GOBAL MARKET ARE WEAK..
CRUDE SURGE BY SPECULATION TO $142/BBL.
$ VS INR HOVERING AROUND AT 42.75.
AFTER STARTING OF NEW CLEARING WE GOT HEAVY SELLING PRESSURE ACROSS THE BOARD........MATKET IS SHOWING CONTINUOUS WEAKNESS.
TOTAL O I IS 58 K CR AFTER STARTING NEW SERIES ..
PUT CALL RATIO IS AT PLEASUREBLE LEVEL OF 1.07%.
LEVEL OF NIFTY IS 4040-4120-4180-4250 GO LONG FROM 4040 LEVEL WITH SL OF 4000 AND GO SHORT FROM 4180OR 4250 LEVEL IF MARKET FAIL TO HOLD THOSE LEVEL GO SHORT.
TODAY AMERICAN GDP DATA WILL COME .
MARKET WILL BE REMAIN VOLATILE MAILTAIN STRICT S L.
HAVE A NICE TRADING DAY...
-MR SAM
Monday, June 30, 2008
Saturday, June 28, 2008
How Economic Cycles affect Investing
Economic cycles have been with us since the beginning of recorded history. In ancient agrarian times, they were identified by periods of bumper crops followed by episodes of drought or pestilence. Today, we track these cycles by the relative strength or weakness of our current medium of exchange, money. In times of economic boon – which typically last an average of about four or five years – people often become lulled into a false sense of security, believing that the good times will go on forever. Jobs are abundant. Workers ask for and receive higher wages, making more cash available for the purchase of goods and services. Additionally, more people invest in the stock market, causing it to go up – a direct reflection of the public's rising expectations.
More investor purchases work to create more demand, which pushes prices even higher. Because of this, every investor believes that he or she will be able to sell at a profit to someone else later on (the so-called "greater fool theory" in action). They begin to ignore the fundamental value of what they're purchasing, thinking that they're buying future profits. Then, when high expectations are no longer being met, prices begin to drop. Investors who are unsure of themselves or their assets panic and start dumping them. This pushes prices down even further. Eventually, the economy finally runs out of steam and begins to falter.
There are a number of causes that might precipitate these occurrences. For instance, labor or material shortages and demands for increased wages could slow down business productivity. External factors, such as economic embargoes, might create additional shortages. And acts of Congress (such as tax increases) or the Federal Reserve (in regulating the nation's money supply and interest rates in an effort to slow down the economy or stave off a contraction) can dramatically affect economic cycles.
Since the post-World War II era began, economic contractions (more commonly known as recessions) have lasted an average of less than three years. During this cyclic downturn, the greater and more widespread the public's pessimism, the lower prices sink. Once prices have nearly bottomed out, most investors typically find that they either have no money left (because they've lost it in the market's fall) or, if they do have money, they're too pessimistic or scared to invest further. Only after the market has made a recovery and prices begin to rebound does the general investing public come back. When that happens, the cycle begins all over again.
It's important to note that, historically, each subsequent boon has reached a higher level than the previous one. The savvy investor realizes this and maintains a long-term perspective. In good times he or she will act conservatively by avoiding the speculative fervor of the masses, and in bad times will adopt the attitude that investment opportunities are being created for long-term gains. In this manner, the careful investor will avoid getting hurt during temporary economic downturns, and may even build a position to take advantage of them. Over the long haul, his or her assets will grow in value along with the overall net growth of the economy. Many financial advisors emphasize the wisdom of long-term investment for this very reason.
More investor purchases work to create more demand, which pushes prices even higher. Because of this, every investor believes that he or she will be able to sell at a profit to someone else later on (the so-called "greater fool theory" in action). They begin to ignore the fundamental value of what they're purchasing, thinking that they're buying future profits. Then, when high expectations are no longer being met, prices begin to drop. Investors who are unsure of themselves or their assets panic and start dumping them. This pushes prices down even further. Eventually, the economy finally runs out of steam and begins to falter.
There are a number of causes that might precipitate these occurrences. For instance, labor or material shortages and demands for increased wages could slow down business productivity. External factors, such as economic embargoes, might create additional shortages. And acts of Congress (such as tax increases) or the Federal Reserve (in regulating the nation's money supply and interest rates in an effort to slow down the economy or stave off a contraction) can dramatically affect economic cycles.
Since the post-World War II era began, economic contractions (more commonly known as recessions) have lasted an average of less than three years. During this cyclic downturn, the greater and more widespread the public's pessimism, the lower prices sink. Once prices have nearly bottomed out, most investors typically find that they either have no money left (because they've lost it in the market's fall) or, if they do have money, they're too pessimistic or scared to invest further. Only after the market has made a recovery and prices begin to rebound does the general investing public come back. When that happens, the cycle begins all over again.
It's important to note that, historically, each subsequent boon has reached a higher level than the previous one. The savvy investor realizes this and maintains a long-term perspective. In good times he or she will act conservatively by avoiding the speculative fervor of the masses, and in bad times will adopt the attitude that investment opportunities are being created for long-term gains. In this manner, the careful investor will avoid getting hurt during temporary economic downturns, and may even build a position to take advantage of them. Over the long haul, his or her assets will grow in value along with the overall net growth of the economy. Many financial advisors emphasize the wisdom of long-term investment for this very reason.
Friday, June 27, 2008
Oil jumps to new record near $142 as equities wilt
Oil leapt to a new record high near $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets triggered a wider commodities rally.
U.S. light crude for August delivery was $1.71 up at $141.35 a barrel by 0925 GMT, off highs of $141.71. London Brent crude was $1.56 up at $141.39, off highs of $141.98.
World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits, hastening the rush of investors' funds into commodities.
"It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.
The MSCI main world equity index fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.
By contrast, commodities fared better, with gold steady near a one-month record high while U.S. corn futures jumped to a fresh record high.
CURB SPECULATION
Oil's latest surge comes despite moves in the U.S. to curb energy market speculation.
U.S. lawmakers on Thursday have approved legislation which directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.
Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.
"It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment," said Toby Hassall, analyst at Commodities Warrants Australia.
Oil, which had been trading in a range for most of the week, broke out of that range after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.
"We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as U.S. attempts to extend its jurisdiction beyond its territory.
OPEC President Chakib Khelil's comments that prices could reach $170 a barrel in the coming months, also fuelled the rally. "I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television.
Talks between oil workers and Chevron continued in Nigeria, with the oil minister saying he was confident a deal could be reached, but union officials left open the possibility of a strike early next week.
U.S. light crude for August delivery was $1.71 up at $141.35 a barrel by 0925 GMT, off highs of $141.71. London Brent crude was $1.56 up at $141.39, off highs of $141.98.
World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits, hastening the rush of investors' funds into commodities.
"It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.
The MSCI main world equity index fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.
By contrast, commodities fared better, with gold steady near a one-month record high while U.S. corn futures jumped to a fresh record high.
CURB SPECULATION
Oil's latest surge comes despite moves in the U.S. to curb energy market speculation.
U.S. lawmakers on Thursday have approved legislation which directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.
Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.
"It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment," said Toby Hassall, analyst at Commodities Warrants Australia.
Oil, which had been trading in a range for most of the week, broke out of that range after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.
"We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as U.S. attempts to extend its jurisdiction beyond its territory.
OPEC President Chakib Khelil's comments that prices could reach $170 a barrel in the coming months, also fuelled the rally. "I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television.
Talks between oil workers and Chevron continued in Nigeria, with the oil minister saying he was confident a deal could be reached, but union officials left open the possibility of a strike early next week.
Thursday, June 26, 2008
Oil Prices Jump on OPEC Statements
Oil futures shot up to nearly $139 a barrel Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production.
Light, sweet crude for August delivery rose as high as $138.95 a barrel shortly after the New York Mercantile Exchange opened before retreating some to trade up $3.59 at $138.14.
Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer before declining later in the year. Khelil said he doesn't think prices will reach $200 a barrel.
The head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.
''Shokri Ghanem, the nation's top oil official, declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration,'' said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.
Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Interest rates affect the dollar; many analysts believe the Fed's rate cutting campaign, which began last September, had much to do with weakening the dollar against the euro and sending oil prices skyrocketing. Investors buy commodities such as oil when the greenback is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies.
The dollar slid against the euro after the Fed's comments Wednesday, and was down again on Thursday.
''Breaking through $140 now ... seems hard to avoid,'' Cordier said.
Retail gas prices, meanwhile, were unchanged overnight at a national average of $4.067, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. Gas prices have retreated slightly from a record of $4.08 set June 16, but are likely to fall much more as long as crude oil remains in its recent range between roughly $131 and $140.
''If we go through $140, we're at $4.25 on gas within a week,'' Cordier said.
In other Nymex trading Thursday, July gasoline futures rose 8.08 cents to $3.4749 a gallon and July heating oil futures rose 13.09 cents to $3.8801 a gallon. July natural gas futures rose 20.3 cents to $12.956 per 1,000 cubic feet.
In London, August Brent crude futures rose $3.64 to $137.97 on the ICE Futures Exchange.
Light, sweet crude for August delivery rose as high as $138.95 a barrel shortly after the New York Mercantile Exchange opened before retreating some to trade up $3.59 at $138.14.
Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer before declining later in the year. Khelil said he doesn't think prices will reach $200 a barrel.
The head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.
''Shokri Ghanem, the nation's top oil official, declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration,'' said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.
Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Interest rates affect the dollar; many analysts believe the Fed's rate cutting campaign, which began last September, had much to do with weakening the dollar against the euro and sending oil prices skyrocketing. Investors buy commodities such as oil when the greenback is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies.
The dollar slid against the euro after the Fed's comments Wednesday, and was down again on Thursday.
''Breaking through $140 now ... seems hard to avoid,'' Cordier said.
Retail gas prices, meanwhile, were unchanged overnight at a national average of $4.067, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. Gas prices have retreated slightly from a record of $4.08 set June 16, but are likely to fall much more as long as crude oil remains in its recent range between roughly $131 and $140.
''If we go through $140, we're at $4.25 on gas within a week,'' Cordier said.
In other Nymex trading Thursday, July gasoline futures rose 8.08 cents to $3.4749 a gallon and July heating oil futures rose 13.09 cents to $3.8801 a gallon. July natural gas futures rose 20.3 cents to $12.956 per 1,000 cubic feet.
In London, August Brent crude futures rose $3.64 to $137.97 on the ICE Futures Exchange.
At $4 billion PE investments India outpaces China's $570 million in Q1 2008
Despite the slowdown in global venture capital investments, owing to a slowdown in global financial market conditions private equity (PE) investments in India doubled to $4 billion in the first quarter of the calendar year 2008 compared to the corresponding period last year, maintaining its position as the most attrcative destination in Asia (excluding Japan) surpassing China that has recorded just $570 million in investments so far. India had first surpassed China in attracting PE investments towards the end of the second quarter of the calendar year 2007 when it grossed $10 billion compared to China's $8 billion. During the same period in 2006 China had received $13 billion in private equity investments compared with $7 billion in India.
The equation has changed since then, with India well in the lead now, says market research and cross-border M&A advisory firm IndusView Advisors Private Ltd.
The Indian real estate and infrastructure sector has again been the key contributor to this increasing trend this year, emerging a favorite with 28 per cent share in value of all private equity investments at $1.12 billion
The power sector received about 13 per cent share of the pie with $520 million so far this year
Banking & Finance and Telecom sectors tied for the third most favorable sectors for investments with 8.7 per cent of the deals at more than $340 million each.
Globally, real estate and infrastructure fundraising by international real estate private equity funds, has been brisk, with as much as $130 billion raised over the last two, according to estimates. A large percentage of these funds raised are focused outside of the US for investing in emerging markets such as India and China.
''With the economic downturn in developed economies intensifying and the application of capital becoming dearer and pressurising the expected return on investments (RoIs); PE firms are finding their way in to safer investment heavens, that is, emerging markets which have decoupled from the developed markets.'' says Bundeep Singh Rangar, chairman, IndusView.
China will overtake the US by 2025 as the world's largest economy. China's economy is expected to continue to grow to become about 130 per cent the size of the US by 2050, according to estimates.
India will grow to almost 90 per cent of the size of the US by 2050, while Brazil is expected to overtake Japan by 2050 to move into fourth place. Russia, Mexico and Indonesia all have the potential to have economies larger than those of Germany or the UK, by the middle of this century.
''India continues to enjoy a favourable investment flavor among investors due to liberal economic initiatives on the part of the government, compared to China which is much regulated,'' added Rangar.
The Indian government has responded to an urgent demand for new infrastructure, announcing that 9 per cent of the country's GDP will be spent on infrastructure by 2012, presenting an unprecedented investment opportunity.
This has renewed interest in the Indian infrastructure sector with fresh fund raising of up to $8 billion in the pipeline this year with financial entities such as India's State Bank of India (SBI), Australia-based Macquarie Capital Group Ltd, the UK-based private equity firm 3i Group, the US-based Blackstone Group among others, participating.
''Emergence of the non-tech sectors, as favorite for investments is symbolic of the realisation of the need to develop world class infrastructure to accelerate growth in the Indian economy to 10 per cent, which will see the inflow of a resource base of incremental funds, application of internationally applicable best practices and experienced global management expertise & technology.'' said Rishi Sahai, director, IndusView.
A significant share of international real estate funds will find their way in to the Indian real-estate and infrastructure market, which has the capacity to absorb as much as $500 billion over the next five years, according to government estimates.
Global private equity funds that have mapped out investment strategies for the Indian market include some of the largest private equity investore such as:
The equation has changed since then, with India well in the lead now, says market research and cross-border M&A advisory firm IndusView Advisors Private Ltd.
The Indian real estate and infrastructure sector has again been the key contributor to this increasing trend this year, emerging a favorite with 28 per cent share in value of all private equity investments at $1.12 billion
The power sector received about 13 per cent share of the pie with $520 million so far this year
Banking & Finance and Telecom sectors tied for the third most favorable sectors for investments with 8.7 per cent of the deals at more than $340 million each.
Globally, real estate and infrastructure fundraising by international real estate private equity funds, has been brisk, with as much as $130 billion raised over the last two, according to estimates. A large percentage of these funds raised are focused outside of the US for investing in emerging markets such as India and China.
''With the economic downturn in developed economies intensifying and the application of capital becoming dearer and pressurising the expected return on investments (RoIs); PE firms are finding their way in to safer investment heavens, that is, emerging markets which have decoupled from the developed markets.'' says Bundeep Singh Rangar, chairman, IndusView.
China will overtake the US by 2025 as the world's largest economy. China's economy is expected to continue to grow to become about 130 per cent the size of the US by 2050, according to estimates.
India will grow to almost 90 per cent of the size of the US by 2050, while Brazil is expected to overtake Japan by 2050 to move into fourth place. Russia, Mexico and Indonesia all have the potential to have economies larger than those of Germany or the UK, by the middle of this century.
''India continues to enjoy a favourable investment flavor among investors due to liberal economic initiatives on the part of the government, compared to China which is much regulated,'' added Rangar.
The Indian government has responded to an urgent demand for new infrastructure, announcing that 9 per cent of the country's GDP will be spent on infrastructure by 2012, presenting an unprecedented investment opportunity.
This has renewed interest in the Indian infrastructure sector with fresh fund raising of up to $8 billion in the pipeline this year with financial entities such as India's State Bank of India (SBI), Australia-based Macquarie Capital Group Ltd, the UK-based private equity firm 3i Group, the US-based Blackstone Group among others, participating.
''Emergence of the non-tech sectors, as favorite for investments is symbolic of the realisation of the need to develop world class infrastructure to accelerate growth in the Indian economy to 10 per cent, which will see the inflow of a resource base of incremental funds, application of internationally applicable best practices and experienced global management expertise & technology.'' said Rishi Sahai, director, IndusView.
A significant share of international real estate funds will find their way in to the Indian real-estate and infrastructure market, which has the capacity to absorb as much as $500 billion over the next five years, according to government estimates.
Global private equity funds that have mapped out investment strategies for the Indian market include some of the largest private equity investore such as:
- Temasek Holdings (Pte) Ltd, the investment arm of the Singapore government .
- Blackstone Group L P, a global private equity and investment management firm .
- Warburg Pincus, with approximately $14 billion under management .
- The Carlyle Group, Washington DC-based private equity investment firm with more than $75 billion of equity capital under management.
- Actis Capital LLP, a leading private equity investor in emerging markets with $3.5 billion of funds under management.
New fertilizer policy likely to push up subsidy bill considerably
India might have to spend more to subsidize fertilizer prices when a group of ministers meets on Thursday to consider a new policy that is likely to peg the subsidy to the international prices of key ingredients phosphorus and potassium, say industry watchers.
The government currently subsidizes fertilizer costs by fixing retail prices. It then pays manufacturers the difference between the sale and production prices, plus a reasonable profit. To arrive at this, the government looks at the actual cost of production while determining the price at which the producer sells to the government.
Under the new policy, which will replace one that expired on 31 March, the cabinet committee on economic affairs will discuss whether the government will reimburse producers for the use of phosphorus and potassium determined by global prices.
“The price of phosphorus, as calculated from the imported diammonium phosphate (DAP), will be the benchmark in this regard,” said a senior fertilizers department official who did not wish to be identified.
DAP, urea and muriate of potash, or MoP, are the three most widely used fertilizers in the country.
The cost of producing the phosphatic component of a fertilizer domestically would be linked to the international cost of production of phosphorus as calculated from imported DAP.
The MoP used in the country is entirely imported and the cost of production of potassium is likely to be linked to the cost of production of potassium in the imported MoP.
The Fertiliser Association of India, or FAI, the apex industry body, has been demanding that the government announce a policy, in the absence of which the industry does not know the producers’ price.
“Our basic demand is that the policy should allow us to not only cover our costs but also give some margin,” said FAI director Satish Chander.
“The cost-plus (expired) policy did not provide anyincentive to an efficient producer since all productivity gains were mopped up by the government.”
India’s fertilizer subsidy is likely to skyrocket to an estimated Rs95,000 crore in the year to March 2009, or 1.9% of the country’s gross domestic product, from Rs15,779 crore in the fiscal year 2004-05.
The department of fertilizers has also proposed subsidizing two new fertilizers—triplesuper phosphate (TSP) and ammonium sulphate.
Although these are now produced in negligible quantities, the government expects the production of TSP—a DAP substitute—will increase once it is subsidized.
The department official said presently only two plants in the country have the capacity to produce TSP—Fertilisers and Chemicals Travancore Ltd and Gujarat State Fertilizers and Chemicals Ltd.
The new policy is also likely to exclude the so-called outliers—those who managed to import at a price that is lower by $30 (Rs1,284) per tonne than the price at which the others import—while calculating the average import price. The government uses this average import price to arrive at the formula to compensate manufacturers.
In fiscal year to March, India produced 32.3 million tonnes (mt) of fertilizer and imported 14mt of it.
The government currently subsidizes fertilizer costs by fixing retail prices. It then pays manufacturers the difference between the sale and production prices, plus a reasonable profit. To arrive at this, the government looks at the actual cost of production while determining the price at which the producer sells to the government.
Under the new policy, which will replace one that expired on 31 March, the cabinet committee on economic affairs will discuss whether the government will reimburse producers for the use of phosphorus and potassium determined by global prices.
“The price of phosphorus, as calculated from the imported diammonium phosphate (DAP), will be the benchmark in this regard,” said a senior fertilizers department official who did not wish to be identified.
DAP, urea and muriate of potash, or MoP, are the three most widely used fertilizers in the country.
The cost of producing the phosphatic component of a fertilizer domestically would be linked to the international cost of production of phosphorus as calculated from imported DAP.
The MoP used in the country is entirely imported and the cost of production of potassium is likely to be linked to the cost of production of potassium in the imported MoP.
The Fertiliser Association of India, or FAI, the apex industry body, has been demanding that the government announce a policy, in the absence of which the industry does not know the producers’ price.
“Our basic demand is that the policy should allow us to not only cover our costs but also give some margin,” said FAI director Satish Chander.
“The cost-plus (expired) policy did not provide anyincentive to an efficient producer since all productivity gains were mopped up by the government.”
India’s fertilizer subsidy is likely to skyrocket to an estimated Rs95,000 crore in the year to March 2009, or 1.9% of the country’s gross domestic product, from Rs15,779 crore in the fiscal year 2004-05.
The department of fertilizers has also proposed subsidizing two new fertilizers—triplesuper phosphate (TSP) and ammonium sulphate.
Although these are now produced in negligible quantities, the government expects the production of TSP—a DAP substitute—will increase once it is subsidized.
The department official said presently only two plants in the country have the capacity to produce TSP—Fertilisers and Chemicals Travancore Ltd and Gujarat State Fertilizers and Chemicals Ltd.
The new policy is also likely to exclude the so-called outliers—those who managed to import at a price that is lower by $30 (Rs1,284) per tonne than the price at which the others import—while calculating the average import price. The government uses this average import price to arrive at the formula to compensate manufacturers.
In fiscal year to March, India produced 32.3 million tonnes (mt) of fertilizer and imported 14mt of it.
Textile Firm GHCL Courting UK Funds Too
Some new suitors may have emerged for Ahmedabad-based GHCL, which is into soda ash, textiles and home textile retailing business. Among those who are in the race for a controlling stake in Sanjay Dalmia led GHCL include a few UK-based companies. One of the suitors has offered $175 million for a 20 per cent stake in the company, which would value the firm at $875 million or Rs 3,675 crore or Rs 365 per share, six times its current price.The report cites a source close to Mumbai-based investment advisor, Sanghi Advisors, saying that one of its UK-based client is engaged in negotiations for determining the control premium for eventual transfer of the controlling stake. The deal may be wrapped up by the middle of next month. Once this deal is through, GHCL may opt for restructuring of its two businesses – soda ash and home textiles – by creating two separate entities.GHCL had earlier announced that it would hive off its home textile retail and B2B businesses into two separate firms while retaining soda ash and home textile manufacturing business in the parent firm.This report comes at a time when Dubai-based diversified group Al Rostamani has already made an expression of interest to acquire upto 25 per cent stake in GHCL. This could be through a mix of 15 per cent stake sale by the promoters followed by an open offer which could take its stake to 35 per cent if fully subscribed.Two other British investors have also shown interest in GHCL’s home textiles and retail business which is looking to expand in UK besides expansion in Eastern Europe and South East Asia. GHCL is present in the UK retail home textiles market through Rosebys, which it acquired two years back.
Wednesday, June 25, 2008
RBI makes aggressive hike to fight inflation
The Reserve Bank of India (RBI) raised its key lending rate to its highest in six years on Tuesday and hiked banks' reserve requirements in an aggressive step to combat 11 percent inflation, and signaled it would act again if needed.
The RBI said it wanted to reduce overall demand pressures to stop any instability developing in the buoyant economy due to inflation and said higher energy prices were no longer a temporary phenomenon.
Analysts said government bond yields were likely to jump sharply on Wednesday and stocks fall, as the rate decision, which came after market hours, was above expectations, although traders had been expecting a policy tightening soon.
The RBI raised its key lending rate by 50 basis points to 8.5 percent with immediate effect, its highest since March 2002 and the second hike this month.
It also increased its cash reserve ratio (CRR), the ratio of deposits banks must keep with it, to 8.75 percent from 8.25 percent in two 25-basis-point stages on July 5 and July 19.
The RBI said a "continuous heightened vigil" was needed to respond swiftly to further developments and anchor inflation expectations, and economists did not rule out more tightening.
"In the remaining part of the year, there will be 50 basis points increase in CRR and 25 basis points in the repo rate," said Rupa Rege Nitsure, chief economist at Bank of Baroda.
Tuesday's move would boost the CRR 125 basis points this year, after hikes in April and May to drain excess inflation-stoking cash from the money markets. Economists expect banks will also raise rates.
Wholesale price inflation, India's most widely watched price measure, accelerated to a 13-year high of 11.05 percent in early June, the first inflation reading after the government increased state-set fuel prices at the start of the month.
In the previous week the rate had been 8.75 percent. It has doubled since February, largely on costlier oil, metals and food.
NOT JUST SUPPLY SIDE
The central bank said in a statement demand pressures were strong in an economy which grew 9.0 percent last fiscal year.
"At this juncture, the overriding priority for monetary policy is to eschew any further intensification of inflationary pressures and to firmly anchor inflation expectations," it said.
Indian policy makers are concerned rising inflation hits the poor hardest and, with state and national elections due this year and next, fear a voter backlash at the ballot box.
The RBI said an adjustment of demand was warranted to stop gains achieved from strong growth being eroded.
"The urgency of this broader albeit somewhat painful but timely contraction has to be viewed in the context of the new reality of high and volatile energy prices not necessarily being a temporary phenomenon any longer," it added.
D.K. Joshi, principal economist at rating agency Crisil, said the move aimed to control second-round effects of the recent fuel price rise and also other input cost increases such as steel.
"This move will bring down future demand and reduce the pressures on prices," Joshi said.
The central bank had been expected to make a move before its next review on July 29, after RBI governor Yaga Venugopal Reddy met the prime minister and finance minster at the weekend. The finance ministry said monetary policy should be the first line of defence to manage demand in Asia's third-largest economy.
But the extent of the tightening is likely to be a surprise to markets after Reddy seemed to suggest a more gradual move in a statement on Monday.
Abheek Barua, chief economist at HDFC Bank, said the step was extreme and the market had expected smaller increases in the policy rates. He saw the benchmark 10-year bond yield climbing from Tuesday's close of 8.57 percent.
"The 10-year bond yield will move up to 8.8-8.9 percent and there is a possibility of a spike in yields in general across the curve," Barua said.
The yield hit 8.76 percent on Monday, its highest since November 2001.
Economists said banks' prime lending rates, extended to the best customers, were also likely to rise. Barua expected increases of half a percentage point.
The RBI's statement made no mention of the reverse repo rate, at which it absorbs excess cash from banks and which is currently at 6.0 percent. Nor did it refer to the bank rate, used to price longer term loans, and which is also at 6.0 percent.
The RBI said it wanted to reduce overall demand pressures to stop any instability developing in the buoyant economy due to inflation and said higher energy prices were no longer a temporary phenomenon.
Analysts said government bond yields were likely to jump sharply on Wednesday and stocks fall, as the rate decision, which came after market hours, was above expectations, although traders had been expecting a policy tightening soon.
The RBI raised its key lending rate by 50 basis points to 8.5 percent with immediate effect, its highest since March 2002 and the second hike this month.
It also increased its cash reserve ratio (CRR), the ratio of deposits banks must keep with it, to 8.75 percent from 8.25 percent in two 25-basis-point stages on July 5 and July 19.
The RBI said a "continuous heightened vigil" was needed to respond swiftly to further developments and anchor inflation expectations, and economists did not rule out more tightening.
"In the remaining part of the year, there will be 50 basis points increase in CRR and 25 basis points in the repo rate," said Rupa Rege Nitsure, chief economist at Bank of Baroda.
Tuesday's move would boost the CRR 125 basis points this year, after hikes in April and May to drain excess inflation-stoking cash from the money markets. Economists expect banks will also raise rates.
Wholesale price inflation, India's most widely watched price measure, accelerated to a 13-year high of 11.05 percent in early June, the first inflation reading after the government increased state-set fuel prices at the start of the month.
In the previous week the rate had been 8.75 percent. It has doubled since February, largely on costlier oil, metals and food.
NOT JUST SUPPLY SIDE
The central bank said in a statement demand pressures were strong in an economy which grew 9.0 percent last fiscal year.
"At this juncture, the overriding priority for monetary policy is to eschew any further intensification of inflationary pressures and to firmly anchor inflation expectations," it said.
Indian policy makers are concerned rising inflation hits the poor hardest and, with state and national elections due this year and next, fear a voter backlash at the ballot box.
The RBI said an adjustment of demand was warranted to stop gains achieved from strong growth being eroded.
"The urgency of this broader albeit somewhat painful but timely contraction has to be viewed in the context of the new reality of high and volatile energy prices not necessarily being a temporary phenomenon any longer," it added.
D.K. Joshi, principal economist at rating agency Crisil, said the move aimed to control second-round effects of the recent fuel price rise and also other input cost increases such as steel.
"This move will bring down future demand and reduce the pressures on prices," Joshi said.
The central bank had been expected to make a move before its next review on July 29, after RBI governor Yaga Venugopal Reddy met the prime minister and finance minster at the weekend. The finance ministry said monetary policy should be the first line of defence to manage demand in Asia's third-largest economy.
But the extent of the tightening is likely to be a surprise to markets after Reddy seemed to suggest a more gradual move in a statement on Monday.
Abheek Barua, chief economist at HDFC Bank, said the step was extreme and the market had expected smaller increases in the policy rates. He saw the benchmark 10-year bond yield climbing from Tuesday's close of 8.57 percent.
"The 10-year bond yield will move up to 8.8-8.9 percent and there is a possibility of a spike in yields in general across the curve," Barua said.
The yield hit 8.76 percent on Monday, its highest since November 2001.
Economists said banks' prime lending rates, extended to the best customers, were also likely to rise. Barua expected increases of half a percentage point.
The RBI's statement made no mention of the reverse repo rate, at which it absorbs excess cash from banks and which is currently at 6.0 percent. Nor did it refer to the bank rate, used to price longer term loans, and which is also at 6.0 percent.
RBI raises lending rate, CRR by 50 bps each
Reserve Bank of India raised its key lending rate on Tuesday and increased the ratio of deposits banks should keep with it by 50 basis points each to curb price pressures after inflation jumped to a 13-year high in early June.
This is the second increase in the lending rate, known as the repo rate, this month. It rises to 8.5 per cent with immediate effect. The cash reserve ratio increases to 8.75 percent from 8.25 percent and will take effect in two stages on July 5 and July 19.
This is the second increase in the lending rate, known as the repo rate, this month. It rises to 8.5 per cent with immediate effect. The cash reserve ratio increases to 8.75 percent from 8.25 percent and will take effect in two stages on July 5 and July 19.
Tuesday, June 24, 2008
Stocks to watch: DLF, Amtek, GHCL
Stocks are headed for yet another whirlwind session Monday sensing the gloom spreading across global markets. That apart, on the domestic front, inflationary concerns, likelihood of another interest rate hike and fears of political uncertainty could propel the equities into a downward frenzy. Finance minister P Chidambaram, who, along with petroleum minister Murli Deora, attend an emergency meeting of oil producing and consuming countries called by Opec in Jeddah, has urged oil producing nations not to remain “passive spectators of speculation”, and has advocated adopting a “price band mechanism” to cool down crude oil prices. Crude oil rose 36 cents to $135.72 per barrel, reversing earlier losses of more than $1 after concerns of tension between Israel and Iran shadowed pledge by Saudi Arabia to pump more oil. Rupee opened weak Monday on anticipation that foreign funds will continue to exit stock market. Rupee was at 42.95 down 3 paise against close of 42.93/94 on Friday. In one of the largest private equity investments in the textile sector, S Kumars’ subsidiary Reid & Taylor is close to signing a deal for $100-million fund infusion. It couldn’t be ascertained how much stake Reid & Taylor was likely to dilute, but sources said the company may issue fresh equity to a Europe-based fund at the rate of Rs 150 per share. The company is likely to make an announcement next week. When contacted, S Kumars managing director Nitin Kasliwal neither confirmed nor denied the development. Real estate developer DLF will soon get around 5,000 acres near Greater Noida at less than market rate under the Taj Expressway Industrial Development Authority’s (TEA) scheme. Jaypee group, too, has qualified for allotment of 2,500 acres, while Unitech and Punj Lloyd are in queue for 2,500 acres each. As part of its foray into railcars, auto component major Amtek has entered into a strategic pact with Missouri-based American Railcar Industries. The JV has been signed through Amtek Transportation Division, a subsidiary of Amtek Auto. Big courier players such as Blue Dart, DTDC and AFL WIZ have revised their charges by 15-20 per cent on account of the rise in fuel prices and there are indications that courier rates are likely to be hiked yet again by at least 3 per cent. Diamond jewellery maker and exporter Suashish Diamonds is planning to invest Rs 150 crore in setting up a new manufacturing facility at Mumbai’s Santacruz Electronic Export Processing Zone (SEEPZ). The investments will be made through the company’s wholly-owned subsidiary Suashish Jewellery. At least three UK-based companies are interested in picking up a controlling stake in GHCL, which is into soda ash and textiles. One of the intending investors has offered $175 million for a 20 per cent stake in the company, reports Hindu Businessline. With global crude prices shooting through the roof, corporates are making a beeline to exploit India's vast reserves of black diamond for producing liquid gold through CTL (coal-to-liquid) technology, reports Times of India. Naveen Jindal-led Jindal Steel & Power has joined the bandwagon and told the coal ministry earlier this month that it planned to pump Rs 32,000 crore into such a project for extracting 80,000 barrels per day of oil by synthesising coal
ENERGY SECTOR IS MOST PREFERED INVESTMENT BET TO P E PLAYER IN INDIA
An increasing number of private equity (PE) firms are making a beeline for investing in the booming energy sector. These firms have made a total investment of $990 million (Rs 4,158 crore) during the first five months of 2008 in this sector compared to just two deals worth $45 (Rs 189 crore) million during the same period of 2007.
The energy sector, especially power, has been witnessing a lot of interest from PE investors, said Arun Natarajan, chief executive officer (CEO), Venture Intelligence, a Chennai-based research service company focused on PE and venture capital activities.
Some of the big deals between January and May 2008 include Farallon Capital, L N Mittal India and Internet Ventures' investment of $395 million in Indiabulls Power Services in February 2008. In the Konaseema Gas deal in May this year, IDFC Private Equity and Lehman Brothers invested $125 million and in the KLG Power deal, TPG Growth put in about $50 million in April.
In the energy sector, renewable and power equipments are big attractions for PE investors, said Karthikeyan Ranganathan, Head, Investments, Baring Private Equity India. This fund is planning to invest $1 billion in India, of which a significant amount will go to the energy sector, he said.
Natarajan said the number of investments in the energy sector will grow manifold to bridge the demand-supply gap of energy in the country.
India needs to generate an additional 70,000 MW to meet its growing power requirements. Total investment required is $155 billion.
The Planning Commission expects private sector participation to increase by 25 per cent year-on-year.
In a recent report, KPMG Infrastructure Advisory Group had said that India needs to double its generation capacity (currently around 135 giga watt) by the year 2015. Enabled by the Electricity Act 2003, the Indian electricity sector is undergoing structural changes that aim to make it more competitive and bring back the interest of private sector in development and operation of power plants in India.
The energy sector, especially power, has been witnessing a lot of interest from PE investors, said Arun Natarajan, chief executive officer (CEO), Venture Intelligence, a Chennai-based research service company focused on PE and venture capital activities.
Some of the big deals between January and May 2008 include Farallon Capital, L N Mittal India and Internet Ventures' investment of $395 million in Indiabulls Power Services in February 2008. In the Konaseema Gas deal in May this year, IDFC Private Equity and Lehman Brothers invested $125 million and in the KLG Power deal, TPG Growth put in about $50 million in April.
In the energy sector, renewable and power equipments are big attractions for PE investors, said Karthikeyan Ranganathan, Head, Investments, Baring Private Equity India. This fund is planning to invest $1 billion in India, of which a significant amount will go to the energy sector, he said.
Natarajan said the number of investments in the energy sector will grow manifold to bridge the demand-supply gap of energy in the country.
India needs to generate an additional 70,000 MW to meet its growing power requirements. Total investment required is $155 billion.
The Planning Commission expects private sector participation to increase by 25 per cent year-on-year.
In a recent report, KPMG Infrastructure Advisory Group had said that India needs to double its generation capacity (currently around 135 giga watt) by the year 2015. Enabled by the Electricity Act 2003, the Indian electricity sector is undergoing structural changes that aim to make it more competitive and bring back the interest of private sector in development and operation of power plants in India.
MARKET PREDICTION
GLOBAL MARKET IS MIXED ...
NIFTY WILL OPEN IN NEGATIVE NOTE CLEARING IS APPROCHING FAST FOR THAT REASON WE CAN ASSUME SHORT COVERING IN BANKING AND CONSTRUCTION OIL&GAS ACTUALLY ACROSS THE BOARD WE CAN ASSUME SHORT COVERING.
NIFTY LEVEL IS 4250-4300-4350-4450 IF MARKET HOLDs 4300 GO LONG OR FROM 4230 LEVEL GO LONG WITH SL OF 4200 AND IF MARKET COULD NOT HOLD 4350 AND ABOVE GO SHORT WITH SL OF 4400.
TOTAL MARKET OI IS 79 K CR AND 56 K CR IN JUNE SERIES AND 22 K CR IN JULY.
PUT CALL RATIO IS 1.19% DUE TO CLOSER OF PUT AND ACCUMULATION IN CALL OPTION.
ROLLOVER IS 25-30 % FOUND YET.
MARKET WILL BE VOLATILE DUE TO FED MEETING TONIGHT.
HAVE A NICE TRADING DAY...........
-MR SAM
NIFTY WILL OPEN IN NEGATIVE NOTE CLEARING IS APPROCHING FAST FOR THAT REASON WE CAN ASSUME SHORT COVERING IN BANKING AND CONSTRUCTION OIL&GAS ACTUALLY ACROSS THE BOARD WE CAN ASSUME SHORT COVERING.
NIFTY LEVEL IS 4250-4300-4350-4450 IF MARKET HOLDs 4300 GO LONG OR FROM 4230 LEVEL GO LONG WITH SL OF 4200 AND IF MARKET COULD NOT HOLD 4350 AND ABOVE GO SHORT WITH SL OF 4400.
TOTAL MARKET OI IS 79 K CR AND 56 K CR IN JUNE SERIES AND 22 K CR IN JULY.
PUT CALL RATIO IS 1.19% DUE TO CLOSER OF PUT AND ACCUMULATION IN CALL OPTION.
ROLLOVER IS 25-30 % FOUND YET.
MARKET WILL BE VOLATILE DUE TO FED MEETING TONIGHT.
HAVE A NICE TRADING DAY...........
-MR SAM
ONGC to exit Kakinada refinery, GMR to take over
Infrastructure company GMR will replace Oil and Natural Gas Corporation (ONGC), the country's largest oil and gas producer, in the proposed Rs 31,000 crore refinery and petrochemical plant at Kakinada in Andhra Pradesh, after the oil company found the project to be non-profitable venture.
ONGC had also asked the Andhra Pradesh government for tax incentives of Rs 16,000 crore over eight years to make the project viable. The state government, however, declined.
ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, says that the project would have been a non-profitable one. "It is a non-profitable business and that is why we have kept out of it," said a top ONGC official who did not want to be named.
A GMR spokesperson in Bangalore said the company had not yet received any official communication from ONGC. Neither he, nor ONGC, disclosed how much GMR would pay to ONGC.
The originally planned 7.5 million tonne per annum (mtpa) refinery was replanned with a capacity of 15 mtpa after the smaller refinery was found to be financially unviable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said the ONGC official.
ONGC, which had 46 per cent stake present in the refinery and petrochemical project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), had asked the Andhra Pradesh state government for fiscal benefits worth Rs 16,000 crore over eight years. "The state government was not willing to give us that incentive, and we were not willing to go ahead without the incentive. So they wanted us out and we obliged," the ONGC official said.
The Andhra Pradesh government was keen that the refinery be set up. Chief Minister YS Rajasekhar Reddy had urged Prime Minister Manmohan Singh and Petroleum Minister Murli Deora to convince ONGC to execute the project after ONGC found the refinery unviable after many studies were conducted.
The refinery and petrochemical is being implemented by Kakinada Refinery and Petrochemicals (KRPL), in which MRPL had 46 per cent stake, IL&FS 51 per cent stake and the Andhra Pradesh government 3 per cent stake through Kakinada Seaports.
KRPL's shareholding will now be restructured with GMR controlling 51 per cent stakle, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake.
Even though ONGC had found the refinery unviable, various companies such as the Hinduja group, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemical project. The project was initially conceptualised by then ONGC chairman and managing director Subir Raha, who is currently employed by the Hindujas. "The refinery is very feasible as its products can be exported to the east Asian countries. Kakinada also has a port which will facilitate import of crude oil and export of petroleum products," said a Delhi-based analyst who advises oil companies.
The refinery is being planned in a special economic zone land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR) which runs from Vishakapatnam to Kakinada, a distance of around over 150 kms.
ONGC had also asked the Andhra Pradesh government for tax incentives of Rs 16,000 crore over eight years to make the project viable. The state government, however, declined.
ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, says that the project would have been a non-profitable one. "It is a non-profitable business and that is why we have kept out of it," said a top ONGC official who did not want to be named.
A GMR spokesperson in Bangalore said the company had not yet received any official communication from ONGC. Neither he, nor ONGC, disclosed how much GMR would pay to ONGC.
The originally planned 7.5 million tonne per annum (mtpa) refinery was replanned with a capacity of 15 mtpa after the smaller refinery was found to be financially unviable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said the ONGC official.
ONGC, which had 46 per cent stake present in the refinery and petrochemical project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), had asked the Andhra Pradesh state government for fiscal benefits worth Rs 16,000 crore over eight years. "The state government was not willing to give us that incentive, and we were not willing to go ahead without the incentive. So they wanted us out and we obliged," the ONGC official said.
The Andhra Pradesh government was keen that the refinery be set up. Chief Minister YS Rajasekhar Reddy had urged Prime Minister Manmohan Singh and Petroleum Minister Murli Deora to convince ONGC to execute the project after ONGC found the refinery unviable after many studies were conducted.
The refinery and petrochemical is being implemented by Kakinada Refinery and Petrochemicals (KRPL), in which MRPL had 46 per cent stake, IL&FS 51 per cent stake and the Andhra Pradesh government 3 per cent stake through Kakinada Seaports.
KRPL's shareholding will now be restructured with GMR controlling 51 per cent stakle, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake.
Even though ONGC had found the refinery unviable, various companies such as the Hinduja group, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemical project. The project was initially conceptualised by then ONGC chairman and managing director Subir Raha, who is currently employed by the Hindujas. "The refinery is very feasible as its products can be exported to the east Asian countries. Kakinada also has a port which will facilitate import of crude oil and export of petroleum products," said a Delhi-based analyst who advises oil companies.
The refinery is being planned in a special economic zone land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR) which runs from Vishakapatnam to Kakinada, a distance of around over 150 kms.
Monday, June 23, 2008
Oil Prices Rise After Saudi Meeting
A hastily convened global energy summit meeting led by Saudi Arabia ended largely in disagreement on Sunday, with only a modest pledge of increased production by the Saudis and no resolution on what other practical steps should be taken to ease the crisis over soaring oil prices.
On Monday, the global oil market shrugged off the news, pushing up prices. Oil was up $1.57, to $136.93 a barrel, in New York at noon.
The Saudis, who considered the meeting a success because of the high attendance, announced a production increase of 200,000 barrels a day and an expansion of their output capacity if needed in coming years.
But news of the immediate production increase had already been absorbed by the world market for oil. Some experts had anticipated that the Saudis might announce a bigger increase.
Saudi Arabia, the biggest oil exporter, is the only country with the ability to significantly increase production quickly.
Rather than finding areas of agreement, participants in the one-day meeting in this coastal city on the Red Sea illustrated the sharply diverging views on what has caused oil prices to double in the last year to the $130- to $140-a-barrel range.
Consumer nations, led by the Britain, Japan and United States, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to pump more oil, and they say a big reason for the price inflation is speculation. Everyone agreed that surging demand in the developing world was a major factor.
That point was punctuated last Thursday when China, the world’s fastest-growing consumer of oil, announced it was sharply raising the subsidized prices that its own citizens pay. The price of oil temporarily dropped more than 3 percent on that news alone because of expectations that demand from China would slow.
But the overall demand for oil by China, India and other rapidly developing nations, including many in the Middle East, is still expected to grow relentlessly, putting enormous pressure on producers to keep pace.
If anything, the Saudi summit meeting made plain the limited options available to push prices down.
For King Abdullah of Saudi Arabia, who called for the meeting just two weeks ago, it was an opportunity to show that his oil-rich kingdom was aware of growing anger and frustration caused by surging prices in oil-importing countries. It also reflected some alarm by the Saudis that the price inflation was causing consumer nations to look far more seriously at energy alternatives, which eventually could hurt the price of oil.
The crisis is also becoming a central issue in the American presidential race, where arguments over who is to blame for high oil prices echoed some of what was heard at the Saudi summit meeting.
President Bush has supported calls by Senator John McCain, the presumptive Republican presidential nominee, to allow for more drilling off the coast of the United States. Senator Barack Obama, the presumptive Democratic nominee, opposes more offshore drilling and has called for a crackdown on market speculators, whom he blamed for pushing up prices.
The question of whether speculators are influencing prices is expected to get closer scrutiny this week in Washington, where a Senate committee led by Senator Joseph I. Lieberman, the Connecticut independent and former Democrat who supports Mr. McCain, will hold hearings on the price swings in the crude oil market.
The oil summit meeting here was attended by energy ministers from 35 nations, who convened in a vast ballroom and listened as King Abdullah said he understood the pain that $140 oil was causing.
But King Abdullah and Prime Minister Gordon Brown of Britain, who walked into the high-ceilinged hall together as a military band played, soon offered totally different perspectives on the problem.
The king spoke of the “selfish interests“ of speculators as a primary reason and urged the gathered ministers to “rule out biased rumors“ and to “reach the real causes for the increase in price.“
But Mr. Brown pointed to fundamental economics and “oil demand rising faster than supply.“ The American energy secretary, Samuel W. Bodman, put it more bluntly in a meeting with reporters, saying, “There is no evidence we can find that speculators are driving futures prices.“
Both sides spoke about the need for compromise, with Mr. Brown calling for a “global new deal“ that would allow a “greater commonality of interest“ between consumers and producers, including greater freedom to invest in one another’s markets.
But asked how all this would help remedy the worst oil crisis in decades, some ministers seemed baffled and uneasy.
“Let me ask you,“ said India’s petroleum minister, Murli Deora, when a group of reporters asked him for his views, “what else can we do to bring harmony between buyers and sellers?“
Despite the urgency that brought hundreds of participants here, Jeroen van der Veer, the chief executive of Royal Dutch Shell, summarized the difficulties faced by oil producers in dealing with record prices: “There are no overnight solutions.“
King Abdullah also called for OPEC, the oil cartel, to pledge $1 billion to help developing nations deal with the effects of soaring energy costs, to which the Saudis would contribute an undetermined share. He also offered an additional $500 million in loans from Saudi Arabia.
Beyond that, participants called for both more transparency and more regulation in energy markets, more investments in both production and refining capacity, and more cooperation between producers and consumers.
While it is reaping record profits, Saudi Arabia is growing increasingly concerned that current oil prices might eventually dampen economic growth around the world and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices could make alternative fuels much more viable and threaten the long-term prospects of the oil-based economy.
Japan’s minister for economy, trade and industry, Akira Amari, made some sharply worded comments on that subject, warning that steep increases in the price of oil were already leading to greater energy efficiency and to the introduction of alternative fuels. He called these “natural self-defense measures“ that would “inevitably reduce the revenues of oil producing countries in the medium- to long-term.“
To ease fears over the supply of oil, a crucial factor behind the rally in prices, Saudi officials said the kingdom would be able to increase production capacity in the coming years. The Saudi oil minister, Ali al-Naimi, said that Saudi Arabia would be capable of adding an additional 2.5 million barrels a day to its output beyond the current expansion plans the kingdom is completing.
Saudi Arabia is increasing its production capacity to 12.5 million barrels a day in a $90 billion expansion plan that is scheduled for completion next year. Beyond that, Mr. Naimi said, oil experts in the kingdom had identified additional opportunities to expand production, if needed, to 15 million barrels a day in future years.
Mr. Naimi said this additional capacity would be used only “if and when crude oil demand levels warrant their development.“ He used the same language in saying the kingdom could add even more than the new 200,000-barrels-a-day increase in the short term.
The Saudis have already said they believe current demand is being met, despite the high prices — suggesting that high prices alone might not be enough to warrant the increase in supply.
Saudi Arabia has already increased its daily production by 300,000 barrels, or about 3 percent, to 9.45 million barrels. But that has had little impact.
“There is a very clear difference of opinion on key issues underpinning the high price of oil,“ said Raad Alkadiri, an energy analyst at PFC Energy, a consulting firm, who was present in Jidda. “It’s not clear that anything you heard today is going to reverse sentiment. One thing is clear: You are not going to wake up tomorrow and find that oil prices have dropped 20 or 30 dollars.“
Strike Against Chevron in Nigeria
LAGOS (Reuters) — Nigeria’s senior oil workers’ union began strike action at the energy giant Chevron on Monday but said it had not yet shut down any production, pending further talks with the government.
“A limited form of protest has started but we have not yet gone deep,” Lumumba Okugbawa, deputy secretary general of the union, told Reuters. “We have not shut down the oilfields, but administrative functions are affected.”
He said union representatives will travel to the Nigerian capital Abuja for talks with the federal government about the dispute, after negotiations with Chevron management reached deadlock.
Chevron confirmed that union members had declared a work stoppage but said it was “continuing to engage all the stakeholders” through dialogue.
“It is still too early to comment on any potential impact of the declared work stoppage on our operations,” Chevron spokeswoman Margaret Cooper said.
Chevron’s output from Nigeria is around 350,000 barrels a day, of which its equity share is around 129,000 barrels a day. A strike could further cut Nigeria’s production, already driven down by militant attacks on oil operations.
The oil minister,Odein Ajumogobia, said on Sunday that Nigeria was producing around 1.8 million barrels a day before the most recent attacks, less than two-thirds of its output capacity.
On Monday, the global oil market shrugged off the news, pushing up prices. Oil was up $1.57, to $136.93 a barrel, in New York at noon.
The Saudis, who considered the meeting a success because of the high attendance, announced a production increase of 200,000 barrels a day and an expansion of their output capacity if needed in coming years.
But news of the immediate production increase had already been absorbed by the world market for oil. Some experts had anticipated that the Saudis might announce a bigger increase.
Saudi Arabia, the biggest oil exporter, is the only country with the ability to significantly increase production quickly.
Rather than finding areas of agreement, participants in the one-day meeting in this coastal city on the Red Sea illustrated the sharply diverging views on what has caused oil prices to double in the last year to the $130- to $140-a-barrel range.
Consumer nations, led by the Britain, Japan and United States, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to pump more oil, and they say a big reason for the price inflation is speculation. Everyone agreed that surging demand in the developing world was a major factor.
That point was punctuated last Thursday when China, the world’s fastest-growing consumer of oil, announced it was sharply raising the subsidized prices that its own citizens pay. The price of oil temporarily dropped more than 3 percent on that news alone because of expectations that demand from China would slow.
But the overall demand for oil by China, India and other rapidly developing nations, including many in the Middle East, is still expected to grow relentlessly, putting enormous pressure on producers to keep pace.
If anything, the Saudi summit meeting made plain the limited options available to push prices down.
For King Abdullah of Saudi Arabia, who called for the meeting just two weeks ago, it was an opportunity to show that his oil-rich kingdom was aware of growing anger and frustration caused by surging prices in oil-importing countries. It also reflected some alarm by the Saudis that the price inflation was causing consumer nations to look far more seriously at energy alternatives, which eventually could hurt the price of oil.
The crisis is also becoming a central issue in the American presidential race, where arguments over who is to blame for high oil prices echoed some of what was heard at the Saudi summit meeting.
President Bush has supported calls by Senator John McCain, the presumptive Republican presidential nominee, to allow for more drilling off the coast of the United States. Senator Barack Obama, the presumptive Democratic nominee, opposes more offshore drilling and has called for a crackdown on market speculators, whom he blamed for pushing up prices.
The question of whether speculators are influencing prices is expected to get closer scrutiny this week in Washington, where a Senate committee led by Senator Joseph I. Lieberman, the Connecticut independent and former Democrat who supports Mr. McCain, will hold hearings on the price swings in the crude oil market.
The oil summit meeting here was attended by energy ministers from 35 nations, who convened in a vast ballroom and listened as King Abdullah said he understood the pain that $140 oil was causing.
But King Abdullah and Prime Minister Gordon Brown of Britain, who walked into the high-ceilinged hall together as a military band played, soon offered totally different perspectives on the problem.
The king spoke of the “selfish interests“ of speculators as a primary reason and urged the gathered ministers to “rule out biased rumors“ and to “reach the real causes for the increase in price.“
But Mr. Brown pointed to fundamental economics and “oil demand rising faster than supply.“ The American energy secretary, Samuel W. Bodman, put it more bluntly in a meeting with reporters, saying, “There is no evidence we can find that speculators are driving futures prices.“
Both sides spoke about the need for compromise, with Mr. Brown calling for a “global new deal“ that would allow a “greater commonality of interest“ between consumers and producers, including greater freedom to invest in one another’s markets.
But asked how all this would help remedy the worst oil crisis in decades, some ministers seemed baffled and uneasy.
“Let me ask you,“ said India’s petroleum minister, Murli Deora, when a group of reporters asked him for his views, “what else can we do to bring harmony between buyers and sellers?“
Despite the urgency that brought hundreds of participants here, Jeroen van der Veer, the chief executive of Royal Dutch Shell, summarized the difficulties faced by oil producers in dealing with record prices: “There are no overnight solutions.“
King Abdullah also called for OPEC, the oil cartel, to pledge $1 billion to help developing nations deal with the effects of soaring energy costs, to which the Saudis would contribute an undetermined share. He also offered an additional $500 million in loans from Saudi Arabia.
Beyond that, participants called for both more transparency and more regulation in energy markets, more investments in both production and refining capacity, and more cooperation between producers and consumers.
While it is reaping record profits, Saudi Arabia is growing increasingly concerned that current oil prices might eventually dampen economic growth around the world and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices could make alternative fuels much more viable and threaten the long-term prospects of the oil-based economy.
Japan’s minister for economy, trade and industry, Akira Amari, made some sharply worded comments on that subject, warning that steep increases in the price of oil were already leading to greater energy efficiency and to the introduction of alternative fuels. He called these “natural self-defense measures“ that would “inevitably reduce the revenues of oil producing countries in the medium- to long-term.“
To ease fears over the supply of oil, a crucial factor behind the rally in prices, Saudi officials said the kingdom would be able to increase production capacity in the coming years. The Saudi oil minister, Ali al-Naimi, said that Saudi Arabia would be capable of adding an additional 2.5 million barrels a day to its output beyond the current expansion plans the kingdom is completing.
Saudi Arabia is increasing its production capacity to 12.5 million barrels a day in a $90 billion expansion plan that is scheduled for completion next year. Beyond that, Mr. Naimi said, oil experts in the kingdom had identified additional opportunities to expand production, if needed, to 15 million barrels a day in future years.
Mr. Naimi said this additional capacity would be used only “if and when crude oil demand levels warrant their development.“ He used the same language in saying the kingdom could add even more than the new 200,000-barrels-a-day increase in the short term.
The Saudis have already said they believe current demand is being met, despite the high prices — suggesting that high prices alone might not be enough to warrant the increase in supply.
Saudi Arabia has already increased its daily production by 300,000 barrels, or about 3 percent, to 9.45 million barrels. But that has had little impact.
“There is a very clear difference of opinion on key issues underpinning the high price of oil,“ said Raad Alkadiri, an energy analyst at PFC Energy, a consulting firm, who was present in Jidda. “It’s not clear that anything you heard today is going to reverse sentiment. One thing is clear: You are not going to wake up tomorrow and find that oil prices have dropped 20 or 30 dollars.“
Strike Against Chevron in Nigeria
LAGOS (Reuters) — Nigeria’s senior oil workers’ union began strike action at the energy giant Chevron on Monday but said it had not yet shut down any production, pending further talks with the government.
“A limited form of protest has started but we have not yet gone deep,” Lumumba Okugbawa, deputy secretary general of the union, told Reuters. “We have not shut down the oilfields, but administrative functions are affected.”
He said union representatives will travel to the Nigerian capital Abuja for talks with the federal government about the dispute, after negotiations with Chevron management reached deadlock.
Chevron confirmed that union members had declared a work stoppage but said it was “continuing to engage all the stakeholders” through dialogue.
“It is still too early to comment on any potential impact of the declared work stoppage on our operations,” Chevron spokeswoman Margaret Cooper said.
Chevron’s output from Nigeria is around 350,000 barrels a day, of which its equity share is around 129,000 barrels a day. A strike could further cut Nigeria’s production, already driven down by militant attacks on oil operations.
The oil minister,Odein Ajumogobia, said on Sunday that Nigeria was producing around 1.8 million barrels a day before the most recent attacks, less than two-thirds of its output capacity.
Sunday, June 22, 2008
Malvinder to pump money into Religare, Fortis
Flush with funds, almost to the tune of Rs 10,000 crore after selling family stake in Ranbaxy Laboratories to Japan's Daiichi Sankyo, Malvinder Singh plans to pump in money to Religare and Fortis to make them top firms in respective sectors, besides planning to list diagnostics subsidiary 'SRL Ranbaxy'.
"Healthcare and financial services are two areas where we have existing businesses, where we will make investments," Ranbaxy CEO and Managing Director Malvinder Singh said when asked how he planned to utilise proceeds of stake sale.
Earlier this month, Ranbaxy promoters had entered into an agreement with Daiichi Sankyo to sell off their 34.82 per cent stake in the pharmaceutical major, valued at around Rs 10,000 crore.
"I think for the next many years, our focus is clear to remain in healthcare and to make it number one healthcare firm in India," Singh said.
Elaborating on future plans for Fortis, Singh said, "In the next step, we would be looking at taking it to international level and have strong presence in Asia and then take it to other markets. That will happen in a phase manner."
Dispelling speculations of stake sale in Fortis Healthcare and link-up with Anil Ambani group, he said: "I am not talking to them and I welcome competition but there is absolutely no discussion at any place and I am not talking to anyone about this."
As for Religare, he said, "In terms of the financial services, we certainly want Religare to be in the financial services what Ranbaxy is in pharmaceutical sector."
Singh, however declined to divulge details of investments in the two firms.
"Till now, we haven't discussed it to decide what will go where," he said.
Asked if the funds from the Ranbaxy stake sale could be utilised by Fortis and Religare for mergers and acquisitions, he said, "It is an integral part of the growth of these companies."
Two-three months ago Religare picked up the oldest broking house in UK, which was the first acquisition by any financial company outside India, he said.
"We have done things and will keep doings which will continue to strengthen our business globally. We are always evaluating opportunity and it is difficult at this point of time to give definite answer," Singh said when asked if there could be any acquisition in the near future.
The Singh family had recently undertook a rebranding exercise to rechristening its diagnostics subsidiary SRL Ranbaxy under the Religare name and is planning to expand it further.
Asked if there was any plan to go public with the diagnostic arm, Singh replied in the affirmative.
"The company is doing well... we are the largest pathology company in the country and at some point, we would like to list it as a separate company in the Indian market," he said.
Under the new initiative, Singh said SRL Ranbaxy would be rebranded in terms of the growth and the business.
"Healthcare and financial services are two areas where we have existing businesses, where we will make investments," Ranbaxy CEO and Managing Director Malvinder Singh said when asked how he planned to utilise proceeds of stake sale.
Earlier this month, Ranbaxy promoters had entered into an agreement with Daiichi Sankyo to sell off their 34.82 per cent stake in the pharmaceutical major, valued at around Rs 10,000 crore.
"I think for the next many years, our focus is clear to remain in healthcare and to make it number one healthcare firm in India," Singh said.
Elaborating on future plans for Fortis, Singh said, "In the next step, we would be looking at taking it to international level and have strong presence in Asia and then take it to other markets. That will happen in a phase manner."
Dispelling speculations of stake sale in Fortis Healthcare and link-up with Anil Ambani group, he said: "I am not talking to them and I welcome competition but there is absolutely no discussion at any place and I am not talking to anyone about this."
As for Religare, he said, "In terms of the financial services, we certainly want Religare to be in the financial services what Ranbaxy is in pharmaceutical sector."
Singh, however declined to divulge details of investments in the two firms.
"Till now, we haven't discussed it to decide what will go where," he said.
Asked if the funds from the Ranbaxy stake sale could be utilised by Fortis and Religare for mergers and acquisitions, he said, "It is an integral part of the growth of these companies."
Two-three months ago Religare picked up the oldest broking house in UK, which was the first acquisition by any financial company outside India, he said.
"We have done things and will keep doings which will continue to strengthen our business globally. We are always evaluating opportunity and it is difficult at this point of time to give definite answer," Singh said when asked if there could be any acquisition in the near future.
The Singh family had recently undertook a rebranding exercise to rechristening its diagnostics subsidiary SRL Ranbaxy under the Religare name and is planning to expand it further.
Asked if there was any plan to go public with the diagnostic arm, Singh replied in the affirmative.
"The company is doing well... we are the largest pathology company in the country and at some point, we would like to list it as a separate company in the Indian market," he said.
Under the new initiative, Singh said SRL Ranbaxy would be rebranded in terms of the growth and the business.
India’s Growth Outstrips Crops
With the right technology and policies, India could help feed the world. Instead, it can barely feed itself.
India’s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis.
It was not supposed to be this way.
Forty years ago, a giant development effort known as the Green Revolution drove hunger from an India synonymous with famine and want. Now, after a decade of neglect, this country is growing faster than its ability to produce more rice and wheat.
The problem has grown so dire that Prime Minister Manmohan Singh has called for a Second Green Revolution “so that the specter of food shortages is banished from the horizon once again.”
And while Mr. Singh worries about feeding the poor, India’s growing affluent population demands not only more food but also a greater variety.
Today Indian agriculture is a double tragedy. “Both in rice and wheat, India has a large untapped reservoir. It can make a major contribution to the world food crisis,” said M. S. Swaminathan, a plant geneticist who helped bring the Green Revolution to India.
India’s own people are paying as well. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor, and inflation has soared past 11 percent, the highest in 13 years.
Experts blame the agriculture slowdown on a variety of factors.
The Green Revolution introduced high-yielding varieties of rice and wheat, expanded the use of irrigation, pesticides and fertilizers, and transformed the northwestern plains into India’s breadbasket. Between 1968 and 1998, the production of cereals in India more than doubled.
But since the 1980s, the government has not expanded irrigation and access to loans for farmers, or to advance agricultural research. Groundwater has been depleted at alarming rates.
The Peterson Institute for International Economics in Washington says changes in temperature and rain patterns could diminish India’s agricultural output by 30 percent by the 2080s.
Family farms have shrunk in size and quantity, and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings.
Among farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets.
A long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, a World Bank study found, far less than farmers in, say, Thailand or the United States.
Surinder Singh Chawla knows the system is broken. Mr. Chawla, 62, bore witness to the Green Revolution — and its demise.
Once, his family grew wheat and potatoes on 20 acres. They looked to the sky for rains. They used cow manure for fertilizer. Then came the Mexican semi-dwarf wheat seedlings that the revolution helped introduce to India. Mr. Chawla’s wheat yields soared. A few years later, the same happened with new high-yield rice seeds.
Increasingly prosperous, Mr. Chawla finally bought his first tractor in 1980.
But he has since witnessed with horror the ills the revolution wrought: in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields.
By the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water.
Here in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature.
Between 1980 and 2002, the government continued to heavily subsidize fertilizers and food grains for the poor, but reduced its total investment in agriculture. Public spending on farming shrank by roughly a third, according to an analysis of government data by the Center for Policy Alternatives in New Delhi.
Today only 40 percent of Indian farms are irrigated. “When there is no water, there is nothing,” Mr. Chawla said.
And he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle. Last summer, he wanted to ease out of growing rice, a water-intensive crop.
The gains of the Green Revolution have begun to ebb in other countries, too, like Indonesia and the Philippines, agriculture experts say. But the implications in India are greater because of its sheer size.
India raised a red flag two years ago about how heavily the appetites of its 1.1 billion people would weigh on world food prices. For the first time in many years, India had to import wheat for its grain stockpile. In two years it bought about 7 million tons.
Today, two staples of the Indian diet are imported in ever-increasing quantities because farmers cannot keep up with growing demand — pulses, like lentils and peas, and vegetable oils, the main sources of protein and calories, respectively, for most Indians.
“India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed,” said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. “When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels.”
In April, in a village called Udhopur, not far from here, Harmail Singh, 60, wondered aloud how farmers could possibly be expected to grow more grain.
“The cultivable land is shrinking and government policies are not farmer friendly,” he said as he supervised his wheat harvest. “Our next generation is not willing to work in agriculture. They say it is a losing proposition.”
The luckiest farmers make more money selling out to land-hungry mall developers.
Gurmeet Singh Bassi, 33, blessed with a farm on the edges of a booming Punjabi city called Ludhiana, sold off most of his ancestral land. Its value had grown more than fivefold in two years. He made enough to buy land in a more remote part of the state and hire laborers to till it.
Meanwhile, Mr. Chawla’s neighbors migrated to North America. They were happy to lease their land to him, if he was foolish enough to stay and work it, he said. Today, he cultivates more than 100 acres.
Last year, on a small patch of that land, he planted what no one in his village could imagine putting on their plate: baby corn, which he learned was being lapped up by upscale urban Indian restaurants and even sold abroad.
At the time, baby corn brought a better profit than the government’s price for his wheat crop.
This had been the Green Revolution’s other pillar — a fixed government price for grain. A farmer could sell his crop to a private trader, but for many small tillers, it was far easier to approach the nearest government granary, and accept their rate.
For years, those prices remained miserably low, farmers and their advocates complained, and there was little incentive for farmers to invest in their crop. “For farmers,” said Mr. Swaminathan, the plant geneticist, “a remunerative price is the best fertilizer.”
Mr. Swaminathan’s adage proved true this year. After two years of having to import wheat, the government offered farmers a substantially higher price for their grain: farmers not only planted slightly more wheat but also sold much more of their harvest to the state. As a result, by May, the country’s buffer stocks were at record levels.
Nanda Kumar, India’s most senior bureaucrat for food, said the country would not need to buy wheat on the world market this year. That is good news, for India and the world, but how long it will remain the case is unclear.
Will greater demand for food and higher market prices enrich farmers, eventually, encouraging them to stay on their land? There is potential, but other conditions, like India’s inefficient transportation and supply chains, would have to improve too.
How to address these challenges is a matter of debate.
From one quarter comes pressure to introduce genetically modified crops with greater yields; from another come lawsuits to stop it. And from yet another come pleas to mount a greener Green Revolution.
Alexander Evans, author of a recent paper on food prices published by Chatham House, a British research institution, said: “This time around, it needs to be more efficient in its use of water, in its use of energy, in its use of fertilizer and land.”
Mr. Swaminathan wants to dedicate villages to sowing lentils and oilseeds, to meet demand. The World Bank, meanwhile, favors high-value crops, like Mr. Chawla’s baby corn, because they allow farmers to maximize their income from small holdings.
The market may yet help India. Mr. Chawla, for instance, has replaced baby corn with sunflowers, prompted by the high price of sunflower oil. For the same reason, he is also considering planting more wheat.
India’s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis.
It was not supposed to be this way.
Forty years ago, a giant development effort known as the Green Revolution drove hunger from an India synonymous with famine and want. Now, after a decade of neglect, this country is growing faster than its ability to produce more rice and wheat.
The problem has grown so dire that Prime Minister Manmohan Singh has called for a Second Green Revolution “so that the specter of food shortages is banished from the horizon once again.”
And while Mr. Singh worries about feeding the poor, India’s growing affluent population demands not only more food but also a greater variety.
Today Indian agriculture is a double tragedy. “Both in rice and wheat, India has a large untapped reservoir. It can make a major contribution to the world food crisis,” said M. S. Swaminathan, a plant geneticist who helped bring the Green Revolution to India.
India’s own people are paying as well. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor, and inflation has soared past 11 percent, the highest in 13 years.
Experts blame the agriculture slowdown on a variety of factors.
The Green Revolution introduced high-yielding varieties of rice and wheat, expanded the use of irrigation, pesticides and fertilizers, and transformed the northwestern plains into India’s breadbasket. Between 1968 and 1998, the production of cereals in India more than doubled.
But since the 1980s, the government has not expanded irrigation and access to loans for farmers, or to advance agricultural research. Groundwater has been depleted at alarming rates.
The Peterson Institute for International Economics in Washington says changes in temperature and rain patterns could diminish India’s agricultural output by 30 percent by the 2080s.
Family farms have shrunk in size and quantity, and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings.
Among farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets.
A long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, a World Bank study found, far less than farmers in, say, Thailand or the United States.
Surinder Singh Chawla knows the system is broken. Mr. Chawla, 62, bore witness to the Green Revolution — and its demise.
Once, his family grew wheat and potatoes on 20 acres. They looked to the sky for rains. They used cow manure for fertilizer. Then came the Mexican semi-dwarf wheat seedlings that the revolution helped introduce to India. Mr. Chawla’s wheat yields soared. A few years later, the same happened with new high-yield rice seeds.
Increasingly prosperous, Mr. Chawla finally bought his first tractor in 1980.
But he has since witnessed with horror the ills the revolution wrought: in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields.
By the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water.
Here in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature.
Between 1980 and 2002, the government continued to heavily subsidize fertilizers and food grains for the poor, but reduced its total investment in agriculture. Public spending on farming shrank by roughly a third, according to an analysis of government data by the Center for Policy Alternatives in New Delhi.
Today only 40 percent of Indian farms are irrigated. “When there is no water, there is nothing,” Mr. Chawla said.
And he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle. Last summer, he wanted to ease out of growing rice, a water-intensive crop.
The gains of the Green Revolution have begun to ebb in other countries, too, like Indonesia and the Philippines, agriculture experts say. But the implications in India are greater because of its sheer size.
India raised a red flag two years ago about how heavily the appetites of its 1.1 billion people would weigh on world food prices. For the first time in many years, India had to import wheat for its grain stockpile. In two years it bought about 7 million tons.
Today, two staples of the Indian diet are imported in ever-increasing quantities because farmers cannot keep up with growing demand — pulses, like lentils and peas, and vegetable oils, the main sources of protein and calories, respectively, for most Indians.
“India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed,” said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. “When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels.”
In April, in a village called Udhopur, not far from here, Harmail Singh, 60, wondered aloud how farmers could possibly be expected to grow more grain.
“The cultivable land is shrinking and government policies are not farmer friendly,” he said as he supervised his wheat harvest. “Our next generation is not willing to work in agriculture. They say it is a losing proposition.”
The luckiest farmers make more money selling out to land-hungry mall developers.
Gurmeet Singh Bassi, 33, blessed with a farm on the edges of a booming Punjabi city called Ludhiana, sold off most of his ancestral land. Its value had grown more than fivefold in two years. He made enough to buy land in a more remote part of the state and hire laborers to till it.
Meanwhile, Mr. Chawla’s neighbors migrated to North America. They were happy to lease their land to him, if he was foolish enough to stay and work it, he said. Today, he cultivates more than 100 acres.
Last year, on a small patch of that land, he planted what no one in his village could imagine putting on their plate: baby corn, which he learned was being lapped up by upscale urban Indian restaurants and even sold abroad.
At the time, baby corn brought a better profit than the government’s price for his wheat crop.
This had been the Green Revolution’s other pillar — a fixed government price for grain. A farmer could sell his crop to a private trader, but for many small tillers, it was far easier to approach the nearest government granary, and accept their rate.
For years, those prices remained miserably low, farmers and their advocates complained, and there was little incentive for farmers to invest in their crop. “For farmers,” said Mr. Swaminathan, the plant geneticist, “a remunerative price is the best fertilizer.”
Mr. Swaminathan’s adage proved true this year. After two years of having to import wheat, the government offered farmers a substantially higher price for their grain: farmers not only planted slightly more wheat but also sold much more of their harvest to the state. As a result, by May, the country’s buffer stocks were at record levels.
Nanda Kumar, India’s most senior bureaucrat for food, said the country would not need to buy wheat on the world market this year. That is good news, for India and the world, but how long it will remain the case is unclear.
Will greater demand for food and higher market prices enrich farmers, eventually, encouraging them to stay on their land? There is potential, but other conditions, like India’s inefficient transportation and supply chains, would have to improve too.
How to address these challenges is a matter of debate.
From one quarter comes pressure to introduce genetically modified crops with greater yields; from another come lawsuits to stop it. And from yet another come pleas to mount a greener Green Revolution.
Alexander Evans, author of a recent paper on food prices published by Chatham House, a British research institution, said: “This time around, it needs to be more efficient in its use of water, in its use of energy, in its use of fertilizer and land.”
Mr. Swaminathan wants to dedicate villages to sowing lentils and oilseeds, to meet demand. The World Bank, meanwhile, favors high-value crops, like Mr. Chawla’s baby corn, because they allow farmers to maximize their income from small holdings.
The market may yet help India. Mr. Chawla, for instance, has replaced baby corn with sunflowers, prompted by the high price of sunflower oil. For the same reason, he is also considering planting more wheat.
Friday, June 20, 2008
GLOBAL MARKET IS MIXED AFTER YESTERDAY TRUMA.INDIAN MARKET WOULD OPEN IN FLAT TO POSITIVE NOTE.LEVEL OF NIFTY 4480-4500-435-4550 THIS IS THE RANGE OF THE MARKET BUY FROM 4535 AND ABOVE AND GO SHORT IF MARKETDOES NOT SUSTAIN 4500 WITH SL OF 4535.TOTAL MARKET O I IS 84 K CR.JUNE SERISE IS 69 K CR AND JULY SERISE IS 14 K CR.PUT CALL RATIO IS 1.51% BE CAUTIOUS AT MARKET INFLATION EXPECTION IS 9.5 TO 10.25.ONE GOOD TRIGGER FOR MARKET IS OIL SETTLED AT$132 WILL BE VOLATILE MAINTAIN STRICT S L .HAVE A NICE TRADING DAY
Thursday, June 19, 2008
Ranbaxy, Pfizer sign truce over Lipitor
Exactly a week after the promoters of Ranbaxy Laboratories sold their shareholding to Japanese drug maker Daiichi Sankyo, the Indian drug maker and US giant Pfizer announced that they have reached an out-of-court settlement on their litigation over the world’s largest selling drug, Lipitor (Atorvastatin). According to the settlement, Ranbaxy will launch its generic version of Lipitor, the $12.7-billion cholesterol-lowering medicine, and combination drug Caduet in November 30, 2011 in the US with exclusive marketing rights for 180 days, along with the innovator company. Industry estimates peg Ranbaxy’s revenue upside from the settlement for Lipitor at $1.5 billion over a four-year period up to May 2012. Ranbaxy (subject to litigation) was on course to launch its generic version of Lipitor in the US in March, 2010, 15 months ahead of its patent expiry in June, 2011. The settlement pushes back the launch date by 20 months, even though it eliminates all uncertainty regarding the launch date. In addition, Ranbaxy will also not receive any upfront payment from the out-of-court settlement. Says Prabhudas Lilladher’s pharma analyst Ranjit Kapadia: “The settlement brings certainty to Ranbaxy’s launch and will cut down litigation cost for Ranbaxy from tomorrow itself. However, the drug’s launch has been pushed back by 20 months, which means that Pfizer will get additional sales of around $20 billion during the extended period.”
Ranbaxy has described the deal as a win-win situation. “This is the largest and the most comprehensive out-of-court settlement ever in the pharma industry covering a total revenue of over $13 billion. The revenues will start kicking in from this year as we will be launching generic version of Lipitor in Canada this calendar year,” Ranbaxy Laboratories CEO and MD Malvinder Singh told ET. A senior Pfizer executive said the agreement clearly reaffirms the value and importance of intellectual property. The settlement was announced after Indian stock exchanges closed on Wednesday. Ranbaxy shares moved up 2.9% to Rs 598 during the day. According to industry estimates, Ranbaxy will get a revenue upside of around $1.5 billion from the Lipitor generic over a four-year period up to May 2012. Bulk of this revenue will be backloaded and is expected to accrue when Ranbaxy launches the drug in the US market in November, 2011. Lipitor generates annual sales of $8 billion in the US alone. In Canada, the drug rakes in about a $1 billion in sales every year. Caduet, a combination drug of Lipitor and hypertension drug Norvasc, has annual global sales of $400 million. In addition to the US and Canada, the Indian drug maker will also have the licence to sell Atorvastatin in six more countries - Belgium, Netherlands, Germany, Sweden, Italy and Australia - on different dates. Ranbaxy can launch its Atorvastatin 2-4 months ahead of patent expiry in these countries. Ranbaxy and Pfizer have also resolved their disputes regarding Atorvastatin in Malaysia, Brunei, Peru and Vietnam.
Ranbaxy has described the deal as a win-win situation. “This is the largest and the most comprehensive out-of-court settlement ever in the pharma industry covering a total revenue of over $13 billion. The revenues will start kicking in from this year as we will be launching generic version of Lipitor in Canada this calendar year,” Ranbaxy Laboratories CEO and MD Malvinder Singh told ET. A senior Pfizer executive said the agreement clearly reaffirms the value and importance of intellectual property. The settlement was announced after Indian stock exchanges closed on Wednesday. Ranbaxy shares moved up 2.9% to Rs 598 during the day. According to industry estimates, Ranbaxy will get a revenue upside of around $1.5 billion from the Lipitor generic over a four-year period up to May 2012. Bulk of this revenue will be backloaded and is expected to accrue when Ranbaxy launches the drug in the US market in November, 2011. Lipitor generates annual sales of $8 billion in the US alone. In Canada, the drug rakes in about a $1 billion in sales every year. Caduet, a combination drug of Lipitor and hypertension drug Norvasc, has annual global sales of $400 million. In addition to the US and Canada, the Indian drug maker will also have the licence to sell Atorvastatin in six more countries - Belgium, Netherlands, Germany, Sweden, Italy and Australia - on different dates. Ranbaxy can launch its Atorvastatin 2-4 months ahead of patent expiry in these countries. Ranbaxy and Pfizer have also resolved their disputes regarding Atorvastatin in Malaysia, Brunei, Peru and Vietnam.
Vietnam move hits hopes of cheaper rice
The world’s second-largest exporter of rice on Wednesday dashed hopes of a significant reduction in prices of the grain in the short term when Vietnam imposed a minimum export price of $800 a tonne for new contracts.
The minimum export price came as Hanoi on Wednesday lifted a ban on the signing of new export contracts that was imposed earlier this year. However, it said that it would only allow limited sales and reiterated a limit of 3.5m tonnes of exports for the first nine months of the year.
The minimum export price came as Hanoi on Wednesday lifted a ban on the signing of new export contracts that was imposed earlier this year. However, it said that it would only allow limited sales and reiterated a limit of 3.5m tonnes of exports for the first nine months of the year.
Wednesday, June 18, 2008
U.S. to Set New Limits on Oil Trade Overseas
Federal regulators said on Tuesday that they would place stricter limits on foreign exchanges that trade American oil as concerns continue to grow about the role of speculation in rising fuel prices. Some lawmakers said the move was long overdue.
At a Senate hearing to assess its performance, the Commodity Futures Trading Commission said it would require the London-based ICE Futures Europe exchange to adopt position limits used in the United States for the trading of the West Texas Intermediate crude oil contract, which is linked to a similar contract on the New York Mercantile Exchange.
Under the new agreement, foreign officials also will share daily trading data with American authorities and report any violations. Previously they shared data on a weekly basis.
IntercontinentalExchange Inc. in Atlanta, the parent company of ICE Futures Europe, plans to comply with the new rules and said the commission’s action would have almost no impact on its customers or business.
The commission’s acting chairman, Walter L. Lukken, had previously told Congress that oil prices appeared to reflect market fundamentals. He pointed to the declining value of the dollar and rising demand in developing nations as major factors behind the multiyear ascent in oil prices.
But in the last month the agency has taken a flurry of actions to gather more data on unregulated trading, including over-the-counter swaps.
Considering the commission’s limited view of the futures market, Senator Byron L. Dorgan, a North Dakota Democrat, questioned whether regulators knew enough about the markets to gauge the effects of speculation.
“If you don’t have the foggiest idea what percentage of total contracts you are regulating, you wouldn’t have a clue whether there is excessive speculation in the markets,” Mr. Dorgan said.
At a Senate hearing to assess its performance, the Commodity Futures Trading Commission said it would require the London-based ICE Futures Europe exchange to adopt position limits used in the United States for the trading of the West Texas Intermediate crude oil contract, which is linked to a similar contract on the New York Mercantile Exchange.
Under the new agreement, foreign officials also will share daily trading data with American authorities and report any violations. Previously they shared data on a weekly basis.
IntercontinentalExchange Inc. in Atlanta, the parent company of ICE Futures Europe, plans to comply with the new rules and said the commission’s action would have almost no impact on its customers or business.
The commission’s acting chairman, Walter L. Lukken, had previously told Congress that oil prices appeared to reflect market fundamentals. He pointed to the declining value of the dollar and rising demand in developing nations as major factors behind the multiyear ascent in oil prices.
But in the last month the agency has taken a flurry of actions to gather more data on unregulated trading, including over-the-counter swaps.
Considering the commission’s limited view of the futures market, Senator Byron L. Dorgan, a North Dakota Democrat, questioned whether regulators knew enough about the markets to gauge the effects of speculation.
“If you don’t have the foggiest idea what percentage of total contracts you are regulating, you wouldn’t have a clue whether there is excessive speculation in the markets,” Mr. Dorgan said.
Growth down to 3.6% for six core industries in April 08
Pulled down by the sluggish performance of petroleum and electricity sector, growth of India’s six core industries slowed down to 3.6% in the first month of the current fiscal as against 5.9% a year ago.
The six core infrastructure industries - crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel - had registered a 9.6% growth in the preceding month of March.
Of the six industries, that have a combined weight of 26.7% in the overall Index of Industrial Production (IIP), refinery products growth slowed down considerably to 4.3% in April from 15.% in the same month last year.
Similarly, electricity generation growth was down to 1.4% from a robust 8.7% in April 2007.
Crude oil growth came down to 0.9% from 1.4%.
The remaining three sectors--coal, cement and finished carbon steel--registered good growth rates. Coal output grew by 10.3% from a mere 0.6%, while cement production rose by 6.9% from 5.8% and finished carbon steel to 4% from 2.7%.
Industrial growth, contributed to the extent of more than one-fourth by these six industries, had recovered to 7.1% in April from a mere 3.9% in the preceding month. However, the growth was quite down from 11.3% in April 2007.
For the April-March period of 2007-08, growth of six infrastructure industries was down to 5.6% as compared to 9.2% in the corresponding period a year ago.
The six core infrastructure industries - crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel - had registered a 9.6% growth in the preceding month of March.
Of the six industries, that have a combined weight of 26.7% in the overall Index of Industrial Production (IIP), refinery products growth slowed down considerably to 4.3% in April from 15.% in the same month last year.
Similarly, electricity generation growth was down to 1.4% from a robust 8.7% in April 2007.
Crude oil growth came down to 0.9% from 1.4%.
The remaining three sectors--coal, cement and finished carbon steel--registered good growth rates. Coal output grew by 10.3% from a mere 0.6%, while cement production rose by 6.9% from 5.8% and finished carbon steel to 4% from 2.7%.
Industrial growth, contributed to the extent of more than one-fourth by these six industries, had recovered to 7.1% in April from a mere 3.9% in the preceding month. However, the growth was quite down from 11.3% in April 2007.
For the April-March period of 2007-08, growth of six infrastructure industries was down to 5.6% as compared to 9.2% in the corresponding period a year ago.
MARKET PREDICTION
GLOBAL MARKETS ARE MIXED.
NIFTY COULD OPEN FLAT TOTAL OI IS 85K CR AND JUNE SERISE OI IS 75K CR AND JULY SERISE O I IS 10 K CR,PUT CAL RATIO EASING A BIT TO 1.54 DUE TO FEW ADDITION IN CALL OPTION.
LEVEL OF NIFTY IS 4580-4630-4670-4700.
HEAVY SHORT COVERING FOUND IN BANKING AND FINANCIAL SERVICE AND CONSTRUCTION SECTOR ..
TODAY WE CAN ASSUME SAME SHORT COVERING IN THE SECTOR.
HAVE A NICE TRADING DAY
-MR SAM
NIFTY COULD OPEN FLAT TOTAL OI IS 85K CR AND JUNE SERISE OI IS 75K CR AND JULY SERISE O I IS 10 K CR,PUT CAL RATIO EASING A BIT TO 1.54 DUE TO FEW ADDITION IN CALL OPTION.
LEVEL OF NIFTY IS 4580-4630-4670-4700.
HEAVY SHORT COVERING FOUND IN BANKING AND FINANCIAL SERVICE AND CONSTRUCTION SECTOR ..
TODAY WE CAN ASSUME SAME SHORT COVERING IN THE SECTOR.
HAVE A NICE TRADING DAY
-MR SAM
Investors pour funds into Asian real estate
The flow of capital into Asian property from outside the region is accelerating as a result of the credit crisis in the US, according to a report on the sector published on Wednesday.
Property investment in Asia grew 27 per cent to $121bn in 2007 and continues to build, says the report, which is being published by KPMG, the Asia Pacific Real Estate Association and index provider FTSE.
Investment was evenly allocated over the first and second halves of the year, unlike in Europe and North America, where investment slowed dramatically in the second half.
Most Asian markets recorded direct real estate returns above the global average of 10 per cent last year. This is forecast to continue, albeit at a lower rate.
The report comes during a period of aggressive fundraising activity for new global property funds, many of which are raising allocations to Asia to gain exposure to economies that are relatively insulated from the credit crisis. Property markets in the region, while not immune, have stood up relatively well compared with the US and Europe.
MGPA, the private equity fund manager part owned by Australia’s Macquarie Bank, this week launched a global fund that will invest mostly in Asia. It has secured $3.9bn in equity for Asian investment, giving it a potential buying power in the region, with leverage, of $15.6bn.
The fund has already committed $2.2bn to investments in Singapore, Japan, China and Thailand, and is looking at South Korea, Malaysia, Taiwan and Australia. North American investors make up 40 per cent of the fund.
Asian real estate investment trusts also outperformed American and European counterparts. Credit problems and softening real estate prices in the US and Europe mean that investors are focusing more on Asia both for long-term returns and opportunistic investments, according to the report.
At the same time, banks have become more reluctant to lend for new Asian projects, which increases the bargaining power of foreign funds. But the report says this has slowed, rather than halted, the financing process.
“There’s no shortage of capital in Asia,” said Andrew Weir, one of the report’s authors. “There are investment funds that have raised money and haven’t spent it yet.”
Property investment in Asia grew 27 per cent to $121bn in 2007 and continues to build, says the report, which is being published by KPMG, the Asia Pacific Real Estate Association and index provider FTSE.
Investment was evenly allocated over the first and second halves of the year, unlike in Europe and North America, where investment slowed dramatically in the second half.
Most Asian markets recorded direct real estate returns above the global average of 10 per cent last year. This is forecast to continue, albeit at a lower rate.
The report comes during a period of aggressive fundraising activity for new global property funds, many of which are raising allocations to Asia to gain exposure to economies that are relatively insulated from the credit crisis. Property markets in the region, while not immune, have stood up relatively well compared with the US and Europe.
MGPA, the private equity fund manager part owned by Australia’s Macquarie Bank, this week launched a global fund that will invest mostly in Asia. It has secured $3.9bn in equity for Asian investment, giving it a potential buying power in the region, with leverage, of $15.6bn.
The fund has already committed $2.2bn to investments in Singapore, Japan, China and Thailand, and is looking at South Korea, Malaysia, Taiwan and Australia. North American investors make up 40 per cent of the fund.
Asian real estate investment trusts also outperformed American and European counterparts. Credit problems and softening real estate prices in the US and Europe mean that investors are focusing more on Asia both for long-term returns and opportunistic investments, according to the report.
At the same time, banks have become more reluctant to lend for new Asian projects, which increases the bargaining power of foreign funds. But the report says this has slowed, rather than halted, the financing process.
“There’s no shortage of capital in Asia,” said Andrew Weir, one of the report’s authors. “There are investment funds that have raised money and haven’t spent it yet.”
Tuesday, June 17, 2008
MARKET PREDICTION
WORLD MARKETS ARE BIT NEGATIVE AS OIL TOUCHED ALL TIME HIGH AND THEN REBOUND BACK $133(APROX) AFTER SAUDIARABIA COMMIT TO BOOST THE SUPPLY,$vsINR HOVERING AROUND 42.95,GOOD FOR IT AND PHARMA STOCK.
NIFTY LEVEL TO BE WATCH OUT TODAY IS 4530-4580-4630 IF SUSTAIN ABOVE 4530 GO LONG WITH SL OF 4500 AND IF MARKET DOES NOT HOLD 4580 GO SHORT WITH SL OF 4600.
IT SECTOR
WIPRO,SASKEN,NIITTECH, GSSAMERICA
PHARMA
DRREDDY, CADILA, SUNPHARMA
MINING
PLAY WITH STRICT SL.
TOTAL O I IS 81 K CR JUNE SERISE IS 72 K CR AND JULY IS 21 K CR.
PUT CALL RATIO IS 1.60 MAINTAINING ALMOST SAME LEVEL.
HAVE A NICE TRADING DAY
-MR SAM
NIFTY LEVEL TO BE WATCH OUT TODAY IS 4530-4580-4630 IF SUSTAIN ABOVE 4530 GO LONG WITH SL OF 4500 AND IF MARKET DOES NOT HOLD 4580 GO SHORT WITH SL OF 4600.
IT SECTOR
WIPRO,SASKEN,NIITTECH, GSSAMERICA
PHARMA
DRREDDY, CADILA, SUNPHARMA
MINING
PLAY WITH STRICT SL.
TOTAL O I IS 81 K CR JUNE SERISE IS 72 K CR AND JULY IS 21 K CR.
PUT CALL RATIO IS 1.60 MAINTAINING ALMOST SAME LEVEL.
HAVE A NICE TRADING DAY
-MR SAM
Kotak Launches Sensex ETF
Kotak Mutual is launching Kotak Sensex ETF on May 7, 2008. This exchange traded fund will track BSE Sensitive Index (Sensex) to provide returns before expenses that closely correspond to the total returns of the BSE Sensex. The fund is open for subscription from May 07, 2008 till May 16, 2008. The units would be listed on BSE to provide liquidity through secondary market.
This will be the second ETF on Sensex. The first ETF on Sensex was launched in January 2003 -- ICICI Pru Spice which has closely tracked Sensex and delivered returns as much as the Sensex in the past 5-years but currently has less than Rs 1 crore assets under management.ETF is an Index fund but they trade on the market like stocks. Kotak Sensex ETF will facilitate exposure to Sensex with a single order. It will also enable trading flexibility by Intra day buying and selling just like any other listed share. The pricing will also be almost live as the intraday indicative price is likely to be closely linked to Sensex.Index funds have lower cost as they charge lower management fee compared to actively managed funds. Investors will have to pay brokerage in buying and selling these instead of any entry/exit load.Other Details:
Each unit of the Kotak Sensex ETF will be approximately equal to 1/100th of the value of BSE
SENSEX
Entry Load during NFO: For investments < investments =" "> Rs 1 Crore Nil
No entry load shall be charged on “all direct” applications received by AMC i.e., on application forms that are not routed through any distributor / agent / broker and submitted to AMC office or collection centre / investment service centre.
Entry Load during continuous offer : Nil
Exit Load Nil
This will be the second ETF on Sensex. The first ETF on Sensex was launched in January 2003 -- ICICI Pru Spice which has closely tracked Sensex and delivered returns as much as the Sensex in the past 5-years but currently has less than Rs 1 crore assets under management.ETF is an Index fund but they trade on the market like stocks. Kotak Sensex ETF will facilitate exposure to Sensex with a single order. It will also enable trading flexibility by Intra day buying and selling just like any other listed share. The pricing will also be almost live as the intraday indicative price is likely to be closely linked to Sensex.Index funds have lower cost as they charge lower management fee compared to actively managed funds. Investors will have to pay brokerage in buying and selling these instead of any entry/exit load.Other Details:
Each unit of the Kotak Sensex ETF will be approximately equal to 1/100th of the value of BSE
SENSEX
Entry Load during NFO: For investments < investments =" "> Rs 1 Crore Nil
No entry load shall be charged on “all direct” applications received by AMC i.e., on application forms that are not routed through any distributor / agent / broker and submitted to AMC office or collection centre / investment service centre.
Entry Load during continuous offer : Nil
Exit Load Nil
Ranbaxy dismisses reports of Pfizer's bid for stake
Ranbaxy Labs, which last week announced sale of its promoters' 34.8 per cent stake to Japan's Daiichi Sankyo for nearly Rs 10,000 crore, dismissed rumours that Pfizer might bid for 65 per cent stake which is not owned by the promoting family as "very speculative". Leading business newspaper Financial Times quoted Ranbaxy promoter and CEO and Malvinder Mohan Singh as saying that he had not been in talks with the world's largest drugmaker. The daily also said that Singh dismissed rumours that Pfizer might bid for the 65 per cent stake in Ranbaxy not owned by the family as "very speculative". In one of the the largest sell-outs in India's private sector, promoters of Ranbaxy, the country's largest drugmaker, announced selling their entire 34.8 per cent stake in the firm to Japan's Daiichi Sankyo for Rs 10,000 crore. The decision to sell was "emotional," Singh has said. "But you cannot hold a company from future advancement because your shareholding will come down." "If someone else can create more value and do things better, you should be open to exploring those options," Singh is quoted as saying in the daily. Explaining why he sold his family's crown jewel, Singh has said, "It takes Ranbaxy to a whole different level and there is huge merit in bringing big pharma and generics together. Joining forces with Daiichi strengthens Ranbaxy's fledging and expensive efforts to develop original drugs rather than just copying existing ones."
Monday, June 16, 2008
Fears of CRR hike may haunt market
The spectre of inflation, which many bet would rise to double digits soon, is expected to keep shares of interest-rate-sensitive sectors such as banks and real estate under pressure. Investors fear the Reserve Bank of India (RBI), as part of its efforts to contain rising inflation, would resort to more measures to make banks’ lending rates dearer. Analysts expect the central bank to hike the cash reserve ratio (CRR) next - the minimum cash that banks need to keep with RBI, after the recent hike in repo-the rate at which banks borrow from RBI for short-term. As a CRR hike would result in banks having lesser money at their disposal for lending, the move is expected to keep interest rates higher and further slowdown borrowing by corporates and individuals. By keeping interest rates high, RBI intends to curb spending, and in turn keep prices lower. “The wide and persistent gap between RBI’s WPI inflation target (of 5.5%) and the likely trajectory suggests more policy tightening ahead to keep inflation expectations anchored. We expect another 25 basis point (bps) hike in the repo rate in Q3 (Oct-Dec) 2008 and 100-bps hike in CRR during this financial year,” Lehman Brothers economist Sonal Varma said in a client note. Inflation, measured by wholesale price index (WPI), jumped to a 7-year high of 8.75% in the week to May 31, after rising 8.24% in the previous week. Investors fear that the negative impact of higher lending rates may not be restricted to banks and real estate, but would rub off on the entire economy. Such concerns over slowdown in economic growth are expected to keep the market choppy this week too. “If the course of monetary policy is to be corrected by controlling money supply, interest rates will go up; exchange rates will appreciate leading to further slowdown in growth,” Merrill Lynch equity strategist Vijay Gaba said in a client note. A weaker rupee against the US dollar makes import of oil and other critical raw materials costlier, thereby widening trade deficits while boosting exports. These parameters of India’s economic conditions are of significance, as they are closely watched by foreign investors, including institutions, which have been key to India’s recent bull run. So far in 2008, foreign institutions have net-sold Indian shares worth Rs 21,832.60 on account of India’s deteriorating economic conditions. The performance of dollar in the coming weeks will largely depend on the outcome of the Fed meet on June 24-25. If the Fed does not cut benchmark rates further in the meet, analysts expect the dollar to weaken, at least, temporarily.
MARKET PREDICTION
GLOBAL MARKETS ARE IN GREEN AND WE ARE HOPING POSITIVE OPENING .
LEVELS OF NIFTY TO BE WATCH OUT IS 4480-4550-4620 ..
TOTAL OI IS 81 K CR AND JULY SERIES IS 8 K CR.
PUT CALL RATIO IS HOVERING AROUND 1.61%.
FROM HIGH THIS RALLY CAN BE ASSUME UPTO 4680-4700 WE CAN TAKE FRESH VIEW ON NIFTY FROM 4700 AND ABOVE.
HAVE A NICE TRADING ..
-MR SAM
LEVELS OF NIFTY TO BE WATCH OUT IS 4480-4550-4620 ..
TOTAL OI IS 81 K CR AND JULY SERIES IS 8 K CR.
PUT CALL RATIO IS HOVERING AROUND 1.61%.
FROM HIGH THIS RALLY CAN BE ASSUME UPTO 4680-4700 WE CAN TAKE FRESH VIEW ON NIFTY FROM 4700 AND ABOVE.
HAVE A NICE TRADING ..
-MR SAM
SAIL to set up three steel processing units
The Steel Authority of India Ltd (SAIL) is setting up three steel processing units (SPU) in Madhya Pradesh for manufacturing various types of steel items used by the construction industry.
The foundation stone for the first two units in Ujjain and Hosangabad have been laid during the week by the Minister for Steel, Ram Vilas Paswan. The company plans to invest Rs 100 crore in the Ujjain unit and Rs 154 for the Hosangabad unit, a company release said.
The Ujjain unit will produce TMT bars from billets supplied from the Bhilai Steel Plant (BSP) and will have an annual capacity of one lakh tonne.
The Hosangabad unit will manufacture angles, channels, beams, joists and also TMT bars. SAIL is in the process of setting up 10 SPUs in six States where it does not have any production facility to meet the market demand for tailor-made steel products and to help increase per capita steel consumption in rural areas, the release said.
The foundation stone for the first two units in Ujjain and Hosangabad have been laid during the week by the Minister for Steel, Ram Vilas Paswan. The company plans to invest Rs 100 crore in the Ujjain unit and Rs 154 for the Hosangabad unit, a company release said.
The Ujjain unit will produce TMT bars from billets supplied from the Bhilai Steel Plant (BSP) and will have an annual capacity of one lakh tonne.
The Hosangabad unit will manufacture angles, channels, beams, joists and also TMT bars. SAIL is in the process of setting up 10 SPUs in six States where it does not have any production facility to meet the market demand for tailor-made steel products and to help increase per capita steel consumption in rural areas, the release said.
Friday, June 13, 2008
OIL PRICE HIKE IS SPECULATION OR DEMAND PULL????????
By now it is becoming too obvious that the United States is playing the oil game all over again. And this is the desperate gamble of a country whose economy is neck deep in trouble. Given this scenario, managing prices of oil is central to the US economic architecture. Expectedly, this gamble has been played in a great alliance between the US government, US financial sector and the media. Naturally, since the past few years, the US financial sector has begun to turn its attention from currency and stock markets to commodity markets. According to The Economist, about $260 billion has been invested into the commodity market -- up nearly 20 times from what it was in 2003. Coinciding with a weak dollar and this speculative interest of the US financial sector, prices of commodities have soared globally. And most of these investments are bets placed by hedge and pension funds, always on the lookout for risky but high-yielding investments. What is indeed interesting to note here is that unlike margin requirements for stocks which are as high as 50 per cent in many markets, the margin requirements for commodities is a mere 5-7 per cent. This implies that with an outlay of a mere $260 billion these speculators would be able to take positions of approximately $5 trillion -- yes, $5 trillion! -- in the futures markets. It is estimated that half of these are bets placed on oil.
It may be noted that oil is internationally traded in New York and London and denominated in US dollar only. Naturally, it has been opined by experts that since the advent of oil futures, oil prices are no longer controlled by OPEC (Organization of Petroleum Exporting Countries). Rather, it is now done by Wall Street. This tectonic shift in the determination of international oil prices from the hands of producers to the hands of speculators is crucial to understanding the oil price rise. Today's oil prices are believed to be determined by the four Anglo-American financial companies-turned-oil traders, viz., Goldman Sachs, Citigroup, J P Morgan Chase, and Morgan Stanley. It is only they who have any idea about who is entering into oil futures or derivative contracts. It is also they who are placing bets on oil prices and in the process ensuring that the prices of oil futures go up by the day. But how does the increase in the price of this oil in the futures market determine the prices of oil in the spot markets? Crucially, does speculation in oil influence and determine the prices of oil in the spot markets? Answering these questions as to whether speculation has supercharged the demand for oil The Economist, in its recent issue, states: 'But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of 'paper barrels,' but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.' On both counts -- that speculation in oil is not pushing up oil prices, as well as on the issue of the build-up of inventories -- the venerable Economist is wrong. The finding of US Senate Committee in 2006 In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil. The report further stated that it was 'difficult to quantify the effect of speculation on prices,' but concluded that 'there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.' The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation! But the report found a serious loophole in the US regulation of oil derivatives trading, which according to experts could allow even a 'herd of elephants to walk to through it.' The report pointed out that US energy futures were traded on regulated exchanges within the US and subjected to extensive oversight by the Commodities Future Trading Commission (CFTC) -- the US regulator for commodity futures market. In recent years, the report however pointed out to the tremendous growth in the trading of contracts which were traded on unregulated OTC (over-the-counter) electronic markets. Interestingly, the report pointed out that the trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron into the Commodity Futures Modernization Act in 2000. The report concludes that consequential impact on account of lack of market oversight has been 'substantial.' NYMEX (New York Mercantile Exchange) traders are required to keep records of all trades and report large trades to the CFTC enabling it to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. In contrast, however, traders on unregulated OTC electronic exchanges are not required to keep records or file any information with the CFTC as these trades are exempt from its oversight. Consequently, as there is no monitoring of such trading by the oversight body, the committee believes that it allows speculators to indulge in price manipulation. Finally, the report concludes that to a certain extent, whether or not any level of speculation is 'excessive' lies entirely in the eye of the beholder. In the absence of data, however, it is impossible to begin the analysis or engage in an informed debate over whether our energy markets are functioning properly or are in the midst of a speculative bubble. That was two years back. And much water has flown in the Mississippi since then. The link to the spot markets Now to answer the second leg of the question: how speculators are able to translate the future prices into spot prices. The answer to this question is fairly simple. After all, oil price is highly inelastic -- i.e. even a substantial increase in price does not alter the consumption pattern. No wonder, a mere 3-4 per cent annual global growth has translated into more than a 40 per cent annual increase in prices for the past three or four years. But there is more to it. One may note that the world supply and demand is evenly matched at about 85 million barrels every day. Only if supplies exceed demand by a substantial margin can any downward pressure on oil prices be created. In contrast, if someone with deep pockets picks up even a small quantity of oil, it dramatically alters the delicate global demand-supply gap, creating enormous upward pressure on prices. What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices. Do the oil speculators know of this reserves build-up by the US and are indulging in rampant speculation? Are they acting in tandem with the US government? Worse still, are they bordering on recklessness knowing fully well that if the oil prices fall the US government will be forced to a 'Bears Stearns' on them and bail them out? One is not sure. But who foots bill at such high prices? At an average price of even $100 per barrel, the entire cost for the purchase of this additional 350 million barrels by the US works out to a mere $35 billion. Needless to emphasise, this can be funded by the US by allowing it currency printing presses to work overtime. After all, it has a currency that is acceptable globally and people worldwide are willing to exchange it for precious oil. No wonder Goldman Sachs predicts that oil will touch $200 to a barrel shortly, knowing fully well that the US government will back its prediction. And, in the past three years alone the world has paid an estimated additional $3 trillion for its oil purchases. Oil speculators (and not oil producers) are the biggest beneficiaries of this price increase. In the process, the US has been able to keep the value of the US dollar afloat -- perhaps at an extra cost of a mere $35 billion to its exchequer! The global crude oil price rise is complex, sinister and beyond innocent economic theories of demand and supply. It is speculation, geopolitics and much more. Obviously, there is a symbiotic link between the US, the US dollar and the oil prices. And unless this truth is understood and the link broken, oil prices cannot be controlled.
It may be noted that oil is internationally traded in New York and London and denominated in US dollar only. Naturally, it has been opined by experts that since the advent of oil futures, oil prices are no longer controlled by OPEC (Organization of Petroleum Exporting Countries). Rather, it is now done by Wall Street. This tectonic shift in the determination of international oil prices from the hands of producers to the hands of speculators is crucial to understanding the oil price rise. Today's oil prices are believed to be determined by the four Anglo-American financial companies-turned-oil traders, viz., Goldman Sachs, Citigroup, J P Morgan Chase, and Morgan Stanley. It is only they who have any idea about who is entering into oil futures or derivative contracts. It is also they who are placing bets on oil prices and in the process ensuring that the prices of oil futures go up by the day. But how does the increase in the price of this oil in the futures market determine the prices of oil in the spot markets? Crucially, does speculation in oil influence and determine the prices of oil in the spot markets? Answering these questions as to whether speculation has supercharged the demand for oil The Economist, in its recent issue, states: 'But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of 'paper barrels,' but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.' On both counts -- that speculation in oil is not pushing up oil prices, as well as on the issue of the build-up of inventories -- the venerable Economist is wrong. The finding of US Senate Committee in 2006 In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil. The report further stated that it was 'difficult to quantify the effect of speculation on prices,' but concluded that 'there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.' The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation! But the report found a serious loophole in the US regulation of oil derivatives trading, which according to experts could allow even a 'herd of elephants to walk to through it.' The report pointed out that US energy futures were traded on regulated exchanges within the US and subjected to extensive oversight by the Commodities Future Trading Commission (CFTC) -- the US regulator for commodity futures market. In recent years, the report however pointed out to the tremendous growth in the trading of contracts which were traded on unregulated OTC (over-the-counter) electronic markets. Interestingly, the report pointed out that the trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron into the Commodity Futures Modernization Act in 2000. The report concludes that consequential impact on account of lack of market oversight has been 'substantial.' NYMEX (New York Mercantile Exchange) traders are required to keep records of all trades and report large trades to the CFTC enabling it to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. In contrast, however, traders on unregulated OTC electronic exchanges are not required to keep records or file any information with the CFTC as these trades are exempt from its oversight. Consequently, as there is no monitoring of such trading by the oversight body, the committee believes that it allows speculators to indulge in price manipulation. Finally, the report concludes that to a certain extent, whether or not any level of speculation is 'excessive' lies entirely in the eye of the beholder. In the absence of data, however, it is impossible to begin the analysis or engage in an informed debate over whether our energy markets are functioning properly or are in the midst of a speculative bubble. That was two years back. And much water has flown in the Mississippi since then. The link to the spot markets Now to answer the second leg of the question: how speculators are able to translate the future prices into spot prices. The answer to this question is fairly simple. After all, oil price is highly inelastic -- i.e. even a substantial increase in price does not alter the consumption pattern. No wonder, a mere 3-4 per cent annual global growth has translated into more than a 40 per cent annual increase in prices for the past three or four years. But there is more to it. One may note that the world supply and demand is evenly matched at about 85 million barrels every day. Only if supplies exceed demand by a substantial margin can any downward pressure on oil prices be created. In contrast, if someone with deep pockets picks up even a small quantity of oil, it dramatically alters the delicate global demand-supply gap, creating enormous upward pressure on prices. What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices. Do the oil speculators know of this reserves build-up by the US and are indulging in rampant speculation? Are they acting in tandem with the US government? Worse still, are they bordering on recklessness knowing fully well that if the oil prices fall the US government will be forced to a 'Bears Stearns' on them and bail them out? One is not sure. But who foots bill at such high prices? At an average price of even $100 per barrel, the entire cost for the purchase of this additional 350 million barrels by the US works out to a mere $35 billion. Needless to emphasise, this can be funded by the US by allowing it currency printing presses to work overtime. After all, it has a currency that is acceptable globally and people worldwide are willing to exchange it for precious oil. No wonder Goldman Sachs predicts that oil will touch $200 to a barrel shortly, knowing fully well that the US government will back its prediction. And, in the past three years alone the world has paid an estimated additional $3 trillion for its oil purchases. Oil speculators (and not oil producers) are the biggest beneficiaries of this price increase. In the process, the US has been able to keep the value of the US dollar afloat -- perhaps at an extra cost of a mere $35 billion to its exchequer! The global crude oil price rise is complex, sinister and beyond innocent economic theories of demand and supply. It is speculation, geopolitics and much more. Obviously, there is a symbiotic link between the US, the US dollar and the oil prices. And unless this truth is understood and the link broken, oil prices cannot be controlled.
Thursday, June 12, 2008
Industrial growth rebounds to 7 per cent
Slowdown in the manufacturing sector pulled down the overall industrial growth rate to 7 per cent in April, the first month of the current financial year.
The industrial production during April 2008 declined from 11.3 per cent recorded in the corresponding month of the previous financial year, says the Index of Industrial Production (IIP) figures released on Thursday.
The decline has been mainly on account of poor showing by manufacturing and electricity sectors. While the manufacturing sector growth rate slipped from 12.4 per cent to 7.5 per cent during the month, power generation recorded a sharper decline from 8.7 per cent to 1.4 per cent.
The mining sector, however, registered a robust growth in April, moving up to 8.6 per cent from 2.6 per cent in the corresponding period last year.
According to the official figures, the industrial growth rate for 2007-08 worked out to be 8.3 per cent, down from 11.6 per cent in the previous year.
The industrial production during April 2008 declined from 11.3 per cent recorded in the corresponding month of the previous financial year, says the Index of Industrial Production (IIP) figures released on Thursday.
The decline has been mainly on account of poor showing by manufacturing and electricity sectors. While the manufacturing sector growth rate slipped from 12.4 per cent to 7.5 per cent during the month, power generation recorded a sharper decline from 8.7 per cent to 1.4 per cent.
The mining sector, however, registered a robust growth in April, moving up to 8.6 per cent from 2.6 per cent in the corresponding period last year.
According to the official figures, the industrial growth rate for 2007-08 worked out to be 8.3 per cent, down from 11.6 per cent in the previous year.
Wednesday, June 11, 2008
Railways revenue earnings up 19.85 per cent
Robust passenger traffic and booming freight traffic has led the Indian Railways sustaining its growth momentum in the current fiscal year (2008–09). Total earnings of the railways have increased by a whopping 19.85 per cent during the first two months of 2008-09.
Total earnings of the Indian railways on an originating basis during April–May 2008 have increased to Rs. 133.34 billion, as against Rs. 111.25 billion in the corresponding period last year.
Goods earnings accounted for the largest share of the total earnings, with a growth rate of 23.54 per cent, contributing Rs. 91.21 billion earnings, compared to Rs. 73.83 billion recorded in the same period last year.
Simultaneously, increase in passenger traffic has led to total passenger earnings of the Indian Railways rising by 12.28 per cent to Rs. 37.27 billion. Similarly, earnings from other coaching and total sundry earnings have increased to Rs. 3.57 billion and Rs. 1.27 billion respectively.
Total earnings of the Indian railways on an originating basis during April–May 2008 have increased to Rs. 133.34 billion, as against Rs. 111.25 billion in the corresponding period last year.
Goods earnings accounted for the largest share of the total earnings, with a growth rate of 23.54 per cent, contributing Rs. 91.21 billion earnings, compared to Rs. 73.83 billion recorded in the same period last year.
Simultaneously, increase in passenger traffic has led to total passenger earnings of the Indian Railways rising by 12.28 per cent to Rs. 37.27 billion. Similarly, earnings from other coaching and total sundry earnings have increased to Rs. 3.57 billion and Rs. 1.27 billion respectively.
Rosebys set for India foray
Rosebys, the UK's largest home textile retail chain, which was acquired by Gujarat Heavy Chemicals in 2006, is set to foray into the domestic market this year with a slew of stores. Aimed to fill the gap between luxury and value segments, Rosebys will be positioned as a premium brand in the domestic organised home linen market.
The company plans to roll out the stores across the country. "We plan to open 700 stores over the next three years in metros and tier-2 and tier-3 cities," Nikhil Sen, director, Rosebys interiors India, told Business Standard.
Unlike its multi brand outlets in the UK, which are known as ‘Rosebys Interiors', the stores in India will be single brand stores under the name ‘Rosebys London' sporting a tagline - Inspiring your imagination. Apart from company owned stores, a major part of expansion will come through the franchisee route.
According to Sen, in India out of the Rs 15,000-crore home linen vertical, the organised sector accounts for only Rs 3,000 crore and is growing at an annual rate of 8-10 per cent, providing ample opportunity to a format like Rosebys.
Going by the new on-the-go culture in the country, the company is targeting working segment in the age group of 25-35 year in the country.
"We aim at providing affordable luxury for everyday lifestyle to people along with helping them save time and money and giving them a feel good environment. Our stores will be very approachable and will cultivate experiential buying in the country," Sen added.
Another growth opportunity the company has identified is gifting. "If something is good for you it is also good enough to be gifted and that change in psyche gives us a great opportunity," Sen said.
Like its stores in the UK, Rosebys India will provide complete home furnishings and lifestyle products from bedding, curtains to kitchen and children's room accessories.Rosebys, has over 320 stores across the UK and is one of the biggest home textile retail chain company in the UK.
While the major part of Rosebys products will be manufactured at GHCL's Vapi plant, the company also plans to source them from contract manufacturers in India and abroad.
The company plans to roll out the stores across the country. "We plan to open 700 stores over the next three years in metros and tier-2 and tier-3 cities," Nikhil Sen, director, Rosebys interiors India, told Business Standard.
Unlike its multi brand outlets in the UK, which are known as ‘Rosebys Interiors', the stores in India will be single brand stores under the name ‘Rosebys London' sporting a tagline - Inspiring your imagination. Apart from company owned stores, a major part of expansion will come through the franchisee route.
According to Sen, in India out of the Rs 15,000-crore home linen vertical, the organised sector accounts for only Rs 3,000 crore and is growing at an annual rate of 8-10 per cent, providing ample opportunity to a format like Rosebys.
Going by the new on-the-go culture in the country, the company is targeting working segment in the age group of 25-35 year in the country.
"We aim at providing affordable luxury for everyday lifestyle to people along with helping them save time and money and giving them a feel good environment. Our stores will be very approachable and will cultivate experiential buying in the country," Sen added.
Another growth opportunity the company has identified is gifting. "If something is good for you it is also good enough to be gifted and that change in psyche gives us a great opportunity," Sen said.
Like its stores in the UK, Rosebys India will provide complete home furnishings and lifestyle products from bedding, curtains to kitchen and children's room accessories.Rosebys, has over 320 stores across the UK and is one of the biggest home textile retail chain company in the UK.
While the major part of Rosebys products will be manufactured at GHCL's Vapi plant, the company also plans to source them from contract manufacturers in India and abroad.
India’s GDP growth may dip to 7%: World Bank
The World Bank has projected India’s GDP (gross domestic product) growth to slow further to seven per cent in 2008 on account of the tight monetary policy in place as a measure to rein in inflation leading to a consequent slowdown in demand for industrial goods.
In its report on ‘Global Development Finance’ released on Tuesday, the World Bank said: “GDP growth in India eased to a still strong 8.7 per cent in 2007, from 9.7 per cent in 2006, and is projected to slow further to 7 per cent in 2008.” The Bank attributed the moderation in the country’s economic growth to the “monetary tightening in 2007 [that] led to softening in domestic demand.”
The report pointed out that although the restrictive monetary policy measures prevented a further surge in the inflationary spiral, the resultant strengthening of the rupee proved detrimental to the exporting community. With the country’s industrial production decelerating to three per cent in April this year, the report noted that there were growing signs of the economy cooling down. However, thanks mainly to the large remittance flows and robust growth in wage rates, the industrial slowdown has not led to a fall in the rate of consumption, it said.
Alongside, the report noted that owing to an overall slowdown affecting most economies, the global GDP growth is projected to slide from 3.7 per cent in 2007 to 2.7 per cent in 2008. Surge in food prices
Aggravating the situation was the worldwide surge in food prices in 2008 and there was a “sharp reduction in purchasing power of the poor,” owing to the increasing gap between wages and food prices. However, the report pointed to the export restrictions imposed by countries such as India, China and Vietnam as the major reason for the soaring global prices of food commodities.
“Among other factors, rice producers such as China, India and Vietnam have introduced export restrictions to keep stocks for domestic use and to prevent sharp domestic price increases; these policies have contributed to the increase in international grain prices,” the Bank said, while noting that “India is self-sufficient, but grain stocks are low and crop production has been on the decline”.
The report pointed out that soaring food prices had become a serious concern in South Asia by early 2008, mainly because food insecurity in the region was relatively high and the rural population have to spend over 50 per cent of their total income on food. It noted that the rapidly rising gap between food prices and wages indicated a sharp reduction in the purchasing power of the poor and the situation had become increasingly acute across the region, especially in Bangladesh and Afghanistan.
Referring to the global turmoil in financial markets, the Bank noted that the turbulence had adversely affected the Indian stock market as well.
“The turmoil in international financial markets...has affected the region primarily through fallouts and weakness in equity market. The latter has been most pronounced in India, particularly during the first quarter,” the report said.
In its report on ‘Global Development Finance’ released on Tuesday, the World Bank said: “GDP growth in India eased to a still strong 8.7 per cent in 2007, from 9.7 per cent in 2006, and is projected to slow further to 7 per cent in 2008.” The Bank attributed the moderation in the country’s economic growth to the “monetary tightening in 2007 [that] led to softening in domestic demand.”
The report pointed out that although the restrictive monetary policy measures prevented a further surge in the inflationary spiral, the resultant strengthening of the rupee proved detrimental to the exporting community. With the country’s industrial production decelerating to three per cent in April this year, the report noted that there were growing signs of the economy cooling down. However, thanks mainly to the large remittance flows and robust growth in wage rates, the industrial slowdown has not led to a fall in the rate of consumption, it said.
Alongside, the report noted that owing to an overall slowdown affecting most economies, the global GDP growth is projected to slide from 3.7 per cent in 2007 to 2.7 per cent in 2008. Surge in food prices
Aggravating the situation was the worldwide surge in food prices in 2008 and there was a “sharp reduction in purchasing power of the poor,” owing to the increasing gap between wages and food prices. However, the report pointed to the export restrictions imposed by countries such as India, China and Vietnam as the major reason for the soaring global prices of food commodities.
“Among other factors, rice producers such as China, India and Vietnam have introduced export restrictions to keep stocks for domestic use and to prevent sharp domestic price increases; these policies have contributed to the increase in international grain prices,” the Bank said, while noting that “India is self-sufficient, but grain stocks are low and crop production has been on the decline”.
The report pointed out that soaring food prices had become a serious concern in South Asia by early 2008, mainly because food insecurity in the region was relatively high and the rural population have to spend over 50 per cent of their total income on food. It noted that the rapidly rising gap between food prices and wages indicated a sharp reduction in the purchasing power of the poor and the situation had become increasingly acute across the region, especially in Bangladesh and Afghanistan.
Referring to the global turmoil in financial markets, the Bank noted that the turbulence had adversely affected the Indian stock market as well.
“The turmoil in international financial markets...has affected the region primarily through fallouts and weakness in equity market. The latter has been most pronounced in India, particularly during the first quarter,” the report said.
MARKET PREDICTION
GLOBAL MARKET ARE IN MIXED...
CRUDE CORRECTED SIGNIFICANTLY TO $131(APRX)
$ VS INR 42.94 GOOD FOR IT AND PHARMA STOCKS..
NIFTY IS WITNESSING HEAVY SELLING BECAUSE OF FIIs SELLING PRESSURE SINCE LAST FEW SESSION. EVERY HIGH IS WITNESSING SELLING PRESSURE AND IT PUSHING THE MARKET DOWN.
TODAY'S LEVEL OF NIFTY 4400-4500-4535 GO LONG IF MARKET HOLDS 4400 WITH SL OF 4370
SECTORS:
PHARMA AND IT @ 4500 LEVEL
ABOVE 4500 LEVEL GO LONG IN CONSTRUCTION AND BANKING .
TOTAL MARKET OI IS 74K CR AND PUT CALL RATIO IS 1.48%.
HAVE A NICE TRADING DAY.
-MR SAM
CRUDE CORRECTED SIGNIFICANTLY TO $131(APRX)
$ VS INR 42.94 GOOD FOR IT AND PHARMA STOCKS..
NIFTY IS WITNESSING HEAVY SELLING BECAUSE OF FIIs SELLING PRESSURE SINCE LAST FEW SESSION. EVERY HIGH IS WITNESSING SELLING PRESSURE AND IT PUSHING THE MARKET DOWN.
TODAY'S LEVEL OF NIFTY 4400-4500-4535 GO LONG IF MARKET HOLDS 4400 WITH SL OF 4370
SECTORS:
PHARMA AND IT @ 4500 LEVEL
ABOVE 4500 LEVEL GO LONG IN CONSTRUCTION AND BANKING .
TOTAL MARKET OI IS 74K CR AND PUT CALL RATIO IS 1.48%.
HAVE A NICE TRADING DAY.
-MR SAM
Apple Aims for the Masses With a Cheaper iPhone
Steven P. Jobs, chief executive of Apple, introduced a new cheaper iPhone model on Monday that navigates the Internet more quickly, expanded its distribution overseas and displayed a range of new applications and services in order to establish Apple as a major player in the cellphone industry.
Apple, the maker of consumer electronics and computer equipment, had set a goal of selling 10 million iPhones in 2008, which would establish it as one of the major smartphone makers in the less than two years since it began shipping the original iPhone. Apple has sold six million phones globally since its introduction.
Analysts said that Mr. Jobs, one of the world’s best product marketers, had largely accomplished what he set out to do and they welcomed the moves he outlined in a presentation before software developers on Monday.
“This is the phone that has changed phones forever,” Mr. Jobs said.
Mr. Jobs said the new iPhone 3G, to be available in the United States through AT&T beginning on July 11, will sell for $199 for the 8-gigabyte model and $299 for a 16-gigabyte model. He said the biggest barrier to people buying the phone had been price.
Analysts and industry executives said they believed the lower prices would bring in new consumers who had been put off by its $399 price. “The price is clearly correct,” said Mike McGuire, a research vice president at Gartner, a market research firm based in San Jose, Calif.
As widely anticipated, the phone will run on so-called 3G wireless networks that allow much faster Internet connections than the original iPhone. During a 110-minute presentation, Mr. Jobs went to some lengths to compare the speed of the new iPhone 3G to the current phone and to rival phones like the Nokia N95 and the Palm Treo 750. He called downloads “amazingly zippy.”
The phone, sleeker than the original, will also have built-in Global Positioning System capability to allow location-based services. It will also have a longer battery life in some cases, five hours for talking on the 3G network and 24 hours for playing music on the phone.
The announcements came on the opening day of Apple’s Worldwide Developers Conference, where several developers showed off software that turned the iPhone into a game console and a musical instrument. Others demonstrated programs that used the phone’s ability to locate its users on a map.
At one point during his demonstration, Mr. Jobs showed a tracking feature making it possible to watch on a Google map as an iPhone user drove down Lombard Street, the twisty tourist attraction in San Francisco.
Mr. Jobs also indirectly challenged Microsoft with a mobile Web service call MobileMe, intended to permit a user to synchronize a phone, calendar and contact information on the iPhone and multiple devices including PCs and other iPhones. The service, which will costs $99 a year and comes with 20 gigabytes of data storage, is similar to a service offered by Microsoft.
Apple’s obstacle in offering the new service is that its competitors, like Google, offer similar services for less. Google offers 10 gigabytes of e-mail storage for $20 a year.
Apple announced that it would begin selling the iPhone in 70 countries this summer; the current phone is being sold in six countries.
“Given the feature set, ecosystem partners, launch countries and the pricing of the iPhone, they are likely to hit the 10 million mark by September-October,” said Chetan Sharma, an independent consultant on the wireless data communications industry.
The company, based in Cupertino, Calif., announced on Monday in a regulatory filing that it would sell the 3G phones under different business arrangements in the United States. In the past, Apple shared service plan revenue with AT&T and other cellular firms. The second-generation iPhone will be sold without the recurring revenue streams and without the exclusivity arrangements it was previously able to command.
While trying to convince cellular carriers around the world that they should carry the iPhone, Apple realized that it needed to change the financial deal that it had with the carriers in the first six countries.
“We’ve changed our business model, from getting a cut of the future revenues to just a more traditional model,” Mr. Jobs said in an interview on Monday. “That’s enabled us to roll out around the world much faster.”
AT&T said it would subsidize the phones to attract consumers. Under the plan, unlimited iPhone 3G data plans for consumers will be available for $30 a month, in addition to voice plans starting at $40. Business users will be charged $45 a month for data.
By giving back the revenue to the carriers, which they may use for subsidies, Apple is hoping to dramatically increase its volume, as well as sell more Macintosh computers to iPhone users.
“It’s not about the iPhone,” said Charles Wolf, a financial analyst at Needham & Company. “There’s a tradeoff that Apple is making. The iPhone halo effect will be far more powerful than the iPod halo effect was. It’s going to stimulate Mac sales among iPhone users.”
Apple, the maker of consumer electronics and computer equipment, had set a goal of selling 10 million iPhones in 2008, which would establish it as one of the major smartphone makers in the less than two years since it began shipping the original iPhone. Apple has sold six million phones globally since its introduction.
Analysts said that Mr. Jobs, one of the world’s best product marketers, had largely accomplished what he set out to do and they welcomed the moves he outlined in a presentation before software developers on Monday.
“This is the phone that has changed phones forever,” Mr. Jobs said.
Mr. Jobs said the new iPhone 3G, to be available in the United States through AT&T beginning on July 11, will sell for $199 for the 8-gigabyte model and $299 for a 16-gigabyte model. He said the biggest barrier to people buying the phone had been price.
Analysts and industry executives said they believed the lower prices would bring in new consumers who had been put off by its $399 price. “The price is clearly correct,” said Mike McGuire, a research vice president at Gartner, a market research firm based in San Jose, Calif.
As widely anticipated, the phone will run on so-called 3G wireless networks that allow much faster Internet connections than the original iPhone. During a 110-minute presentation, Mr. Jobs went to some lengths to compare the speed of the new iPhone 3G to the current phone and to rival phones like the Nokia N95 and the Palm Treo 750. He called downloads “amazingly zippy.”
The phone, sleeker than the original, will also have built-in Global Positioning System capability to allow location-based services. It will also have a longer battery life in some cases, five hours for talking on the 3G network and 24 hours for playing music on the phone.
The announcements came on the opening day of Apple’s Worldwide Developers Conference, where several developers showed off software that turned the iPhone into a game console and a musical instrument. Others demonstrated programs that used the phone’s ability to locate its users on a map.
At one point during his demonstration, Mr. Jobs showed a tracking feature making it possible to watch on a Google map as an iPhone user drove down Lombard Street, the twisty tourist attraction in San Francisco.
Mr. Jobs also indirectly challenged Microsoft with a mobile Web service call MobileMe, intended to permit a user to synchronize a phone, calendar and contact information on the iPhone and multiple devices including PCs and other iPhones. The service, which will costs $99 a year and comes with 20 gigabytes of data storage, is similar to a service offered by Microsoft.
Apple’s obstacle in offering the new service is that its competitors, like Google, offer similar services for less. Google offers 10 gigabytes of e-mail storage for $20 a year.
Apple announced that it would begin selling the iPhone in 70 countries this summer; the current phone is being sold in six countries.
“Given the feature set, ecosystem partners, launch countries and the pricing of the iPhone, they are likely to hit the 10 million mark by September-October,” said Chetan Sharma, an independent consultant on the wireless data communications industry.
The company, based in Cupertino, Calif., announced on Monday in a regulatory filing that it would sell the 3G phones under different business arrangements in the United States. In the past, Apple shared service plan revenue with AT&T and other cellular firms. The second-generation iPhone will be sold without the recurring revenue streams and without the exclusivity arrangements it was previously able to command.
While trying to convince cellular carriers around the world that they should carry the iPhone, Apple realized that it needed to change the financial deal that it had with the carriers in the first six countries.
“We’ve changed our business model, from getting a cut of the future revenues to just a more traditional model,” Mr. Jobs said in an interview on Monday. “That’s enabled us to roll out around the world much faster.”
AT&T said it would subsidize the phones to attract consumers. Under the plan, unlimited iPhone 3G data plans for consumers will be available for $30 a month, in addition to voice plans starting at $40. Business users will be charged $45 a month for data.
By giving back the revenue to the carriers, which they may use for subsidies, Apple is hoping to dramatically increase its volume, as well as sell more Macintosh computers to iPhone users.
“It’s not about the iPhone,” said Charles Wolf, a financial analyst at Needham & Company. “There’s a tradeoff that Apple is making. The iPhone halo effect will be far more powerful than the iPod halo effect was. It’s going to stimulate Mac sales among iPhone users.”
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