The government today hiked the external commercial borrowing limits for Indian companies to $50 million for rupee expenditure for permissible end-uses under the approval route. The earlier limit was $20 million, which had been imposed last August.
In addition, infrastructure sector companies will now be able to avail ECB's of up to $ 100 million for rupee expenditure for permissible end-uses under the approval route. The move is aimed at providing a boost to the infrastructure sector, which requires $500 billion worth of investment during the 11th Five-Year Plan (2007-12), of which $ 30 billion is expected to come through this route.
The government has also increased the all-in-cost ceilings over six months LIBOR in respect of ECB for average maturity period between three years and five years to 200 bps, from 150 bps at present. For borrowings more than five years, the cost has been increased to 350 bps from 250 bps at present.
However, the existing $500 million annual borrowing limit for individual companies through the automatic route has been left unchanged. Other aspects of the ECB policy such as the end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements have also been left unchanged.
The decisions were taken at a high level committee on ECB's chaired by finance secretary D Subbarao here today. Officials from the Reserve Bank of India attended the meeting.
The high-level committee on ECB had agreed ‘in principle' last September to relax overseas borrowing norms for the infrastructure sector. However, huge capital inflows since then, which led to a sharp appreciation of the rupee, prevented the RBI from granting this leeway.
Friday, May 30, 2008
FII, sub-accounts registration made easy
Market regulator SEBI (Securities and Exchange Board of India) has revised the registration guidelines for FIIs. Institutions set up by non-resident Indians can now register as FIIs and invest in the Indian stock markets.
Sebi has amended regulations for easier registration of FIIs and sub-accounts. It has also made AMCs, Investment Managers or advisors owned by NRI eligible for FII registration.
Sebi has allowed FIIs to invest in collective investment schemes. It has said that NRIs can register as FIIs if they do not invest their proprietary funds.
Sebi has allowed sovereign wealth funds, pension funds and endowment funds to register as FII. FIIs cannot issue Offshore Derivative Instrument to any entity not regulated by the Foreign Regulatory Authority. They can issue offshore instruments only after compliance with know your customer, or KYC, norms. Non-regulated FIIs have to cancel, redeem or close positions by March 2009.
Investors were anyways investing through PE notes in India but it’s a classic example of Indian fund managers who are based overseas or heading institutions but were having problems because of the PE note gap which was there. So, now they will be able to register through being an FII.
Sebi has amended regulations for easier registration of FIIs and sub-accounts. It has also made AMCs, Investment Managers or advisors owned by NRI eligible for FII registration.
Sebi has allowed FIIs to invest in collective investment schemes. It has said that NRIs can register as FIIs if they do not invest their proprietary funds.
Sebi has allowed sovereign wealth funds, pension funds and endowment funds to register as FII. FIIs cannot issue Offshore Derivative Instrument to any entity not regulated by the Foreign Regulatory Authority. They can issue offshore instruments only after compliance with know your customer, or KYC, norms. Non-regulated FIIs have to cancel, redeem or close positions by March 2009.
Investors were anyways investing through PE notes in India but it’s a classic example of Indian fund managers who are based overseas or heading institutions but were having problems because of the PE note gap which was there. So, now they will be able to register through being an FII.
Petrol may go up by Rs 4; Cabinet decision today
Prime Minister Manmohan Singh, Oil Minister Murli Deora, Finance Minister P Chidamabaram and UPA Chairperson Sonia Gandhi met yesterday in the evening. Though there was no final decision, CNBC-TV18 has learnt that it has been agreed to marginally increase the price of petroleum products for the moment.
The consensus is that petrol price could go up by Rs 3 and branded petrol even more. No consensus has been reached yet on a hike for diesel prices.
Deora said that he is not very sure what the bail out package for OMCs (oil marketing companies) will. It may be a mix of price hikes, duty cuts and bonds and the Finance Minister would take a call on it, he said.
Deora also said that the cabinet meet on the fuel price hike is likely to be tomorrow. The crude prices soaring and something definitely needs to be done, he said.
CNBC-TV18's Abhijit Neogy said there are two scenarios floating around for the quantum of a price hike: Rs 4 per litre for petrol and Rs 2 for diesel or Rs 3 per litre for petrol and Rs 2 for diesel.
Excerpts from CNBC-TV18's exclusive interview with Murli Deora:
Q: There are so many options being floated around - what are the options that our government has really zeroed in after the meeting with the Prime Minister?
A: Due to the very unprecedented rise in the oil price, we are trying to find solutions to this. The only solution is to realise more money so that oil companies would buy the products we are selling. We are trying to see that all the PSUs, Hindustan Petroleum and Indian Oil Corporation are galvanized to face this situation.
Up until now, there has hardly been a problem and there is no question of any rationing. I would appeal to the people to kindly corporate with the authorities in case there is a shortage .
Q: What people are wanting to know is the price hike, is there going to be a price hike? What are the options? Is it a price hike, bonds and duty cuts?
A: The oil price which was USD 60-70 per barrel has gone up now to USD 130-132 per barrel. The public sector oil companies are losing a lot of money. The government may either give them some more subsidy or allow them to rise price. Something needs to be done and this is what we are contemplating. I’m sure tomorrow we will be able to find a solution to this.
Q: You are basically saying that price rise is also one of the options being considered?
A: There are various options considered, I can’t say which will be accepted by the cabinet and the government.
Q: The Finance Minister has steadfastly refused to go in for duty cuts, either excise cuts or customs cuts. In the meeting with the Prime Minister has he agreed to any kind of duty cuts excise or customs?
A: The Finance Minister has been co-operative and I would say that he has totally refused duty cuts.
Q: So he has basically signaled his intention to at least go in for a marginal reduction in excise duty, can we say that?
A: I can’t say that is not in my hands.
Q: Have you got any indication that there is a margin reduction of excise duty at least happening on petro- products?
A: Unless and until it is approved by the cabinet it’s not possible for me to say.
Q: But the package that you are contemplating will have duty cuts, price rise and bonds?
A: The package we are contemplating cannot be revealed just now because it is not finalized and when it is finalized we will be the first to reveal them.
Q: When is the cabinet meeting - is it going to happening this evening or is the cabinet meeting going to be convened tomorrow?
A: I don’t know whether it will come today or tomorrow.
Q: If the Left has forwarded its own proposals, tax private refiners who have got windfall profits. They have infact proposed a new tax windfall profit tax how do you react to that?
A: I am not for that and that is for the Finance Minister to reply to them; I have nothing to do with this.
The consensus is that petrol price could go up by Rs 3 and branded petrol even more. No consensus has been reached yet on a hike for diesel prices.
Deora said that he is not very sure what the bail out package for OMCs (oil marketing companies) will. It may be a mix of price hikes, duty cuts and bonds and the Finance Minister would take a call on it, he said.
Deora also said that the cabinet meet on the fuel price hike is likely to be tomorrow. The crude prices soaring and something definitely needs to be done, he said.
CNBC-TV18's Abhijit Neogy said there are two scenarios floating around for the quantum of a price hike: Rs 4 per litre for petrol and Rs 2 for diesel or Rs 3 per litre for petrol and Rs 2 for diesel.
Excerpts from CNBC-TV18's exclusive interview with Murli Deora:
Q: There are so many options being floated around - what are the options that our government has really zeroed in after the meeting with the Prime Minister?
A: Due to the very unprecedented rise in the oil price, we are trying to find solutions to this. The only solution is to realise more money so that oil companies would buy the products we are selling. We are trying to see that all the PSUs, Hindustan Petroleum and Indian Oil Corporation are galvanized to face this situation.
Up until now, there has hardly been a problem and there is no question of any rationing. I would appeal to the people to kindly corporate with the authorities in case there is a shortage .
Q: What people are wanting to know is the price hike, is there going to be a price hike? What are the options? Is it a price hike, bonds and duty cuts?
A: The oil price which was USD 60-70 per barrel has gone up now to USD 130-132 per barrel. The public sector oil companies are losing a lot of money. The government may either give them some more subsidy or allow them to rise price. Something needs to be done and this is what we are contemplating. I’m sure tomorrow we will be able to find a solution to this.
Q: You are basically saying that price rise is also one of the options being considered?
A: There are various options considered, I can’t say which will be accepted by the cabinet and the government.
Q: The Finance Minister has steadfastly refused to go in for duty cuts, either excise cuts or customs cuts. In the meeting with the Prime Minister has he agreed to any kind of duty cuts excise or customs?
A: The Finance Minister has been co-operative and I would say that he has totally refused duty cuts.
Q: So he has basically signaled his intention to at least go in for a marginal reduction in excise duty, can we say that?
A: I can’t say that is not in my hands.
Q: Have you got any indication that there is a margin reduction of excise duty at least happening on petro- products?
A: Unless and until it is approved by the cabinet it’s not possible for me to say.
Q: But the package that you are contemplating will have duty cuts, price rise and bonds?
A: The package we are contemplating cannot be revealed just now because it is not finalized and when it is finalized we will be the first to reveal them.
Q: When is the cabinet meeting - is it going to happening this evening or is the cabinet meeting going to be convened tomorrow?
A: I don’t know whether it will come today or tomorrow.
Q: If the Left has forwarded its own proposals, tax private refiners who have got windfall profits. They have infact proposed a new tax windfall profit tax how do you react to that?
A: I am not for that and that is for the Finance Minister to reply to them; I have nothing to do with this.
Thursday, May 29, 2008
Fertiliser units to get highest gas allocation
The empowered group of ministers (EGoM) is understood to have finalised gas allocations for 2008-09, giving top priority to the fertiliser sector. Existing gas-based power plants have been given the second priority followed by city gas distribution (CGD) projects. The ad-hoc prioritisation for one year has been set up to decide the fate of Reliance Industries’ KG basin gas. The company is expected to pump 40 million standard cubic meter per day (mmscmd) of gas from the third quarter this year. It is learnt from government sources that a final gas utilisation policy is still being debated. “An interim arrangement for the year 2008-09 has been made so that RIL would be able to sell its KG basin gas, which is expected in this year. A long-term policy on gas utilisation would be determined later,” a source present in the eGoM said. An eGoM is the final authority on the subject assigned and its decision does not require the Cabinet’s ratification. It is learnt that for 2008-09 those fertiliser units that are stranded would get priority with a total allocation close to 50 mmscmd. This is higher than last year’s allocation when fertiliser units got just about 30 mmscmd of gas. Similarly, only existing gas-based power plant (read no new power plant) would get priority in gas allocation with expected 30 mmscmd allocation. The decision has, however, left the power ministry sulking as it was expecting much higher allocation to run gas-based power projects to full capacity. The power sector is also last in the priority order for gas allocation for greenfield projects. Power ministry had earlier sought allocation of 77 mmscmd of gas for existing and upcoming projects . The power sector requires 60 mmscmd of gas to run 13,334 mw of existing gas-based projects at 90% plant load factor (PLF). It requires additional gas for running 1,285 mw of gas-based capacity that is ready but is not being commissioned due to shortage of fuel, and another 1,002 mw is running on high-cost liquid fuel that needs to shift to gas to become economical. “The proposed allocation of 30 mmscmd for 2008-09 is even lower than last year’s allocation of about 36 mmscmd allocation. The PLF of gas-based power plants is already low at about 50%, this could further get affected this year,” an official source said. The allocation formula has, however, finalised 5 mmscmd gas allocation for CGD projects that would help to keep cities pollution free as per the direction of the Supreme Court. Surprisingly, industry and other sectors, including LPG, petrochemicals, refineries, sponge iron units etc, would also get a lion’s share of gas allocation this year with release of close to 50 mmscmd of gas. Against a demand of about 180 mmscmd of gas during 2007-08, the actual supplies were to the tune of just 102 mmscmd (88 mmscmd domestic production and 26 mmscmd imports). The total allocation of gas is expected to the tune of 140 mmscmd this year, leaving a huge demand-supply mismatch.
India GSPC plans 5 mln T/yr LNG terminal
India's Gujarat State Petroleum Corp Ltd (GSPC) plans to build a five million tonne a year liquefied natural gas (LNG) terminal at the Mundra port in western India by 2013, a top company official said on Wednesday.
"To begin with it will have a capacity of five million tonnes, and will go up to 20 million tonnes," Managing Director D.J. Pandian told Reuters in a telephone interview from Gujarat.
India, Asia's third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in inflation but there is not enough supply to satisfy rising demand.
State-owned GSPC has hired an international consultant to prepare detailed feasibility report of the project, Pandian said.
"The report will be ready in four to six months from now, then only we can work out the costing and finalise the capacity," he said.
GSPC would hold a 50 percent stake in the project while India's Adani group has agreed to buy 25 percent, he said.
"We are talking to Essar for remaining stake. HPCL has also approached us for buying 25 percent. Let's see, if Essar, HPCL don't join us then we will go for IPO," Pandian said.
HPCL (HPCL.BO: Quote, Profile, Research) is a state-run refining and retailing firm.
Gas demand in India, currently around 179 million standard cubic metres a day (mmscmd), is far short of the supply of about 95 mmscmd. Supply is expected to double by 2009 after new gas fields, including those of Reliance Industries (RELI.BO: Quote, Profile, Research), start production.
India's Petronet LNG (PLNG.BO: Quote, Profile, Research) plans to double its capacity to 10 million tonnes of LNG, while Britain's BG Group Plc (BG.L: Quote, Profile, Research) plans to import LNG in India this year, adding to domestic supplies, but Pandian said the demand was rising.
Analysts say there is enormous potential for using compressed natural gas in vehicles once availability increases, while power and fertiliser units would also switch to natural gas.
Goldman Sachs estimates the share of natural gas in India's coal-dominated energy basket will double to 18 percent by 2015 and stabilise at 20 percent by 2025.
He said the LNG was not easily available currently, but by the time the firm's terminal is set up, enough gas would be there in the market.
A GSPC group firm Gujarat State Petronet Ltd (GSPT.BO: Quote, Profile, Research) is laying a pipeline network of 2,500 kilometres in the state, which can be used by GSPC to transport the re-gassified LNG to the demand centres. (Editing by Ranjit Gangadharan)
"To begin with it will have a capacity of five million tonnes, and will go up to 20 million tonnes," Managing Director D.J. Pandian told Reuters in a telephone interview from Gujarat.
India, Asia's third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in inflation but there is not enough supply to satisfy rising demand.
State-owned GSPC has hired an international consultant to prepare detailed feasibility report of the project, Pandian said.
"The report will be ready in four to six months from now, then only we can work out the costing and finalise the capacity," he said.
GSPC would hold a 50 percent stake in the project while India's Adani group has agreed to buy 25 percent, he said.
"We are talking to Essar for remaining stake. HPCL has also approached us for buying 25 percent. Let's see, if Essar, HPCL don't join us then we will go for IPO," Pandian said.
HPCL (HPCL.BO: Quote, Profile, Research) is a state-run refining and retailing firm.
Gas demand in India, currently around 179 million standard cubic metres a day (mmscmd), is far short of the supply of about 95 mmscmd. Supply is expected to double by 2009 after new gas fields, including those of Reliance Industries (RELI.BO: Quote, Profile, Research), start production.
India's Petronet LNG (PLNG.BO: Quote, Profile, Research) plans to double its capacity to 10 million tonnes of LNG, while Britain's BG Group Plc (BG.L: Quote, Profile, Research) plans to import LNG in India this year, adding to domestic supplies, but Pandian said the demand was rising.
Analysts say there is enormous potential for using compressed natural gas in vehicles once availability increases, while power and fertiliser units would also switch to natural gas.
Goldman Sachs estimates the share of natural gas in India's coal-dominated energy basket will double to 18 percent by 2015 and stabilise at 20 percent by 2025.
He said the LNG was not easily available currently, but by the time the firm's terminal is set up, enough gas would be there in the market.
A GSPC group firm Gujarat State Petronet Ltd (GSPT.BO: Quote, Profile, Research) is laying a pipeline network of 2,500 kilometres in the state, which can be used by GSPC to transport the re-gassified LNG to the demand centres. (Editing by Ranjit Gangadharan)
MARKET PREDICTION
GLOBAL MARKET IS OPEN POSITIVE AFTER EASING OF CRUDE TO $130.
BUT STILL PAIN LEFT IN US BECAUSE OF HOUSING DATA AND CONSUMER SPENDING IS SUPPORTING ECONOMY,RS VS $ 42.73 ALMOST AT THE SAME LEVEL OF YEASTERDAY,TODAY IS CLEARING DAY NIFTY TUNES INTO PREMIUM FROM DINCOUNT FOR SHORT CLOSER, TOTAL MARKET O I IS 89 K CR OUT O I PREVEIL 46 K CR IN JUNE AND 43 K CR IN MAY SERISE LAST.
PUT CALL RATIO INCHED UP A BIT TO 1.29%.LEVEL OF NIFTY 4930-4980-5020 GO LONG FROM 4930 WITH S L OF 4900 AND GO SHORT FROM 5020 LEVEL WITH S L OF 5030.
BFSI AND IT AND FMCG LOOKS POSITIVE.
HAVE A NICE TRADING DAY
BUT STILL PAIN LEFT IN US BECAUSE OF HOUSING DATA AND CONSUMER SPENDING IS SUPPORTING ECONOMY,RS VS $ 42.73 ALMOST AT THE SAME LEVEL OF YEASTERDAY,TODAY IS CLEARING DAY NIFTY TUNES INTO PREMIUM FROM DINCOUNT FOR SHORT CLOSER, TOTAL MARKET O I IS 89 K CR OUT O I PREVEIL 46 K CR IN JUNE AND 43 K CR IN MAY SERISE LAST.
PUT CALL RATIO INCHED UP A BIT TO 1.29%.LEVEL OF NIFTY 4930-4980-5020 GO LONG FROM 4930 WITH S L OF 4900 AND GO SHORT FROM 5020 LEVEL WITH S L OF 5030.
BFSI AND IT AND FMCG LOOKS POSITIVE.
HAVE A NICE TRADING DAY
Wednesday, May 28, 2008
Fertile gains for fertiliser shares on higher subsidy
Seven fertiliser shares rose between 3.24% and 14.53% on reports that the government has provided fertiliser subsidy of Rs 95000 crore for 2008/09, much higher from earlier budget estimates of Rs 31000 crore.
Tata Chemicals (up 4.29% to Rs 395.10), Nagarjuna Fertilisers and Chemicals (up 2.74% to Rs 46.80), Rashtriya Chemicals and Fertilisers (up 3.90% to Rs 70.55), Chambal Fertilisers and Chemicals (up 3.60% to Rs 79.15), Gujarat State Fertiliser Corporation (up 6.11% to Rs 176.25), Zuari Industries (up 3.24% to Rs 235.55), and National Fertiliser (up 14.53% to Rs 54.40), advanced.
Chambal Fertilisers and Chemicals clocked volumes of 59.20 lakh shares, Nagarjuna Fertilisers saw volumes of 28.30 lakh shares while 3.44 lakh shares changed hands on the Rashtriya Chemicals and Fertilisers counter on BSE.
Fertiliser shares had risen in a weak market yesterday, 27 May 2008, when the news of higher subsidy hit the market during trading hours. On that day, Nagarjuna Fertilisers and Chemicals rose 2.36% to Rs 45.55, Rashtriya Chemicals and Fertilisers gained 1.04% to Rs 67.90, and Chambal Fertilisers and Chemicals jumped 6.85% to Rs 76.40
The substantially higher subsidy bill is a part of the strategy of the government to safeguard farmers from sharp price spiral for both raw materials and finished fertilisers in the global market.
Meanwhile, the government's new fertiliser investment policy is likely to be finalised in the next two to three weeks. The new policy will aim at linking production cost of new fertiliser units to the international prices, in order to encourage fresh investments in the sector.
Tata Chemicals (up 4.29% to Rs 395.10), Nagarjuna Fertilisers and Chemicals (up 2.74% to Rs 46.80), Rashtriya Chemicals and Fertilisers (up 3.90% to Rs 70.55), Chambal Fertilisers and Chemicals (up 3.60% to Rs 79.15), Gujarat State Fertiliser Corporation (up 6.11% to Rs 176.25), Zuari Industries (up 3.24% to Rs 235.55), and National Fertiliser (up 14.53% to Rs 54.40), advanced.
Chambal Fertilisers and Chemicals clocked volumes of 59.20 lakh shares, Nagarjuna Fertilisers saw volumes of 28.30 lakh shares while 3.44 lakh shares changed hands on the Rashtriya Chemicals and Fertilisers counter on BSE.
Fertiliser shares had risen in a weak market yesterday, 27 May 2008, when the news of higher subsidy hit the market during trading hours. On that day, Nagarjuna Fertilisers and Chemicals rose 2.36% to Rs 45.55, Rashtriya Chemicals and Fertilisers gained 1.04% to Rs 67.90, and Chambal Fertilisers and Chemicals jumped 6.85% to Rs 76.40
The substantially higher subsidy bill is a part of the strategy of the government to safeguard farmers from sharp price spiral for both raw materials and finished fertilisers in the global market.
Meanwhile, the government's new fertiliser investment policy is likely to be finalised in the next two to three weeks. The new policy will aim at linking production cost of new fertiliser units to the international prices, in order to encourage fresh investments in the sector.
Robust quarterly earnings propel Neyveli Lignite Corporation
Neyveli Lignite Corporation jumped 6.51% to Rs 148 at 9:56 IST on BSE after reporting 1357.10% surge in net profit to Rs 384.68 crore on 128.9% jump in net sales to Rs 801.74 crore in Q4 March 2008 over Q4 March 2007.
The company announced the results after trading hours on Tuesday, 27 May 2008.
Meanwhile, the BSE Sensex was up 84.87 points, or 0.52%, to 16,360.46.
On BSE, 49,343 shares were traded in the counter. The scrip had an average daily volume of 11.09 lakh shares in the past one quarter.
The stock hit a high of Rs 148 and a low of Rs 142.10 so far during the day. The stock had a 52-week high of Rs 273.90 on 4 January 2008 and the stock hit a 52-week low of Rs 58.85 on 12 June 2007.
The mid-cap company had underperformed the market over the past one month till 27 May 2008, declining 5.99% compared to the Sensex’s decline of 4.35%. It had also underperformed the market in the past one quarter, declining 10.70% compared to Sensex’s decline of 8.70%.
The company’s current equity is Rs 1677.71 crore. Face value per share is Rs 10.
The current price of Rs 148 discounts its Q4 March 2008 annualised EPS of Rs 9.17, by a PE multiple of 16.14.
Neyveli Lignite Corporation (NLC)’s net profit surged 94.36% to Rs 1101.57 crore on 34.48% rise in total income to Rs 3638.07 crore in the year ended March 2008 over the year ended March 2007.
On 15 May 2008, NLC got approval from the Union government for development of 1000-megawatt coal based thermal power project at Tuticorin in Tamil Nadu.
Neyveli Lignite Corporation’s principal activities are exploration of lignite mines and power generation. The company owns three lignite mines and two thermal power stations in Neyveli and Cuddalore district in the state of Tamil Nadu. It generates power by using lignite as fuel.
The company announced the results after trading hours on Tuesday, 27 May 2008.
Meanwhile, the BSE Sensex was up 84.87 points, or 0.52%, to 16,360.46.
On BSE, 49,343 shares were traded in the counter. The scrip had an average daily volume of 11.09 lakh shares in the past one quarter.
The stock hit a high of Rs 148 and a low of Rs 142.10 so far during the day. The stock had a 52-week high of Rs 273.90 on 4 January 2008 and the stock hit a 52-week low of Rs 58.85 on 12 June 2007.
The mid-cap company had underperformed the market over the past one month till 27 May 2008, declining 5.99% compared to the Sensex’s decline of 4.35%. It had also underperformed the market in the past one quarter, declining 10.70% compared to Sensex’s decline of 8.70%.
The company’s current equity is Rs 1677.71 crore. Face value per share is Rs 10.
The current price of Rs 148 discounts its Q4 March 2008 annualised EPS of Rs 9.17, by a PE multiple of 16.14.
Neyveli Lignite Corporation (NLC)’s net profit surged 94.36% to Rs 1101.57 crore on 34.48% rise in total income to Rs 3638.07 crore in the year ended March 2008 over the year ended March 2007.
On 15 May 2008, NLC got approval from the Union government for development of 1000-megawatt coal based thermal power project at Tuticorin in Tamil Nadu.
Neyveli Lignite Corporation’s principal activities are exploration of lignite mines and power generation. The company owns three lignite mines and two thermal power stations in Neyveli and Cuddalore district in the state of Tamil Nadu. It generates power by using lignite as fuel.
Cement shares build on relaxation of export ban
Four frontline cement shares rose between 1.37% and 3.69% after the Union government partially lifted a ban on cement exports.
Meanwhile the BSE Sensex was down 19.92 points or 0.12% to 16,259.98
Ambuja Cement (up 3.69% to Rs 101.20), UltratechCement Company (up 2.52% to Rs 651.95), ACC (up 1.37% to Rs 664.50), and India Cement (up 3.51% to Rs 162.30), advanced.
Ambuja Cement clocked volumes of 1.28 lakh shares, UltratechCement Company notched volumes of 3228 shares, ACC clinched volumes of 33,701 shares and 61,827 shares were traded on India Cements counter on BSE.
As per the notification of Directorate General of Foreign Trade (DGFT) issued yesterday, 27 May 2008, export of cement will be allowed from ports based in Gujarat. Gujarat accounts for almost 90% of the country’s cement exports and approximately two million tonne of cement is exported annually from Gujarat.
The partial relaxation on the export ban comes at a time of expectation of slow down in the demand of cement in the country with monsoons approaching.
Earlier, on 11 April 2008, the government had banned cement export to increase availability of the construction material in the domestic market and keep a check on prices, which among other items had fuelled inflation.
Earlier this month, the government had allowed export of cement and cement clinkers to Nepal.
Meanwhile the BSE Sensex was down 19.92 points or 0.12% to 16,259.98
Ambuja Cement (up 3.69% to Rs 101.20), UltratechCement Company (up 2.52% to Rs 651.95), ACC (up 1.37% to Rs 664.50), and India Cement (up 3.51% to Rs 162.30), advanced.
Ambuja Cement clocked volumes of 1.28 lakh shares, UltratechCement Company notched volumes of 3228 shares, ACC clinched volumes of 33,701 shares and 61,827 shares were traded on India Cements counter on BSE.
As per the notification of Directorate General of Foreign Trade (DGFT) issued yesterday, 27 May 2008, export of cement will be allowed from ports based in Gujarat. Gujarat accounts for almost 90% of the country’s cement exports and approximately two million tonne of cement is exported annually from Gujarat.
The partial relaxation on the export ban comes at a time of expectation of slow down in the demand of cement in the country with monsoons approaching.
Earlier, on 11 April 2008, the government had banned cement export to increase availability of the construction material in the domestic market and keep a check on prices, which among other items had fuelled inflation.
Earlier this month, the government had allowed export of cement and cement clinkers to Nepal.
Singapore Hot Stocks-Raffles Education hits 3-mth high on JVs
Raffles Education Corp (RLSE.SI: Quote, Profile, Research) rose as much as 6.3 percent to a three-month high of S$1.36 after the firm formed joint ventures with India's Educomp Solutions (EDSO.BO: Quote, Profile, Research) in India and China.
The $150 million joint ventures with Educomp Solutions, which provides multimedia teaching aids and computer education programmes to schools, allows Raffles Education to tap into the Indian market.
"The Indian education market mirrors that of China in many ways -- inefficient spending by the government on infrastructure and restrictive regulations that stagger private sector participation," Credit Suisse said in a client note.
Credit Suisse analysts kept Raffles Education at "outperform" with a price target of S$1.75, a 30-percent upside from the stock's last traded price.
They said both firms would have limited near-term synergies, and that their education programmes and systems would take time to gain recognition in China and India.
The $150 million joint ventures with Educomp Solutions, which provides multimedia teaching aids and computer education programmes to schools, allows Raffles Education to tap into the Indian market.
"The Indian education market mirrors that of China in many ways -- inefficient spending by the government on infrastructure and restrictive regulations that stagger private sector participation," Credit Suisse said in a client note.
Credit Suisse analysts kept Raffles Education at "outperform" with a price target of S$1.75, a 30-percent upside from the stock's last traded price.
They said both firms would have limited near-term synergies, and that their education programmes and systems would take time to gain recognition in China and India.
MARKET PREDICTION
GLOBAL MARKET IS MIXED...OIL CORRECTED SIGNIFICANTLY FROM HIGH TO $128.
RUPEE GOT WEAK AGAINST DOLLAR 42.78.
JUST BEFORE CLEARING DAY MARKET IS REALLY BAISED TOTAL ROLL OVER SEEN IS 42% JUNE SERISE O I IS 37 K CR AND MAY SERISE O I IS 48 K CR TOTAL O I IS PREVALING IS 85 K CR.
PUT CALL RATIO IS 1.25%.LEVEL OF NOFTY IS 4800 AND 4920 IS CRUCIAL LEVEL FOR THE DAY.
GO SHORT FROM 4900 WITH SL OF 4920 AND BUY FROM LOWER SUPPORT OF 4820 WITH S L OF 4800.IN LONG SIDE IT AND PHARMA LOOK ATTRACTIVE AND IN SHORT SIDE BANKING , FINANCIAL SERVICES AND CONSTRUCTION LOOKS GOOD.
HAVE A NICE TRADING DAY.
-MR SAM
RUPEE GOT WEAK AGAINST DOLLAR 42.78.
JUST BEFORE CLEARING DAY MARKET IS REALLY BAISED TOTAL ROLL OVER SEEN IS 42% JUNE SERISE O I IS 37 K CR AND MAY SERISE O I IS 48 K CR TOTAL O I IS PREVALING IS 85 K CR.
PUT CALL RATIO IS 1.25%.LEVEL OF NOFTY IS 4800 AND 4920 IS CRUCIAL LEVEL FOR THE DAY.
GO SHORT FROM 4900 WITH SL OF 4920 AND BUY FROM LOWER SUPPORT OF 4820 WITH S L OF 4800.IN LONG SIDE IT AND PHARMA LOOK ATTRACTIVE AND IN SHORT SIDE BANKING , FINANCIAL SERVICES AND CONSTRUCTION LOOKS GOOD.
HAVE A NICE TRADING DAY.
-MR SAM
Tuesday, May 27, 2008
MARKET PREDICTION
GLOBAL MARKET IS MIXED TODAY.
OIL HIT $133 APROX AFTER 2ND ATTACK IN NIGERIA.
RUPEE VS DOLLAR SETTLE AT 42.63.IN NIFTY WE HAVE SEEN HAVY SELLING PRESURE AFTER BRECH 4900 LEVEL,IF MARKET DO NOT TAKE SUPPORT AT 4800 IT COULD TUMBLE TO 4700 TOO WHICH IS IMMEDIATE SUPPORT TO MARKET IN SHORT TERM,TOTAL O I IS 83 K CR,IN MAY SERISE 54 K CR AND IN JUNE SERISE 29 K CR.
TOTAL MARKET WIDE ROLL OVER IS 25% AND PUT CALL RATIO IS HOVERING AROUD 1.27.
LEVEL OF NIFTY 4850-4920-4980.
IF MARKET HOLD 4800 GO LONG IN PHARMA AND TECH SHARE,ALSO IN SHORT SIDE IF MARKET DOES NOT HOLD 4920 GO SHORT WITH S L OF 4950 IN BANK AND CONSTRUCTION.
HAVE A NICE TRADING DAY..
-MR SAM
OIL HIT $133 APROX AFTER 2ND ATTACK IN NIGERIA.
RUPEE VS DOLLAR SETTLE AT 42.63.IN NIFTY WE HAVE SEEN HAVY SELLING PRESURE AFTER BRECH 4900 LEVEL,IF MARKET DO NOT TAKE SUPPORT AT 4800 IT COULD TUMBLE TO 4700 TOO WHICH IS IMMEDIATE SUPPORT TO MARKET IN SHORT TERM,TOTAL O I IS 83 K CR,IN MAY SERISE 54 K CR AND IN JUNE SERISE 29 K CR.
TOTAL MARKET WIDE ROLL OVER IS 25% AND PUT CALL RATIO IS HOVERING AROUD 1.27.
LEVEL OF NIFTY 4850-4920-4980.
IF MARKET HOLD 4800 GO LONG IN PHARMA AND TECH SHARE,ALSO IN SHORT SIDE IF MARKET DOES NOT HOLD 4920 GO SHORT WITH S L OF 4950 IN BANK AND CONSTRUCTION.
HAVE A NICE TRADING DAY..
-MR SAM
Monday, May 26, 2008
MARKET OUTLOOK
GLOBAL MARKE T IS WEAK ASIAN MARKET ARE DOWN ALMOST 2%.SO WE CAN ASSUME NIFTY WILL OPEN IN NEGETIVE NOTE .
THIS IS CLEARING WEAK TOTAL JUNE SERISE O I IS 22 K CR,TOTAL MARKET ROLL OVER IS 20% AROUND MAY SERISE O I IS 59 K CR.PUT CALL RATIO IS 1.31%.
LEVEL OF NIFTY IS 4800-4850-4920.
IF MARKET HOLD 4850 GO LONG IN PHARMA AND FMCG,AND IF MARKET DOES NOT HOLD 4900 GO SHORT IN CONSTRUCTION AND BANKING AND FINANCIAL SERVICE.
KARNATAKA ELECTION IS TURNMOIL IN INDIA BECAUSE BJP HOLDING MAJORITY SEAT IT COULD LEAD TO LOKSHABHA ELECTION.
HAVE NICE TRADING DAY
THIS IS CLEARING WEAK TOTAL JUNE SERISE O I IS 22 K CR,TOTAL MARKET ROLL OVER IS 20% AROUND MAY SERISE O I IS 59 K CR.PUT CALL RATIO IS 1.31%.
LEVEL OF NIFTY IS 4800-4850-4920.
IF MARKET HOLD 4850 GO LONG IN PHARMA AND FMCG,AND IF MARKET DOES NOT HOLD 4900 GO SHORT IN CONSTRUCTION AND BANKING AND FINANCIAL SERVICE.
KARNATAKA ELECTION IS TURNMOIL IN INDIA BECAUSE BJP HOLDING MAJORITY SEAT IT COULD LEAD TO LOKSHABHA ELECTION.
HAVE NICE TRADING DAY
Saturday, May 24, 2008
Indian Rupee Has Fifth Week of Losses on Rising Crude Oil Costs
India's rupee declined for the fifth week, the worst run in almost two years, as record crude oil costs spurred demand for dollars needed to buy the commodity.
The local currency fell to the lowest since April 2007 this week as companies such as Indian Oil Corp., the nation's largest refiner, paid more for raw materials. Higher oil costs may slow growth of Asia's third-largest economy, which depends on imports to meet three-quarters of its annual energy needs.
``The pressure on the rupee continues because refiners are looking to cover dollar needs arising in the short term,'' said Rohan Lasrado, a foreign-exchange trader at HDFC Bank Ltd. in Mumbai. ``Adding to the rupee's worries will be the inconsistent dollar supply.''
The rupee declined 0.5 percent this week to 42.705 versus the dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It may fall to 43.25 in next few days, Lasrado said.
The rupee is the second-worst performer this year among Asia's 10 most-traded currencies, excluding the yen.
The local currency will rise by almost 9 percent through the end of the year as the central bank raises borrowing costs by July to fight inflation that's at the fastest pace in 3 1/2 years, Fortis Bank SA said.
The currency will rebound from its lowest in 13 months as the Reserve Bank of India increases the repurchase rate to 8 percent from 7.75 percent before its next meeting on July 29, Joseph Tan, Fortis Bank's Singapore-based strategist, said in an interview.
Tightening Policy
``Economic growth is pretty much intact, but inflation is a new threat and there is no scope for the central bank to have a neutral monetary policy approach,'' Tan said. ``I am leaning toward believing that the central bank will tighten monetary policy further, despite what the economy is going through, and will also use the exchange rate.''
Fortis predicts the rupee will rise to as high as 39.4 at the end of this year. It is among the 21 respondents in a Bloomberg News survey, all of whom predict that the currency will rise in 2008.
Goldman Sachs Group Inc. revised its forecasts for the Indian rupee, predicting a 3.2 percent drop in the next six months because rising oil costs will increase the import bill and double the nation's current-account deficit. Goldman wasn't part of Bloomberg's survey.
The broad measure of trade that includes investment flows will widen to 3.5 percent of gross domestic product in the fiscal year ending in March from 1.5 percent the previous year, Goldman's Tushar Poddar and Pranjul Bhandari wrote in a note.
Caught By Surprise
``The recent large move up in the dollar has caught us by surprise and appears to be driven by the run-up in oil prices,'' wrote Mumbai-based Poddar and Bhandari, analysts at the world's largest securities firm by market value. ``The rupee will continue to weaken.''
Goldman changed its three-month, six-month and one-year forecasts for the rupee to 43.9, 44.1 and 42.2 from earlier estimates of 41, 40.3 and 38.9, respectively.
The current-account shortfall widened to $5.4 billion in the three months ended Dec. 31, from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31. That was after the country imported oil worth $71.8 billion in the year through March 31, 23.5 percent more than a year earlier.
The local currency fell to the lowest since April 2007 this week as companies such as Indian Oil Corp., the nation's largest refiner, paid more for raw materials. Higher oil costs may slow growth of Asia's third-largest economy, which depends on imports to meet three-quarters of its annual energy needs.
``The pressure on the rupee continues because refiners are looking to cover dollar needs arising in the short term,'' said Rohan Lasrado, a foreign-exchange trader at HDFC Bank Ltd. in Mumbai. ``Adding to the rupee's worries will be the inconsistent dollar supply.''
The rupee declined 0.5 percent this week to 42.705 versus the dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It may fall to 43.25 in next few days, Lasrado said.
The rupee is the second-worst performer this year among Asia's 10 most-traded currencies, excluding the yen.
The local currency will rise by almost 9 percent through the end of the year as the central bank raises borrowing costs by July to fight inflation that's at the fastest pace in 3 1/2 years, Fortis Bank SA said.
The currency will rebound from its lowest in 13 months as the Reserve Bank of India increases the repurchase rate to 8 percent from 7.75 percent before its next meeting on July 29, Joseph Tan, Fortis Bank's Singapore-based strategist, said in an interview.
Tightening Policy
``Economic growth is pretty much intact, but inflation is a new threat and there is no scope for the central bank to have a neutral monetary policy approach,'' Tan said. ``I am leaning toward believing that the central bank will tighten monetary policy further, despite what the economy is going through, and will also use the exchange rate.''
Fortis predicts the rupee will rise to as high as 39.4 at the end of this year. It is among the 21 respondents in a Bloomberg News survey, all of whom predict that the currency will rise in 2008.
Goldman Sachs Group Inc. revised its forecasts for the Indian rupee, predicting a 3.2 percent drop in the next six months because rising oil costs will increase the import bill and double the nation's current-account deficit. Goldman wasn't part of Bloomberg's survey.
The broad measure of trade that includes investment flows will widen to 3.5 percent of gross domestic product in the fiscal year ending in March from 1.5 percent the previous year, Goldman's Tushar Poddar and Pranjul Bhandari wrote in a note.
Caught By Surprise
``The recent large move up in the dollar has caught us by surprise and appears to be driven by the run-up in oil prices,'' wrote Mumbai-based Poddar and Bhandari, analysts at the world's largest securities firm by market value. ``The rupee will continue to weaken.''
Goldman changed its three-month, six-month and one-year forecasts for the rupee to 43.9, 44.1 and 42.2 from earlier estimates of 41, 40.3 and 38.9, respectively.
The current-account shortfall widened to $5.4 billion in the three months ended Dec. 31, from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31. That was after the country imported oil worth $71.8 billion in the year through March 31, 23.5 percent more than a year earlier.
Friday, May 23, 2008
India to issue 3G, WiMax guidelines by June - Raja
India aims to issue guidelines for third-generation mobile (3G) and WiMAX networks by June and will allow foreign participation in them, telecoms minister Andimuthu Raja said on Friday.
"By June the guidelines will be issued for 3G and WiMAX," Raja said in a speech at an industry conference, adding he expected the roll-out of such networks by January 2009.
3G wireless networks allow operators to transmit data, voice and video at high speeds, enabling Internet services on mobile devices. India is eyeing 3G network as a solution for lack of voice-centric 2G network capacity and slow growth of broadband.
"All existing operators are ready for 3G rollout. It does not need new infrastructure," Raja told reporters after the speech.
When asked if foreign players would be allowed to bid for 3G spectrum, he said: "If there is common auction, open auction, then there will be no bar."
India allows foreign firms to own up to 74 percent in an Indian telecoms firm, and these partnerships can also start 3G services, Raja said.
"Either way foreign players will be permitted," he said.
"By June the guidelines will be issued for 3G and WiMAX," Raja said in a speech at an industry conference, adding he expected the roll-out of such networks by January 2009.
3G wireless networks allow operators to transmit data, voice and video at high speeds, enabling Internet services on mobile devices. India is eyeing 3G network as a solution for lack of voice-centric 2G network capacity and slow growth of broadband.
"All existing operators are ready for 3G rollout. It does not need new infrastructure," Raja told reporters after the speech.
When asked if foreign players would be allowed to bid for 3G spectrum, he said: "If there is common auction, open auction, then there will be no bar."
India allows foreign firms to own up to 74 percent in an Indian telecoms firm, and these partnerships can also start 3G services, Raja said.
"Either way foreign players will be permitted," he said.
Oil resumes climb after sharp drop
Oil stood near $132 a barrel on Friday, recovering a little from a strong bout of profit-taking in the previous session that pulled prices back more than 3 percent from the record high above $135 a barrel.
U.S. light crude for July delivery was up $1.13 at $131.94 a barrel by 0736 GMT. It surged to $135.09 on Thursday before slumping to settle at $130.81, the first time in five sessions that it settled lower.
London Brent crude was up $1.37 at $131.88.
"Supplies not growing is still the main thing. OPEC can turn the tap but they cannot do it forever, and non-OPEC growth is not enough," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.
"Demand...is not falling as much as expected," he added.
Oil production from countries outside OPEC is stagnating and forecast to remain below 50 million barrels per day this year, at 49.56 million bpd, lower than earlier forecast, a Reuters survey of 12 analysts showed on Thursday.
The failure of non-OPEC producers to increase output significantly has helped drive oil prices up more than a third since the beginning of the year.
It has also sent long-term prices even higher, at close to $150 a barrel, as concerns mount that supplies will not be enough to meet demand from developing countries in the future.
OPEC Secretary-General Abdullah al-Badri on Thursday repeated the group's stance that it can do nothing to lower oil prices in a "crazy" market, blaming record prices on factors such as geopolitical tensions, speculation and the weak dollar.
The cartel's view was shared by the chief executive of Royal Dutch Shell Plc, Jeroen van der Veer, who told Reuters Television that oil prices are rising due to market sentiment rather than a shortage of supply.
A stronger dollar on Thursday also contributed to lower oil prices as investors have increasingly been using oil as a hedge against the falling currency, setting off inverse trends in the dollar and oil.
The greenback steadied on Friday, but the currency stayed in sight of a one-month low against the euro on worries that inflation could lead to a deeper U.S. slowdown.
U.S. light crude for July delivery was up $1.13 at $131.94 a barrel by 0736 GMT. It surged to $135.09 on Thursday before slumping to settle at $130.81, the first time in five sessions that it settled lower.
London Brent crude was up $1.37 at $131.88.
"Supplies not growing is still the main thing. OPEC can turn the tap but they cannot do it forever, and non-OPEC growth is not enough," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.
"Demand...is not falling as much as expected," he added.
Oil production from countries outside OPEC is stagnating and forecast to remain below 50 million barrels per day this year, at 49.56 million bpd, lower than earlier forecast, a Reuters survey of 12 analysts showed on Thursday.
The failure of non-OPEC producers to increase output significantly has helped drive oil prices up more than a third since the beginning of the year.
It has also sent long-term prices even higher, at close to $150 a barrel, as concerns mount that supplies will not be enough to meet demand from developing countries in the future.
OPEC Secretary-General Abdullah al-Badri on Thursday repeated the group's stance that it can do nothing to lower oil prices in a "crazy" market, blaming record prices on factors such as geopolitical tensions, speculation and the weak dollar.
The cartel's view was shared by the chief executive of Royal Dutch Shell Plc, Jeroen van der Veer, who told Reuters Television that oil prices are rising due to market sentiment rather than a shortage of supply.
A stronger dollar on Thursday also contributed to lower oil prices as investors have increasingly been using oil as a hedge against the falling currency, setting off inverse trends in the dollar and oil.
The greenback steadied on Friday, but the currency stayed in sight of a one-month low against the euro on worries that inflation could lead to a deeper U.S. slowdown.
India set to raise fuel price, inflation a worry
India is set to raise petrol and diesel prices to keep pace with crude oil's record run but the move will fuel inflation, heaping more pressure on a government struggling to calm prices ahead of elections.
Crude oil's surge has hurt consumers around the world and countries such as Indonesia are being forced to raise state-controlled prices. China said on Thursday it would retain controls on fuel prices, denying rumours about deregulation.
"A fuel price hike is inevitable," Indian Petroleum Secretary M.S. Srinivasan told reporters on Friday, adding that the oil ministry was also seeking tax changes to help Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which are forced to sell fuel below cost.
India sets the heavily discounted prices at which fuel is sold in order to help fight inflation and protect hundreds of millions of poor people from price shocks.
It partially compensates oil retailers by issuing oil bonds to them, which they can either hold as assets or sell in the market, while upstream companies share some of the burden.
The government, which faces a string of state elections this year and a national poll by May 2009, is worried that higher fuel prices will stoke inflation, already at its highest level in 3-½ years at nearly 8 percent.
It has strived to contain inflation with tough restrictions on exports of rice and duty cuts on some imports, while steel firms have been firmly told to freeze prices for three months.
But with oil above $130 a barrel and losses at state energy firms mounting, the government has little option but to raise retail fuel prices.
The oil minister said on Friday the government may take a week to decide whether to raise prices.
"With a fuel price hike in the offing, inflation is headed up and we may see inflation hit 8.5 percent by June," said A. Prasanna, economist at ICICI Securities.
"We expect the central bank to take further liquidity tightening measures to control inflation."
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.
Crude oil's surge has hurt consumers around the world and countries such as Indonesia are being forced to raise state-controlled prices. China said on Thursday it would retain controls on fuel prices, denying rumours about deregulation.
"A fuel price hike is inevitable," Indian Petroleum Secretary M.S. Srinivasan told reporters on Friday, adding that the oil ministry was also seeking tax changes to help Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which are forced to sell fuel below cost.
India sets the heavily discounted prices at which fuel is sold in order to help fight inflation and protect hundreds of millions of poor people from price shocks.
It partially compensates oil retailers by issuing oil bonds to them, which they can either hold as assets or sell in the market, while upstream companies share some of the burden.
The government, which faces a string of state elections this year and a national poll by May 2009, is worried that higher fuel prices will stoke inflation, already at its highest level in 3-½ years at nearly 8 percent.
It has strived to contain inflation with tough restrictions on exports of rice and duty cuts on some imports, while steel firms have been firmly told to freeze prices for three months.
But with oil above $130 a barrel and losses at state energy firms mounting, the government has little option but to raise retail fuel prices.
The oil minister said on Friday the government may take a week to decide whether to raise prices.
"With a fuel price hike in the offing, inflation is headed up and we may see inflation hit 8.5 percent by June," said A. Prasanna, economist at ICICI Securities.
"We expect the central bank to take further liquidity tightening measures to control inflation."
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.
MARKET PREDICTION
NO BIG NEWS IS MOVING AROUND THE WORLD ..
TODAY'S INDIAN MARKET WILL TOTALLY DEPENDS ON INFLATION DATA AND GOVERNMENT ACTION PLAN ON THAT.
TOTAL MARKET O I IS 81 K CR (IN MAY SERIES 61 K CR AND 19 K CR N JUNE SERIES) PUT CALL RATIO IS 1.37.DOLLAR VS RUPEE IS 42.85.
CRUDE OIL IS $131.4/BRL.
LEVEL OF NIFTY IS 4950-5000-5060-5100.
IF MARKET HOLD 5000 GO LONG IN TECH AND PHARMA WITH SL OF 4980..IF DOES NOT SUSTAIN ABOVE 5000 GO SHORT IN CONSTRUCTION WITH S L OF 5030.
--HAVE A NICE TRADING DAY
-MR SAM
TODAY'S INDIAN MARKET WILL TOTALLY DEPENDS ON INFLATION DATA AND GOVERNMENT ACTION PLAN ON THAT.
TOTAL MARKET O I IS 81 K CR (IN MAY SERIES 61 K CR AND 19 K CR N JUNE SERIES) PUT CALL RATIO IS 1.37.DOLLAR VS RUPEE IS 42.85.
CRUDE OIL IS $131.4/BRL.
LEVEL OF NIFTY IS 4950-5000-5060-5100.
IF MARKET HOLD 5000 GO LONG IN TECH AND PHARMA WITH SL OF 4980..IF DOES NOT SUSTAIN ABOVE 5000 GO SHORT IN CONSTRUCTION WITH S L OF 5030.
--HAVE A NICE TRADING DAY
-MR SAM
Thursday, May 22, 2008
BPCL starts rationing fuel supplies
As crude oil prices keep soaring and the Centre refuses to bail out public sector oil marketing companies, which are under tremendous strain, the oil crisis has literally reached your neighbourhood gas station. Vehicle owners can no longer be sure that petrol or diesel will be available on demand. Beginning Tuesday, Bharat Petroleum Corporation Limited has put its petrol pumps across the country on a "rationed" supply. BPCL has adopted the drastic system because of a severe cash crunch for buying oil products. Other oil majors like as HPCL and IOC too are facing a cash crunch given the government's refusal to allow an increase in retail prices, which has been in the offing several times in the last few months. Amarjit Singh, vice-president of the Petro Dealers' Association in Mumbai, said that BPCL petrol-pump owners were informed on Tuesday that every dealer would receive only a limited quota every month. "Every petrol dealer will receive petrol/diesel equivalent to the sale that was done in the same period last year. For instance, my pump sold around 80 kilolitres in May last year. I will receive a similar quantity or less this month," he said. In effect, this means that if a dealer exhausts his quota within, say, 25 days, due to the growing demand for petrol from the ever-growing automobile sector, he has to down the shutter for the remaining days of the month. The company has told dealers that the move is only aimed at extending the available products for a longer duration.
A high-ranking BPCL official, requesting anonymity, confirmed that rationing has been done across the country and would, in effect, be initially for four to five months or less if the issue of payment is resolved earlier. HPCL officials refused to comment while IOC's N Srikumar said: "There is no quota from our end and there is no such move from our end." Singh said the petrol dealers had proposed to BPCL that they would keep the petrol pumps open only for a limited period every day. "Some of us are open till late at night or all 24 hours.
We have proposed that the petrol pumps will be open only from 7am to 10pm every day. It does not make sense to work longer hours if we are going to run out of petrol before the month-end and have to shut shop." The government, he said, must act soon as it is a very difficult situation.
A high-ranking BPCL official, requesting anonymity, confirmed that rationing has been done across the country and would, in effect, be initially for four to five months or less if the issue of payment is resolved earlier. HPCL officials refused to comment while IOC's N Srikumar said: "There is no quota from our end and there is no such move from our end." Singh said the petrol dealers had proposed to BPCL that they would keep the petrol pumps open only for a limited period every day. "Some of us are open till late at night or all 24 hours.
We have proposed that the petrol pumps will be open only from 7am to 10pm every day. It does not make sense to work longer hours if we are going to run out of petrol before the month-end and have to shut shop." The government, he said, must act soon as it is a very difficult situation.
Why oil prices are at a record high????????
U.S. crude oil hit an all-time high of $130.47 a barrel.
Robust demand for crude and a weak dollar have fuelled the rally from a dip below $50 at the start of 2007.
Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
It has also reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.
OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.
Some analysts say investors have been using oil as a hedge against the weaker dollar.
FUNDS
Since the Federal Reserve cut U.S. interest rates in mid-August last year and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil and gold have risen.
Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. At the same time, the credit crunch has brought some other markets, such as the U.S. asset-backed commercial paper market, to a virtual standstill.
Some of that money has found its way into energy and commodities, analysts say.
DEMAND
While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a main driver of the current rally.
Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a limited effect on economic growth.
Analysts say the world is coping with high nominal prices because, adjusted for exchange rates and inflation, they have been until recently lower than during previous price spikes and some economies have become less energy intensive.
OPEC SUPPLY RESTRAINT
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.
Fewer OPEC barrels entering the market helped propel the rally and consumer nations led by the International Energy Agency have urged OPEC to pump more oil.
At its meetings since December, OPEC has agreed to leave output unchanged, saying there is enough crude in the market. It next meets formally on September 9.
Few in the group believe there is much it can do to tame a market it says defies logic.
NIGERIA
Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 because of militant attacks on the country's oil industry.
Oil companies and trading sources have detailed 559,000 bpd of shut Nigerian production due to militant attacks and sabotage.
IRAN
Oil consumers are concerned about supply disruption from Iran, the world's fourth-biggest exporter, which is locked in a dispute with the West over its nuclear program.
Western governments suspect Iran is using its civilian nuclear program as a cover to develop nuclear weapons. Iran denies this, saying it wants nuclear power to make electricity.
IRAQ
Iraq is struggling to get its oil industry back on its feet after decades of wars, sanctions and underinvestment.
Exports of Kirkuk crude from the country's north are stabilizing as the system recovers from technical problems that had mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003.
REFINERY BOTTLENECKS
Refiners in the United States, the world's top gas guzzler, struggled with unexpected outages which have drained inventories.
Robust demand for crude and a weak dollar have fuelled the rally from a dip below $50 at the start of 2007.
Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
It has also reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.
OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.
Some analysts say investors have been using oil as a hedge against the weaker dollar.
FUNDS
Since the Federal Reserve cut U.S. interest rates in mid-August last year and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil and gold have risen.
Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. At the same time, the credit crunch has brought some other markets, such as the U.S. asset-backed commercial paper market, to a virtual standstill.
Some of that money has found its way into energy and commodities, analysts say.
DEMAND
While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a main driver of the current rally.
Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a limited effect on economic growth.
Analysts say the world is coping with high nominal prices because, adjusted for exchange rates and inflation, they have been until recently lower than during previous price spikes and some economies have become less energy intensive.
OPEC SUPPLY RESTRAINT
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.
Fewer OPEC barrels entering the market helped propel the rally and consumer nations led by the International Energy Agency have urged OPEC to pump more oil.
At its meetings since December, OPEC has agreed to leave output unchanged, saying there is enough crude in the market. It next meets formally on September 9.
Few in the group believe there is much it can do to tame a market it says defies logic.
NIGERIA
Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 because of militant attacks on the country's oil industry.
Oil companies and trading sources have detailed 559,000 bpd of shut Nigerian production due to militant attacks and sabotage.
IRAN
Oil consumers are concerned about supply disruption from Iran, the world's fourth-biggest exporter, which is locked in a dispute with the West over its nuclear program.
Western governments suspect Iran is using its civilian nuclear program as a cover to develop nuclear weapons. Iran denies this, saying it wants nuclear power to make electricity.
IRAQ
Iraq is struggling to get its oil industry back on its feet after decades of wars, sanctions and underinvestment.
Exports of Kirkuk crude from the country's north are stabilizing as the system recovers from technical problems that had mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003.
REFINERY BOTTLENECKS
Refiners in the United States, the world's top gas guzzler, struggled with unexpected outages which have drained inventories.
Penny stock zooms to Rs 55,000 intra-day on BSE
Ahmedabad-based KGN Industries, a ‘Z' group share that was re-listed at Rs 100 on the Bombay Stock Exchange (BSE) today after over seven years, witnessed a mammoth intra-day high of Rs 55,000 on minuscule volumes of 827 shares.
Although the BSE suspended trading in the share at 12.20 pm on Wednesday, the exchange said trading would resume at usual on Thursday.
"Further investigations are being carried out to examine the placing of orders at unrealistic prices and appropriate action, if any, will be initiated against the entities concerned," said a BSE spokesperson.
The spokesperson added that none of the trades conducted today were nullified and would be honoured. The counter, however, would attract a circuit filter of 5 per cent and would be under the trade-to-trade group.
The opening price for the stock on Thursday will be Rs 5,216.30, an average price set by BSE.
A KGN spokesperson said the company was also shocked by the price spurt. "We, too, called the exchange and asked them to look into the matter," the spokesperson said.
KGN Industries, a non-banking financial company (NBFC) before its suspension, is jointly owned by Arif Memon and Ismail Memon and is located at Navrangpura in Ahmedabad. Trading in the company's stock was suspended on 2001 after it failed to fulfil compliance issues with the exchange. Currently, the company trades in castor oil.
Although the BSE suspended trading in the share at 12.20 pm on Wednesday, the exchange said trading would resume at usual on Thursday.
"Further investigations are being carried out to examine the placing of orders at unrealistic prices and appropriate action, if any, will be initiated against the entities concerned," said a BSE spokesperson.
The spokesperson added that none of the trades conducted today were nullified and would be honoured. The counter, however, would attract a circuit filter of 5 per cent and would be under the trade-to-trade group.
The opening price for the stock on Thursday will be Rs 5,216.30, an average price set by BSE.
A KGN spokesperson said the company was also shocked by the price spurt. "We, too, called the exchange and asked them to look into the matter," the spokesperson said.
KGN Industries, a non-banking financial company (NBFC) before its suspension, is jointly owned by Arif Memon and Ismail Memon and is located at Navrangpura in Ahmedabad. Trading in the company's stock was suspended on 2001 after it failed to fulfil compliance issues with the exchange. Currently, the company trades in castor oil.
MARKET PREDICTION
GLOBAL MARKETS ARE DOWN BECAUSE OF OIL PRICES SURGES TO $135..
WHICH WILL HAVE IMPACT ON INDIAN MARKET ALSO.
MARKET WILL BE RANGE BOUND FOR COMING FEW DAYS ON THE CONCERN OF GOVT. ACTION REGARDING INFLATION CONTROL.
THERE IS NO CONFIDENCE AMONGS THE INVESTORS AFTER THE JAN FALL, AND THINGS ARE CHANGING DRAMATICALLY DUE TO THE FLOW OF BAD NEWS ALL OVER THE WORLD.
TODAY'S VIEW
LONG POSITION CAN BE BUILT FROM 5010 WITH SL 4980
SECTOR
ENERGY, TELECOM AND PHARMA-------------FOR LONG
AUTO, CONSTRUCTION-------------------------FOR SHORT
HAVE A NICE DAY
-MR SAM
WHICH WILL HAVE IMPACT ON INDIAN MARKET ALSO.
MARKET WILL BE RANGE BOUND FOR COMING FEW DAYS ON THE CONCERN OF GOVT. ACTION REGARDING INFLATION CONTROL.
THERE IS NO CONFIDENCE AMONGS THE INVESTORS AFTER THE JAN FALL, AND THINGS ARE CHANGING DRAMATICALLY DUE TO THE FLOW OF BAD NEWS ALL OVER THE WORLD.
TODAY'S VIEW
LONG POSITION CAN BE BUILT FROM 5010 WITH SL 4980
SECTOR
ENERGY, TELECOM AND PHARMA-------------FOR LONG
AUTO, CONSTRUCTION-------------------------FOR SHORT
HAVE A NICE DAY
-MR SAM
Oil Rises Above $135 After Unexpected Drop in U.S. Inventories
Crude oil rose to a record above $135 a barrel in New York on concern that supplies are inadequate after U.S. stockpiles unexpectedly dropped last week.
U.S. crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months, the Energy Department said yesterday. Gasoline supplies plunged by 755,000 barrels when analysts expected an increase.
``The price was roaring before the inventory report and was going up regardless, but that gave it the extra push,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. ``I'm beginning to think that this is a serious macro event, with oil at these levels, and it's going to have some serious consequences.''
Crude oil for July delivery rose as much as $1.87, or 1.4 percent, to $135.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.85 a barrel at 9:30 a.m. Singapore time.
Oil for prompt delivery has surged 8.5 percent in the past week while futures contracts for 2016 gained $20 to $142 a barrel.
Brent crude oil for July settlement rose $1.80, or 1.4 percent, to a record $134.50 a barrel on London's ICE Futures Europe exchange at 9:29 a.m. Singapore time.
The crude-oil market is ``well supplied,'' Libya's top oil official Shokri Ghanem said yesterday, rejecting calls for the Organization of Petroleum Exporting Countries to increase production to curb prices. OPEC, which pumps more than 40 percent of the world's oil, isn't planning to meet before its next scheduled conference in September to review production, he said.
`Playing With Fire'
``OPEC is playing with fire,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``While they may be right from a fundamental standpoint about crude supplies, at this time it will take more than words from them to bring prices down. We will need to see more gestures like the Saudis made, to lower prices.''
Saudi Oil Minister Ali al-Naimi told reporters on May 16 that the kingdom is planning a 300,000 barrel-a-day output increase, to bring June production to 9.45 million barrels a day.
``Once prices hit $150 or $200 like our friends at Goldman are saying, we are looking at $5 or $6 gasoline, which will really hurt demand and cause a recession,'' Mueller said.
Goldman analyst Arjun N. Murti said in a May 16 report that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Oil Companies
U.S. oil-company executives told Congress oil prices should be between $35 and $90 a barrel. Representatives of the five largest publicly traded oil companies appeared before the Senate Judiciary Committee to testify on record energy prices. Appearing yesterday were representatives of BP Plc, ConocoPhillips, Chevron Corp., Exxon Mobil Corp and Royal Dutch Shell Plc.
The price of oil should be ``somewhere between $35 and $65 a barrel,'' John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell, said at the hearing yesterday. Other executives said prices should be as much as $90 a barrel.
Congress last week approved legislation to halt deliveries to the Strategic Petroleum Reserve in an effort to respond to record prices.
Airlines have been hit by higher jet fuel costs. The price of the fuel, the largest expense at many airlines, has climbed 88 percent in the past year and traded at a record $4.0592 a gallon in New York Harbor yesterday.
AMR Corp.'s American Airlines, the world's largest carrier, said it will cut ``thousands'' of jobs as it responds to high fuel prices and slowing demand.
U.S. crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months, the Energy Department said yesterday. Gasoline supplies plunged by 755,000 barrels when analysts expected an increase.
``The price was roaring before the inventory report and was going up regardless, but that gave it the extra push,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. ``I'm beginning to think that this is a serious macro event, with oil at these levels, and it's going to have some serious consequences.''
Crude oil for July delivery rose as much as $1.87, or 1.4 percent, to $135.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.85 a barrel at 9:30 a.m. Singapore time.
Oil for prompt delivery has surged 8.5 percent in the past week while futures contracts for 2016 gained $20 to $142 a barrel.
Brent crude oil for July settlement rose $1.80, or 1.4 percent, to a record $134.50 a barrel on London's ICE Futures Europe exchange at 9:29 a.m. Singapore time.
The crude-oil market is ``well supplied,'' Libya's top oil official Shokri Ghanem said yesterday, rejecting calls for the Organization of Petroleum Exporting Countries to increase production to curb prices. OPEC, which pumps more than 40 percent of the world's oil, isn't planning to meet before its next scheduled conference in September to review production, he said.
`Playing With Fire'
``OPEC is playing with fire,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``While they may be right from a fundamental standpoint about crude supplies, at this time it will take more than words from them to bring prices down. We will need to see more gestures like the Saudis made, to lower prices.''
Saudi Oil Minister Ali al-Naimi told reporters on May 16 that the kingdom is planning a 300,000 barrel-a-day output increase, to bring June production to 9.45 million barrels a day.
``Once prices hit $150 or $200 like our friends at Goldman are saying, we are looking at $5 or $6 gasoline, which will really hurt demand and cause a recession,'' Mueller said.
Goldman analyst Arjun N. Murti said in a May 16 report that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Oil Companies
U.S. oil-company executives told Congress oil prices should be between $35 and $90 a barrel. Representatives of the five largest publicly traded oil companies appeared before the Senate Judiciary Committee to testify on record energy prices. Appearing yesterday were representatives of BP Plc, ConocoPhillips, Chevron Corp., Exxon Mobil Corp and Royal Dutch Shell Plc.
The price of oil should be ``somewhere between $35 and $65 a barrel,'' John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell, said at the hearing yesterday. Other executives said prices should be as much as $90 a barrel.
Congress last week approved legislation to halt deliveries to the Strategic Petroleum Reserve in an effort to respond to record prices.
Airlines have been hit by higher jet fuel costs. The price of the fuel, the largest expense at many airlines, has climbed 88 percent in the past year and traded at a record $4.0592 a gallon in New York Harbor yesterday.
AMR Corp.'s American Airlines, the world's largest carrier, said it will cut ``thousands'' of jobs as it responds to high fuel prices and slowing demand.
Wednesday, May 21, 2008
Oil tops $130 haunted by future supply worry
Oil climbed to a life-time high above $130 a barrel on Wednesday, driven higher by a combination of long-term production worries and a near-term focus on tight fuel stocks.
A U.S. government report later on Wednesday was expected to show crude inventories rose for a fifth straight week.
Stocks of refined products were also forecast to have increased slightly, but the market is concerned distillates, which include heating oil and gasoline, could run short.
U.S. crude hit $130.05, up $1.07. London Brent gained $1.69 to $129.53 by 1009 GMT.
"This market refuses to lie down," said Robert Laughlin of MF Global. "There is fresh length coming into the market even at these lofty levels."
Investors have been drawn in by a weak U.S. currency, which has made dollar-denominated commodities relatively cheap for holders of other currencies.
The dollar slid to a one-month low against a basket of currencies on Wednesday as the euro was pushed higher by expectations of higher euro zone interest rates.
Speaking to Reuters during a visit to Venezuela, OPEC Secretary General Abdullah al-Badri said the soft dollar was one of the factors that could keep pushing oil higher.
The Organization of the Petroleum Exporting Countries (OPEC) has kept official policy unchanged, but its biggest producer Saudi Arabia has raised production and other members have overcome problems that had reduced supplies.
Tanker tracker Petrologistics said on Wednesday OPEC's oil output in May had risen by 700,000 barrels per day (bpd) compared with April.
Extra OPEC crude has had little impact as the market has instead focused on short-term refinery problems, which are symptomatic of chronic underinvestment.
Diesel consumption has led the energy complex higher after last week's earthquake in China increased the need for fuel to make up for disruption of other supplies.
The perception available oil will struggle to keep up with demand for the foreseeable future has led to a series of bullish price forecasts from investment banks and influential investors.
Billionaire T. Boone Pickens said on Tuesday he expected oil to hit $150 a barrel this year after Goldman Sachs (nyse: GS- news - people ) said earlier this month a barrel of crude could reach $200 by 2010.
A U.S. government report later on Wednesday was expected to show crude inventories rose for a fifth straight week.
Stocks of refined products were also forecast to have increased slightly, but the market is concerned distillates, which include heating oil and gasoline, could run short.
U.S. crude hit $130.05, up $1.07. London Brent gained $1.69 to $129.53 by 1009 GMT.
"This market refuses to lie down," said Robert Laughlin of MF Global. "There is fresh length coming into the market even at these lofty levels."
Investors have been drawn in by a weak U.S. currency, which has made dollar-denominated commodities relatively cheap for holders of other currencies.
The dollar slid to a one-month low against a basket of currencies on Wednesday as the euro was pushed higher by expectations of higher euro zone interest rates.
Speaking to Reuters during a visit to Venezuela, OPEC Secretary General Abdullah al-Badri said the soft dollar was one of the factors that could keep pushing oil higher.
The Organization of the Petroleum Exporting Countries (OPEC) has kept official policy unchanged, but its biggest producer Saudi Arabia has raised production and other members have overcome problems that had reduced supplies.
Tanker tracker Petrologistics said on Wednesday OPEC's oil output in May had risen by 700,000 barrels per day (bpd) compared with April.
Extra OPEC crude has had little impact as the market has instead focused on short-term refinery problems, which are symptomatic of chronic underinvestment.
Diesel consumption has led the energy complex higher after last week's earthquake in China increased the need for fuel to make up for disruption of other supplies.
The perception available oil will struggle to keep up with demand for the foreseeable future has led to a series of bullish price forecasts from investment banks and influential investors.
Billionaire T. Boone Pickens said on Tuesday he expected oil to hit $150 a barrel this year after Goldman Sachs (nyse: GS- news - people ) said earlier this month a barrel of crude could reach $200 by 2010.
CARBON CREDITS – A MARKET OF THE 21st CENTURY
With growing concerns among nations to curb pollution levels while maintaining the growth in their economic activities, the emission trading (ET) industry has come to life. And, with the increasing ratification of Kyoto Protocol (KP) by countries and rising social accountability of polluting industries in the developed nations, the carbon emissions trading is likely to emerge as a multibillion-dollar market in global emissions trading. The recent surge in carbon credits trading activities in Europe is an indication of how the emissions trading industry is going to pan out in the years to come.
What is a carbon credit?
Simply put, one carbon credit is equivalent to one tonne of carbon dioxide or its equivalent greenhouse gas (GHG). Carbon credits are “Entitlement Certificates” issued by the United Nations Framework Convention on Climate Change (UNFCCC) to the implementers of the approved Clean Development Mechanism (CDM) projects. The potential buyers of carbon credits shall be corporates in various Annexure I countries that need to meet the compliance prevailing in their countries as per the Kyoto Protocol or those investors who would like buy the credits and with the expectation of selling them at a higher price during the KP phase (2008-12). The extension of KP shall be ratified by the current signatories of KP in their future meetings essentially to curb GHG emissions into the environment.
Sources of demand & supply
Emerging carbon credit markets offer enormous opportunities for the upcoming manufacturing/public utility projects to employ a range of energy saving devices or any other mechanisms or technology to reduce GHG emissions and earn carbon credits to be sold at a price. The carbon credits can be either generated by project participants who acquire carbon credits through implementation of CDM in Non Annexure I countries or through Joint Implementation (JI) in Annexure I countries or supplied into the market by those who got surplus allowances with them. The buyers of carbon credits are principally from Annexure I countries. They are:
Especially European nations, as currently European Union Emission Trading Scheme (EU ETS) is the most active market;
Other markets include Japan, Canada, New Zealand, etc.
The major sources of supply are Non-Annexure I countries such as India, China, and Brazil.
Trading In Carbon Credits
Emissions trading (ET) is a mechanism that enables countries with legally binding emissions targets to buy and sell emissions allowances among themselves. Currently, futures contracts in carbon credits are actively traded in the European exchanges. In fact, many companies actively participate in the futures market to manage the price risks associated with trading in carbon credits and other related risks such as project risk, policy risk, etc. Keeping in view the various risks associated with carbon credits, trading in futures contracts in carbon allowances has now become a reality in Europe with burgeoning volumes.
Currently, project participants, public utilities, manufacturing entities, brokers, banks, and others actively participate in futures trading in environment-related instruments. The European Climate Exchange (ECX), a subsidiary of Chicago Climate Exchange (CCX), remains the leading exchange trading in European environmental instruments that are listed on the Intercontinental Exchange (ICE), previously known as International Petroleum Exchange (IPE).
Price influencing factors
In Non-Annexure B countries (the developing countries) across the world, CER prices are influenced by various factors including EUA prices, crude oil prices, electricity, coal, natural gas, the level of economic activities across Annexure I countries, among others
Some of the major price influencing factors:
Supply-demand mismatch
Policy issues
Crude oil prices
Coal prices
CO2 emissions
Weather/Fuel prices
European Union Allowances (EUAs) prices
Foreign exchange fluctuations
Global economic growth
Risks associated with carbon credits
The coming into being and operation of the EU-ETS, the ECX futures exchange platform, revealed that there are market- and policy-related risks for CER producers, including the supply-side risks starting from the DNA approval risk to the CER issuance risk in a complete CDM approval cycle. Apart from these risks there are a host of other risks from both the supply and demand sides that the real market players confront with.
Most CDM projects by their very nature take a long time to generate the CERs and hence, face the aforesaid risks in large proportion, which if not hedged would lead to reduced realization. Under such a situation, the realization of CER generators at times may not even cover the investment put in to generate the CERs and thus, has the potential of even making a CDM project unviable in the long term. Given the long gestation period of CDM projects and the risks involved, it is rather inevitable that they pre-sell their potential credits in the futures market (preferably a domestic futures market, to avoid forex risk attached to participation in a foreign exchange) and thereby, cover their probable downside in the physical market.
Potential participants in carbon credits trading are as below:
Hedgers
Producers
Intermediaries in spot markets
Ultimate buyers
Investors
Arbitragers
Portfolio managers
Diverse participants with wide participation objectives
Commodity financers
Funding agencies
Corporates having risk exposure in energy products
India as a potential supplier
India, being one of the leading generators of CERs through CDM, has a large scope in emissions trading. Analysts forecast that its trading in carbon credits would touch US$ 100 billion by 2010.
Currently, the total registered CDM projects are more than 300, almost 1/3rd of the total CDM projects registered with the UNFCCC. The total issued CERs with India as a host country till now stand at 34,101,315 (around 34 million), again around 1/3rd of the total CERs issued by the UNFCCC. In value terms (INR), it could be running into thousands of crores. Further, there has been a surge in number of registered projects in India. In 2007, a total of 160 new projects were registered with the UNFCCC indicating that more than half of all registered projects in India happened last year. It is expected that with increasing awareness this would go further up in the future. The number of expected annual CERs in India is hovering around 28 million and considering that each of these CERs is sold for around 15 euros, on an average, the expected value is going to be around Rs 2,500 crore.
Various industries that have scope of generation of CERs:
Agriculture
Energy ( renewable & non-renewable sources)
Manufacturing
Fugitive emissions from fuels (solid, oil and gas)
Metal production
Mining and mineral production
Chemicals
Afforestation & reforestation
The role of MCX
Multi Commodity Exchange of India Ltd. (MCX) entered into a strategic alliance with CCX in September 2005 to initiate carbon trading in India. The tie-up would provide immense scope and opportunity for domestic suppliers to realize better prices for their carbon credits. Further, the MCX-CCX alliance would also integrate the Indian market with its global counterparts to foster world-class best practices in the commodities futures market as related to emission trading. With MCX keen to play a major role on the emission front by extending its platform to add carbon credits to its existing basket of commodities with regard to commodities futures trading, the existing and potential suppliers of carbon credits in India have geared up to generate more carbon credits from their existing and ongoing projects to be sold in the international markets. With India supposed to be a major supplier of carbon credits, the tie-up between the two exchanges is expected to ensure better price discovery of carbon credits, besides covering risks associated with buying and selling.
Advantages of an MCX carbon contract
In India, currently only bilateral deals and trading through intermediaries are widely prevalent leading to sellers being denied fair prices for their carbon credits. Advantages that the MCX platform offers are:
Sellers and intermediaries can hedge against price risk;
Advance selling could help projects generate liquidity and thereby, reduce costs of implementation;
There is no counterparty risk as the Exchange guarantees the trade;
The price discovery on the Exchange platform ensures a fair price for both the buyer and the seller;
Players are brought to a single platform, thus, eliminating the laborious process of identifying either buyers or sellers with enough credibility; and
The MCX futures floor gives an immediate reference price. At present, there is no transparency related to prices in the Indian carbon credit market, which has kept sellers at the receiving end with no bargaining power.
What is a carbon credit?
Simply put, one carbon credit is equivalent to one tonne of carbon dioxide or its equivalent greenhouse gas (GHG). Carbon credits are “Entitlement Certificates” issued by the United Nations Framework Convention on Climate Change (UNFCCC) to the implementers of the approved Clean Development Mechanism (CDM) projects. The potential buyers of carbon credits shall be corporates in various Annexure I countries that need to meet the compliance prevailing in their countries as per the Kyoto Protocol or those investors who would like buy the credits and with the expectation of selling them at a higher price during the KP phase (2008-12). The extension of KP shall be ratified by the current signatories of KP in their future meetings essentially to curb GHG emissions into the environment.
Sources of demand & supply
Emerging carbon credit markets offer enormous opportunities for the upcoming manufacturing/public utility projects to employ a range of energy saving devices or any other mechanisms or technology to reduce GHG emissions and earn carbon credits to be sold at a price. The carbon credits can be either generated by project participants who acquire carbon credits through implementation of CDM in Non Annexure I countries or through Joint Implementation (JI) in Annexure I countries or supplied into the market by those who got surplus allowances with them. The buyers of carbon credits are principally from Annexure I countries. They are:
Especially European nations, as currently European Union Emission Trading Scheme (EU ETS) is the most active market;
Other markets include Japan, Canada, New Zealand, etc.
The major sources of supply are Non-Annexure I countries such as India, China, and Brazil.
Trading In Carbon Credits
Emissions trading (ET) is a mechanism that enables countries with legally binding emissions targets to buy and sell emissions allowances among themselves. Currently, futures contracts in carbon credits are actively traded in the European exchanges. In fact, many companies actively participate in the futures market to manage the price risks associated with trading in carbon credits and other related risks such as project risk, policy risk, etc. Keeping in view the various risks associated with carbon credits, trading in futures contracts in carbon allowances has now become a reality in Europe with burgeoning volumes.
Currently, project participants, public utilities, manufacturing entities, brokers, banks, and others actively participate in futures trading in environment-related instruments. The European Climate Exchange (ECX), a subsidiary of Chicago Climate Exchange (CCX), remains the leading exchange trading in European environmental instruments that are listed on the Intercontinental Exchange (ICE), previously known as International Petroleum Exchange (IPE).
Price influencing factors
In Non-Annexure B countries (the developing countries) across the world, CER prices are influenced by various factors including EUA prices, crude oil prices, electricity, coal, natural gas, the level of economic activities across Annexure I countries, among others
Some of the major price influencing factors:
Supply-demand mismatch
Policy issues
Crude oil prices
Coal prices
CO2 emissions
Weather/Fuel prices
European Union Allowances (EUAs) prices
Foreign exchange fluctuations
Global economic growth
Risks associated with carbon credits
The coming into being and operation of the EU-ETS, the ECX futures exchange platform, revealed that there are market- and policy-related risks for CER producers, including the supply-side risks starting from the DNA approval risk to the CER issuance risk in a complete CDM approval cycle. Apart from these risks there are a host of other risks from both the supply and demand sides that the real market players confront with.
Most CDM projects by their very nature take a long time to generate the CERs and hence, face the aforesaid risks in large proportion, which if not hedged would lead to reduced realization. Under such a situation, the realization of CER generators at times may not even cover the investment put in to generate the CERs and thus, has the potential of even making a CDM project unviable in the long term. Given the long gestation period of CDM projects and the risks involved, it is rather inevitable that they pre-sell their potential credits in the futures market (preferably a domestic futures market, to avoid forex risk attached to participation in a foreign exchange) and thereby, cover their probable downside in the physical market.
Potential participants in carbon credits trading are as below:
Hedgers
Producers
Intermediaries in spot markets
Ultimate buyers
Investors
Arbitragers
Portfolio managers
Diverse participants with wide participation objectives
Commodity financers
Funding agencies
Corporates having risk exposure in energy products
India as a potential supplier
India, being one of the leading generators of CERs through CDM, has a large scope in emissions trading. Analysts forecast that its trading in carbon credits would touch US$ 100 billion by 2010.
Currently, the total registered CDM projects are more than 300, almost 1/3rd of the total CDM projects registered with the UNFCCC. The total issued CERs with India as a host country till now stand at 34,101,315 (around 34 million), again around 1/3rd of the total CERs issued by the UNFCCC. In value terms (INR), it could be running into thousands of crores. Further, there has been a surge in number of registered projects in India. In 2007, a total of 160 new projects were registered with the UNFCCC indicating that more than half of all registered projects in India happened last year. It is expected that with increasing awareness this would go further up in the future. The number of expected annual CERs in India is hovering around 28 million and considering that each of these CERs is sold for around 15 euros, on an average, the expected value is going to be around Rs 2,500 crore.
Various industries that have scope of generation of CERs:
Agriculture
Energy ( renewable & non-renewable sources)
Manufacturing
Fugitive emissions from fuels (solid, oil and gas)
Metal production
Mining and mineral production
Chemicals
Afforestation & reforestation
The role of MCX
Multi Commodity Exchange of India Ltd. (MCX) entered into a strategic alliance with CCX in September 2005 to initiate carbon trading in India. The tie-up would provide immense scope and opportunity for domestic suppliers to realize better prices for their carbon credits. Further, the MCX-CCX alliance would also integrate the Indian market with its global counterparts to foster world-class best practices in the commodities futures market as related to emission trading. With MCX keen to play a major role on the emission front by extending its platform to add carbon credits to its existing basket of commodities with regard to commodities futures trading, the existing and potential suppliers of carbon credits in India have geared up to generate more carbon credits from their existing and ongoing projects to be sold in the international markets. With India supposed to be a major supplier of carbon credits, the tie-up between the two exchanges is expected to ensure better price discovery of carbon credits, besides covering risks associated with buying and selling.
Advantages of an MCX carbon contract
In India, currently only bilateral deals and trading through intermediaries are widely prevalent leading to sellers being denied fair prices for their carbon credits. Advantages that the MCX platform offers are:
Sellers and intermediaries can hedge against price risk;
Advance selling could help projects generate liquidity and thereby, reduce costs of implementation;
There is no counterparty risk as the Exchange guarantees the trade;
The price discovery on the Exchange platform ensures a fair price for both the buyer and the seller;
Players are brought to a single platform, thus, eliminating the laborious process of identifying either buyers or sellers with enough credibility; and
The MCX futures floor gives an immediate reference price. At present, there is no transparency related to prices in the Indian carbon credit market, which has kept sellers at the receiving end with no bargaining power.
Tuesday, May 20, 2008
U.S. Credit Crisis Will Extend Into 2009, Oppenheimer Says
The U.S. credit crisis will extend into and even beyond 2009 as banks will write off more than $170 billion of additional reserves by the end of next year, according to Oppenheimer & Co. estimates.
``The real harrowing days of credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,'' analysts Meredith Whitney, Kaimon Chung and Joseph Mack wrote in a research note today.
The three lowered earnings estimates for the U.S. banking sector ``significantly'' due to ``strained liquidity resulting from shut down in the securitization market'' and on expectations that banks may take provisions of $88 billion in 2008 and $96 billion in 2009.
Banks and securities firms worldwide amassed almost $380 billion of writedowns and credit losses following the worst U.S. housing slump in a quarter century, according to data compiled by Bloomberg. At least $35 billion of additional writedowns included in their balance sheets weren't deducted from reported earnings, regulatory filings show.
Large U.S. banks have taken more than $73 billion in writedowns related to real estate securities investments and over $25 billion of reserves have been taken, Oppenheimer said.
``The real harrowing days of credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,'' analysts Meredith Whitney, Kaimon Chung and Joseph Mack wrote in a research note today.
The three lowered earnings estimates for the U.S. banking sector ``significantly'' due to ``strained liquidity resulting from shut down in the securitization market'' and on expectations that banks may take provisions of $88 billion in 2008 and $96 billion in 2009.
Banks and securities firms worldwide amassed almost $380 billion of writedowns and credit losses following the worst U.S. housing slump in a quarter century, according to data compiled by Bloomberg. At least $35 billion of additional writedowns included in their balance sheets weren't deducted from reported earnings, regulatory filings show.
Large U.S. banks have taken more than $73 billion in writedowns related to real estate securities investments and over $25 billion of reserves have been taken, Oppenheimer said.
Microsoft proposes to buy Yahoo search - source
Microsoft Corp has proposed to buy Yahoo Inc's search business and take a minority stake in the Web pioneer, stopping short of a full-out merger, a person familiar with the discussions said on Monday.
As part of the deal, Yahoo would sell its Asian assets including significant minority stakes in Yahoo Japan and China's Alibaba Group, while Microsoft would buy a chunk of what remains of the company, the source said.
The talks were revealed by the two companies on Sunday, but they declined to reveal the terms of the discussions. Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion, or $33 per share, after Yahoo rebuffed the offer, saying it would only settle for $37 a share.
The new deal, if completed, would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc, whose ubiquitous search engine has made it an online advertising powerhouse.
The proposal represents an outline of Microsoft's current thinking and it does not yet put a value on Yahoo's search business, said the source, who was not authorized to speak on the record because the discussions are confidential.
Microsoft and Yahoo representatives declined to comment.
Shares of Yahoo fell as much as 0.87 percent on Monday, before closing up 2 cents at $27.68 on Nasdaq. Microsoft dropped 1.8 percent to $29.46.
Collins Stewart analyst Sandeep Aggarwal estimates Yahoo's search advertising business is worth about $21 billion, while putting the value of its its international assets at $9.25 billion, according to a research note he published on Monday.
"Microsoft is the most interested in Yahoo Search," said Aggarwal, who added that Microsoft may buy parts of Yahoo for a premium or buy all of Yahoo and then spin off certain assets.
Microsoft said on Sunday that it was talking with Yahoo about an alternative transaction that did not involve a full buyout after withdrawing its sweetened $47.5 billion bid for the company on May 3.
CHASING GOOGLE
Yahoo is a distant second to Google Inc in Web search in the United States, and Microsoft is third.
Combined, Yahoo and Microsoft would have around a 30 percent U.S. share, compared with Google's roughly 60 percent, according to figures from research firm comScore. Google's lead is even larger on a global basis, according to comScore.
The proposal from Microsoft would likely complicate ongoing discussions between Yahoo and Google. The two companies are still talking about a possible search advertising partnership, people familiar with those discussions have told Reuters.
Talks between Yahoo and Microsoft resumed after Microsoft insisted for two weeks that it had moved on from its pursuit of Yahoo, prompting shareholders of the Web company to criticize its board for mishandling negotiations.
Financier Carl Icahn launched a proxy fight last week to force Yahoo to reopen talks with Microsoft. Icahn, who owns nearly 10 million Yahoo shares as well as options to acquire another 49 million shares, formally filed on Monday the preliminary proxy to nominate 10 directors to Yahoo's board.
A person familiar with Icahn's thinking said on Sunday that an alternative deal for Yahoo, rather than a full acquisition, would prompt the investor to push Yahoo to do a deal with Google. Icahn did not comment on the talks between Microsoft and Yahoo in his filing on Monday.
For its part, Alibaba, the private holding company whose assets include Alibaba.com Ltd, has been lining up investors to help it buy back the Yahoo stake, sources told Reuters earlier.
Yahoo's core franchise stems from the roughly 500 million Web users who pass through its network of Internet media properties each month. Major attractions include Yahoo Mail, news, sports, entertainment and its Flickr.com photo site.
It generates most of its revenue through sales of display advertising to those visitors, as well as making an increasing push to sell ads on non-Yahoo sites. As the No. 2 provider of Web search services, Yahoo also sells ads alongside search results and on a variety of affiliated sites.
As part of the deal, Yahoo would sell its Asian assets including significant minority stakes in Yahoo Japan and China's Alibaba Group, while Microsoft would buy a chunk of what remains of the company, the source said.
The talks were revealed by the two companies on Sunday, but they declined to reveal the terms of the discussions. Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion, or $33 per share, after Yahoo rebuffed the offer, saying it would only settle for $37 a share.
The new deal, if completed, would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc, whose ubiquitous search engine has made it an online advertising powerhouse.
The proposal represents an outline of Microsoft's current thinking and it does not yet put a value on Yahoo's search business, said the source, who was not authorized to speak on the record because the discussions are confidential.
Microsoft and Yahoo representatives declined to comment.
Shares of Yahoo fell as much as 0.87 percent on Monday, before closing up 2 cents at $27.68 on Nasdaq. Microsoft dropped 1.8 percent to $29.46.
Collins Stewart analyst Sandeep Aggarwal estimates Yahoo's search advertising business is worth about $21 billion, while putting the value of its its international assets at $9.25 billion, according to a research note he published on Monday.
"Microsoft is the most interested in Yahoo Search," said Aggarwal, who added that Microsoft may buy parts of Yahoo for a premium or buy all of Yahoo and then spin off certain assets.
Microsoft said on Sunday that it was talking with Yahoo about an alternative transaction that did not involve a full buyout after withdrawing its sweetened $47.5 billion bid for the company on May 3.
CHASING GOOGLE
Yahoo is a distant second to Google Inc in Web search in the United States, and Microsoft is third.
Combined, Yahoo and Microsoft would have around a 30 percent U.S. share, compared with Google's roughly 60 percent, according to figures from research firm comScore. Google's lead is even larger on a global basis, according to comScore.
The proposal from Microsoft would likely complicate ongoing discussions between Yahoo and Google. The two companies are still talking about a possible search advertising partnership, people familiar with those discussions have told Reuters.
Talks between Yahoo and Microsoft resumed after Microsoft insisted for two weeks that it had moved on from its pursuit of Yahoo, prompting shareholders of the Web company to criticize its board for mishandling negotiations.
Financier Carl Icahn launched a proxy fight last week to force Yahoo to reopen talks with Microsoft. Icahn, who owns nearly 10 million Yahoo shares as well as options to acquire another 49 million shares, formally filed on Monday the preliminary proxy to nominate 10 directors to Yahoo's board.
A person familiar with Icahn's thinking said on Sunday that an alternative deal for Yahoo, rather than a full acquisition, would prompt the investor to push Yahoo to do a deal with Google. Icahn did not comment on the talks between Microsoft and Yahoo in his filing on Monday.
For its part, Alibaba, the private holding company whose assets include Alibaba.com Ltd, has been lining up investors to help it buy back the Yahoo stake, sources told Reuters earlier.
Yahoo's core franchise stems from the roughly 500 million Web users who pass through its network of Internet media properties each month. Major attractions include Yahoo Mail, news, sports, entertainment and its Flickr.com photo site.
It generates most of its revenue through sales of display advertising to those visitors, as well as making an increasing push to sell ads on non-Yahoo sites. As the No. 2 provider of Web search services, Yahoo also sells ads alongside search results and on a variety of affiliated sites.
MARKET PREDICTION
MV1: Trade long at dips till Nifty holds above 5100 with a SL at 5080 and trade short only from higher levels if Nifty fails to hold 5200 with a SL at 5230.
MV2: Key supports: 5100/5050;Key resistances: 5200/5230;
Positive sector(s): Metals and Pharma;Negative sector: Auto.
..
MV2: Key supports: 5100/5050;Key resistances: 5200/5230;
Positive sector(s): Metals and Pharma;Negative sector: Auto.
..
Monday, May 19, 2008
COMMON MISTAKE MADE BY INVESTOR
Throughout your investing career, it is likely that you will be guilty of committing a lot of mistakes. There is no one today who has not committed costly financial mistakes including the legendary Warren Buffet. However it is the ability to recognize and learn from your mistakes that will determine whether you are able to achieve your investment objectives. It is thus paramount to commit as few mistakes as possible. Failure is often the best teacher provided you allow yourself to be taught.
The last three months have exposed investors to several such mistakes. Here we highlight eight of the common ones.
1.Relying on tips and hearsay is the first and most common mistake committed by most investors.
2.Expecting Big Gains fast. Very few people have the mindset and patience required to invest in equity. A common expectation is to make big gains quickly. There is no focus on the risk the investment exposes your portfolio to. A classic example of recent times was the Power sector. Any stock that had the name ‘Power’ in it was considered sacrosanct. People did not even care about risk involved in taking exposure to such stocks. Instant gratification is injurious to your wealth.
3.Leverage in equity markets can have disastrous consequences not just on your financial health but on your physical health.
4.It’s not easy to always MAKE MONEY in equities and there could be periods of negative returns. Though over time, returns can even out, in the short run there could be sizeable downside. So don’t be surprised by it. Understand, expect corrections and be realistic.
5.Have reasonable expectations from equity. As an asset class equity should technically deliver returns in line with corporate earnings. However we do not invest in a utopian stock market but a market that drives on hope, greed and fear. Hence you are bound to see eras of excesses and exuberance and those of pessimism.
6.It’s all easy to know ‘Buy low and sell high’, but majority of people would end up doing exactly the opposite. Most investment banks, brokerages, hedge funds, FIIs, domestic investors, gurus and analysts are super confident in a bullish market when highs are torn apart every other day. Things suddenly change for them when the market corrects and no one is ready to put even their thumb in the market. Learn to embrace market sell offs. People who could not earlier invest had an excellent opportunity to invest at 14000 to 15000 levels but I do not know too many people who had the gut to really invest.
7.When the market corrects, Do not put all your eggs immediately. Corrections that happen after very sharp rallies tend to extend themselves over a few months. One of the strategies that can be adopted is to invest in a staggered fashion. You should start investing if the market has corrected by more than 15-20% and go higher when it crosses 30-35%. There is no way to know what the bottom could be and I don’t know how people come up with their holy predictions on how lower can the index go. When the going is bad, all one hears is bad news and it’s very important to grow beyond these daily projections. Investing is certainly not a poker game and you would be harming your economic interests by following what a bunch of unknown people are doing.
8.Don’t keep looking at your portfolio because things are not going to change even if you see it many times. A quarterly or semi annual review should be good enough for most people. Looking daily is harmful to your overall thought process and can urge you to take emotional decisions whether on the way up or way down.
This is the time to take stock of what you actually have. The first step is to understand the various investments in your portfolio and how they fit within the overall scheme of things. Most people would like to see their investments grow right from day one. For a long term investor, it should not matter if prices do not rise right away. Infact if investment values indeed go down, you should be happy to see your buying happening at lower levels. Eventually when the market recovers, you are bound to get much higher returns because of these inefficiencies in a turbulent market. The only time your stock prices should be up is when you need to sell.
Currently one sees lower volumes in the market due to fear and several other factors. The increase in STT (securities transaction tax) and short term capital gains tax also has had some impact on volumes. There is a lack of clarity on the direction of the market. However just because this is the case, there is no need to change your investment strategy. Continue to buy in a staggered fashion and just stay put if you already have.
The last three months have exposed investors to several such mistakes. Here we highlight eight of the common ones.
1.Relying on tips and hearsay is the first and most common mistake committed by most investors.
2.Expecting Big Gains fast. Very few people have the mindset and patience required to invest in equity. A common expectation is to make big gains quickly. There is no focus on the risk the investment exposes your portfolio to. A classic example of recent times was the Power sector. Any stock that had the name ‘Power’ in it was considered sacrosanct. People did not even care about risk involved in taking exposure to such stocks. Instant gratification is injurious to your wealth.
3.Leverage in equity markets can have disastrous consequences not just on your financial health but on your physical health.
4.It’s not easy to always MAKE MONEY in equities and there could be periods of negative returns. Though over time, returns can even out, in the short run there could be sizeable downside. So don’t be surprised by it. Understand, expect corrections and be realistic.
5.Have reasonable expectations from equity. As an asset class equity should technically deliver returns in line with corporate earnings. However we do not invest in a utopian stock market but a market that drives on hope, greed and fear. Hence you are bound to see eras of excesses and exuberance and those of pessimism.
6.It’s all easy to know ‘Buy low and sell high’, but majority of people would end up doing exactly the opposite. Most investment banks, brokerages, hedge funds, FIIs, domestic investors, gurus and analysts are super confident in a bullish market when highs are torn apart every other day. Things suddenly change for them when the market corrects and no one is ready to put even their thumb in the market. Learn to embrace market sell offs. People who could not earlier invest had an excellent opportunity to invest at 14000 to 15000 levels but I do not know too many people who had the gut to really invest.
7.When the market corrects, Do not put all your eggs immediately. Corrections that happen after very sharp rallies tend to extend themselves over a few months. One of the strategies that can be adopted is to invest in a staggered fashion. You should start investing if the market has corrected by more than 15-20% and go higher when it crosses 30-35%. There is no way to know what the bottom could be and I don’t know how people come up with their holy predictions on how lower can the index go. When the going is bad, all one hears is bad news and it’s very important to grow beyond these daily projections. Investing is certainly not a poker game and you would be harming your economic interests by following what a bunch of unknown people are doing.
8.Don’t keep looking at your portfolio because things are not going to change even if you see it many times. A quarterly or semi annual review should be good enough for most people. Looking daily is harmful to your overall thought process and can urge you to take emotional decisions whether on the way up or way down.
This is the time to take stock of what you actually have. The first step is to understand the various investments in your portfolio and how they fit within the overall scheme of things. Most people would like to see their investments grow right from day one. For a long term investor, it should not matter if prices do not rise right away. Infact if investment values indeed go down, you should be happy to see your buying happening at lower levels. Eventually when the market recovers, you are bound to get much higher returns because of these inefficiencies in a turbulent market. The only time your stock prices should be up is when you need to sell.
Currently one sees lower volumes in the market due to fear and several other factors. The increase in STT (securities transaction tax) and short term capital gains tax also has had some impact on volumes. There is a lack of clarity on the direction of the market. However just because this is the case, there is no need to change your investment strategy. Continue to buy in a staggered fashion and just stay put if you already have.
India's Rural Electrification to Lend $894 Million to NTPC Unit
Rural Electrification Corp., the state-owned lender to power projects in India's villages, will lend 38 billion rupees ($894 million) to a utility that's partially owned by NTPC Ltd.
NTPC Tamil Nadu Power Co., a joint venture by India's biggest power producer and the Tamil Nadu Electricity Board, will use the funds to set up a 1,000 megawatts-power generation plant near the southern city of Chennai, the ministry of power said in a statement on a government Web site today. The utility will start generating power in the year ending March 31, 2011.
The ministry didn't provide the interest rate at which the loan will be given, or the tenure. Rural Electrification plans to provide 160 billion rupees to finance the addition of 3,000 megawatts-capacity by the Tamil Nadu Electricity Board, the statement said.
NTPC Tamil Nadu Power Co., a joint venture by India's biggest power producer and the Tamil Nadu Electricity Board, will use the funds to set up a 1,000 megawatts-power generation plant near the southern city of Chennai, the ministry of power said in a statement on a government Web site today. The utility will start generating power in the year ending March 31, 2011.
The ministry didn't provide the interest rate at which the loan will be given, or the tenure. Rural Electrification plans to provide 160 billion rupees to finance the addition of 3,000 megawatts-capacity by the Tamil Nadu Electricity Board, the statement said.
BSEL May Invest 15 Billion Ringgit in Malaysia Iskandar Region
BSEL Infrastructure Realty Ltd., an Indian property developer, may invest 15 billion ringgit ($4.6 billion) over 12 years in Malaysia's so-called Iskandar Regional Development in the southern state of Johor.
BSEL has signed an initial agreement to develop projects in the area, the Iskandar Regional Development Authority said in a statement today. The authority will seek approvals from various authorities to facilitate Mumbai stock exchange-listed BSEL's projects, it said.
BSEL, which has information technology park projects in India and builds shopping malls, is developing a project for 70 million square feet in Iskandar over three phases, the development authority said.
BSEL would invest 2 billion ringgit initially, and then 4 billion ringgit and 9 billion ringgit later, the Iskandar authority said.
Developers in the Iskandar region will be exempt from paying income tax until 2015 on earnings from land sales and until 2020 on income from the rental or sale of buildings, the Iskandar Regional Development Authority said on Oct. 9 last year.
Malaysian Prime Minister Abdullah Ahmad Badawi is wooing foreign money with easier investment rules and tax breaks, aiming to attract 382 billion ringgit in two decades to redevelop Johor, 2 1/2 times the size of neighboring Singapore, and turn the southern state into a global destination for business and leisure.
BSEL has signed an initial agreement to develop projects in the area, the Iskandar Regional Development Authority said in a statement today. The authority will seek approvals from various authorities to facilitate Mumbai stock exchange-listed BSEL's projects, it said.
BSEL, which has information technology park projects in India and builds shopping malls, is developing a project for 70 million square feet in Iskandar over three phases, the development authority said.
BSEL would invest 2 billion ringgit initially, and then 4 billion ringgit and 9 billion ringgit later, the Iskandar authority said.
Developers in the Iskandar region will be exempt from paying income tax until 2015 on earnings from land sales and until 2020 on income from the rental or sale of buildings, the Iskandar Regional Development Authority said on Oct. 9 last year.
Malaysian Prime Minister Abdullah Ahmad Badawi is wooing foreign money with easier investment rules and tax breaks, aiming to attract 382 billion ringgit in two decades to redevelop Johor, 2 1/2 times the size of neighboring Singapore, and turn the southern state into a global destination for business and leisure.
Blackstone to up focus on India
Blackstone Group, a global private equity player, is set to increase its focus on India. After setting the ball rolling on its corporate private equity and recently starting off its real estate opportunity focus, the company during the past week has set up Blackstone Altius Advisors, an event-driven strategy focusing on opportunities in the Asia Pacific region. Event-driven strategies are those where PEs fund merger and acquisitions or bankruptcies scenario.
According to a statement from Blackstone, a global, highly-experienced investment team will be headquartered in Hong Kong, with additional professionals based in Tokyo, Mumbai and New York for the foray.
Estimates indicate that close to $1 billion has already been committed by this player to the Indian market.
The statement from Blackstone further added that its Asia business includes its fund of hedge funds and two close-end mutual funds - The India Fund and The Asia Tigers Fund.
Blackstone Altius Advisors will be led by Aaron Nieman, who previously was with SAC Capital Management as managing director in the Canvas Capital Management division. Stephen A Schwarzman, Chairman, CEO and Co-founder of the Blackstone Group, said in a statement: "Aaron has a superb history of developing teams and investing in Asia. He will add greater depth and intellectual capital to Blackstone's wide range of alternative investment businesses, and we are delighted that he has chosen to join us."
Antony Leung, chairman, Blackstone Greater China, added, "As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region."
"Blackstone has a good global alternative investment platform. The synergies that exist within Blackstone's various businesses will provide us with a significant advantage investing in the Asia Pacific markets," said Aaron Nieman, senior managing director and chief investment officer of Altius Advisors.
According to a statement from Blackstone, a global, highly-experienced investment team will be headquartered in Hong Kong, with additional professionals based in Tokyo, Mumbai and New York for the foray.
Estimates indicate that close to $1 billion has already been committed by this player to the Indian market.
The statement from Blackstone further added that its Asia business includes its fund of hedge funds and two close-end mutual funds - The India Fund and The Asia Tigers Fund.
Blackstone Altius Advisors will be led by Aaron Nieman, who previously was with SAC Capital Management as managing director in the Canvas Capital Management division. Stephen A Schwarzman, Chairman, CEO and Co-founder of the Blackstone Group, said in a statement: "Aaron has a superb history of developing teams and investing in Asia. He will add greater depth and intellectual capital to Blackstone's wide range of alternative investment businesses, and we are delighted that he has chosen to join us."
Antony Leung, chairman, Blackstone Greater China, added, "As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region."
"Blackstone has a good global alternative investment platform. The synergies that exist within Blackstone's various businesses will provide us with a significant advantage investing in the Asia Pacific markets," said Aaron Nieman, senior managing director and chief investment officer of Altius Advisors.
Friday, May 16, 2008
TEN GOLDEN RULE FOR THE INVESTOR
Currently, the Indian markets are in doldrums and nobody is talking of stocks or investments. You may think justifiably so, as the markets are headed in no direction. Is it not exactly the opposite of the exuberant times we were witnessing a few months back. Conversely, bottoms are made in turbulent times. It is difficult, if not impossible, to say when the markets will halt their southward journey and change direction for the better. Who knows, we might have already hit the bottom and the markets may soon return back to their upward trajectory. My empirical observation and research have proved it that wealth making in the market has more to do with discipline and the power of time to compound growth than being smart at stock picking and timing the markets just right. To help you in your quest to make wealth in our markets, I suggest you follow the 10 golden rules of markets that will virtually ensure reasonable, steady wealth appreciation.
Bear in mind, you cannot have your cake and eat it too. Saving and consumption do not go hand-in-hand. You need to plan today for the lifestyle you want after you stop working, i.e. the finances you will require after you retire. Accordingly, save the necessary portion of your income to invest in equities. Equities, or stocks, may appear risky, but they are just volatile, they go up and down, and time is the perfect hedge against volatility.
Therefore, Rule No 1: Plan for tomorrow, today. Start saving for it now! Stagger your investments throughout your earning phase. Invest regularly and invest for the long term to buy in at an average price that includes both markets’ up and down ticks. Never wait until you have large amounts of money to invest. However small the amount you are able to save, start early. The earlier you start, the better are your chances of making great wealth. Remember to make great gains. Time is a crucial factor, as wealth creation is a factor of both the power of compounding and the returns on your investments.
Accordingly, Rule No 2: Start early so that the power of compounding begins sooner; time is the magic that converts paise into rupees. In exuberant phases, when we have earned good money from our investments, most of us get greedy, and derivatives and futures provide an outlet for the expression of human greed. While such instruments often satisfy the whims of human greed, if taken to unrealistic levels, irresponsible investment in these securities can lead to financial ruin.
Hence, Rule No 3: Do not leverage, it is difficult, if not impossible, to predict short-term trends. Buy markets, not stocks. We all know that our economy is in a secular phase of prosperity and the stock market is the best proxy for the growth of an economy. To benefit from our soaring economy, buy the market as a whole and not any single stock.
Consequently, Rule No 4: Buy stocks that mirror the broader indexes, but never buy a single, or a handful of stock exposures. This means that you need to spread your risk across various market segments in the event a particular stock does not perform for reasons beyond the company’s control. It is easier to predict company earnings, but difficult to predict stock prices of the same company in the short run. Ironically, over the long term, stock prices mirror growth in a corporation’s earnings.
Therefore, Rule No 5: Look at company earnings, not at stock prices. Stock prices may tempt or give the wrong impression of a company’s welfare. But to build real wealth in equities, you must always rely on declared profits and facts, rather than make decisions based on stock movements. We all tend to sell stocks when we have made profits and keep the ones that have not appreciated. Eventually, we end up holding a portfolio of companies that are not performing! It is only human to sell for profits and not to want to take losses.
Hence, Rule No 6: Keep the winners, sell the losers. Stay on top of your investments. Check constantly for stocks that are not performing and eliminate them from your portfolio if the outlook does not seem promising. This way, you will have all winners left in your portfolio to take you to your goals. In exuberant times, we all tend to believe that the good times will last longer than they actually will. And before D-day, we will be able to sell our investments that were bought at unjustified levels. Just then, it happens that the markets turn and before we can sell out, we are left holding the bag.
For this reason, Rule No 7: Avoid being the “Bigger Fool;” it is imperative that you recognise the difference between price and value. Buy value and not momentum. When investing in stocks, your head should prevail over your heart. Resist the urge to get consumed by market chatter. Ignore hot tips from dealers and friends. It is advisable to do your own home work.
As the result, Rule No 8: Pick stocks with your brain, not your heart. Large-caps are the ones that have already proven themselves over longer periods of time and have the balance sheet acumen, strong cash flow and brains to manage businesses effectively according to prevailing situations and realistic opportunities available.
Hence, Rule No 9: Prefer large-cap stocks to small- and medium-caps. Investment in small and mid-cap stocks requires expertise and strong tracking abilities, that without, your portfolio will under-perform. Do not short sell a stock just because it is going up, and thus, one day it must come down. Newton’s law is not applicable to the markets. What goes up does not necessarily come back down! If companies are able to sustain earnings’ growth for long periods, then its stock may go up, up and up, or it can even remain high without any reason for a long period of time.
Because of this, Rule No 10: Markets can remain irrationally up, or continually climb for the right reasons. Therefore, never go short. It will expose you to unnecessary risks.
Bear in mind, you cannot have your cake and eat it too. Saving and consumption do not go hand-in-hand. You need to plan today for the lifestyle you want after you stop working, i.e. the finances you will require after you retire. Accordingly, save the necessary portion of your income to invest in equities. Equities, or stocks, may appear risky, but they are just volatile, they go up and down, and time is the perfect hedge against volatility.
Therefore, Rule No 1: Plan for tomorrow, today. Start saving for it now! Stagger your investments throughout your earning phase. Invest regularly and invest for the long term to buy in at an average price that includes both markets’ up and down ticks. Never wait until you have large amounts of money to invest. However small the amount you are able to save, start early. The earlier you start, the better are your chances of making great wealth. Remember to make great gains. Time is a crucial factor, as wealth creation is a factor of both the power of compounding and the returns on your investments.
Accordingly, Rule No 2: Start early so that the power of compounding begins sooner; time is the magic that converts paise into rupees. In exuberant phases, when we have earned good money from our investments, most of us get greedy, and derivatives and futures provide an outlet for the expression of human greed. While such instruments often satisfy the whims of human greed, if taken to unrealistic levels, irresponsible investment in these securities can lead to financial ruin.
Hence, Rule No 3: Do not leverage, it is difficult, if not impossible, to predict short-term trends. Buy markets, not stocks. We all know that our economy is in a secular phase of prosperity and the stock market is the best proxy for the growth of an economy. To benefit from our soaring economy, buy the market as a whole and not any single stock.
Consequently, Rule No 4: Buy stocks that mirror the broader indexes, but never buy a single, or a handful of stock exposures. This means that you need to spread your risk across various market segments in the event a particular stock does not perform for reasons beyond the company’s control. It is easier to predict company earnings, but difficult to predict stock prices of the same company in the short run. Ironically, over the long term, stock prices mirror growth in a corporation’s earnings.
Therefore, Rule No 5: Look at company earnings, not at stock prices. Stock prices may tempt or give the wrong impression of a company’s welfare. But to build real wealth in equities, you must always rely on declared profits and facts, rather than make decisions based on stock movements. We all tend to sell stocks when we have made profits and keep the ones that have not appreciated. Eventually, we end up holding a portfolio of companies that are not performing! It is only human to sell for profits and not to want to take losses.
Hence, Rule No 6: Keep the winners, sell the losers. Stay on top of your investments. Check constantly for stocks that are not performing and eliminate them from your portfolio if the outlook does not seem promising. This way, you will have all winners left in your portfolio to take you to your goals. In exuberant times, we all tend to believe that the good times will last longer than they actually will. And before D-day, we will be able to sell our investments that were bought at unjustified levels. Just then, it happens that the markets turn and before we can sell out, we are left holding the bag.
For this reason, Rule No 7: Avoid being the “Bigger Fool;” it is imperative that you recognise the difference between price and value. Buy value and not momentum. When investing in stocks, your head should prevail over your heart. Resist the urge to get consumed by market chatter. Ignore hot tips from dealers and friends. It is advisable to do your own home work.
As the result, Rule No 8: Pick stocks with your brain, not your heart. Large-caps are the ones that have already proven themselves over longer periods of time and have the balance sheet acumen, strong cash flow and brains to manage businesses effectively according to prevailing situations and realistic opportunities available.
Hence, Rule No 9: Prefer large-cap stocks to small- and medium-caps. Investment in small and mid-cap stocks requires expertise and strong tracking abilities, that without, your portfolio will under-perform. Do not short sell a stock just because it is going up, and thus, one day it must come down. Newton’s law is not applicable to the markets. What goes up does not necessarily come back down! If companies are able to sustain earnings’ growth for long periods, then its stock may go up, up and up, or it can even remain high without any reason for a long period of time.
Because of this, Rule No 10: Markets can remain irrationally up, or continually climb for the right reasons. Therefore, never go short. It will expose you to unnecessary risks.
INFLATION INCHED UP TO 7.83%VS 7.61%
The annual inflation was at 7.83% for the week ended May 03 versus 7.61% the previous week. The data for the week ended March 8 has been revised to 7.78% versus 5.92% (provisional). The markets seem to have discounted the inflation figures. The food articles index was up at 0.5% whereas the manufacturing products index was up by 0.3%. Fuel, power index was up by 0.8%. “The benefits of the fiscal measures like excise and import duty cuts have been negated by currency depreciation. Rise in food prices has also been a contributor”, says HDFC chief economist Abheek Baruah. FY-08 subsidy burden seen over Rs 20,000 cr versus Rs 17,000 crore. The wholesale price index is forecast to have risen 7.5 per cent in the 12 months to May 3, below 7.61 per cent a week earlier that was its highest since November 13, 2004. It will be the ninth consecutive week that inflation has held above 5.5 per cent, the central bank's target for inflation by the end of the fiscal year ending in March 2009.
The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices. Policymakers have also signalled their intent to take more steps to tame inflation if needed. In April, the RBI raised the proportion of deposits that banks must set aside by 75 basis points to a seven-year high of 8.25 per cent, to suck out inflation-fuelling excess cash from the banking system. The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.
The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices. Policymakers have also signalled their intent to take more steps to tame inflation if needed. In April, the RBI raised the proportion of deposits that banks must set aside by 75 basis points to a seven-year high of 8.25 per cent, to suck out inflation-fuelling excess cash from the banking system. The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.
MARKET OUTLOOK
GLOBAL MARKET IS IN POSITIVE MODE AFTER OIL SLIPPED A BIT.NIFTY CLOSE ABOVE PSYCHOLOGICAL LEVEL OF 5100,MARKET O I IS INCHED UP TO 76 K CR AND PUT CALL RATIO HOVERING AROUND 1.45.
LEVEL OF NIFTY IS 5030-5100-5150-5200.MARKET WITNESSING SHORT OF 5200 CE & 5300 CE AND SIMULTANIOUSLY SHORT OF 4800-4900 PE .IT MEANS MARKET WILL MOVE IN BROADER RANGE OF 4900-5250.SECTOR TO BE WATCHED OUT IN MARKET IS PHARMA AD FOR MANSOON FORCAST SUGAR AND FERTILIZER SECTOR.
INFLATION DATA IS GOING TO CONFUSE TODAY IT IS EXPECTED AROUND 7.5-7.6.
HAVE NICE WEEKEND TRADING DAY.
LEVEL OF NIFTY IS 5030-5100-5150-5200.MARKET WITNESSING SHORT OF 5200 CE & 5300 CE AND SIMULTANIOUSLY SHORT OF 4800-4900 PE .IT MEANS MARKET WILL MOVE IN BROADER RANGE OF 4900-5250.SECTOR TO BE WATCHED OUT IN MARKET IS PHARMA AD FOR MANSOON FORCAST SUGAR AND FERTILIZER SECTOR.
INFLATION DATA IS GOING TO CONFUSE TODAY IT IS EXPECTED AROUND 7.5-7.6.
HAVE NICE WEEKEND TRADING DAY.
Thursday, May 15, 2008
Citigroup Raises $500 Million for Fund in India
Citigroup Inc. the largest U.S. bank by assets, raised $500 million to invest in roads, ports and utilities in India, the world's second-fastest growing economy.
Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.
Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.
The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.
``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''
Citigroup operates 39 branches in 27 cities in India.
Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.
Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.
The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.
``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''
Citigroup operates 39 branches in 27 cities in India.
ICICI Seeks $3 Billion for India Private Equity, Property Funds
ICICI Bank Ltd. India's second biggest lender, plans to raise as much as $3 billion for two funds as it competes with Morgan Stanley and Deutsche Bank AG to invest in the world's second-fastest growing major economy.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
European Expansion Accelerates More Than Forecast
European economic growth accelerated more than economists forecast in the first three months of 2008 as stronger expansions in Germany and France masked slowdowns in Spain and Italy.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
`BRIC' Nations Summit Seeks to Turn Economic Might Into Clout
First came the booming economies. Then came the rush of investors. Now the so-called BRIC nations -- Brazil, Russia, India and China -- are talking about forming a political alliance.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
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