TCS has announced a global engineering service partnership with Rolls-Royce. (ET)
L&T Power, a subsidiary of L&T, to ramp up boiler, turbines, generators and balance of plant business from 4,000mw to 6,000mw by 2012. (BL)
Unitech to list demerged infra division by December 2010. (BS)
Videocon Industries may sell its 26% stake in the telecom ventures to foreign investors. (ET)
Glenmark has won a favorable legal verdict in US over a cholesterol drug case with Merck. (ET)
Goldman Sachs fraud case not to hit business says TCS. (ET)
Unitech Infra the demerged arm of Unitech will bid for infrastructure projects in road, power and airports. (ET)
Orient Green Power a subsidiary of Shriram EPC files DRHP for an IPO. (ET)
Zee Entertainment board approves acquisition of INX media’s general entertainment channel 9X. (BS)
Sundaram Finance Group to buy BNP Paribas’s 49.9% stake in their mutual fund JV. (ET)
Aditya Birla Financial Services to launch real estate fund to raise Rs10bn. (ET)
India is expected to grow at 8.75% in CY2010 and 8.5% in CY2011 says IMF. (ET)
RBI may give some banks more time to meet the 70% provision coverage ratio. (ET)
RBI has asked private banks to take its approval for all QIPs and preferential issues. (ET)
RBI tightens loan securitization rules for banks. (ET)
Airport Authority of India plans to levy development fee at non-metro airports. (ET)
Centre wheat purchases are up 13.6% up to April 20th 2010. (ET)
3G spectrum bids are up 90% to Rs663bn on the 10th day of auction. (ET)
Telecom panel to decide on BSNL listing says Telecom minister. (ET)
RBI will relax the 25% ceiling on classifying bonds in the held-to-maturity category if the investment is in infrastructure bonds. (BS)
Bank credits grow by 8.26bn during the fortnight ended April 9th, a 17% yoy growth. (BS)
2010 south-west monsoon is expected to be near normal says the India Meteorological Department. (BL)
NPAs of public sector banks grew by 23% between March-December 2009. (BL)
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Thursday, April 22, 2010
Wednesday, April 21, 2010
DAILY NEWS ROUNDUP -APRIL 21, 2010
Tata Power has made a direct offer to the state government to transfer it some parts of the distribution network owned by RInfra to save Mumbai from the tariff hike proposed by RInfra. (ET)
M&M said that its foray into the mini-truck segment through Maxximo, which was launched in the northern and western regions only about a month back, has garnered about 25% of the market share in these regions. (BS)
Real estate major Unitech announced a demerger swap ratio of 1:1, following its decision to hive off non-core operations such as telecom, SEZs, logistics, hotels, transmission towers and others into a separate entity called Unitech Infra Ltd. (BL)
The strong rebound in demand for software services has prompted TCS to earmark an ‘all-time high' capital expenditure of over Rs22bn for this fiscal. (BL)
TCS plans to hire about 3,000 people in FY11 across its global delivery centers to bring onsite support to its clients. (FE)
Suzlon Energy’s subsidiary, REpower Systems AG, bagged a contract for supply of 44 wind turbines for a project in Turkey. (FE)
Japanese drug major Daiichi Sankyo, which owns 63.9% in Ranbaxy, failed to convert the warrants issued by the latter into shares during the stipulated 18-month period. (BS)
Maruti Suzuki crossed the milestone of rolling out 0.3mn K-Series engines, its latest generation engine which powers new models, including A Star, Swift, Swift Dzire and Ritz. (ET)
International Finance Corporation plans to invest US$75mn (Rs3.3bn) in IDFC to make investments in renewable energy as well as cleaner production and energy-efficiency projects across the country. (BS)
Procter & Gamble’s biggest bet on a new diaper in 25 years has run afoul of some parents who say their babies suffered rashes and burns after using them. (BS)
Uttar Pradesh government gave its nod to Bajaj Hindustan to set up its 1,980MW coal-fired power plant in Lalitpur district of Bundelkhand region. (BS)
SpiceJet has received its board’s approval to raise US$50-75mn to fund its international expansion. (BS)
Strides Arcolab bought back FCCBs worth US$34mn that were due this year. (BL)
Bharati Shipyard plans to appoint two of its members as executive directors on the board of Great Offshore in an attempt to correct an incongruous situation that arose after it bought GOL in a hotly-contested takeover battle last year. (ET)
Binani Cement said its board will meet on April 23 to consider a share buy-back proposal. (FE)
Everonn Kompass, a division of Chennai-based Everonn Education Ltd, opened its centre in Kurnool, Andhra Pradesh. (BL)
Education solutions provider CORE Projects & Technologies bagged Rs1.2bn order from the Government of Maharashtra to implement technology infrastructure at 947 schools in the State for five years. (BL)
GSS America, specializing in providing managed IT services, has been awarded a US$5mn contract to provide an end-to-end e-governance and e-procurement solution to the Bangladesh Government. (BL)
Hanung Toys & Textiles bagged an export order worth US$90mn from a leading US buyer. (ET)
The government plans to raise Rs130bn by selling shares in Coal India Ltd in July, the country’s biggest initial public offering. (BS)
Jai Prakash Power Ventures Ltd has signed a lease agreement with Kerala Industrial Infrastructure Development Corporation for setting up a 240MW coal-based thermal power plant, 1.5mtpa cement grinding unit and a jetty in 164.2 acres of land at its industrial park at Kalliassery and Pappinissery villages in Kannur district. (BL)
Essar Shipping Ports and Logistics signed a licence agreement with Paradip Port Trust to invest Rs5bn in a dry bulk cargo berth. (ET)
The RBI raised the repo and reverse repo rates by 25bps each, effective today and CRR by 25bps, but effective from Friday. (BS)
The RBI will now allot bank licenses to private sector players and NBFCs. (BS)
In an effort to promote the corporate bond market, the RBI has permitted banks to treat their exposure to unlisted non-statutory liquidity ratio debt securities as an investment in listed securities at the time of making investments. (BS)
The RBI has made registration of core investment companies with assets of over Rs1bn mandatory. (BL)
The RBI announced that it will allow banks to treat annuity payments and toll collection rights for highways built on BOT model as secured loans. (BL)
MCX Stock Exchange is likely to start trading in equities in the next two-to-three months, a top company official said. (BS)
Low-grade iron ore miners in Goa reduced their production by 30% to avoid stockpiling ahead of the monsoon. (BS)
The government would rake in at least Rs255bn from the auction of 3G spectrum as the pan-India licence on the ninth day reached a bid of Rs63.5bn, up 81.5% from the base price of Rs35bn. (BS)
The Department of Pharmaceuticals has declined the commerce ministry’s proposal to incorporate intellectual property protection clauses, which go beyond the existing rules, as part of the free trade agreements being negotiated with the European Union and Japan. (BS)
Gujarat government plans to set up a dedicated SEZ for offsets in the defense sector. (BS)
Rising demand from China and India, coupled with global recovery, is driving thermal coal prices that have appreciated by about a fourth in the past few months. (BL)
M&M said that its foray into the mini-truck segment through Maxximo, which was launched in the northern and western regions only about a month back, has garnered about 25% of the market share in these regions. (BS)
Real estate major Unitech announced a demerger swap ratio of 1:1, following its decision to hive off non-core operations such as telecom, SEZs, logistics, hotels, transmission towers and others into a separate entity called Unitech Infra Ltd. (BL)
The strong rebound in demand for software services has prompted TCS to earmark an ‘all-time high' capital expenditure of over Rs22bn for this fiscal. (BL)
TCS plans to hire about 3,000 people in FY11 across its global delivery centers to bring onsite support to its clients. (FE)
Suzlon Energy’s subsidiary, REpower Systems AG, bagged a contract for supply of 44 wind turbines for a project in Turkey. (FE)
Japanese drug major Daiichi Sankyo, which owns 63.9% in Ranbaxy, failed to convert the warrants issued by the latter into shares during the stipulated 18-month period. (BS)
Maruti Suzuki crossed the milestone of rolling out 0.3mn K-Series engines, its latest generation engine which powers new models, including A Star, Swift, Swift Dzire and Ritz. (ET)
International Finance Corporation plans to invest US$75mn (Rs3.3bn) in IDFC to make investments in renewable energy as well as cleaner production and energy-efficiency projects across the country. (BS)
Procter & Gamble’s biggest bet on a new diaper in 25 years has run afoul of some parents who say their babies suffered rashes and burns after using them. (BS)
Uttar Pradesh government gave its nod to Bajaj Hindustan to set up its 1,980MW coal-fired power plant in Lalitpur district of Bundelkhand region. (BS)
SpiceJet has received its board’s approval to raise US$50-75mn to fund its international expansion. (BS)
Strides Arcolab bought back FCCBs worth US$34mn that were due this year. (BL)
Bharati Shipyard plans to appoint two of its members as executive directors on the board of Great Offshore in an attempt to correct an incongruous situation that arose after it bought GOL in a hotly-contested takeover battle last year. (ET)
Binani Cement said its board will meet on April 23 to consider a share buy-back proposal. (FE)
Everonn Kompass, a division of Chennai-based Everonn Education Ltd, opened its centre in Kurnool, Andhra Pradesh. (BL)
Education solutions provider CORE Projects & Technologies bagged Rs1.2bn order from the Government of Maharashtra to implement technology infrastructure at 947 schools in the State for five years. (BL)
GSS America, specializing in providing managed IT services, has been awarded a US$5mn contract to provide an end-to-end e-governance and e-procurement solution to the Bangladesh Government. (BL)
Hanung Toys & Textiles bagged an export order worth US$90mn from a leading US buyer. (ET)
The government plans to raise Rs130bn by selling shares in Coal India Ltd in July, the country’s biggest initial public offering. (BS)
Jai Prakash Power Ventures Ltd has signed a lease agreement with Kerala Industrial Infrastructure Development Corporation for setting up a 240MW coal-based thermal power plant, 1.5mtpa cement grinding unit and a jetty in 164.2 acres of land at its industrial park at Kalliassery and Pappinissery villages in Kannur district. (BL)
Essar Shipping Ports and Logistics signed a licence agreement with Paradip Port Trust to invest Rs5bn in a dry bulk cargo berth. (ET)
The RBI raised the repo and reverse repo rates by 25bps each, effective today and CRR by 25bps, but effective from Friday. (BS)
The RBI will now allot bank licenses to private sector players and NBFCs. (BS)
In an effort to promote the corporate bond market, the RBI has permitted banks to treat their exposure to unlisted non-statutory liquidity ratio debt securities as an investment in listed securities at the time of making investments. (BS)
The RBI has made registration of core investment companies with assets of over Rs1bn mandatory. (BL)
The RBI announced that it will allow banks to treat annuity payments and toll collection rights for highways built on BOT model as secured loans. (BL)
MCX Stock Exchange is likely to start trading in equities in the next two-to-three months, a top company official said. (BS)
Low-grade iron ore miners in Goa reduced their production by 30% to avoid stockpiling ahead of the monsoon. (BS)
The government would rake in at least Rs255bn from the auction of 3G spectrum as the pan-India licence on the ninth day reached a bid of Rs63.5bn, up 81.5% from the base price of Rs35bn. (BS)
The Department of Pharmaceuticals has declined the commerce ministry’s proposal to incorporate intellectual property protection clauses, which go beyond the existing rules, as part of the free trade agreements being negotiated with the European Union and Japan. (BS)
Gujarat government plans to set up a dedicated SEZ for offsets in the defense sector. (BS)
Rising demand from China and India, coupled with global recovery, is driving thermal coal prices that have appreciated by about a fourth in the past few months. (BL)
Tuesday, April 20, 2010
HIGHLIGHTS OF FY11 ANNUAL POLICY STATEMENT
* Hikes reverse repo, repo rate, CRR by 25bps each
* Reverse repo, repo rate hikes with immediate effect
* CRR hike effective from Apr 24
* CRR hike to impound 125 bln rupees from banks
* FY11 GDP growth projection at 8.0% with upside bias
* March end inflation projection at 5.5%
* FY11 banks' credit growth projection at 20.0%
* FY11 banks' deposit growth projection at 18.0%
* FY11 money supply growth projection at 17.0%
.
STANCE
* Hike in policy rates, CRR to help contain inflation
* Hike in policy rates, CRR to anchor inflationary expectations
* Measures to sustain recovery process
* Govt borrow needs, private credit demand will be met
* Hikes to align policy tools with evolving state of econ
* To closely monitor macro events, prices; take warranted steps
* Econ firmly on recovery path, industrial growth broad based
* India economy resilient, recovery consolidating
* FY11 econ growth to be higher, more broad-based vs FY10
* Lower policy rates can complicate inflation outlook
* Lower policy rates also impair inflationary expectations
* Despite 25bps hike in rates, real policy rates still negative
* Need to
normalise policy rates in calibrated manner
* Inflationary pressures "accentuated" in recent period
* Inflation getting increasingly generalised
* Capacity constraints to re-emerge as econ growth rises
* Must ensure demand-side inflation does not become entrenched
* FY11 fresh govt bond issuances 36.3% higher vs FY10
* FY11 fresh govt bond issuances "a dilemma"
* Policy considerations demands liquidity be curbed
* Govt borrow needs supportive liquidity conditions
* Need to absorb liquidity without hurting govt borrow plan
* To respond swiftly, effectively to inflationary expectation
* To actively manage liquidity, ensure private credit demand is met
.
INFLATION
* Significant changes in drivers of inflation in recent months
* Overall food inflation high despite seasonal ease
* Rise in global commodity prices upside risk to inflation
* Household inflation expectations remain at elevated level
* Demand pressures may rise as recovery gains momentum
* Monsoon prospects unclear, blur FY11 inflation outlook
* Volatile crude prices cloud FY11 inflation outlook
* To ensure price stability, anchor inflationary expectations
* To monitor overall, disaggregated components of inflation
* keeps medium-term inflation objective of 3.0%
* An unfavourable monsoon may exacerbate food inflation
* Unfavourable 2010 monsoon may add to fiscal burden
.
GROWTH
* GDP projection assumes normal monsoons
* GDP projection also assumes good industrial, services growth
* Industrial growth to take firmer hold going forward
.
FISC
* Fiscal prudence to avoid crowding out private credit demand
* Fiscal prudence must shift to structural improvements
* Govt borrow "very large", can pressure interest rates
.
GLOBAL
* Pace of global econ recovery remains uncertain
* Uncertain global econ recovery downside risk to India GDP
* Trade, financial linkages to other economies may impact India GDP
* Commodity price seen up more if global recovery gain momentum
* Rise in global commodity prices may up inflation pressure
* Expansionary fiscal policy may not be unwound in advanced economies
* Expansionary policies may trigger large FX flows to India
* Excessive flows challenge to FX rate, monetary mgmt
* FX rate policy not guided by pre-announced target
* Keep flexibility to intervene in FX market to manage volatility
* Need to be vigilant volatile FX rate movements
.
MARKET
* RBI panel to mull single point reporting for OTC FX derivatives
* To launch reporting platform for secondary deals of CDs, CPs
* Asked FIMMDA to develop CD, CP reporting platform
* To allow banks to purchase non-SLR bonds by infra companies in HTM
* OKs bourses to launch plain vanilla dollar/rupee options
* Reverse repo, repo rate hikes with immediate effect
* CRR hike effective from Apr 24
* CRR hike to impound 125 bln rupees from banks
* FY11 GDP growth projection at 8.0% with upside bias
* March end inflation projection at 5.5%
* FY11 banks' credit growth projection at 20.0%
* FY11 banks' deposit growth projection at 18.0%
* FY11 money supply growth projection at 17.0%
.
STANCE
* Hike in policy rates, CRR to help contain inflation
* Hike in policy rates, CRR to anchor inflationary expectations
* Measures to sustain recovery process
* Govt borrow needs, private credit demand will be met
* Hikes to align policy tools with evolving state of econ
* To closely monitor macro events, prices; take warranted steps
* Econ firmly on recovery path, industrial growth broad based
* India economy resilient, recovery consolidating
* FY11 econ growth to be higher, more broad-based vs FY10
* Lower policy rates can complicate inflation outlook
* Lower policy rates also impair inflationary expectations
* Despite 25bps hike in rates, real policy rates still negative
* Need to
normalise policy rates in calibrated manner
* Inflationary pressures "accentuated" in recent period
* Inflation getting increasingly generalised
* Capacity constraints to re-emerge as econ growth rises
* Must ensure demand-side inflation does not become entrenched
* FY11 fresh govt bond issuances 36.3% higher vs FY10
* FY11 fresh govt bond issuances "a dilemma"
* Policy considerations demands liquidity be curbed
* Govt borrow needs supportive liquidity conditions
* Need to absorb liquidity without hurting govt borrow plan
* To respond swiftly, effectively to inflationary expectation
* To actively manage liquidity, ensure private credit demand is met
.
INFLATION
* Significant changes in drivers of inflation in recent months
* Overall food inflation high despite seasonal ease
* Rise in global commodity prices upside risk to inflation
* Household inflation expectations remain at elevated level
* Demand pressures may rise as recovery gains momentum
* Monsoon prospects unclear, blur FY11 inflation outlook
* Volatile crude prices cloud FY11 inflation outlook
* To ensure price stability, anchor inflationary expectations
* To monitor overall, disaggregated components of inflation
* keeps medium-term inflation objective of 3.0%
* An unfavourable monsoon may exacerbate food inflation
* Unfavourable 2010 monsoon may add to fiscal burden
.
GROWTH
* GDP projection assumes normal monsoons
* GDP projection also assumes good industrial, services growth
* Industrial growth to take firmer hold going forward
.
FISC
* Fiscal prudence to avoid crowding out private credit demand
* Fiscal prudence must shift to structural improvements
* Govt borrow "very large", can pressure interest rates
.
GLOBAL
* Pace of global econ recovery remains uncertain
* Uncertain global econ recovery downside risk to India GDP
* Trade, financial linkages to other economies may impact India GDP
* Commodity price seen up more if global recovery gain momentum
* Rise in global commodity prices may up inflation pressure
* Expansionary fiscal policy may not be unwound in advanced economies
* Expansionary policies may trigger large FX flows to India
* Excessive flows challenge to FX rate, monetary mgmt
* FX rate policy not guided by pre-announced target
* Keep flexibility to intervene in FX market to manage volatility
* Need to be vigilant volatile FX rate movements
.
MARKET
* RBI panel to mull single point reporting for OTC FX derivatives
* To launch reporting platform for secondary deals of CDs, CPs
* Asked FIMMDA to develop CD, CP reporting platform
* To allow banks to purchase non-SLR bonds by infra companies in HTM
* OKs bourses to launch plain vanilla dollar/rupee options
DAILY NEWS ROUNDUP -APRIL 20, 2010
The Government is considering divesting 10% stake in the state-owned National Aluminium Company (NALCO). (BS)
L&T to bid for airport projects in West Asia. (BL)
ArcelorMittal in talks with Delhi-based Ferro Alloys Corporation (Facor) for a strategic stake. (BS)
BHEL has bagged contract of Rs63bn from Raichur Power Corporation Ltd’s for setting up a 1,600 mw supercritical power plant in Karnataka. (FE)
GMR group is planning to raise an additional US$100mn from a group of private equity companies, led by Singapore-based Temasek Holdings, to fund its expansion plans. (BS)
Siemens to invest Rs5bn for wind turbine manufacturing facility in Gujarat. (BS)
Bajaj Auto has increased its stake in Austrian power bike maker KTM further to 35.7% from present 31.9%. (FE)
Cipla has developed three low-cost generic medicines to treat blood pressure, allergic rhinitis and control excessive bleeding in women during delivery. (BS)
United Spirits plans to expand into Southeast Asia and Africa by buying distilleries as it seeks to bolster its position as the world’s second-biggest seller of alcohol. (ET)
JSW has beaten two South African bidders to acquire a majority stake in South African Coal Mining Holdings (SACMH) at a price of 85.4mn rand (~Rs511.6mn). (BS)
Coal India Limited (CIL) has fallen short of its targeted coal supplies to consumers in sectors like power, steel and fertilizers during April-February 2009-10. As against the 281.8mn tons which was to be supplied by CIL to the power sector, the coal major managed to supply 270.2mn tons, thus falling short of the target by 4.1%.(BS)
Philips has outsourced its entire TV business, including manufacturing, distribution and selling, to Videocon industries. (BS)
Shree Renuka Sugars has been insisting for at least 8% more equity in the Brazilian firm, Equipav. (ET)
Jay Shree Tea & Industries is close to acquiring tea estates in Uganda and Rwanda. This overseas acquisition is expected to lift production from 23.5mn kg to nearly 29mn kg in 2010-11. (ET)
Coal India is expected to seal deals worth US$1.8bn with foreign firms in the next two months for mining coal abroad (ET)
The government would rake in a minimum of over Rs240bn from the auction of third generation (3G) spectrum on the eighth day as the pan-India licence reached a bid of Rs60.7bn, up by about 73% from the base price of Rs35bn. (BS)
Government has managed to add over Rs96.5bn in 2009-10 as non-tax revenue from the oil exploration companies. (BS)
The sugar production in Uttar Pradesh for the 2009-10 crushing season is likely to fall short of 5.2mn tons as earlier projected. (BS)
Credit growth surpassed the RBI's projection of 16% in FY10 mainly on account of public sector banks reporting robust growth in lending. (BL)
A key committee of Parliament has said that the proposed Financial Stability and Development Council (FSDC) should be constituted at the earliest to address the inter-regulatory issues in the financial sector, creating pressure on the government to make the council some sort of a super regulator. (ET)
L&T to bid for airport projects in West Asia. (BL)
ArcelorMittal in talks with Delhi-based Ferro Alloys Corporation (Facor) for a strategic stake. (BS)
BHEL has bagged contract of Rs63bn from Raichur Power Corporation Ltd’s for setting up a 1,600 mw supercritical power plant in Karnataka. (FE)
GMR group is planning to raise an additional US$100mn from a group of private equity companies, led by Singapore-based Temasek Holdings, to fund its expansion plans. (BS)
Siemens to invest Rs5bn for wind turbine manufacturing facility in Gujarat. (BS)
Bajaj Auto has increased its stake in Austrian power bike maker KTM further to 35.7% from present 31.9%. (FE)
Cipla has developed three low-cost generic medicines to treat blood pressure, allergic rhinitis and control excessive bleeding in women during delivery. (BS)
United Spirits plans to expand into Southeast Asia and Africa by buying distilleries as it seeks to bolster its position as the world’s second-biggest seller of alcohol. (ET)
JSW has beaten two South African bidders to acquire a majority stake in South African Coal Mining Holdings (SACMH) at a price of 85.4mn rand (~Rs511.6mn). (BS)
Coal India Limited (CIL) has fallen short of its targeted coal supplies to consumers in sectors like power, steel and fertilizers during April-February 2009-10. As against the 281.8mn tons which was to be supplied by CIL to the power sector, the coal major managed to supply 270.2mn tons, thus falling short of the target by 4.1%.(BS)
Philips has outsourced its entire TV business, including manufacturing, distribution and selling, to Videocon industries. (BS)
Shree Renuka Sugars has been insisting for at least 8% more equity in the Brazilian firm, Equipav. (ET)
Jay Shree Tea & Industries is close to acquiring tea estates in Uganda and Rwanda. This overseas acquisition is expected to lift production from 23.5mn kg to nearly 29mn kg in 2010-11. (ET)
Coal India is expected to seal deals worth US$1.8bn with foreign firms in the next two months for mining coal abroad (ET)
The government would rake in a minimum of over Rs240bn from the auction of third generation (3G) spectrum on the eighth day as the pan-India licence reached a bid of Rs60.7bn, up by about 73% from the base price of Rs35bn. (BS)
Government has managed to add over Rs96.5bn in 2009-10 as non-tax revenue from the oil exploration companies. (BS)
The sugar production in Uttar Pradesh for the 2009-10 crushing season is likely to fall short of 5.2mn tons as earlier projected. (BS)
Credit growth surpassed the RBI's projection of 16% in FY10 mainly on account of public sector banks reporting robust growth in lending. (BL)
A key committee of Parliament has said that the proposed Financial Stability and Development Council (FSDC) should be constituted at the earliest to address the inter-regulatory issues in the financial sector, creating pressure on the government to make the council some sort of a super regulator. (ET)
POSITIVE START LIKELY; RBI'S POLICY IN FOCUS
Headlines for the day:
Mining firms ride the profit boom
ArcelorMittal eyes stake in Ferro Alloys Corp
JSW acquires control of South African coal mining company
Events for the day:
Major corporate action
RBI’s quarterly monetary policy review today
Ex-date for Interim dividend of Nissan Copper
Results: GTL, Axis Bank, Zee Entertainment, HCL
For more events, log on to Sharekhan.com
Pre-market report
Global signals
The European equities ended lower on Monday, with banking stocks falling on Friday's fraud charges against Goldman Sachs and airlines slipping on a fifth day of cancellations due to volcanic ash.
The US stocks rose late on Monday as investors reassessed the potential damage of the fraud case against Goldman Sachs and earnings optimism grew.
In today's trade, the Asian markets were trading on a positive note, except Shanghai Composite. At the time of writing this report, SGX Nifty was trading 7.5 points higher.
Indian markets
The Indian Indices are likely to open on a higher note on the back of positive Asian cues and as the investor sentiment across the globe turned good on hopes of better earnings declaration. Yesterday, post the market, Hero Honda and Tata Consultancy Services (TCS) announced their Q4 numbers, which were above the street expectations. Thus, we might see some momentum in these stocks.
However, going in the session, the results of HCL Technologies, Axis Bank, GTL are to be announced later by the day, which might affect the future course of the day. We expect the market to remain volatile as the case in the previous last five sessions, as investors will keenly look forward to the Reserve Bank of India (RBIs)' monetary policy, which is scheduled later today. The street expects a 25-50 basis points hike in interest rates.
Commodity cues
In the commodity space, the crude oil prices tumbled on Monday for the third straight trading day as investors reacted to the fraud charges against Goldman Sachs and the strength of the dollar, with the Nymex light crude oil for the May series declined by $1.79 per barrel, whereas in the metals space, the Comex Gold for the May series down by $1.10 and the Comex Silver for the May series was declined by $0.05 to a troy ounce respectively.
Daily trend of FII/MF investment in equities
On April 19, 2010, the FIIs were the net buyers of the Indian stocks to the tune of Rs363.70 crore, whereas the domestic mutual funds, on April 16, 2010, were the net sellers of the stocks to the tune of Rs292.90 crore
Mining firms ride the profit boom
ArcelorMittal eyes stake in Ferro Alloys Corp
JSW acquires control of South African coal mining company
Events for the day:
Major corporate action
RBI’s quarterly monetary policy review today
Ex-date for Interim dividend of Nissan Copper
Results: GTL, Axis Bank, Zee Entertainment, HCL
For more events, log on to Sharekhan.com
Pre-market report
Global signals
The European equities ended lower on Monday, with banking stocks falling on Friday's fraud charges against Goldman Sachs and airlines slipping on a fifth day of cancellations due to volcanic ash.
The US stocks rose late on Monday as investors reassessed the potential damage of the fraud case against Goldman Sachs and earnings optimism grew.
In today's trade, the Asian markets were trading on a positive note, except Shanghai Composite. At the time of writing this report, SGX Nifty was trading 7.5 points higher.
Indian markets
The Indian Indices are likely to open on a higher note on the back of positive Asian cues and as the investor sentiment across the globe turned good on hopes of better earnings declaration. Yesterday, post the market, Hero Honda and Tata Consultancy Services (TCS) announced their Q4 numbers, which were above the street expectations. Thus, we might see some momentum in these stocks.
However, going in the session, the results of HCL Technologies, Axis Bank, GTL are to be announced later by the day, which might affect the future course of the day. We expect the market to remain volatile as the case in the previous last five sessions, as investors will keenly look forward to the Reserve Bank of India (RBIs)' monetary policy, which is scheduled later today. The street expects a 25-50 basis points hike in interest rates.
Commodity cues
In the commodity space, the crude oil prices tumbled on Monday for the third straight trading day as investors reacted to the fraud charges against Goldman Sachs and the strength of the dollar, with the Nymex light crude oil for the May series declined by $1.79 per barrel, whereas in the metals space, the Comex Gold for the May series down by $1.10 and the Comex Silver for the May series was declined by $0.05 to a troy ounce respectively.
Daily trend of FII/MF investment in equities
On April 19, 2010, the FIIs were the net buyers of the Indian stocks to the tune of Rs363.70 crore, whereas the domestic mutual funds, on April 16, 2010, were the net sellers of the stocks to the tune of Rs292.90 crore
Monday, April 19, 2010
DAILY NEWS ROUNDUP -APRIL 19, 2010
HDFC has revived its teaser home loan rates for two weeks to protect market share. (ET)
L&T to make industrial tyres with Mitsubishi. (ET)
ONGC says that it will not be economically viable to produce gas from its Krishna-Godavari basin block at current sale price of US$4.2/mmBtu. (ET)
SAIL is in talks with Posco and Kobe Steel for technology tie-ups for jointly setting-up steel plants. (ET)
IOC may see revenue loss on fuel sales jump 63% in FY10. (BS)
Bank of India has cut interest rates on its bulk deposits by up to 1.25% across various tenures with immediate effect. (ET)
Tata Motors global sales grow 39% in March. (BS)
Ranbaxy has voluntarily recalled two consignments of one of its antibiotics from US market. (BL)
UBI to raise upto US$500mn through a maiden MTN programme. (BL)
Japan’s JFE is in advanced talks to buy a small stake in JSW Steel. (ET)
Jet Airways seeks more FSI for BKC plot, eyes lease income. (ET)
Triveni Engineering has formed a JV with GE to make and sale steam turbines for small power generation projects. (ET)
Aurobindo Pharma has received final approval for Ondansetron orally disintegrating tablets from US FDA. (BL)
Pipavav Shipyard is in talks to buy an oil rig and shipping company in West Europe. (ET)
Glodyne close to buying a US company for Rs5bn. (ET)
Areva T&D has won three turnkey project orders worth Rs630mn. (BL)
WPI inflation for the month of March stood at 9.9%. (BS)
Domestic air traffic climbs 23% yoy in March 2010. (ET)
CMI pegs FY10 growth at 7.1% and FY11 growth at 9.2%. (ET)
L&T to make industrial tyres with Mitsubishi. (ET)
ONGC says that it will not be economically viable to produce gas from its Krishna-Godavari basin block at current sale price of US$4.2/mmBtu. (ET)
SAIL is in talks with Posco and Kobe Steel for technology tie-ups for jointly setting-up steel plants. (ET)
IOC may see revenue loss on fuel sales jump 63% in FY10. (BS)
Bank of India has cut interest rates on its bulk deposits by up to 1.25% across various tenures with immediate effect. (ET)
Tata Motors global sales grow 39% in March. (BS)
Ranbaxy has voluntarily recalled two consignments of one of its antibiotics from US market. (BL)
UBI to raise upto US$500mn through a maiden MTN programme. (BL)
Japan’s JFE is in advanced talks to buy a small stake in JSW Steel. (ET)
Jet Airways seeks more FSI for BKC plot, eyes lease income. (ET)
Triveni Engineering has formed a JV with GE to make and sale steam turbines for small power generation projects. (ET)
Aurobindo Pharma has received final approval for Ondansetron orally disintegrating tablets from US FDA. (BL)
Pipavav Shipyard is in talks to buy an oil rig and shipping company in West Europe. (ET)
Glodyne close to buying a US company for Rs5bn. (ET)
Areva T&D has won three turnkey project orders worth Rs630mn. (BL)
WPI inflation for the month of March stood at 9.9%. (BS)
Domestic air traffic climbs 23% yoy in March 2010. (ET)
CMI pegs FY10 growth at 7.1% and FY11 growth at 9.2%. (ET)
ONE LINK AT A TIME.
It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time - Winston Churchill.
The weak link for the market appears to be fears of an adverse outcome of the RBI’s annual policy meet next week. Meanwhile, India’s quest to break into the elite global space club will be delayed. In a rare failure, ISRO’s indigenously made rocket (GSLV-D3) crashed soon after take off on Thursday.
Even the bulls will have to wait for better links before they see the NSE Nifty cross 5400. A sudden bout of selling pulled the market down despite inflation being steady. What is more disturbing is that fund flows have started to taper off. Even the FIIs, who till recently were pouring money at a steady pace have turned a bit cautious.
Its still early days as far as results are concerned. So, the volatility will prevail for a while amid a mix bag of earnings. In any case, the market seems to be looking far ahead at FY12 numbers. Today we see a sluggish opening and another choppy session. A rebound cannot be ruled out after Thursday’s selloff.
US stocks closed higher for a sixth straight session at fresh 2010 highs, bolstered by upbeat economic reports and a strong forecast from UPS. Shares of Google fell in extended trading despite reporting earnings that beat Wall Street estimates. European stocks closed at an 18-month high.
However, Japanese stocks fell for the first time in three days as jobless claims by Americans unexpectedly increased and China announced measures to cool its real-estate market. Hong Kong shares declined, tracking weakness in Shanghai stocks, as Chinese property and banking stocks fell after Beijing tightened policies toward the residential property market.
Results Today: CRISIL, DCB, IndusInd Bank and Stone India.
FIIs were net buyers of just Rs997mn on Thursday on a provisional basis. Local funds were net sellers at Rs768.7mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers of Rs3.91bn. On Tuesday, FIIs were net buyers of Rs6.08bn in the cash segment, as per the SEBI web site.
Shares of JSW Steel will be in focus amid reports that Japan’s JFE is in advanced talks to buy a small stake in the company. Glodyne Technoserve might also gain from reports that it is close to buying a US company for Rs5bn. Airlines could also be in the spotlight as domestic air traffic climbed 23% yoy in March 2010. But, Oil PSUs are set to hike ATF prices again.
US stocks ended up for a sixth consecutive session on Thursday after a volatile session, as investors ignored the latest jobless claims report and Google reported much better-than-expected earnings after the closing bell.
The Dow Jones Industrial Average added 21 points, or 0.2%, to close at 11,144.57. The S&P 500 index ended nearly flat at 1,211.67. The Nasdaq Composite was up 11 points, or 0.4%, to end at 2,515.69.
The industrials sector led the gains the most, while consumer staples fell the most among the index's 10 industry groups.
The dollar was up versus the euro, but it fell against the British pound and Japanese yen.
The price of oil dipped 34 cents to settle at $85.50 a barrel.
Gold prices added 70 cents to settle at $1,159.70 an ounce.
Prices for US Treasurys rose, with the yield on the 10-year note at 3.85%.
Stocks opened weak earlier in the session after the jobless claims report, which showed a surprise surge for the second week in a row. But the Labor Department attributed the jump to "technical" issues, including the Easter holiday.
The major indexes meandered in and out of positive territory during the session, but pushed to afternoon highs in the wake of an industry survey finding increased optimism among US home builders in April.
Stocks had soared on Wednesday on strong earnings and retail sales. The Dow and the S&P 500 both rose to their highest levels in more than 18 months, while the Nasdaq topped the 2,500 mark for the first time since June 2008.
Labor Department's weekly jobless claims report said there were 484,000 new claims filed last week, up 24,000 from the previous week. That was the highest level since the week ended Feb. 20 - a disappointment to economists, who had expected new claims to fall to 440,000.
Separately, government figures showed that capacity utilization increased to 73.2% in March from 72.7% the previous month, slightly missing analysts' expectations of a jump to 73.3%.
The Philadelphia Federal Reserve's regional manufacturing index jumped to 20.2 in April from 18.9 the previous month. Economists expected a reading of 20.
The New York Federal Reserve's manufacturing index also improved, climbing to 31.9 in April from 22.9 in March.
A report from RealtyTrac said there were more than 930,000 foreclosure filings in the first quarter of 2010, up 7% from the previous quarter and a whopping 16% jump from the year-earlier quarter.
A report from China's National Statistics Bureau showed the nation's economy surged nearly 12% during the first quarter compared with a year earlier. China's GDP was up 1.2% from the fourth quarter of 2009. The report fueled worries of tighter monetary policy.
After the closing bell, Google reported quarterly sales and profit that trumped expectations. The search giant's net income was $1.96 billion, or $6.06 per share, in the first quarter, up 38% $1.42 billion from the same period last year.
Analysts expected only $6.60 per share. Google shares rose 1% in after-hours trade.
UPS pre-reported its quarterly results late on Wednesday. The parcel delivery service said earnings per share jumped 33% to 53 cents, compared to 40 cents in the first quarter of last year. Shares rose 5.2%.
Toyota said it is conducting safety tests on all of its sport utility vehicles after suspending worldwide sales of its Lexus GX 460 over rollover concerns.
After the bell, news reports said the Securities and Exchange Commission is investigating whether Hewlett-Packard executives paid nearly $11 million in bribes to secure a contract from a Russian official's office. Shares of HP fell 27 cents, or 0.5%, $54.25 in after-hours trade.
European stocks closed up, boosted by further improvement in the global economic backdrop and a strong rise in sales by Swiss drug giant Roche. The Stoxx Europe 600 index rose 0.6% to finish at 272.14, its highest close since Sept. 23, 2008.
The UK's FTSE 100 index gained 0.5% to close at 5,825.01, the French CAC-40 index advanced 0.2% to 4,065.65 and the German DAX index ended 0.2% higher at 6,291.45. Greek stocks advanced, with the ASE Composite Index rising 2.1% to close at 2,028.55.
The euro lost ground against major rivals.
Speculation has intensified that Greece will have to take up an IMF/European aid package. Greek bond yields spiked. Later this month, Athens plans to hold a sale of US-dollar-denominated bonds, and there are concerns that demand could be smaller than anticipated.
The markets are still worries that Greece will require more aid to stave off a possible default. Earlier this week, European Union officials announced a plan to provide an additional $40 billion in low-cost loans for the debt-stricken nation. The IMF agreed to step in with another $13.5 billion.
European miners and metal futures traded broadly lower after the Chinese GDP data.
Unlike the US market, where the S&P 500 and the Nasdaq crossed key psychological milestones, the BSE Sensex and the NSE Nifty actually slid by 1% each. The key indices finished with a whimper after a smart opening despite inflation staying static in March. Selling intensified post 2 pm as European markets gave up early gains.
The benchmark indices gradually lost ground on the back of selling in the index heavyweights like Reliance Industries, ICICI Bank and L&T. Not all was gloomy in today’s trade as the small-cap and mid-cap indices escaped a sharper selloff. In terms of sectors, Real Estate, IT and Pharma indexes stood out as they bucked the negative trend. On the other hand, Oil & Gas, Banking and Capital Goods indices bore the brunt of the fall.
The Sensex lost over 330 points and the Nifty shed over 100 points from their respective intra-day highs. "Market players turned cautious ahead of the RBI monitory policy scheduled on April 20. The central bank is widely expected to raise key short-term policy rates to rein in stubbornly high inflation", says Amar Ambani VP Research IIFL.
The BSE Sensex fell 183 points to end at 17,639 and NSE Nifty lost 49 points to close at 5,274. Among the 30 components of Sensex, 19 ended in the negative terrain and 11 were in the green.
Markets in Asia ended in the green; the Nikkei in Japan was up 0.6%, Australia's S&P/ASX edged higher by 0.2%. Shanghai SE Composite ended lower by 0.5% and Hang Seng index in Hong Kong was up 0.2%.
On the other hand, European indices were trading with a slight negative bias, the DAX in Germany was down 0.3%, the CAC 40 index in France was down 0.3% and the FTSE in the UK was down 0.2%.
Coming back to India, among the BSE sectoral indices, the BSE Oil & Gas index was top loser, the index lost 1.8%, followed by BSE Banking index down 1.5% and Capital Goods index down 1.4%.
Among the top gainers were, BSE Realty index up 1.5% and BSE Consumer Durables index up 0.7%.
Outside the frontline indices, the big losers in the broader market were Max India, LIC Housing Fin, BOB and GVK Power. On the other hand, gainers included Apollo Hosp, JP Hydro, Titan Ind and Castrol.
Shares of ABB erased early gains and ended at Rs832 losing 0.8%. The stock hit an intra-day high of Rs852 after the company won an order worth Rs630mn from Haryana Vidyut Prasaran Nigam Ltd. to build a 400 kV (kilovolt) substation that will facilitate the transmission of electricity from new power generation plants being constructed in the region. The order was booked in the first quarter.
Shares of IVRCL Assets & Holdings gained by 1.7% to end at Rs180 after the company announced that the board of directors declared bonus shares in the ratio of 1:2.
The board also approved raising of equity funds to the extent of Rs10bn by way of QIP in one or more tranches.
Shares of Zee News plunged over 75% to end at Rs18. Zee News had approved the Scheme of Arrangement whereby the Regional General Entertainment Channel (GEC) business of the company would be de-merged and transferred to Zee Entertainment Enterprises with effect from January 1, 2010 (appointed date).
April 16 was fixed as the Record Date for determination of members of the company who would become eligible for issuance of equity shares by Zee Entertainment Enterprises.
Triveni Engineering announced that the company has signed a joint venture with GE Oil & Gas, through one if its affiliates (GE Pacific Mauritius Ltd.) to design, manufacture, supply, sell and service advanced technology steam turbines in India in the above 30 to 100MW-range for power generation applications in the Indian and worldwide markets. Triveni will hold one extra share with both parties having equal representation on the Board.
Shares of Triveni Engineering gained 1% to end at Rs131. The stock opened at Rs132. It hit an intra-day high of Rs135 and an intra-day low of Rs130. Total traded quantity was 0.43mn on NSE.
Tata Sons Ltd, the largest Differential Voting Rights (DVR) shareholder in Tata Motors are planning to cut stake in the company further by selling shares that have less voting rights than common shares.
Tata Sons had reduced its stake to 54% from 73% in 2009 and is further planning to cut it in an attempt for better pricing for the DVR, which is currently quoting at an almost 30% discount.
Tata Sons plans to sell the shares in the open market through an auction and has also reportedly appointed Tata Capital for the transaction.
On Tuesday, in bulk deal on the exchanges, Tata Sons sold ~1.6mn shares. HDFC MF bought ~1.05mn shares at an average rice of Rs485 per DVR.
The BSE IT index surged to record high and rose to its highest level since February 2007 after heavyweight Infosys came out with its results beating street estimates.
On the other hand, shares of Infosys gained 0.5% to end at Rs2801. The scrip opened at Rs2799 it touched an intra-day high of Rs2823 and a low of Rs2760 and recorded volumes of over 0.47mn shares on BSE.
Finally the BSE IT index ended at 5526 level rising nearly 0.4%, the index pared losses in the second half on
Friday, April 16, 2010
AREVA T&D INDIA
Investors with short-term trading perspective can consider selling Areva T&D India. The stock has been trundling downward since the peak of Rs 385 recorded in June 2009. This decline is however received medium-term support around Rs 255. The rebound from this level from February 24 was arrested at the key short-term resistance at Rs 320 and the stock is currently in a down-trend over the last couple of weeks. Moving average convergence divergence oscillator in the daily chart is signalling a sell for the first time since March 3 signalling a short-term reversal in the stock. The 10-day rate of change oscillator has also declined in to the bearish zone implying that the stock could move lower in the days ahead.
The medium-term trend in the stock is sideways but strong reversal from the resistance zone around Rs 320 can pull the stock lower towards its February lows. Short-term investors can therefore sell the stock with the stop at Rs 307. Downward targets for the stock are Rs 298 and Rs 294.
The medium-term trend in the stock is sideways but strong reversal from the resistance zone around Rs 320 can pull the stock lower towards its February lows. Short-term investors can therefore sell the stock with the stop at Rs 307. Downward targets for the stock are Rs 298 and Rs 294.
DAILY NEWS ROUNDUP -APRIL 16, 2010
HDFC has revived its teaser home loan rates for two weeks to protect market share. (ET)
L&T to make industrial tyres with Mitsubishi. (ET)
ONGC says that it will not be economically viable to produce gas from its Krishna-Godavari basin block at current sale price of US$4.2/mmBtu. (ET)
SAIL is in talks with Posco and Kobe Steel for technology tie-ups for jointly setting-up steel plants. (ET)
IOC may see revenue loss on fuel sales jump 63% in FY10. (BS)
Bank of India has cut interest rates on its bulk deposits by up to 1.25% across various tenures with immediate effect. (ET)
Tata Motors global sales grow 39% in March. (BS)
Ranbaxy has voluntarily recalled two consignments of one of its antibiotics from US market. (BL)
UBI to raise upto US$500mn through a maiden MTN programme. (BL)
Japan’s JFE is in advanced talks to buy a small stake in JSW Steel. (ET)
Jet Airways seeks more FSI for BKC plot, eyes lease income. (ET)
Triveni Engineering has formed a JV with GE to make and sale steam turbines for small power generation projects. (ET)
Aurobindo Pharma has received final approval for Ondansetron orally disintegrating tablets from US FDA. (BL)
Pipavav Shipyard is in talks to buy an oil rig and shipping company in West Europe. (ET)
Glodyne close to buying a US company for Rs5bn. (ET)
Areva T&D has won three turnkey project orders worth Rs630mn. (BL)
WPI inflation for the month of March stood at 9.9%. (BS)
Domestic air traffic climbs 23% yoy in March 2010. (ET)
CMI pegs FY10 growth at 7.1% and FY11 growth at 9.2%. (ET)
L&T to make industrial tyres with Mitsubishi. (ET)
ONGC says that it will not be economically viable to produce gas from its Krishna-Godavari basin block at current sale price of US$4.2/mmBtu. (ET)
SAIL is in talks with Posco and Kobe Steel for technology tie-ups for jointly setting-up steel plants. (ET)
IOC may see revenue loss on fuel sales jump 63% in FY10. (BS)
Bank of India has cut interest rates on its bulk deposits by up to 1.25% across various tenures with immediate effect. (ET)
Tata Motors global sales grow 39% in March. (BS)
Ranbaxy has voluntarily recalled two consignments of one of its antibiotics from US market. (BL)
UBI to raise upto US$500mn through a maiden MTN programme. (BL)
Japan’s JFE is in advanced talks to buy a small stake in JSW Steel. (ET)
Jet Airways seeks more FSI for BKC plot, eyes lease income. (ET)
Triveni Engineering has formed a JV with GE to make and sale steam turbines for small power generation projects. (ET)
Aurobindo Pharma has received final approval for Ondansetron orally disintegrating tablets from US FDA. (BL)
Pipavav Shipyard is in talks to buy an oil rig and shipping company in West Europe. (ET)
Glodyne close to buying a US company for Rs5bn. (ET)
Areva T&D has won three turnkey project orders worth Rs630mn. (BL)
WPI inflation for the month of March stood at 9.9%. (BS)
Domestic air traffic climbs 23% yoy in March 2010. (ET)
CMI pegs FY10 growth at 7.1% and FY11 growth at 9.2%. (ET)
WHY IRDA SEEMS AN INDUSTRY LOBBY AND NOT A REGULATOR
Jandhyala Hari Narayan, chairman of Insurance Regulatory and Development Authority (Irda), has termed the order of the Securities and Exchange Board of India (Sebi) barring 14 private life insurance companies from raising unit linked insurance plan premiums as being against public interest.
But does Hari Narayan himself, or for that matter Irda, have public interest in mind? Or are they only interested in protecting the business interests of the life insurance companies that they are supposed to regulate?
More likely they are serving the industry’s cause, much less that of investors. Here’s why:
1. Highest NAV guaranteed plans: Insurance companies have been launching and raising crores in new premium through highest net asset value (NAV) guaranteed Ulips. Ulips are investment plans carrying a dash of insurance. Typically, highest NAV guaranteed Ulips are 10-year plans. Some of these plans guarantee the investor the highest NAV they achieve for the first seven years of the plan and others guarantee the highest NAV for the entire duration of the plan.
There are a number of issues here
First, how can a regulator which claims to have “public interest” in mind clear an insurance plan that has the flexibility to invest up to 100% of the total money it collects in the stock market and yet offers a guarantee? Guarantees and stock markets don’t go together. Those in doubt can recall the case of the once much loved but now almost defunct institution called the Unit Trust of India (UTI). UTI had around Rs 17,000 crore invested in its assured return schemes and all these schemes had to be shut down in 2002 when things started to go haywire.
Second, the insurance companies in their promotional literature haven’t elaborated on how they plan to manage the guarantee. As the recent financial crisis shows, there are no holy cows in the world of finance.
Third, highest NAV guaranteed Ulips are being blatantly sold and advertised as a stock market product, giving an impression that all the money collected will be invested in the stock market and there it shall stay for the entire period of the plan, and the highest NAV will be guaranteed. Of course, no insurance company will take on the risk of having to pay off investors out of its own pockets. So it will in all likelihood have a higher exposure to equity initially and gradually move the investments into debt as the date of maturity nears.
If Irda had public interest in mind, it would never allow any of this. More so, considering it only benefits the insurance companies, who find it much easier to raise money by using the world guaranteed in their product.
Sebi does not allow mutual funds to use guaranteed returns. In fact, till sometime back mutual funds used to give indicative returns on fixed maturity plans to solicit investment. Even that has been stopped now.
2. Joining the Ulip sales pitch: Recently Irda put out advertisements in newspapers using taxpayers’ money, asking people to invest in Ulips. Is that a function of an industry lobby or a regulator which has public interest on its mind?
3. Identifying the best Ulip: Irda should work on building an infrastructure to help investors figure out which of the Ulips in the market is the best at any given point. In a mutual fund, the difference between the net asset value between two points of time can tell the investor how well a scheme has performed. This is primarily because the expense structure of mutual funds is more or less the same. The expense structure of Ulips offered by different insurance companies is widely different. Therefore, there is no way an individual can figure out which is the best performing Ulip going. This essentially ensures that insurance agents can push anything they want to. Now who does that help? Definitely not the investor!
4. Front loaded commissions: Most Ulips come with a top-loaded commission structure. This means insurance companies offer a significantly higher commission in the first two years of the policy. This has led to a situation wherein insurance agents, which include big banks, get investors to exit their existing Ulip policies once the lock-in is over, and get them to invest in new Ulips. This ensures that agents can continue to earn a high commission. As highlighted earlier by DNA Money (Guess what got Sebi’s goat?, April 13, 2010), the premium collected in latter years of insurance policies is not significantly different from the premium collected in the first year. Irda, as a good industry lobby should, has turned a blind eye towards this. In fact, spreading around the commission equally throughout the tenure of the policy will ensure that insurance agents do not go around mis-selling.
Over and above this, currently a life insurance agent is allowed to sell products only from one company. This has led to a situation where some big banks have switched insurance companies just because of more commission being offered. This obviously left a lot of current investors in Ulips in the lurch. A staggered commission structure will take care of this problem as well to some extent. But then that may not be.
5. Switching Ulips: If the Ulip an investor has invested in delivers mediocre returns, switching to another Ulip is a very expensive process. This is primarily because the commissions in the first two years of any policy are very high. So the investor has to pay the high commission all over again.
A staggered commission structure was in place, an investor could easily switch Ulips. This would ensure that insurance companies will compete on their performance as well, rather than the current situation where it is more a question of who has the better distribution system, pays higher commission and can get a bigger celebrity to endorse its product.
Mutual funds are currently not allowed to use celebrities to advertise their products.
6. ‘The commission-free structure will kill the insurance industry’: Irda chief Hari Narayan has gone on record with this statement after the recommendations of the Committee on Investor Awareness and Protection headed by D Swarup, the last chairman of the Pension Fund Regulatory and Development Authority, was released. The committee, which had members from the ministries of finance and corporate affairs, the Reserve Bank of India, Sebi and Irda, recommended that all retail financial products should go no-load and hence no-commission by April 2011. It recommended that upfront commissions given by insurance companies should fall to 7% by April 2010 and 0% by 2011. Now, that’s keeping “public-interest” in mind, for this would benefit the Ulip investor rather than the insurance company. Is Irda on the investor’s side?
But does Hari Narayan himself, or for that matter Irda, have public interest in mind? Or are they only interested in protecting the business interests of the life insurance companies that they are supposed to regulate?
More likely they are serving the industry’s cause, much less that of investors. Here’s why:
1. Highest NAV guaranteed plans: Insurance companies have been launching and raising crores in new premium through highest net asset value (NAV) guaranteed Ulips. Ulips are investment plans carrying a dash of insurance. Typically, highest NAV guaranteed Ulips are 10-year plans. Some of these plans guarantee the investor the highest NAV they achieve for the first seven years of the plan and others guarantee the highest NAV for the entire duration of the plan.
There are a number of issues here
First, how can a regulator which claims to have “public interest” in mind clear an insurance plan that has the flexibility to invest up to 100% of the total money it collects in the stock market and yet offers a guarantee? Guarantees and stock markets don’t go together. Those in doubt can recall the case of the once much loved but now almost defunct institution called the Unit Trust of India (UTI). UTI had around Rs 17,000 crore invested in its assured return schemes and all these schemes had to be shut down in 2002 when things started to go haywire.
Second, the insurance companies in their promotional literature haven’t elaborated on how they plan to manage the guarantee. As the recent financial crisis shows, there are no holy cows in the world of finance.
Third, highest NAV guaranteed Ulips are being blatantly sold and advertised as a stock market product, giving an impression that all the money collected will be invested in the stock market and there it shall stay for the entire period of the plan, and the highest NAV will be guaranteed. Of course, no insurance company will take on the risk of having to pay off investors out of its own pockets. So it will in all likelihood have a higher exposure to equity initially and gradually move the investments into debt as the date of maturity nears.
If Irda had public interest in mind, it would never allow any of this. More so, considering it only benefits the insurance companies, who find it much easier to raise money by using the world guaranteed in their product.
Sebi does not allow mutual funds to use guaranteed returns. In fact, till sometime back mutual funds used to give indicative returns on fixed maturity plans to solicit investment. Even that has been stopped now.
2. Joining the Ulip sales pitch: Recently Irda put out advertisements in newspapers using taxpayers’ money, asking people to invest in Ulips. Is that a function of an industry lobby or a regulator which has public interest on its mind?
3. Identifying the best Ulip: Irda should work on building an infrastructure to help investors figure out which of the Ulips in the market is the best at any given point. In a mutual fund, the difference between the net asset value between two points of time can tell the investor how well a scheme has performed. This is primarily because the expense structure of mutual funds is more or less the same. The expense structure of Ulips offered by different insurance companies is widely different. Therefore, there is no way an individual can figure out which is the best performing Ulip going. This essentially ensures that insurance agents can push anything they want to. Now who does that help? Definitely not the investor!
4. Front loaded commissions: Most Ulips come with a top-loaded commission structure. This means insurance companies offer a significantly higher commission in the first two years of the policy. This has led to a situation wherein insurance agents, which include big banks, get investors to exit their existing Ulip policies once the lock-in is over, and get them to invest in new Ulips. This ensures that agents can continue to earn a high commission. As highlighted earlier by DNA Money (Guess what got Sebi’s goat?, April 13, 2010), the premium collected in latter years of insurance policies is not significantly different from the premium collected in the first year. Irda, as a good industry lobby should, has turned a blind eye towards this. In fact, spreading around the commission equally throughout the tenure of the policy will ensure that insurance agents do not go around mis-selling.
Over and above this, currently a life insurance agent is allowed to sell products only from one company. This has led to a situation where some big banks have switched insurance companies just because of more commission being offered. This obviously left a lot of current investors in Ulips in the lurch. A staggered commission structure will take care of this problem as well to some extent. But then that may not be.
5. Switching Ulips: If the Ulip an investor has invested in delivers mediocre returns, switching to another Ulip is a very expensive process. This is primarily because the commissions in the first two years of any policy are very high. So the investor has to pay the high commission all over again.
A staggered commission structure was in place, an investor could easily switch Ulips. This would ensure that insurance companies will compete on their performance as well, rather than the current situation where it is more a question of who has the better distribution system, pays higher commission and can get a bigger celebrity to endorse its product.
Mutual funds are currently not allowed to use celebrities to advertise their products.
6. ‘The commission-free structure will kill the insurance industry’: Irda chief Hari Narayan has gone on record with this statement after the recommendations of the Committee on Investor Awareness and Protection headed by D Swarup, the last chairman of the Pension Fund Regulatory and Development Authority, was released. The committee, which had members from the ministries of finance and corporate affairs, the Reserve Bank of India, Sebi and Irda, recommended that all retail financial products should go no-load and hence no-commission by April 2011. It recommended that upfront commissions given by insurance companies should fall to 7% by April 2010 and 0% by 2011. Now, that’s keeping “public-interest” in mind, for this would benefit the Ulip investor rather than the insurance company. Is Irda on the investor’s side?
Thursday, April 15, 2010
DAILY NEWS ROUNDUP -APRIL 15, 2010
Infosys will offer up to 17% salary hikes for over 100,000 employees this year, as the company seeks to retain staff and also attract new recruits in the year. (ET)
Tata Steel asked a member of British Parliament not to be "over-critical" about the company’s strategy in dealing with problems in Corus. (BS)
ONGC to challenge the government’s decision to withdraw the seven year tax holiday on production of natural gas. (ET)
Infosys has bagged an order worth US$150mn order from Microsoft. (BS)
Tata Sons is taking a book building to sell its Tata Motors DVR shares. (ET)
Cairn Mangala field to hit peak output in 2010. (BS)
Ranbaxy to recall two consignments of one of its antibiotics from the US market. (ET)
The province of Moselle in France said Tata Motors should explore setting up a manufacturing unit for Nano in the region as it could facilitate the company’s plans to launch the world’s cheapest car in Europe by 2011. (BS)
Bajaj Auto, which is planning launch four-wheelers in both passenger and commercial vehicle segment in 2012, will use the Renault platform for their production. (ET)
Bajaj Auto’s four-wheeler project, a JV with Nissan and Renault, at Chakan in Pune seems to have hit a roadblock, as the company has not been able to acquire enough land. (BS)
ACC said prices of the building material need to rise by at least 20%, if the company has to complete its expansion plans for the next two years. (ET)
Four out of the five subsidiaries of ACC incurred losses in operations in 2009. (BS)
M&M group may foray into banking through its NBFC arm Mahindra Finance. (FE)
HDFC plans to raise up to Rs250bn through non-convertible debentures in the current financial year through private placements. (BS)
DLF group has bagged carbon credits worth Rs400mn for reducing emission of greenhouse gasses. (ET)
RBI may relax exposure norms for state-run power sector lenders such as REC and PFC to ensure healthy flow of funds to cash-starved projects. (ET)
ABB bags an order worth Rs630bn from Haryana Vidyut Prasaran Nigam Limited. (BS)
Strides Arcolab gets USFDA approval for anti-nausea drug. (BS)
HCC bagged a contract worth Rs6.1bn from the Director General of Naval Projects to develop a dry dock and associated north and south wharves at the Naval Dockyard in Mumbai. (BL)
Punjab National Bank ruled out any increase in interest rates in the near future saying there is enough liquidity in the system. (ET)
The Environment Minister indicated to Adani Power that it would not approve the company’s proposal for drawing water from the Pench Tiger reserve for its project in Madhya Pradesh. (BS)
United Spirits is looking at various options to continue its bulk supply of scotch from the stables of Whyte & Mackay, which USL acquired during mid-2007 in a US$1.7bn deal. (BS)
Dewan Housing Finance plans to raise up to Rs500bn in the current fiscal to support its expansion plans besides meeting the capital adequacy needs. (ET)
Dewan Housing Finance plans to launch a finance JV focused on low-income housing in partnership with International Finance Corporation. (BS)
Elder Pharma to hire 1,000 sales and marketing professional for rural sales. (BS)
Godrej Consumer may introduce some of its international brands in India. (BS)
Shree Ganesh Jewellery secured contracts worth Rs5.1bn for gold jewellery from overseas buyer. (ET)
Subhash Projects won two orders worth Rs632mn from PGCIL. (FE)
State-owned Gujarat State Petroleum Corporation, which has lined up its Rs30.7bn IPO, says development of its Deen Dayal West field may be delayed by a year. (BS)
Andrew Yule may defer its Tide Water Oil stake sale plan. (ET)
Both the US and the EU are discussing additional taxes on carbon-emitting products from advanced developing countries, such as India and China, which could render products from the region uncompetitive. (ET)
SEBI asks 14 firms to register before launching new plans; Irda rejects proposal. (BS)
After failing to convince states to keep petroleum products within the ambit of the proposed GST, the Centre has finally agreed to keep petroleum products like crude, motor spirit, ATF and high-speed diesel out of GST. (BS)
Actual FDI by the Indian business declined by 34.1% in April-December 2009 to US$8.4bn from US$12.7bn a year ago. (BS)
After coking coal and iron ore, thermal coal supply contracts have now been signed at about 40% higher than last year. (BS)
The government imposed an export duty of Rs2,500/ton on raw cotton and 3% of the FOB value of cotton waste with effect from April 9. (BL)
Life insurance companies that have completed five years of operations can apply for permission to go public, according to the norms for IPO finalized by the IRDA. (BL)
The telecom operators may get free 2G airwaves. (ET)
Oil marketing companies to get rest of dues next month. (ET)
Petroleum and Natural Gas Regulatory Board feels the need to take a re-look at the gas transmission tariff. (BL)
Tata Steel asked a member of British Parliament not to be "over-critical" about the company’s strategy in dealing with problems in Corus. (BS)
ONGC to challenge the government’s decision to withdraw the seven year tax holiday on production of natural gas. (ET)
Infosys has bagged an order worth US$150mn order from Microsoft. (BS)
Tata Sons is taking a book building to sell its Tata Motors DVR shares. (ET)
Cairn Mangala field to hit peak output in 2010. (BS)
Ranbaxy to recall two consignments of one of its antibiotics from the US market. (ET)
The province of Moselle in France said Tata Motors should explore setting up a manufacturing unit for Nano in the region as it could facilitate the company’s plans to launch the world’s cheapest car in Europe by 2011. (BS)
Bajaj Auto, which is planning launch four-wheelers in both passenger and commercial vehicle segment in 2012, will use the Renault platform for their production. (ET)
Bajaj Auto’s four-wheeler project, a JV with Nissan and Renault, at Chakan in Pune seems to have hit a roadblock, as the company has not been able to acquire enough land. (BS)
ACC said prices of the building material need to rise by at least 20%, if the company has to complete its expansion plans for the next two years. (ET)
Four out of the five subsidiaries of ACC incurred losses in operations in 2009. (BS)
M&M group may foray into banking through its NBFC arm Mahindra Finance. (FE)
HDFC plans to raise up to Rs250bn through non-convertible debentures in the current financial year through private placements. (BS)
DLF group has bagged carbon credits worth Rs400mn for reducing emission of greenhouse gasses. (ET)
RBI may relax exposure norms for state-run power sector lenders such as REC and PFC to ensure healthy flow of funds to cash-starved projects. (ET)
ABB bags an order worth Rs630bn from Haryana Vidyut Prasaran Nigam Limited. (BS)
Strides Arcolab gets USFDA approval for anti-nausea drug. (BS)
HCC bagged a contract worth Rs6.1bn from the Director General of Naval Projects to develop a dry dock and associated north and south wharves at the Naval Dockyard in Mumbai. (BL)
Punjab National Bank ruled out any increase in interest rates in the near future saying there is enough liquidity in the system. (ET)
The Environment Minister indicated to Adani Power that it would not approve the company’s proposal for drawing water from the Pench Tiger reserve for its project in Madhya Pradesh. (BS)
United Spirits is looking at various options to continue its bulk supply of scotch from the stables of Whyte & Mackay, which USL acquired during mid-2007 in a US$1.7bn deal. (BS)
Dewan Housing Finance plans to raise up to Rs500bn in the current fiscal to support its expansion plans besides meeting the capital adequacy needs. (ET)
Dewan Housing Finance plans to launch a finance JV focused on low-income housing in partnership with International Finance Corporation. (BS)
Elder Pharma to hire 1,000 sales and marketing professional for rural sales. (BS)
Godrej Consumer may introduce some of its international brands in India. (BS)
Shree Ganesh Jewellery secured contracts worth Rs5.1bn for gold jewellery from overseas buyer. (ET)
Subhash Projects won two orders worth Rs632mn from PGCIL. (FE)
State-owned Gujarat State Petroleum Corporation, which has lined up its Rs30.7bn IPO, says development of its Deen Dayal West field may be delayed by a year. (BS)
Andrew Yule may defer its Tide Water Oil stake sale plan. (ET)
Both the US and the EU are discussing additional taxes on carbon-emitting products from advanced developing countries, such as India and China, which could render products from the region uncompetitive. (ET)
SEBI asks 14 firms to register before launching new plans; Irda rejects proposal. (BS)
After failing to convince states to keep petroleum products within the ambit of the proposed GST, the Centre has finally agreed to keep petroleum products like crude, motor spirit, ATF and high-speed diesel out of GST. (BS)
Actual FDI by the Indian business declined by 34.1% in April-December 2009 to US$8.4bn from US$12.7bn a year ago. (BS)
After coking coal and iron ore, thermal coal supply contracts have now been signed at about 40% higher than last year. (BS)
The government imposed an export duty of Rs2,500/ton on raw cotton and 3% of the FOB value of cotton waste with effect from April 9. (BL)
Life insurance companies that have completed five years of operations can apply for permission to go public, according to the norms for IPO finalized by the IRDA. (BL)
The telecom operators may get free 2G airwaves. (ET)
Oil marketing companies to get rest of dues next month. (ET)
Petroleum and Natural Gas Regulatory Board feels the need to take a re-look at the gas transmission tariff. (BL)
BULLS SET TO TAKE OFF.!
Careers, like rockets, don't always take off on time. The trick is to always keep the engine running - Gary Sinise.
Be it careers, market or rockets, the trick remains the same. The first Indian rocket to be powered by a totally indigenous cryogenic engine will blast off today. Hopefully, it will be mark another major milestone for ISRO and India. Talking of milestones, the S&P 500 and Nasdaq crossed 1200 and 2500, respectively. US shares had their best performance in nearly six weeks after Intel and JP Morgan outperformed.
The domestic market engine is set to chug along well, powered by global cues. The positive undertone on Wall Street also rubbed off on Europe. Asian markets are mostly up. Markets in Shanghai are up marginally despite China clocking a better-than-anticipated 11.9% GDP growth in Q1. May be, investors fear a fresh monetary tightening response from the Chinese central bank!
Another hike in CRR and short-term rates is also on the cards by the RBI later this month. Inflation for March will be out today and is most likely to have crossed 10%. This may lead to a temporary blip in sentiment but on the whole things should be fine.
FIIs were net buyers of Rs1.28bn on Tuesday on a provisional basis. Local funds were also net buyers at Rs2.53bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs1.86bn. On Monday, FIIs were net buyers of Rs2.44bn in the cash segment, as per the SEBI web site.
Investor sentiment in India continues to be the highest amongst the pan-Asia (ex-Japan) markets, according to survey from ING. Climbing further in the ‘very optimistic’ zone, the India Investor Sentiment Index rose to 174 in Q1 2010 from 169 in Q4 2009.
Results Today: Castrol India, CMC and Sanwaria Agro.
Crude oil futures in New York are trading above $86 per barrel following an unexpected decrease in US inventories. In fact, the entire commodity space rallied across the board on a weaker dollar and rising stocks.
The US economy will continue to recover at a moderate pace in coming quarters, bolstered by a return of business and consumer spending, Fed chairman Ben Bernanke told lawmakers. Overall economic activity in the US has increased since mid-March, according to the latest Beige Book survey by the Fed.
US stocks advanced on Wednesday, as investors welcomed quarterly results from JPMorgan Chase and Intel. An encouraging report on retail sales also bolstered the sentiment.
The Dow Jones Industrial Average surged 104 points, or 0.9%, to end at 11,123.11, the highest level since September 2008. Financial and tech shares led the advance.
The S&P 500 index gained 13 points, or 1.1%, to close at 1,210.65, marking the first time the index has closed above the 1,200 mark in almost 19 months.
The Nasdaq added 39 points, or 1.6%, to end at 2,504.86. It was the first time since June 2008 that the index has ended above 2,500.
The dollar fell against its major rivals: the euro, pound and yen.
Oil prices snapped a 5-day losing streak, settling up $1.79 to $85.84 a barrel. The government's weekly report on U.S. crude inventories showed oil supplies fell by 2.2 million barrels last week.
COMEX gold for June delivery settled up $6.20 to $1,159.60 an ounce.
Prices for US Treasurys fell, with the yield on the benchmark 10-year note rising to 3.83%.
Year-to-date, the Dow is up 6.7%, the S&P has gained 8.6% and the Nasdaq has soared 10.4% as of Wednesday's close. The S&P is up 77% from its March 9, 2009 low. However, the index remains 23.5% below the record high set Oct. 9, 2007.
The blue-chip Dow and Nasdaq touched fresh 18-month highs on Tuesday after slight gains.
JPMorgan Chase reported a $3.3 billion profit for the first quarter, though the bank continued to suffer losses in its consumer loan portfolio.
The New York City-based bank said it earned 74 cents a share during the quarter, up 55% from a year earlier. Analysts were expecting earnings of 64 cents a share. Shares of JPMorgan ended more than 4% higher.
After US markets closed on Tuesday, chipmaker Intel reported earnings and revenue that topped Wall Street's estimates. Shares closed 3.3% higher on Wednesday.
The government's monthly retail sales report and a report on consumer inflation were released before the market opened.
Retail sales jumped 1.6% in March, beating estimates from economists. Sales excluding autos rose 0.6%, also topping predictions.
The Consumer Price Index (CPI), a measure of consumer inflation, rose 0.1% in March, in line with predictions. Core CPI, which excludes volatile food and energy prices, was unchanged. Economists had forecast a 0.1% jump.
A separate report showed business inventories rose 0.5% in March, slightly higher than the 0.4% jump that was forecast.
Federal Reserve chairman Ben Bernanke testified before a joint session of Congress on the economic outlook, saying private-sector demand will be sufficient to spur moderate recovery in coming months, but more time is needed to recover job losses.
Separately, the Fed released its Beige Book report, which said economic activity expanded "somewhat" in 11 of the central bank's 12 districts.
European shares closed higher, led by gains in the technology and banking sectors following strong earnings from Intel and JP Morgan Chase.
The Stoxx Europe 600 index rose 1.75 points, or 0.7% to finish at 270.44, its first gain of the week.
The UK FTSE 100 index was up 0.6% at 5,796.25, the German DAX index settled 0.8% higher at 6,278.40 and the French CAC-40 index rose 0.6% to close at 4,057.70.
The Indian market extended losses into the second straight trading session on Tuesday as global markets turned jittery and investors chose to remain cautious ahead of the earnings deluge. The BSE Sensex has lost over 100 points and the NSE Nifty nearly 40 points in two days. "IT bellwether Infosys came out with Q4 results and guidance that beat street estimates, but failed to bring any cheer to the broader market", says Amar Ambani VP Research IIFL.
The stock didn’t react much in opening trades but as the day progressed, it managed to stage a smart come back. Other IT heavyweights like Wipro, TCS and HCL Tech too did well in anticipation of strong earnings. Finally, the BSE Sensex slipped 31 points to end at 17,822 and NSE Nifty lost 17 points to close at 5,323. Among the 30 components of Sensex, 20 ended in the negative terrain and 10 were in the green.
Markets in Asia also ended in the red; the Nikkei in Japan lost 0.8%, Australia's S&P/ASX edged lower by 0.7%. Shanghai SE Composite ended lower by 0.5% and Hang Seng index in Hong Kong was down 0.2%.
European indices also were in the red, the DAX in Germany was down 0.4, the CAC 40 index in France was down 0.3and the FTSE in the UK was down 0.4%.
Coming back to India, among the BSE sectoral indices, the BSE Auto index was top loser, the index lost 1.3%, followed by BSE Banking index down 0.9% and Oil & Gas index down 0.6%.
Among the top gainers were, BSE IT index up 3% and BSE Teck index up 2%.
Outside the frontline indices, the big losers in the broader market were P&G, IDFC, India Cement and Jai Corp. On the other hand, gainers included Balrampur Chini, HCL Tech, Rolta and REI Agro.
Shares of Infosys ended surged 3.7% to end at Rs2782 after the company beat street estimates reporting a consolidated net profit after tax of Rs16.17bn for the fiscal fourth quarter ended March 31, 2010 as against Rs15.82bn reported in the third quarter. This translates into a sequential quarter-on-quarter growth of 2.2%.
Shares of SAIL slipped by 3% to end at Rs229 after reports stated that the company may sell shares at 5% less than the market price to small investors and employees, Steel secretary Atul Chaturvedi was quoted as saying. The scrip opened at Rs236 it touched an intra-day high of Rs236 and a low of Rs228 and recorded volumes of over 1.3mn shares on BSE.
Shares of Rolta gained by 3% to end at Rs197 after the company announced the acquisition of OneGIS, Inc. It is an exceptional consulting, development and system integration firm with an excellent track record of implementing geospatial and IT solutions.
Subhash Projects & Marketing announced that it has received two awards for Ex-Works Supply and Service Contract towards entrusting the work of 'Substation Package-A for 132 KV (New / Extn) Substations for transmission System associated with Consultancy services to Orissa Power Transmission Corporporation Limited' from Power Grid Corporation of India Limited, New Delhi for an amount aggregating to Rs631.9mn.
Shares of Subhash Project gained by 1% to end at Rs154. The scrip opened at Rs151 it touched an intra-day high of Rs155 and a low of Rs150 and recorded volumes of over 61,000 shares on BSE.
Shares of Shiva Fertilizers were locked at 10% upper circuit at Rs53.90 after the board of directors announced that they will meet on April 19, 2010, to consider and discuss to raise funds by way of Preferential Issue of Shares, Right Issue, QIP Placement, Issue of warrant. The scrip opened at Rs53.9 it touched an intra-day high of Rs53.9 and a low of Rs53.9 and has recorded volumes of over 5,000 shares on BSE.
Shares of Rana Sugars further gained by 4.4% to end at Rs13.60 after the company reported a profit of Rs309.3mn in the second quarter, compared with a loss of Rs37.1mn a year earlier. The scrip opened at Rs13.2 it touched an intra-day high of Rs13.99and a low of Rs13.20 and recorded volumes of over 1.9mn shares on BSE.
Wednesday, April 14, 2010
(SJVNL) IPO LIKELY TO HIT THE MARKET ON APRIL 29, 2010
Govt to divest its stake through the IPO
State-run hydro power generator Satluj Jal Vidyut Nigam's (SJVNL) initial public offering (IPO) to raise about Rs 1200 crore is likely to open on 29 April 2010, reports citing the company's chairman & managing director H K Sharma said. The IPO will close on 2 May 2010, reports added.
The company will reportedly file the draft red herring prospectus (DRHP) for the IPO in the forthcoming week.
The Cabinet Committee on Economic Affairs (CCEA) on 8 April 2010 approved a proposal to increase the equity stake of the Himachal Pradesh government in SJVNL by 0.5%. The state now owns 25.5% equity stake in SJVNL, while the balance is held by the Centre.
Earlier in October 2009, SJVNL had received approval from the Cabinet for 10% disinvestment of the government's stake in the company.
State-run hydro power generator Satluj Jal Vidyut Nigam's (SJVNL) initial public offering (IPO) to raise about Rs 1200 crore is likely to open on 29 April 2010, reports citing the company's chairman & managing director H K Sharma said. The IPO will close on 2 May 2010, reports added.
The company will reportedly file the draft red herring prospectus (DRHP) for the IPO in the forthcoming week.
The Cabinet Committee on Economic Affairs (CCEA) on 8 April 2010 approved a proposal to increase the equity stake of the Himachal Pradesh government in SJVNL by 0.5%. The state now owns 25.5% equity stake in SJVNL, while the balance is held by the Centre.
Earlier in October 2009, SJVNL had received approval from the Cabinet for 10% disinvestment of the government's stake in the company.
Tuesday, April 13, 2010
EARNING SEASON SET IN; INFY FAILS TO CHEER
Today's major news
Infosys Technologies Q4FY2010 net income at Rs1,600 crore; the stock jumps 3.69% up
Reserve Bank of India relaxes norms on collaterals for foreign institutional investors
SEBI, IRDA to approach High Court on unit-linked insurance plan row
Global signals
European stocks fell as declining metal prices hurt the earnings outlook for commodity producers and Alcoa posted sales that missed analysts` estimates. At the time of writing of this report, FTSE 100 (London) was trading 0.23% lower.
All the major Asian indices closed in the negative territory on Tuesday, except Shanghai Composite (China) and Kospi (Korea). SGX Nifty closed nine points lower.
US stock futures point to a weak start for the Wall Street on Tuesday ahead of February international trade figures to be announced later on the day.
Indian indices
The domestic market edged lower on a second day in a row on the back of not-so-encouraging global equities. The market slipped despite good FY2010 March quarter numbers posted by information technology (IT) bellwether Infosys Technologies.
The Sensex opened 22 points lower (at 17831) but turned positive soon for few moments to touch the day’s high of 17893 before slipping back into negative. With auto and banking stocks under pressure, the Sensex hit the day’s low of 17736. However, the market pared its losses on robust buying in IT stocks led by Sensex heavyweight— Infosys Technologies. At closing bell, the Sensex quoted at 17822, 31 points lower while Nifty shut at 5323, 17 points down.
Market sentiment
Trailing shares outnumbered gaining ones. Of the 2,964 stocks traded on the BSE, 1,527 (51%) stocks declined, whereas 1,359 (46%) stocks advanced. Seventy eight stocks remained unchanged.
Sectoral & stock screening
IT stocks were the top performers — up by 3.09%. BSE TECk and BSE Power were the other two counters that posted gains. The remaining 10 sectors were down, with Auto index down by 1.32% — the most for any sector —to be followed by banking counter that declined 0.87%.
On stocks’ front, IT bellwether Infosys Technology surged the most by 3.69%, followed by Indiabulls Financial that rose 3.54% and Balrampur Chini Mills that jumped 3.47% up. Among losers, Hero Honda slid the most by 5.29%, followed by Procter & Gamble that fell 3.95%
Viewing volumes
Sugar major Balrampur Chini Mills was the most actively traded share with over 0.30 crore shares changing hands on the BSE, followed by steel maker Ispat Industries (0.26 crore shares), Industrial finance company IFCI (0.26 crore shares), India’s second largest realty major Unitech (0.23 crore shares) and wind turbine major Suzlon Energy (0.22 crore shares).
Infosys Technologies Q4FY2010 net income at Rs1,600 crore; the stock jumps 3.69% up
Reserve Bank of India relaxes norms on collaterals for foreign institutional investors
SEBI, IRDA to approach High Court on unit-linked insurance plan row
Global signals
European stocks fell as declining metal prices hurt the earnings outlook for commodity producers and Alcoa posted sales that missed analysts` estimates. At the time of writing of this report, FTSE 100 (London) was trading 0.23% lower.
All the major Asian indices closed in the negative territory on Tuesday, except Shanghai Composite (China) and Kospi (Korea). SGX Nifty closed nine points lower.
US stock futures point to a weak start for the Wall Street on Tuesday ahead of February international trade figures to be announced later on the day.
Indian indices
The domestic market edged lower on a second day in a row on the back of not-so-encouraging global equities. The market slipped despite good FY2010 March quarter numbers posted by information technology (IT) bellwether Infosys Technologies.
The Sensex opened 22 points lower (at 17831) but turned positive soon for few moments to touch the day’s high of 17893 before slipping back into negative. With auto and banking stocks under pressure, the Sensex hit the day’s low of 17736. However, the market pared its losses on robust buying in IT stocks led by Sensex heavyweight— Infosys Technologies. At closing bell, the Sensex quoted at 17822, 31 points lower while Nifty shut at 5323, 17 points down.
Market sentiment
Trailing shares outnumbered gaining ones. Of the 2,964 stocks traded on the BSE, 1,527 (51%) stocks declined, whereas 1,359 (46%) stocks advanced. Seventy eight stocks remained unchanged.
Sectoral & stock screening
IT stocks were the top performers — up by 3.09%. BSE TECk and BSE Power were the other two counters that posted gains. The remaining 10 sectors were down, with Auto index down by 1.32% — the most for any sector —to be followed by banking counter that declined 0.87%.
On stocks’ front, IT bellwether Infosys Technology surged the most by 3.69%, followed by Indiabulls Financial that rose 3.54% and Balrampur Chini Mills that jumped 3.47% up. Among losers, Hero Honda slid the most by 5.29%, followed by Procter & Gamble that fell 3.95%
Viewing volumes
Sugar major Balrampur Chini Mills was the most actively traded share with over 0.30 crore shares changing hands on the BSE, followed by steel maker Ispat Industries (0.26 crore shares), Industrial finance company IFCI (0.26 crore shares), India’s second largest realty major Unitech (0.23 crore shares) and wind turbine major Suzlon Energy (0.22 crore shares).
CAN INFOSYS BRING SOME CHEER?
However beautiful the strategy, you should occasionally look at the results - Sir Winston Churchill.
The occasion is here; its Infosys results after all. Will the market celebrate? We'll know in a few minutes. The market never fails to surprise; just when one thought the NSE Nifty could surpass 5400 with some ease, it changed direction and headed south. Today it could even fall below 5300 unless Infosys manages to turn the tide. A special dividend could be a temporary boost too.
Markets in the US and Europe finished flat. Asian markets are mostly in the red. Eurozone’s emergency loan package for Greece failed to inspire the bulls. What’s worse, the SEBI-IRDA standoff over ULIPs clouded the sentiment. The good news is that status quo has been maintained on ULIPs. The two regulators will now seek a legal verdict.
We expect a flat to lower opening. The key indices are likely to remain sideways and rangebound. Infosys numbers should be out before the market starts. So, there is a possibility that the mood might change once the IT bellwether’s results and guidance are out. Infosys is expected to post 1-2% QoQ growth in Q4 PAT and Revenues. It’s the company's outlook for FY11 that everyone is keenly awaiting. Broadly, the undertone will be cautiously optimistic. Non-index counters may remain abuzz but don’t take undue risks for now.
Inflows from overseas investors have started to taper off a bit. FIIs were net buyers of only Rs144.1mn on Monday on a provisional basis. Local funds were net sellers of Rs1.92bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers of Rs5.06bn. On Friday, FIIs were net buyers of Rs2.58bn in the cash segment, as per the SEBI web site.
Other companies announcing earnings today are: Blue Dart, Essar Oil and Mastek.
US stocks registered moderate gains on Monday, with the Dow Jones Industrial Average closing above 11,000 for the first time in 18 months, after eurozone leaders announced details of the financial aid to Greece, softening fears that the nation might have to default on its debt.
The Dow added 8 points or 0.1%, finishing at 11,005.97, the highest close since Sept. 26, 2008, when it ended at 11,143.13. The S&P 500 index gained 2 points, or 0.2%, ending at 1196.48, an 18-month high. The Nasdaq edged up 4 points, or 0.2%, to 2,457.87, the highest finish since June 19, 2008.
Treasury prices rallied, lowering the yield on the 10-year note to 3.85% from 3.89% late on Friday. The 10-year had risen as high as 4% on Monday, an 18-month high.
The dollar fell versus the euro and gained against the yen.
COMEX gold for June delivery rose $3 to settle at $1,162.20 per ounce.
US light crude oil for May delivery fell 58 cents to settle at $84.34 a barrel on the New York Mercantile Exchange.
US stocks had closed higher on Friday at the end of another up week for stocks. The market has risen in seven of the last eight weeks as economic confidence has replaced jitters about a global slowdown that felled markets in January.
Both the Dow and S&P 500 stand at roughly 18-month highs, while the Nasdaq stands at the highest point in nearly two years.
Over the weekend European leaders agreed to offer loans to Greece, helping to ease worries that rising debt in that nation and other countries in the region might curb the global economic recovery and weaken the euro.
The 16 countries that use the euro agreed to provide a collective $40 billion, while the IMF agreed to kick in $13.5 billion. The loans, should Greece choose to access them, would have interest rates that are lower than what lenders had been requiring in recent days to hold Greek debt.
On April 8, Greece's borrowing costs hit an all-time high as investors worried the country might default.
Greece is seen as a test case and investors are worried that a default there could exacerbate problems in other debt-burdened nations. Greece is one of the so-called PIIGS, along with Portugal, Ireland, Italy and Spain.
Greece has not yet asked for the aid to be delivered amid hopes that it will be able to return to the bond market.
Activity on the corporate M&A front also bolstered sentiment, with Mirant Corp. agreeing to acquire rival power firm Reliant Energy Inc. for $1.61 billion and military contractor DynCorp International getting taken out by private-equity firm Cerberus Capital Management.
After the close, Dow component Alcoa ignited the quarterly reporting period. The aluminum maker posted earnings of 10 cents per share versus a loss of 59 cents a year earlier, meeting the expectations of analysts. Alcoa reported revenue of $4.89 billion versus $4.147 billion a year ago. Analysts expected revenue of $5.238 billion.
First-quarter earnings are expected to have risen 37% versus the prior year, while revenue is expected to have risen 10%, according to Thomson Reuters.
Gains are expected to be driven by financials, materials and consumer discretionary. Intel reports results on Tuesday, while General Electric Co. (GE), Google, JPMorgan Chase and Bank of America are due later in the week.
Stocks in Europe edged slightly lower, as details about the loan package to Greece helped banks rise, while the media and metals sectors lost ground. After having ended higher for a sixth straight week on Friday, the Stoxx Europe 600 index slipped 0.1% to 269.49.
At the regional level, the German DAX index finished flat at 6,250.69 and the French CAC 40 index ended virtually unchanged as well at 4,050.50, while the UK's FTSE 100 index gained 0.1% to 5,777.65.
With credit-default swaps on Greece falling sharply and the euro climbing, shares of Greek banks shot higher.
In Warsaw, the WIG 20 index rose 1% to 2,578.66 and the zloty gained in the aftermath of the weekend deaths of Poland's president and numerous other senior officials.
A volatile trading session ended with losses on Monday, starting off the week with a negative bias, as SEBI and IRDA continued their slugfest over the jurisdiction for ULIPs. Markets opened higher due to firm global cues in the wake of the announcement of details of the rescue package for Greece. However, "the uncertainty surrounding the ULIP controversy coupled with lower than expected industrial production data had their ill-effects on sentiment", says Amar Ambani VP Research IIFL.
The Capital Goods, Auto and the Banking stocks were among the major losers, even the Mid-Cap index ended in the red. On the other hand, the FMCG and Realty stocks were in demand even the Small-Cap stocks attracted buying.
Finally, the BSE Sensex slipped 80 points to end at 17,853 and NSE Nifty lost 22 points to close at 5,339. Among the 30 components of Sensex, 18 ended in the negative terrain and 12 were in the green.
By the close of trade, markets in Asia and Europe had erased some of the initial gains. Asia markets ended in the green, the Nikkei in Japan gained 0.4%, Australia's S&P/ASX edged higher by 0.7%. Shanghai SE Composite ended lower by 0.5% and Hang Seng index in Hong Kong was down 0.3%.
European indices also were flat, the DAX in Germany, the CAC 40 index in France and the FTSE in the UK all were flat.
Coming back to India, among the BSE sectoral indices, the BSE Capital Goods index was top loser, the index lost 1.2%, followed by BSE PSU index down 0.9% and Banking index down 0.8%.
Among the top gainers were, BSE realty index up 0.7% and BSE FMCG index up 0.7%.
Outside the frontline indices, the big losers in the broader market were Balrampur Chini, Zee Ent, Jet Airways and Jai Corp. On the other hand, losers included Allahabad Bank, BOB, Central Bank and Jubilant Org.
IntraSoft Technologies, which operates the website www.123greetings.com, commenced trading at Rs150 per share as against its issue price of Rs145. Towards the end; the stock closed at Rs159 translating into premium of 9.5%.
The IPO of IntraSoft received a remarkable response from investors and was subscribed 18.15 times. The QIB portion was subscribed 21.97 times, while HNI & Retail portion was subscribed 17.47 and 13 times. The issue had constituted 25.12% of the fully diluted post issue paid up equity share capital of the company. The face value of equity shares of Rs10 and the issue price is 14.5 times of the face value.
The proceeds from the IPO will be used fund the company’s requirements for branding & promotion, purchasing a corporate office in Kolkata, investment in technology infrastructure and for general corporate purposes. Collins Stewart Inga Private Limited and Anand Rathi Advisors Limited were the Book Running Lead Managers to the issue.
Shares of Reliance Industries ended flat at Rs1125. The company over the weekend announced that it agreed to buy a US$1.7bn stake in natural-gas properties from Atlas Energy Inc. The Atlas Energy deal would see Reliance paying upfront US$339mn for its 40% stake, which will be followed by US$1.36bn out of Atlas’ share of exploration expenditure over a period of seven-and-a-half years.
IVR Prime announced that the board of directors of the company will meet on April 14 to consider fund raising plans. The stock gained 1.5% to end at Rs179, it opened at Rs179 it touched an intra-day high of Rs182 and a low of Rs175 and recorded volumes of over 47,000 shares on BSE.
Shares of Rana Sugars erased early gains and ended in the red, the stock lost 0.2% to end at Rs13.02. The stock shot up by over 5% to hit an intra-day high of Rs14.09 after the company reported a profit of Rs309.3mn in the second quarter, compared with a loss of Rs37.1mn a year earlier.
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