apparent from this definition, there is an element of intuition or psychology involved. This can be summarised in just two words: greed and fear.
This aspect is completely neglected by the 'Efficient Market' theorists who propound that all market participants are rational human beings. Behavioural Finance practitioners, however, accord a lot of importance to such psychology.
Though 'sentiment' can be written-off as being largely short-lived, there have been attempts to quantify and pictorially depict these periodic emotional outpourings, through the medium of 'Sentiment Indicators'.
Such indicators attempt to gauge the composite market mood. However, unlike certain trend-following indicators (such as moving averages or trend-line breakouts), sentiment indicators generally are used to signal trend reversals.
Generally speaking, it means that when a sentiment indicator shows an abundance of optimism, investors would be wiser if they approach the market with a higher degree of caution.
The reasoning behind this is rather simple. If the vast majority of investors are very optimistic, then it follows that this positive outlook is getting translated into direct investment by them.
That implies that it would become more difficult progressively to find newer investors that provide an exit route to the existing investors. Therefore, sentiment indicators can point to major turning points in the markET.
Iwill give some assorted examples of sentiment indicators in 2morow edition
Sunday, February 24, 2008
HDFC Bank, CBoP merger ratio at 1:29
HDFC Bank today announced the merger ratio of Centurion Bank of Punjab (CBoP) with itself at 1:29.According to a release issued by HDFC Bank to the BSE today, based on the joint valuation report submitted by Ernst & Young and Dalal & Shah, the board today approved the share swap ratio of 1 equity share of Rs 10 each of HDFC Bank for every 29 equity shares of Re 1 each held in Centurion Bank of Punjab. This share swap ratio is subject to due diligence to be conducted in this regard.The bank's board observed that in the event of the merger of Centurion Bank of Punjab with HDFC Bank being approved at its meeting on February 28, 2008, it would consider making a preferential offer to its promoter Housing Development Finance Corporation (HDFC) to enable HDFC to maintain its shareholding percentage in the Bank, the release added.
HDFC Bank, CBoP merger ratio at 1:29
HDFC Bank today announced the merger ratio of Centurion Bank of Punjab (CBoP) with itself at 1:29.According to a release issued by HDFC Bank to the BSE today, based on the joint valuation report submitted by Ernst & Young and Dalal & Shah, the board today approved the share swap ratio of 1 equity share of Rs 10 each of HDFC Bank for every 29 equity shares of Re 1 each held in Centurion Bank of Punjab. This share swap ratio is subject to due diligence to be conducted in this regard.The bank's board observed that in the event of the merger of Centurion Bank of Punjab with HDFC Bank being approved at its meeting on February 28, 2008, it would consider making a preferential offer to its promoter Housing Development Finance Corporation (HDFC) to enable HDFC to maintain its shareholding percentage in the Bank, the release added.
Systematic investment in balanced funds is good for long-term investor
If you want to maintain a simple portfolio and yet have the benefits of diversification, a systematic investment in balanced funds is a great option As an investor, if you are saving regularly for the long-term and want a low-involvement, hassle-free instrument, then balanced funds are the right choice. Balanced (mutual) funds have been around for over a decade — and manage assets of over Rs 16,000 crore between them. They, by mandate, invest at least 65% of their portfolio in equities, and up to 35% in debt and related instruments. In practice, the equity component of most balanced funds varies between 65% and 80%, depending on the fund manager’s outlook of the markets. Long-term and discerning investors would no doubt have heard of the UTI Balanced Fund and Prashant Jain’s HDFC Prudence Fund. Of course, today, there are over 15 balanced funds offered by different fund houses. They have systematic investment plans (SIP), growth/dividend options, and all the other investor-friendly features provided by ‘pure’ equity and debt funds. But how effective are balanced funds from a tax, load and performance point of view, compared to, say, investing partly in equities and partly in debt? For those who do not wish to enter into nitty-gritties, here’s the simple answer: if you want to maintain a simple portfolio, and yet have the benefits of diversification, a systematic investment in balanced funds is a great option.
If you are the more discerning and involved kind, you might want to synthetically ‘manufacture’ a balanced fund type of portfolio instead; by investing in two or more funds, each of ‘pure’ equity and debt nature. If you want some mathematics around, how we came to this, then read on! For a fair comparison, we consider a Rs 100 investment for three years in a balanced fund on the one hand; and compare it with a combination of two investments for the same duration — of Rs 65 in an equity fund and Rs 35 in a debt fund. Of course, if your desired asset allocation is far different from this (say you are risk averse and want to stay away from equity markets), you should not consider balanced funds. We assume an annualised equity market return of 15% and a debt market return of 7%. Thus, the balanced fund return, ceteris paribus, is expected to be 12.2%, before load and tax. Nature of portfolio Balanced funds would invariably invest the equity component of the portfolio in a well-diversified basket of securities, in different sectors. This is ideal for an investor who wants to participate in the long-term growth of the economy, without any active sector or stock preference. Indeed, balanced funds are best suited for such investors. For someone wanting to take sector calls or ride a mid-cap rally, a ‘pure’ (sector or mid-cap) equity fund exposure is called for.
A balanced fund would invest in debt securities of intermediate duration (1-4 years). Thus, they are sensitive to interest rate movements, but not overly so. Hence, as with equity, they are again suitable for investors without a clear researched view on rate cycles. Transaction costs In any mutual fund investment, there are two kinds of transaction costs — viz entry/exit loads (for purchase or redemption of fund units) and the expense ratio (annual cost of fund management). Let us examine each of these in the illustration given above. Most balanced funds, unfortunately, charge the same entry load as equity funds (2.25%). Thus, in our numerical example, of the Rs 100 invested in the balanced fund, only Rs 97.8 would go towards allotment of units. In our synthetic example, the entire Rs 35 would go into debt units (there being no entry load), and Rs 63.57 towards equity units. Thus, in the synthetic case, we have escaped paying entry load on the debt part of the investment. This difference gets magnified with time, due to compounding. The other major cost — the expense ratio — is (at least currently) similar in the balanced and synthetic fund scenario. In fact, the difference between funds of similar category exceeds the difference between the equity and balanced categories. So, we ignore this term in the comparison. Tax implications There are two tax structures in mutual funds, depending on whether a fund is classified as debt or equity. The following table summarises the currently prevailing tax structure: Thus, equity funds enjoy beneficial tax treatment. Here, balanced funds enjoy the beneficial treatment of being taxed like equity funds and, in this, they clearly score over the synthetic portfolio we had manufactured, where the debt portion would be taxed at a higher rate. Balanced funds have higher transaction costs, but are beneficial from a tax perspective. Let us now examine the net impact of all these factors on returns earned by a typical investor. The accompanying table shows the net impact in both the balanced fund investment and the synthetic portfolio; for the period of three years, given the equity and debt returns as assumed above. As can be seen there, the synthetic portfolio outperforms, but by a very small margin. For all practical purposes, a good balanced fund can easily perform as well as a synthetically-made portfolio with similar debt to equity ratio. And we do have such excellent balanced funds in today’s mutual fund market! As an investor, if you are saving regularly for the long term and want a low involvement hassle free instrument, balanced funds are for you. If you otherwise have a lot of debt investment (Bank FD, PPF, NSC, liquid funds, etc) then you might be better off going for 100% equity oriented funds instead. In either case, you can be comfortable in the knowledge that the benefits of one option over another are not overwhelming; and in most cases not even significant.
If you are the more discerning and involved kind, you might want to synthetically ‘manufacture’ a balanced fund type of portfolio instead; by investing in two or more funds, each of ‘pure’ equity and debt nature. If you want some mathematics around, how we came to this, then read on! For a fair comparison, we consider a Rs 100 investment for three years in a balanced fund on the one hand; and compare it with a combination of two investments for the same duration — of Rs 65 in an equity fund and Rs 35 in a debt fund. Of course, if your desired asset allocation is far different from this (say you are risk averse and want to stay away from equity markets), you should not consider balanced funds. We assume an annualised equity market return of 15% and a debt market return of 7%. Thus, the balanced fund return, ceteris paribus, is expected to be 12.2%, before load and tax. Nature of portfolio Balanced funds would invariably invest the equity component of the portfolio in a well-diversified basket of securities, in different sectors. This is ideal for an investor who wants to participate in the long-term growth of the economy, without any active sector or stock preference. Indeed, balanced funds are best suited for such investors. For someone wanting to take sector calls or ride a mid-cap rally, a ‘pure’ (sector or mid-cap) equity fund exposure is called for.
A balanced fund would invest in debt securities of intermediate duration (1-4 years). Thus, they are sensitive to interest rate movements, but not overly so. Hence, as with equity, they are again suitable for investors without a clear researched view on rate cycles. Transaction costs In any mutual fund investment, there are two kinds of transaction costs — viz entry/exit loads (for purchase or redemption of fund units) and the expense ratio (annual cost of fund management). Let us examine each of these in the illustration given above. Most balanced funds, unfortunately, charge the same entry load as equity funds (2.25%). Thus, in our numerical example, of the Rs 100 invested in the balanced fund, only Rs 97.8 would go towards allotment of units. In our synthetic example, the entire Rs 35 would go into debt units (there being no entry load), and Rs 63.57 towards equity units. Thus, in the synthetic case, we have escaped paying entry load on the debt part of the investment. This difference gets magnified with time, due to compounding. The other major cost — the expense ratio — is (at least currently) similar in the balanced and synthetic fund scenario. In fact, the difference between funds of similar category exceeds the difference between the equity and balanced categories. So, we ignore this term in the comparison. Tax implications There are two tax structures in mutual funds, depending on whether a fund is classified as debt or equity. The following table summarises the currently prevailing tax structure: Thus, equity funds enjoy beneficial tax treatment. Here, balanced funds enjoy the beneficial treatment of being taxed like equity funds and, in this, they clearly score over the synthetic portfolio we had manufactured, where the debt portion would be taxed at a higher rate. Balanced funds have higher transaction costs, but are beneficial from a tax perspective. Let us now examine the net impact of all these factors on returns earned by a typical investor. The accompanying table shows the net impact in both the balanced fund investment and the synthetic portfolio; for the period of three years, given the equity and debt returns as assumed above. As can be seen there, the synthetic portfolio outperforms, but by a very small margin. For all practical purposes, a good balanced fund can easily perform as well as a synthetically-made portfolio with similar debt to equity ratio. And we do have such excellent balanced funds in today’s mutual fund market! As an investor, if you are saving regularly for the long term and want a low involvement hassle free instrument, balanced funds are for you. If you otherwise have a lot of debt investment (Bank FD, PPF, NSC, liquid funds, etc) then you might be better off going for 100% equity oriented funds instead. In either case, you can be comfortable in the knowledge that the benefits of one option over another are not overwhelming; and in most cases not even significant.
Sensex may hit 29,000 by June 2009
Like Mumbaikars caught unawares by the recent spell of cold wave, investors have been struggling to adapt to the recurring bouts of volatility on the bourses over the last one month. But the weathermen of Dalal Street are expecting sunny skies by the end of this calendar year. Five of the six participants at the ET Round Table see the bellwether BSE Sensex between 20-22,000 then. The panelists included Narayan Ramachandran, MD & Country Head, Morgan Stanley; Pankaj Vaish, MD & Head equities and fixed income, Lehman Brothers; Ved Prakash Chaturvedi, MD & CEO, Tata Asset Management; Gaurang Shah, MD, Kotak Life; Rashesh Shah, CEO, Edelweiss Capital; and Motilal Oswal, Chairman, Motilal Oswal Securities. The session was moderated by Ramesh Damani, director, Ramesh S Damani Finance.
Only one participant, Ved Prakash Chaturvedi felt that the market was likely to be around 18,000 levels on December 31, 2008. “But that does not mean that mutual fund investors will not make money,” he added. Mr Ramachandran expects a modest performance by the Sensex in the current calendar, but expects the benchmark to touch 29,000 by June next year. Slowing corporate earnings is one factor that most market watchers feel could hold back the market. However, the ET panelists are not too worried about it. According to Mr Ramachandran and Mr Vaish, interest rates are showing signs of slackening and that could provide a support to corporate earnings over the next couple of years. “These (recent outflow of FII money) are not big things...they are just minor....India has attracted a lot of money and most of it came because of the fact that India is an attractive destination for money,” said Mr Ramachandran. “The real thing that will decide is where fundamentals are going. I feel that they (fundamentals) are solid,” he added. Mr Shah felt that issue was not about whether earnings will grow 18% or 12%, but about the rate at which the Indian GDP would grow. ”If you expect corporate earnings growth of 11-12%, it means we are looking at a GDP growth of 4.5 to 5 to 6%. But if you expect GDP growth rate to be around 8%, give or take 200 basis points, then a 17-18% corporate earnings growth is not difficult. And I haven’t seen anybody—Indian or global—question India’s 8% GDP growth rate,” Mr Shah said. While foreign funds have pulling out over the last few months, domestic liquidity has been a strong pillar of support and this trend is expected to continue, feels Mr Chaturvedi. “The kind of money we have seen that has flown in from the domestic investors in the last one year is certainly heartening,” said Mr Chaturvedi. “My guess is that if you combine insurance and mutual funds and other (domestic) sources of inflows into the market, close to $2 billion of fresh money is coming into the market every month,” he added. Mr Gaurang Shah sees more investors tapping the stock market through Unit Linked Insurance Plans (ULIPs), mainly because of the handsome returns these products have delivered in the last four years of the Bull Run. He excepts inflows of roughly $5 billion through various insurance schemes during the current quarter, a significant portion of which will be accounted for by ULIPs. “I think relative disadvantage of insurance as a instrument vis-à-vis other fixed interest products has come down, which is also because real interest rates have reduced across the world over the last 10 years. So I see money continuing to come in,” he said.
Only one participant, Ved Prakash Chaturvedi felt that the market was likely to be around 18,000 levels on December 31, 2008. “But that does not mean that mutual fund investors will not make money,” he added. Mr Ramachandran expects a modest performance by the Sensex in the current calendar, but expects the benchmark to touch 29,000 by June next year. Slowing corporate earnings is one factor that most market watchers feel could hold back the market. However, the ET panelists are not too worried about it. According to Mr Ramachandran and Mr Vaish, interest rates are showing signs of slackening and that could provide a support to corporate earnings over the next couple of years. “These (recent outflow of FII money) are not big things...they are just minor....India has attracted a lot of money and most of it came because of the fact that India is an attractive destination for money,” said Mr Ramachandran. “The real thing that will decide is where fundamentals are going. I feel that they (fundamentals) are solid,” he added. Mr Shah felt that issue was not about whether earnings will grow 18% or 12%, but about the rate at which the Indian GDP would grow. ”If you expect corporate earnings growth of 11-12%, it means we are looking at a GDP growth of 4.5 to 5 to 6%. But if you expect GDP growth rate to be around 8%, give or take 200 basis points, then a 17-18% corporate earnings growth is not difficult. And I haven’t seen anybody—Indian or global—question India’s 8% GDP growth rate,” Mr Shah said. While foreign funds have pulling out over the last few months, domestic liquidity has been a strong pillar of support and this trend is expected to continue, feels Mr Chaturvedi. “The kind of money we have seen that has flown in from the domestic investors in the last one year is certainly heartening,” said Mr Chaturvedi. “My guess is that if you combine insurance and mutual funds and other (domestic) sources of inflows into the market, close to $2 billion of fresh money is coming into the market every month,” he added. Mr Gaurang Shah sees more investors tapping the stock market through Unit Linked Insurance Plans (ULIPs), mainly because of the handsome returns these products have delivered in the last four years of the Bull Run. He excepts inflows of roughly $5 billion through various insurance schemes during the current quarter, a significant portion of which will be accounted for by ULIPs. “I think relative disadvantage of insurance as a instrument vis-à-vis other fixed interest products has come down, which is also because real interest rates have reduced across the world over the last 10 years. So I see money continuing to come in,” he said.
Rel Power bonus issue cuts shareholders' losses by 40%
Pursuant to this bonus issue, retail shareholders would receive the shares at Rs 269 each while for institutional shareholders, it would be Rs 281 per share. "Compared to the IPO price, for the retail investors it represents a reduction of 40 per cent and for institutional 37 per cent," Ambani added. The bonus issue follows the dismal opening of Reliance Power at the stock exchanges. The scrip, after listing at Rs 547.8, slid within a minute and closed at Rs 372.5, a level much below the issue price. Reliance Power scrip closed at Rs 416.85, down 1.21 per cent on Friday at the BSE. On February 20, the company said it had asked its shareholders to make balance payment by February 26 on shares allotted to them in the IPO to be eligible for bonus shares. Reliance Power's IPO had offered a discount to retail investors, and an option of staggered payment to all segments. The record date for the bonus shares would be fixed in consultation with stock exchanges and in compliance with provisions of the listing agreement, the firm added.
Saturday, February 23, 2008
HDFC Bank agrees to buy smaller Centurion
HDFC Bank, India's third-biggest lender by market capitalisation, agreed on Saturday to buy Centurion Bank of Punjab in an all-share deal in the nation's biggest financial sector buyout.
The boards of the two banks will meet on Feb. 25 to consider the share swap ratio and again on Feb. 28 to finalise the details of the merger, a joint statement from the lenders said. The two first announced plans for the merger late on Friday.
"The two Boards have resolved to pursue the merger subject to satisfactory due diligence, a fair share-swap ratio and all the requisite statutory, regulatory and corporate approvals," the statement said.
It did not give a value for the deal. The Economic Times said the deal may value Centurion's shares at 57 rupees each, or roughly the price at which they closed on Thursday after jumping 14 percent on the day as speculation of a deal intensified.
Ernst & Young and Dalal & Shah have been appointed to determine the share swap ratio, HDFC Bank said in a statement to the stock exchange.
The merger will create a bank with 1,148 branches, surpassing second largest lender ICICI Bank's 955 branches. Centurion had 394 branches and HDFC Bank 754 branches as on Dec. 31 2007, the statement said.
However, the merged entity's total advances of about 870 billion rupees ($21.7 billion) are far lower than ICICI's 2.2 trillion rupees.
The merger will allow HDFC Bank to extend its reach in the country before a central bank review next year that may allow foreign banks such as Citigroup and Standard Chartered to buy Indian lenders.
Indian banks, led by State Bank of India and ICICI, the top two by market value, are raising funds to expand ahead of the review and to meet the demands from an economy that has grown at an average of 8.6 percent over the last four years.
State Bank is raising $4.2 billion in a rights share issue, HDFC Bank plans to sell bonds worth up to $1 billion and ICICI sold $5 billion of shares in June, eyeing rapid growth in the fragmented Indian banking sector.
HDFC Bank and Centurion, which got banking licenses in the mid-1990s, are among the few to have acquired local rivals.
HDFC Bank bought Times Bank from media publisher Bennett Coleman & Co in 2000. While Centurion, which was rescued by buyout firm Sabre Capital in 2003 after major losses, has bought Bank of Punjab and Lord Krishna Bank.
Bank Muscat owns 14.02 percent and Sabre Capital 3.74 percent of Centurion as on Dec. 31, stock exchange data showed.
Centurion Bank shares, which ended one percent down on Friday valuing the bank at 105 billion rupees, have risen 13 percent since Feb. 20. HDFC Bank shares have lost 4 percent in the same period.
The boards of the two banks will meet on Feb. 25 to consider the share swap ratio and again on Feb. 28 to finalise the details of the merger, a joint statement from the lenders said. The two first announced plans for the merger late on Friday.
"The two Boards have resolved to pursue the merger subject to satisfactory due diligence, a fair share-swap ratio and all the requisite statutory, regulatory and corporate approvals," the statement said.
It did not give a value for the deal. The Economic Times said the deal may value Centurion's shares at 57 rupees each, or roughly the price at which they closed on Thursday after jumping 14 percent on the day as speculation of a deal intensified.
Ernst & Young and Dalal & Shah have been appointed to determine the share swap ratio, HDFC Bank said in a statement to the stock exchange.
The merger will create a bank with 1,148 branches, surpassing second largest lender ICICI Bank's 955 branches. Centurion had 394 branches and HDFC Bank 754 branches as on Dec. 31 2007, the statement said.
However, the merged entity's total advances of about 870 billion rupees ($21.7 billion) are far lower than ICICI's 2.2 trillion rupees.
The merger will allow HDFC Bank to extend its reach in the country before a central bank review next year that may allow foreign banks such as Citigroup and Standard Chartered to buy Indian lenders.
Indian banks, led by State Bank of India and ICICI, the top two by market value, are raising funds to expand ahead of the review and to meet the demands from an economy that has grown at an average of 8.6 percent over the last four years.
State Bank is raising $4.2 billion in a rights share issue, HDFC Bank plans to sell bonds worth up to $1 billion and ICICI sold $5 billion of shares in June, eyeing rapid growth in the fragmented Indian banking sector.
HDFC Bank and Centurion, which got banking licenses in the mid-1990s, are among the few to have acquired local rivals.
HDFC Bank bought Times Bank from media publisher Bennett Coleman & Co in 2000. While Centurion, which was rescued by buyout firm Sabre Capital in 2003 after major losses, has bought Bank of Punjab and Lord Krishna Bank.
Bank Muscat owns 14.02 percent and Sabre Capital 3.74 percent of Centurion as on Dec. 31, stock exchange data showed.
Centurion Bank shares, which ended one percent down on Friday valuing the bank at 105 billion rupees, have risen 13 percent since Feb. 20. HDFC Bank shares have lost 4 percent in the same period.
Friday, February 22, 2008
BEST BUY Nagarjuna Construction
Nagarjuna Construction has been growing at 58 per cent annually over the last four years and is expected to grow at about 40-45 per cent during FY08-10. The growth will be driven by robust order book coupled with expansion of volumes and margins, led by diversification into segments like metal, oil & gas and real estate development. Nagarjuna is investing in BOT projects; has five road projects, two hydro power and two sea port projects. Its businesses are valued at Rs 315-395 per share.
Infosys, TCS best outsourcing firms in the world
Reflecting the outsourcing prowess of India Inc around 20 Indian companies, including the likes of Infosys, Wipro and Tata Consultancy Services, are among the best in the world.
‘The 2008 Global Outsourcing 100’ list compiled by the International Association of Outsourcing Professionals (IAOP) has named about 20 companies based in India.
Among them are: India’s top software exporters — Tata Consultancy Services, Infosys, HCL Technologies and Wipro Technologies, while Genpact, WNS and EXLService are leading BPO firms listed in the US.
The others figuring in the list are MindTree Consulting, Aditya Birla Minacs, Patni, Quest, Tech Mahindra, Mastek, KPIT Cummins, Convergys, Zensar Technologies, First Source, ITC Infotech, Hexaware and 24/7 Customer.
The evaluation process for compiling the list mainly takes into consideration the size and growth in revenue of the company, its employees, centres and countries served, management capabilities, competencies and customer experience.
The list also features many foreign entities who have a substantial presence in India. Most of these companies are American such as Accenture, Cognizant Technologies, IBM, ADP, Xerox, CB Richard Ellis and Hewlett-Packard. According to IAOP, the list includes firms providing outsourcing services — “not just information technology and business process outsourcing, but areas such as facility services, real estate and capital asset management, manufacturing and logistics.”
In a statement, CB Richard Ellis Chairman Managing Director (South Asia) Anshuman Magazine said: “It is always good to be recognised but when it is from someone like the International Association of Outsourcing Professionals, it is even more valuable. Such recognition encourages our team and inspires us to give the best in class service to our clients.”
‘The 2008 Global Outsourcing 100’ list compiled by the International Association of Outsourcing Professionals (IAOP) has named about 20 companies based in India.
Among them are: India’s top software exporters — Tata Consultancy Services, Infosys, HCL Technologies and Wipro Technologies, while Genpact, WNS and EXLService are leading BPO firms listed in the US.
The others figuring in the list are MindTree Consulting, Aditya Birla Minacs, Patni, Quest, Tech Mahindra, Mastek, KPIT Cummins, Convergys, Zensar Technologies, First Source, ITC Infotech, Hexaware and 24/7 Customer.
The evaluation process for compiling the list mainly takes into consideration the size and growth in revenue of the company, its employees, centres and countries served, management capabilities, competencies and customer experience.
The list also features many foreign entities who have a substantial presence in India. Most of these companies are American such as Accenture, Cognizant Technologies, IBM, ADP, Xerox, CB Richard Ellis and Hewlett-Packard. According to IAOP, the list includes firms providing outsourcing services — “not just information technology and business process outsourcing, but areas such as facility services, real estate and capital asset management, manufacturing and logistics.”
In a statement, CB Richard Ellis Chairman Managing Director (South Asia) Anshuman Magazine said: “It is always good to be recognised but when it is from someone like the International Association of Outsourcing Professionals, it is even more valuable. Such recognition encourages our team and inspires us to give the best in class service to our clients.”
Thursday, February 21, 2008
Dow drops 143pts; ADRs end mixed
The US stocks ended on a weak note yesterday. The Dow Jones industrial average shed 143 points at 12,284. The Nasdaq dropped 27 points to 2,300.Indian ADRs, however, ended on a mixed note. Patni Computers surged 2.5% to $13.15, and Genpact gained 2% at $14.23. Sterlite and Wipro advanced 1.5% each to $20.29 and $11.75, respectively. Infosys was up over 1% at $41.70.On the other hand, MTNL plunged over 4% to $6, and ICICI Bank tumbled over 3% to $56.47. HDFC Bank slipped over 2% to $114.48, and Satyam was down over 1% at $26.09.
INVESTMENT IDEA 2008--
Pratibha Industries
Pratibha Industries is emerging from being a small player handling projects with an average size of Rs 10-20 crore to a bigger player. The most recent order bagged by the company is as big as Rs 300 crore. The company, which was primarily into the water projects (about 70 per cent), has diversified into other construction segments such as industrial projects, roads, urban infrastructure, airports, railways, pipeline and tunneling. The company has a strong focus and expertise in handling water-related projects, accounting for 60 per cent of its total order book.
Further, to grab the growing opportunities in the water segment, micro tunneling and piping projects, the company has formed a JV with Ostu Stettin of Austria, the world’s third largest tunneling company. It will help getting complex projects involving tunneling for laying pipes in high density urban areas for underground tunneling.
Besides, the company is also integrating backwards into manufacturing of SAW spiral pipes, with a capacity of 90,000 tonnes per annum. These pipes will be used for captive consumption as well as commercial sales to other companies for use in water transmission, oil and gas, sewerage and other industrial usage.
Within construction, the company has also diversified into some of the high potential segments, having undertaken (either independently or jointly) construction of complexes, buildings, airports and roads.
A strong order book of almost 4.5 times its FY08 estimated revenue and better outlook for urban infrastructure and water-related projects, indicates a robust future for the company. Besides, growth would be driven by the increasing revenue share of pipe manufacturing business in FY09. According to estimates, the SAW pipe segment alone can add about Rs 240 crore of revenue in FY09 at 60 per cent capacity. Overall, the stock is attractive from a long-term perspective.
Pratibha Industries is emerging from being a small player handling projects with an average size of Rs 10-20 crore to a bigger player. The most recent order bagged by the company is as big as Rs 300 crore. The company, which was primarily into the water projects (about 70 per cent), has diversified into other construction segments such as industrial projects, roads, urban infrastructure, airports, railways, pipeline and tunneling. The company has a strong focus and expertise in handling water-related projects, accounting for 60 per cent of its total order book.
Further, to grab the growing opportunities in the water segment, micro tunneling and piping projects, the company has formed a JV with Ostu Stettin of Austria, the world’s third largest tunneling company. It will help getting complex projects involving tunneling for laying pipes in high density urban areas for underground tunneling.
Besides, the company is also integrating backwards into manufacturing of SAW spiral pipes, with a capacity of 90,000 tonnes per annum. These pipes will be used for captive consumption as well as commercial sales to other companies for use in water transmission, oil and gas, sewerage and other industrial usage.
Within construction, the company has also diversified into some of the high potential segments, having undertaken (either independently or jointly) construction of complexes, buildings, airports and roads.
A strong order book of almost 4.5 times its FY08 estimated revenue and better outlook for urban infrastructure and water-related projects, indicates a robust future for the company. Besides, growth would be driven by the increasing revenue share of pipe manufacturing business in FY09. According to estimates, the SAW pipe segment alone can add about Rs 240 crore of revenue in FY09 at 60 per cent capacity. Overall, the stock is attractive from a long-term perspective.
Wednesday, February 20, 2008
SBI, Canara cut rates again
In a concerted move, four public sector banks today cut their benchmark prime lending rates (PLRs). State Bank of India (SBI), the country’s largest bank, and Canara Bank cut their PLRs by 25 basis points for the second time in just over a week, while Bank of India (BoI) and Union Bank lowered their PLRs by 50 basis points.
The reductions in lending rates follow a lunch meeting of chairmen of large public sector banks last week to discuss the lowering of interest rates across the board, following finance minister P Chidambaram’s appeal to banks on February 12 to make credit affordable and to help negate the impact of slowing credit on the growth of the economy.
Another public sector bank, Bank of Baroda’s asset liability committee meets tomorrow to take a call on cutting its PLR. Punjab National Bank (PNB) could not be reached to ascertain its call on cutting its lending rates. PNB Chairman, KC Chakraborty had also attended the lunch meeting.
SBI and Canara Bank had reduced their PLRs by 25 basis points on February 11, a day before Chidambaram met chairmen of public sector banks to assess the performance of the government-owned banks in the third quarter of 2007-08.
All four banks now have a PLR of 12.75 per cent. Significantly, no private sector bank has cut PLR yet. ICICI Bank, the country’s largest private sector lender, had said it would consider cutting rates only after March.
The reductions in PLRs will have a significant impact on the earnings of the banks. SBI would face a Rs 1,000-crore loss in income on the loans portfolio as on December 31, 2007. The impact on Canara Bank’s earnings would be about Rs 250 crore, BoI’s Rs 280 crore and Union Bank’s Rs 200 crore.
“It will take about a year to correct the impact on earnings,” said T S Narayanasami, chairman of BoI. Union Bank also reduced interest rate on deposits for three years and above by 50 basis points to 8.25 per cent. The reduction in Union Bank’s home loans range from 25 to 75 basis points.
In a statement, BoI said it reduced its PLR to help productive sectors bring down their cost of finance and stimulate demand for credit and to make home loans, auto loans and consumer loans, which generate more demand for manufactured goods, more affordable.
The year-on-year growth in credit is currently 22.5 per cent against deposit growth of over 27 per cent.
Although few banks actually lend funds at PLR — bigger, reputed borrowers are usually charged lower rates — lowering the benchmark rate can be considered a signal of a lower interest rate regime.
“The trend is towards rates remaining soft. The present spike in the short-term rates is not indicative of the trend but is driven by year-end tightness in liquidity,” said M B N Rao, chairman of Canara Bank.
He pointed out that the incremental credit deposit ratio is just 56 per cent now against 91 per cent last year.
The statutory liquidity ratio (SLR) investment portfolio of banks has grown substantially to close to 30 per cent (against minimum 25 per cent required), indicating ‘stored’ liquidity.
“So, at the beginning of the next financial year, pressures will subside and provide further room for lowering interest rates,” Rao said.
The reductions in lending rates follow a lunch meeting of chairmen of large public sector banks last week to discuss the lowering of interest rates across the board, following finance minister P Chidambaram’s appeal to banks on February 12 to make credit affordable and to help negate the impact of slowing credit on the growth of the economy.
Another public sector bank, Bank of Baroda’s asset liability committee meets tomorrow to take a call on cutting its PLR. Punjab National Bank (PNB) could not be reached to ascertain its call on cutting its lending rates. PNB Chairman, KC Chakraborty had also attended the lunch meeting.
SBI and Canara Bank had reduced their PLRs by 25 basis points on February 11, a day before Chidambaram met chairmen of public sector banks to assess the performance of the government-owned banks in the third quarter of 2007-08.
All four banks now have a PLR of 12.75 per cent. Significantly, no private sector bank has cut PLR yet. ICICI Bank, the country’s largest private sector lender, had said it would consider cutting rates only after March.
The reductions in PLRs will have a significant impact on the earnings of the banks. SBI would face a Rs 1,000-crore loss in income on the loans portfolio as on December 31, 2007. The impact on Canara Bank’s earnings would be about Rs 250 crore, BoI’s Rs 280 crore and Union Bank’s Rs 200 crore.
“It will take about a year to correct the impact on earnings,” said T S Narayanasami, chairman of BoI. Union Bank also reduced interest rate on deposits for three years and above by 50 basis points to 8.25 per cent. The reduction in Union Bank’s home loans range from 25 to 75 basis points.
In a statement, BoI said it reduced its PLR to help productive sectors bring down their cost of finance and stimulate demand for credit and to make home loans, auto loans and consumer loans, which generate more demand for manufactured goods, more affordable.
The year-on-year growth in credit is currently 22.5 per cent against deposit growth of over 27 per cent.
Although few banks actually lend funds at PLR — bigger, reputed borrowers are usually charged lower rates — lowering the benchmark rate can be considered a signal of a lower interest rate regime.
“The trend is towards rates remaining soft. The present spike in the short-term rates is not indicative of the trend but is driven by year-end tightness in liquidity,” said M B N Rao, chairman of Canara Bank.
He pointed out that the incremental credit deposit ratio is just 56 per cent now against 91 per cent last year.
The statutory liquidity ratio (SLR) investment portfolio of banks has grown substantially to close to 30 per cent (against minimum 25 per cent required), indicating ‘stored’ liquidity.
“So, at the beginning of the next financial year, pressures will subside and provide further room for lowering interest rates,” Rao said.
Gold ends above Rs 12,000/10gm in Mumbai
Gold breached the Rs 12,000/10 gram mark in the spot Mumbai bullion market today on rupee depreciation and firm guidance from the global markets.Spot gold opened firm at Rs 12,010 per 10 gram - a gain of Rs 360 from the last close on Monday. The Mumbai market was closed yesterday.In the absence of buyers, gold was range-bound throughout the day, and closed around the same level today.Pure gold closed with a similar gain at Rs 12,060 per 10 gram as against Rs 11,700 per 10 gram on Monday.In Delhi, standard and pure gold closed with a gain of Rs 200 each at Rs 11,980 per 10 gram and Rs 12,040 per 10 gram today.
Rupee ends at 40.22/$
Demand for dollars from importers and lack of fresh inflows saw the spot rupee breach the crucial barrier of 40 per dollar, and close at a seven-month low of 40.22 per dollar.The spot rupee had closed at 39.92 per dollar yesterday.
Tuesday, February 19, 2008
INVESTMENT IDEA FOR 2008
Jain Irrigation
Jain Irrigation, which is in the businesses of micro irrigation systems, food processing and plastic pipes and sheets, is a direct play on the growing emphasis on agriculture. Irrigation systems account for 30 per cent of its revenue. It's revenues from micro irrigation have grown at 70 per cent annually.
Growth will be maintained on the back of its plans to launch new irrigation systems, higher replacement demand, focus on geographical diversification.
Jain's five overseas acquisitions, including a 50 per cent stake in NaanDan of Israel, the world's fifth largest micro-irrigation company, will help in terms of access to technology and access to large markets such as South Africa, US, and Europe.
In food processing, which accounts for 14 per cent of total income and grew by 74 per cent in FY07, Jain produces juices and dehydrated vegetables for companies like Coco Cola, Nestle, etc. This business to grow at healthy from hereon.
In plastic pipes and sheets, its products find application in agriculture (30 per cent market share) and telecom (70% share) among others and, should continue to grow at a healthy pace.
To sum up, Jain is operating in high growth areas, while exports too are expected to grow rapidly, which makes it a good investment case.
Jain Irrigation, which is in the businesses of micro irrigation systems, food processing and plastic pipes and sheets, is a direct play on the growing emphasis on agriculture. Irrigation systems account for 30 per cent of its revenue. It's revenues from micro irrigation have grown at 70 per cent annually.
Growth will be maintained on the back of its plans to launch new irrigation systems, higher replacement demand, focus on geographical diversification.
Jain's five overseas acquisitions, including a 50 per cent stake in NaanDan of Israel, the world's fifth largest micro-irrigation company, will help in terms of access to technology and access to large markets such as South Africa, US, and Europe.
In food processing, which accounts for 14 per cent of total income and grew by 74 per cent in FY07, Jain produces juices and dehydrated vegetables for companies like Coco Cola, Nestle, etc. This business to grow at healthy from hereon.
In plastic pipes and sheets, its products find application in agriculture (30 per cent market share) and telecom (70% share) among others and, should continue to grow at a healthy pace.
To sum up, Jain is operating in high growth areas, while exports too are expected to grow rapidly, which makes it a good investment case.
GOOD BUY--Bank of Baroda
Bank of Baroda has a strong presence in western India -- a key zone for retail and industrial growth-- with equally good rural network.
Further, the bank is one of the few banks having a substantial international presence, which contributes 18-20 per cent to total business and 30 per cent to profits. This business is expected to rise further with the bank growing its global presence.
The bank has improved its fundamentals over the past several years on key parameters such as net interest margins (NIMs) and asset quality despite growing at a robust pace (asset growth CAGR of 19 per cent in FY04-07). Going ahead, the bank's focus on NIMs backed by moderate growth augurs well.
Besides, its initiatives such as online trading services, and joint ventures in insurance and asset management, will help it create value for its shareholders.
Additional triggers could be in the form of consolidation within the public sector bank space. All this put together makes this stock, which is reasonably valued at 1.4 times its FY09 estimated book value, an attractive investment opportunity.
Further, the bank is one of the few banks having a substantial international presence, which contributes 18-20 per cent to total business and 30 per cent to profits. This business is expected to rise further with the bank growing its global presence.
The bank has improved its fundamentals over the past several years on key parameters such as net interest margins (NIMs) and asset quality despite growing at a robust pace (asset growth CAGR of 19 per cent in FY04-07). Going ahead, the bank's focus on NIMs backed by moderate growth augurs well.
Besides, its initiatives such as online trading services, and joint ventures in insurance and asset management, will help it create value for its shareholders.
Additional triggers could be in the form of consolidation within the public sector bank space. All this put together makes this stock, which is reasonably valued at 1.4 times its FY09 estimated book value, an attractive investment opportunity.
Have Rs 1,199? You can own a Nano
As Tata Motors gears up to launch the world’s cheapest car Nano later this year, financing companies, including ICICI Bank, SBI Bank, HDFC Bank and Saraswat Bank, are busy charting out attractive finance schemes to woo the buyers. The Mumbai-based Saraswat Bank is offering a loan of Rs 70,000 at a monthly installment of a mere Rs 1,199 spread comfortably across 84 months or 7 years. The rate of interest is 11-11.5 per cent, which is cheaper than a two wheeler loan.
The Nano has already driven these companies to look beyond the two-wheeler market, which has lately shown a huge slowdown.
Banking officials say that a sizeable segment of the 6.5 million (sales as of last financial year) strong motorcycle buyers are expected to shift to the Nano.
The comparable financing structure for a premium two-wheeler forces you to pay more every month through it is for a shorter period of time. For instance, a Bajaj Pulsar 220 is sold at Rs 92,675 with an equated monthly installment (EMI) of Rs 2200 for a period of three years.
Banks such as ICICI Bank, India’s largest auto financier, is charging an interest rate of 21-22 per cent on a two-wheeler loan with a down payment of 40 per cent of the total cost and 12.5 per cent on a car loan.
ICICI Bank is looking at unveiling a similar ‘consumer friendly’ financing scheme for the Nano. N R Narayanan, head-vehicle loans, ICICI Bank, said, “We will come out with special schemes for the Nano as huge volumes are involved. We are yet to make a proper financing package as it is still very early. But we will look to grow.”
Concurrently, an executive from the State Bank of India said, “There will be attractive schemes for the Nano once the booking starts in June. We will announce plans well before that date. Interest rates and tenures will be the selling points of our package.”
It goes without saying that the directive from Reserve Bank of India (RBI) will be crucial. “Although many banks would come out with attractive financing offers, a lot will depend on market situation and risks involved...but we are talking of huge volumes and many smaller banks will look to grab the opportunity to build a brand through attractive schemes”, said a banking executive.
According to experts, banks will provide packages especially in the non-metro regions where the car will become a hot buy.
The car may not be a good idea for the clogged urban roads of Mumbai, Bangalore or Delhi, but it is likely to become a hot seller in cities such as Kolhapur, Lucknow and Ahmedabad. An interest rate of Rs 1,199 can drive many probable two-wheeler buyers to consider the Nano,” said a Mumbai-based auto analyst.
Tata Motors’ own finance subsidiary, Tata Motors Finance, will also finance the car. The company is, however, discreet about its plans.
Tata Motors is looking at producing about 270,000 units annually to begin with and this will be hiked to 350,000 gradually. The car will be up for sale by October this year.
The Nano has already driven these companies to look beyond the two-wheeler market, which has lately shown a huge slowdown.
Banking officials say that a sizeable segment of the 6.5 million (sales as of last financial year) strong motorcycle buyers are expected to shift to the Nano.
The comparable financing structure for a premium two-wheeler forces you to pay more every month through it is for a shorter period of time. For instance, a Bajaj Pulsar 220 is sold at Rs 92,675 with an equated monthly installment (EMI) of Rs 2200 for a period of three years.
Banks such as ICICI Bank, India’s largest auto financier, is charging an interest rate of 21-22 per cent on a two-wheeler loan with a down payment of 40 per cent of the total cost and 12.5 per cent on a car loan.
ICICI Bank is looking at unveiling a similar ‘consumer friendly’ financing scheme for the Nano. N R Narayanan, head-vehicle loans, ICICI Bank, said, “We will come out with special schemes for the Nano as huge volumes are involved. We are yet to make a proper financing package as it is still very early. But we will look to grow.”
Concurrently, an executive from the State Bank of India said, “There will be attractive schemes for the Nano once the booking starts in June. We will announce plans well before that date. Interest rates and tenures will be the selling points of our package.”
It goes without saying that the directive from Reserve Bank of India (RBI) will be crucial. “Although many banks would come out with attractive financing offers, a lot will depend on market situation and risks involved...but we are talking of huge volumes and many smaller banks will look to grab the opportunity to build a brand through attractive schemes”, said a banking executive.
According to experts, banks will provide packages especially in the non-metro regions where the car will become a hot buy.
The car may not be a good idea for the clogged urban roads of Mumbai, Bangalore or Delhi, but it is likely to become a hot seller in cities such as Kolhapur, Lucknow and Ahmedabad. An interest rate of Rs 1,199 can drive many probable two-wheeler buyers to consider the Nano,” said a Mumbai-based auto analyst.
Tata Motors’ own finance subsidiary, Tata Motors Finance, will also finance the car. The company is, however, discreet about its plans.
Tata Motors is looking at producing about 270,000 units annually to begin with and this will be hiked to 350,000 gradually. The car will be up for sale by October this year.
Have Rs 1,199? You can own a Nano
As Tata Motors gears up to launch the world’s cheapest car Nano later this year, financing companies, including ICICI Bank, SBI Bank, HDFC Bank and Saraswat Bank, are busy charting out attractive finance schemes to woo the buyers. The Mumbai-based Saraswat Bank is offering a loan of Rs 70,000 at a monthly installment of a mere Rs 1,199 spread comfortably across 84 months or 7 years. The rate of interest is 11-11.5 per cent, which is cheaper than a two wheeler loan.
The Nano has already driven these companies to look beyond the two-wheeler market, which has lately shown a huge slowdown.
Banking officials say that a sizeable segment of the 6.5 million (sales as of last financial year) strong motorcycle buyers are expected to shift to the Nano.
The comparable financing structure for a premium two-wheeler forces you to pay more every month through it is for a shorter period of time. For instance, a Bajaj Pulsar 220 is sold at Rs 92,675 with an equated monthly installment (EMI) of Rs 2200 for a period of three years.
Banks such as ICICI Bank, India’s largest auto financier, is charging an interest rate of 21-22 per cent on a two-wheeler loan with a down payment of 40 per cent of the total cost and 12.5 per cent on a car loan.
ICICI Bank is looking at unveiling a similar ‘consumer friendly’ financing scheme for the Nano. N R Narayanan, head-vehicle loans, ICICI Bank, said, “We will come out with special schemes for the Nano as huge volumes are involved. We are yet to make a proper financing package as it is still very early. But we will look to grow.”
Concurrently, an executive from the State Bank of India said, “There will be attractive schemes for the Nano once the booking starts in June. We will announce plans well before that date. Interest rates and tenures will be the selling points of our package.”
It goes without saying that the directive from Reserve Bank of India (RBI) will be crucial. “Although many banks would come out with attractive financing offers, a lot will depend on market situation and risks involved...but we are talking of huge volumes and many smaller banks will look to grab the opportunity to build a brand through attractive schemes”, said a banking executive.
According to experts, banks will provide packages especially in the non-metro regions where the car will become a hot buy.
The car may not be a good idea for the clogged urban roads of Mumbai, Bangalore or Delhi, but it is likely to become a hot seller in cities such as Kolhapur, Lucknow and Ahmedabad. An interest rate of Rs 1,199 can drive many probable two-wheeler buyers to consider the Nano,” said a Mumbai-based auto analyst.
Tata Motors’ own finance subsidiary, Tata Motors Finance, will also finance the car. The company is, however, discreet about its plans.
Tata Motors is looking at producing about 270,000 units annually to begin with and this will be hiked to 350,000 gradually. The car will be up for sale by October this year.
The Nano has already driven these companies to look beyond the two-wheeler market, which has lately shown a huge slowdown.
Banking officials say that a sizeable segment of the 6.5 million (sales as of last financial year) strong motorcycle buyers are expected to shift to the Nano.
The comparable financing structure for a premium two-wheeler forces you to pay more every month through it is for a shorter period of time. For instance, a Bajaj Pulsar 220 is sold at Rs 92,675 with an equated monthly installment (EMI) of Rs 2200 for a period of three years.
Banks such as ICICI Bank, India’s largest auto financier, is charging an interest rate of 21-22 per cent on a two-wheeler loan with a down payment of 40 per cent of the total cost and 12.5 per cent on a car loan.
ICICI Bank is looking at unveiling a similar ‘consumer friendly’ financing scheme for the Nano. N R Narayanan, head-vehicle loans, ICICI Bank, said, “We will come out with special schemes for the Nano as huge volumes are involved. We are yet to make a proper financing package as it is still very early. But we will look to grow.”
Concurrently, an executive from the State Bank of India said, “There will be attractive schemes for the Nano once the booking starts in June. We will announce plans well before that date. Interest rates and tenures will be the selling points of our package.”
It goes without saying that the directive from Reserve Bank of India (RBI) will be crucial. “Although many banks would come out with attractive financing offers, a lot will depend on market situation and risks involved...but we are talking of huge volumes and many smaller banks will look to grab the opportunity to build a brand through attractive schemes”, said a banking executive.
According to experts, banks will provide packages especially in the non-metro regions where the car will become a hot buy.
The car may not be a good idea for the clogged urban roads of Mumbai, Bangalore or Delhi, but it is likely to become a hot seller in cities such as Kolhapur, Lucknow and Ahmedabad. An interest rate of Rs 1,199 can drive many probable two-wheeler buyers to consider the Nano,” said a Mumbai-based auto analyst.
Tata Motors’ own finance subsidiary, Tata Motors Finance, will also finance the car. The company is, however, discreet about its plans.
Tata Motors is looking at producing about 270,000 units annually to begin with and this will be hiked to 350,000 gradually. The car will be up for sale by October this year.
Monday, February 18, 2008
It’s the right time for long-term investors
The current bull run, which began in April 2003, shows no signs of abating. Barring the odd hiccups every once in a while, both the sensex and Nifty have shown a consistent upward trend. To answer the question whether ‘it is a time to exit index funds?’ one needs to understand what index funds are and how they work. Index funds are mutual fund schemes that purport to invest in a basket of stocks similar to that of its benchmark index and in the same proportion. This proportion is same both for stock as well as sector allocations. The performances of such funds are, therefore, closely linked to the performance of the underlying benchmark index. In India, we have index funds that track either the S&P CNX Nifty or the BSE sensex. Both are largecap indices and therefore, by default, the index funds tracking them are ‘largecap’ funds. Index funds differ from regular diversified equity funds in the sense that index funds are passively managed whereas diversified equity funds are actively managed. And while the topic of ‘active vs passive managed funds’ is open to debate, the fact is that passive management reduces the cost of operating funds and thus enhances the returns such funds generate. In contrast, active fund management enhances the chances of outperforming the market average, reflected by the indices. Investors, looking to invest in quality stocks across the leading sectors, can take a medium to long-term view and patiently ride through the market gyrations, can consider investing in index funds. The answer to the question on whether to exit index funds, is ‘No’. For common sense tells us that an exit from equities per se should be when the markets are on a high and entry should be when the markets look ‘attractive’ and valuations look relatively cheap. In fact, we should be thinking the other way round: at these levels, it’s a good time to invest in the index. The one thing that investors should keep in mind though is that mutual funds per se are not an investment avenue for the short-term as they invest in a basket
US slowdown presents opportunities for India, China: Official
The slow down in the US economy provides opportunities for India and China to sustain economic growth through increase in demand and consumption, a senior Chinese official said on Monday. "Chinese and Indian economies are highly complementary and have great potential for bilateral trade and investment relations," Deputy Chief of the Policy Research Office, Central Committee, China, Zheng Xinli said at a CII conference here. He said slowing down of the US economy should enable both countries to sustain economic growth. The target fixed during President Hu Jintao's visit to India in 2006 to increase bilateral trade to 40 billion dollars by 2010 is also expected to be achieved this year, Xinli said. India and China have common challenges in agriculture, rural industry and social security, he said, adding that China could learn from India in the services sector.
Interest rates to move downwards
Interest rates in the country, after rising over the past few years, are expected to decline further, a top banking official said on Monday. "The banking industry has enough liquidity as the credit-deposit (CD) ratio was around 49-50 per cent and deposits growing at 29.5 per cent at January-end. Credit was growing at 22.5 per cent," Indian Banks' Association (IBA) Chairman M B N Rao said here. "I do believe there is enough liquidity to take care of credit requirements, so there is a possibility for interest rates to soften," he said. Inflation, however, needs to taken into consideration, said Rao, who is also Chairman of Canara Bank. "Now, the latest figures do indicate that with the fresh arrivals of commodities, inflation has come down. I believe interest rates will also come down." Asked whether IBA has asked banks to cut rates, Rao said, "We do not guide people, we only highlight issues and individual banks take a call as per their own asset and liability positions. Banks take their own decisions." He said the investment portfolio of the banking industry had gone up by 30 per cent on a year-on-year basis, which was the highest in several years. Commenting on credit growth, Rao said "I believe in the coming months, credit will pick up because the economy is growing well despite what has been happening in other parts of the world".
The stock markets gave up initial gains and closed with marginal losses on Monday
The stock markets gave up initial gains and closed with marginal losses on Monday mainly due to weakness in Realty, IT and Oil& Gas stocks. However, major support came from banking and FMCG stocks
The Sensex and Nifty opened higher buoyed by firm Asian markets. However, key stocks faced resistance at the day's higher levels due to selling by traders and investors with minimal buying support from investors. Realty, IT, Oil & Gas and Capital Goods i ndices showed weakness and were the major losers.
The BSE Sensex closed at 18,048.05, down 67.20 points from previous close. During the day, the index touched a high of 18,256.82 in the morning but fell steadily later to a low of 17,900.96.
The BSE Realty index was the big loser today and was down 290.32 points or 2.77 per cent at 10,206, while the BSE IT segment lost 50.74 or 1.31 per cent to 3,829.24.
The S&P CNX Nifty jumped to a high of 5,343.25 in the morning and fell afterwards to close at 5,276.90, down 26 points from yesterday's finish.
Shares of Reliance Power rose 7.66 per cent to Rs 414 today after the company said yesterday that its board would meet on Feb 24 to consider issuing bonus shares
The Sensex and Nifty opened higher buoyed by firm Asian markets. However, key stocks faced resistance at the day's higher levels due to selling by traders and investors with minimal buying support from investors. Realty, IT, Oil & Gas and Capital Goods i ndices showed weakness and were the major losers.
The BSE Sensex closed at 18,048.05, down 67.20 points from previous close. During the day, the index touched a high of 18,256.82 in the morning but fell steadily later to a low of 17,900.96.
The BSE Realty index was the big loser today and was down 290.32 points or 2.77 per cent at 10,206, while the BSE IT segment lost 50.74 or 1.31 per cent to 3,829.24.
The S&P CNX Nifty jumped to a high of 5,343.25 in the morning and fell afterwards to close at 5,276.90, down 26 points from yesterday's finish.
Shares of Reliance Power rose 7.66 per cent to Rs 414 today after the company said yesterday that its board would meet on Feb 24 to consider issuing bonus shares
Sunday, February 17, 2008
Two-wheeler loans go scarce
High delinquency, tough recovery norms weigh with banks
Banks are going slow on lending for purchase of two-wheelers. Such lending has seen a decline of more than 15 per cent over the past year, said officials from banks which are active in this segment.
According to them, high rate of delinquency among customers and the recent norms on appointment of recovery agents have forced banks to go slow in the two-wheeler segment.
Banks are going slow on lending for purchase of two-wheelers. Such lending has seen a decline of more than 15 per cent over the past year, said officials from banks which are active in this segment.
According to them, high rate of delinquency among customers and the recent norms on appointment of recovery agents have forced banks to go slow in the two-wheeler segment.
Reliance Power to consider bonus!
Reliance Power Ltd. today informed the stock exchanges that a meeting of its Board of Directors has been convened on Sunday, February 24, 2008.
The Reliance Power Board will inter alia consider a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), and/or other measures, which will result in reduction of the cost of Reliance Power Ltd. shares below the IPO price of Rs. 430 per share for retail investors, and Rs. 450 per share for institutional and other categories of investors.
In a statement the company mentioned, “The decline in the Reliance Power stock price has been compounded by:
• a vicious and orchestrated campaign of market manipulation and market abuse
• unleashed by unscrupulous rival corporate interests
• to hammer down all Reliance ADA group stocks
• in an attempt to undermine our fair name and reputation, and
• cause losses to millions of genuine investors.”
Reliance Power has formally written to SEBI seeking an investigation into the same.
Equity shares, by their very nature, are risk-bearing instruments, and there is no obligation on behalf of any issuer to insure investors against possible losses.
However, in keeping with the Reliance ADA Group’s fundamental and over-riding philosophy of creating value for genuine long term investors, the Board of Directors of Reliance Power will be meeting as above, to consider appropriate one-time measures which will result in reduction of the cost of Reliance Power shares below the IPO price, the statement added.
This will include inter alia consideration of a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), thereby protecting investors even from notional short-term losses on their shareholdings.
The proposal will result in dilution of the promoter group’s shareholding in Reliance Power, which they have indicated they will accept in the broader interest of protecting and enhancing value for over 4 million institutional and retail investors
The Reliance Power Board will inter alia consider a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), and/or other measures, which will result in reduction of the cost of Reliance Power Ltd. shares below the IPO price of Rs. 430 per share for retail investors, and Rs. 450 per share for institutional and other categories of investors.
In a statement the company mentioned, “The decline in the Reliance Power stock price has been compounded by:
• a vicious and orchestrated campaign of market manipulation and market abuse
• unleashed by unscrupulous rival corporate interests
• to hammer down all Reliance ADA group stocks
• in an attempt to undermine our fair name and reputation, and
• cause losses to millions of genuine investors.”
Reliance Power has formally written to SEBI seeking an investigation into the same.
Equity shares, by their very nature, are risk-bearing instruments, and there is no obligation on behalf of any issuer to insure investors against possible losses.
However, in keeping with the Reliance ADA Group’s fundamental and over-riding philosophy of creating value for genuine long term investors, the Board of Directors of Reliance Power will be meeting as above, to consider appropriate one-time measures which will result in reduction of the cost of Reliance Power shares below the IPO price, the statement added.
This will include inter alia consideration of a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), thereby protecting investors even from notional short-term losses on their shareholdings.
The proposal will result in dilution of the promoter group’s shareholding in Reliance Power, which they have indicated they will accept in the broader interest of protecting and enhancing value for over 4 million institutional and retail investors
GOOD BUY--IVRCL Infrastructures
Investors with at least a two-year horizon can consider exposure to the stock of IVRCL Infrastructures & Projects. Accelerated growth in revenues on the back of faster execution of projects, strong order book and the expanding Government outlay towards water and irrigation projects augur well for the company’s earnings growth over the next few years. At the current market price, the stock trades at 19 times its expected standalone earnings for FY 2009 and 15 times its consolidated earnings for the same period. We expect the company’s subsidiaries in real estate (IVR Prime Urban) and water engineering solutions (Hindustan Dorr Oliver) to make a significant contribution in future
Thursday, February 14, 2008
India can sustain 9% growth: PM
Prime Minister Manmohan Singh today expressed confidence that, given the current rates of savings and investment, the country will sustain economic growth of close to 9 per cent in the medium term.
The Central Statistical Organisation has forecast 8.7 per cent growth in the gross domestic product (GDP) in the current financial year. The investment and savings rates, at 38.5 per cent and 37 per cent of GDP, respectively, are at historic highs.
“Our objective is to ensure that this growth process is inclusive, in all dimensions, and can be sustained while holding inflation under check. It has been our endeavour to ensure that inflation does not get out of control,” Singh said while releasing Business Standard India 2008, the first offering of BS Books, the books division of Business Standard Ltd.
The 300-page book has 14 chapters, written by pioneering economists and administrators, many of whom are Business Standard columnists.
The prime minister said sustained development was not like going to a free dinner party but required sound macro-economic policies designed to raise savings, investment and productivity.
The challenge, he said, was to get the policy right. “If we can get both politics and prices right, the economy would be on surer ground for sustained growth. That is not just a challenge for political parties. It is equally a challenge for those who are in the business of shaping mindsets.”
According to the prime minister, the creative energy of Indians has been unleashed and is contributing to the acceleration of economic growth.
“It has been our endeavour to ensure the long-term stability of the growth process, rather than seek short-term gains that may have socially and politically destabilising consequences,” he said.
He said a large continental economy like India’s could sustain fairly high rates of growth based on stable and sustained growth in the home market, even if there was turbulence in global markets.
“I also believe that it is our responsibility today to ensure that uncertainty in the global system does not harm our growth process,” he said.
About the much-talked-about rise of India and China, the Prime Minister said the two countries, in the years to come, would be viewed as the new growth engines of the world economy.
“We are not yet there, but we will be. We can certainly sustain much better domestic performance based on our own effort and potential. Our macro-economic policies are aimed at ensuring this,” he said.
The Central Statistical Organisation has forecast 8.7 per cent growth in the gross domestic product (GDP) in the current financial year. The investment and savings rates, at 38.5 per cent and 37 per cent of GDP, respectively, are at historic highs.
“Our objective is to ensure that this growth process is inclusive, in all dimensions, and can be sustained while holding inflation under check. It has been our endeavour to ensure that inflation does not get out of control,” Singh said while releasing Business Standard India 2008, the first offering of BS Books, the books division of Business Standard Ltd.
The 300-page book has 14 chapters, written by pioneering economists and administrators, many of whom are Business Standard columnists.
The prime minister said sustained development was not like going to a free dinner party but required sound macro-economic policies designed to raise savings, investment and productivity.
The challenge, he said, was to get the policy right. “If we can get both politics and prices right, the economy would be on surer ground for sustained growth. That is not just a challenge for political parties. It is equally a challenge for those who are in the business of shaping mindsets.”
According to the prime minister, the creative energy of Indians has been unleashed and is contributing to the acceleration of economic growth.
“It has been our endeavour to ensure the long-term stability of the growth process, rather than seek short-term gains that may have socially and politically destabilising consequences,” he said.
He said a large continental economy like India’s could sustain fairly high rates of growth based on stable and sustained growth in the home market, even if there was turbulence in global markets.
“I also believe that it is our responsibility today to ensure that uncertainty in the global system does not harm our growth process,” he said.
About the much-talked-about rise of India and China, the Prime Minister said the two countries, in the years to come, would be viewed as the new growth engines of the world economy.
“We are not yet there, but we will be. We can certainly sustain much better domestic performance based on our own effort and potential. Our macro-economic policies are aimed at ensuring this,” he said.
Sensex climbs 817 points on global cues
MUMBAI: Posting gains for the second straight session on Thursday, the Bombay Stock Exchange benchmark Sensex zoomed by 817 points, with funds, influenced by a firming global trend, buying into stocks.
The Sensex, which recorded a gain of 341 points in the last day's trading, surged further by 817.49 points at 17,766.63 on foreign funds turning active world-wide. The key index touched the day's high of 17,838.08 points and a low of 17,265.19 points.
Buying sentiments among foreign funds picked up following reports of a faster economic growth rate in Japan and better-than-expected US retail sales. The reports eased concerns that the two economies may slid into a recession.
In similar fashion, the wide-based National Stock Exchange index Nifty surged to 5,202 by adding 272.55 points. Reflecting volatility in the market, the Nifty touched a high of 5,220.25 and a low of 4,944.65 points.
Major support to the market came in from the capital goods sector with its index gaining the most 1,140.36 points at 16,282.17, followed by metal index by 847.58 points at 15,621.89. In the capital goods sector, public sector BHEL, a leading manufacture r of thermal power equipment, shot up to four month's high on reports of winning a contract. Oil and gas index also ended up by 755.38 points at 10,932.36 as the sector's major private refiners Reliance Petroleum and Essar Oil, along with Centurion Ban k of Punjab and state-run Steel Authority of India, surged on the announcement of their inclusion in a number of MSCI indices.
Realty sector index posted gains of 714.66 points at 10,143.55, following DLF Ltd rising the most in more than a week after winning the sponsorship rights for the Indian Premier League Twenty20 cricket series. PSU index also firmed up by 585.94 points at 8351.60, bank index by 471.02 points at 10,614.09, consumer durable index by 290.29 points at 4587.70, auto index by 134.34 points at 4689.41, healthcare index by 118.19 points at 3610.88, IT index by 35.61 points at 3843.50 and teck index by 89.35 poin ts at 3322.90. As the buying activity spilled over a wide-front, midcap index shot up by 377.19 points at 7452.72 and smallcap index by 358.06 points at 9407.76.
The Sensex, which recorded a gain of 341 points in the last day's trading, surged further by 817.49 points at 17,766.63 on foreign funds turning active world-wide. The key index touched the day's high of 17,838.08 points and a low of 17,265.19 points.
Buying sentiments among foreign funds picked up following reports of a faster economic growth rate in Japan and better-than-expected US retail sales. The reports eased concerns that the two economies may slid into a recession.
In similar fashion, the wide-based National Stock Exchange index Nifty surged to 5,202 by adding 272.55 points. Reflecting volatility in the market, the Nifty touched a high of 5,220.25 and a low of 4,944.65 points.
Major support to the market came in from the capital goods sector with its index gaining the most 1,140.36 points at 16,282.17, followed by metal index by 847.58 points at 15,621.89. In the capital goods sector, public sector BHEL, a leading manufacture r of thermal power equipment, shot up to four month's high on reports of winning a contract. Oil and gas index also ended up by 755.38 points at 10,932.36 as the sector's major private refiners Reliance Petroleum and Essar Oil, along with Centurion Ban k of Punjab and state-run Steel Authority of India, surged on the announcement of their inclusion in a number of MSCI indices.
Realty sector index posted gains of 714.66 points at 10,143.55, following DLF Ltd rising the most in more than a week after winning the sponsorship rights for the Indian Premier League Twenty20 cricket series. PSU index also firmed up by 585.94 points at 8351.60, bank index by 471.02 points at 10,614.09, consumer durable index by 290.29 points at 4587.70, auto index by 134.34 points at 4689.41, healthcare index by 118.19 points at 3610.88, IT index by 35.61 points at 3843.50 and teck index by 89.35 poin ts at 3322.90. As the buying activity spilled over a wide-front, midcap index shot up by 377.19 points at 7452.72 and smallcap index by 358.06 points at 9407.76.
Wednesday, February 13, 2008
HUL sales regain traction in December quarter
A strong resurgence in sales growth, a better show from the personal products portfolio and improved profit margins have helped Hindustan Unilever (HUL) make up in the December quarter, for its disappointing earnings numbers in the preceding quarter.
HUL has managed a 14.4 per cent growth in net profit (excluding exceptional items) on the back of a 16.8 per cent sales growth for this quarter.
HUL has managed a 14.4 per cent growth in net profit (excluding exceptional items) on the back of a 16.8 per cent sales growth for this quarter.
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