Aug. 19 (Bloomberg) -- India’s benchmark stock index fell after the nation’s agriculture minister said farm output may decline because of low monsoon rains. Metal producers declined after their Chinese counterparts plunged.
Mahindra & Mahindra Ltd., India’s largest tractor maker, sank 3.7 percent after Farm Minister Sharad Pawar today said monsoon-sown rice production may decline by 10 million metric tons this year as a result of drought in a third of the country’s 626 districts. Tata Steel Ltd., the biggest producer of the alloy, slid 4 percent.
“There is uncertainty in the minds of investors how the government will overcome the drought situation,” said A.N. Sridhar, a fund manager at Sahara Asset Management Co. in Mumbai. “The rally in commodities seems to have come off as there is uncertainty over demand in China.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 225.62, or 1.5 percent, to 14,809.64. The measure has lost 5.5 percent this month on concern monsoon rainfall will be deficient. The S&P CNX Nifty Index on the National Stock Exchange lost 1.5 percent to 4,394.1. The BSE 200 Index declined 1.6 percent to 1,815.11.
Mahindra lost 3.7 percent to 740.15 rupees. Jaiprakash Associates Ltd., the nation’s biggest maker of dams, slid 2.7 percent to 206.7 rupees.
Hero Honda Motors Ltd., the nation’s biggest motorcycle maker, lost 2.3 percent to 1,359.2 rupees on concern that the weak monsoon will slash spending in agricultural regions. Forty percent of Hero Honda’s sales come from rural demand.
Farm Output
ACC Ltd., India’s biggest cement maker, lost 5.2 percent to 756.3 rupees. Reliance Communications Ltd., India’s second- largest mobile-phone services operator, lost 4.6 percent to 240.2 rupees.
The monsoon season, which brings about three-quarters of India’s annual rainfall, may be the driest in seven years, the weather bureau said last week, hurting farm output in the world’s second-biggest producer of rice, sugar and wheat.
Rain in the June-September season will be 87 percent of the 50-year average, compared with 93 percent forecast in June, the India Meteorological Department said last week.
Production of oilseeds and sugar cane may also drop, Pawar said, without providing a forecast. Monsoon-sown oilseeds were planted in 15.2 million hectares compared with 16.4 million hectares a year earlier, the farm ministry said.
The government will extend a 15 rupees-a-liter subsidy on imported edible oils until March 2010, Pawar said.
China Stocks
Tata Steel lost 4 percent to 433.75 rupees. Hindalco Industries Ltd., the biggest aluminum producer, slid 3.6 percent to 102.7 rupees. Sterlite Industries (India) Ltd., the nation’s biggest copper producer, declined 1.4 percent to 610.2 rupees.
China’s stocks tumbled, briefly driving the benchmark index into a so-called bear market, on concern economic growth will falter as banks rein in lending.
The Shanghai Composite Index lost 4.3 percent to 2,785.58. The gauge has slumped 19.8 percent since Aug. 4, after more than doubling from November as China rolled out a 4 trillion yuan ($585 billion) stimulus package.
A measure of Chinese metals and materials producers dropped 6.6 percent, the worst performer among 10 industry groups on the CSI 300 Index that covers the Shanghai and Shenzhen markets.
Overseas funds sold a net 9.74 billion rupees ($200.1 million) of Indian stocks on Aug. 17, the Securities & Exchange Board of India said on its Web site. The funds have bought 366.3 billion rupees of Indian stocks this year, compared with record net sales of 530 billion rupees for the whole of 2008.
The following stocks were among the most active on the exchange:
Glenmark Pharmaceuticals Ltd. (GNP IN) plunged 15 percent to 223.25 rupees. The Indian pharmaceutical company fell the most in six months after saying its drug for lung disease wasn’t effective in a patient study.
Maruti Suzuki India Ltd. (MSIL IN) climbed 0.1 percent to 1,301.85 rupees. The maker of half the cars sold in India was raised to “buy” from “hold” at Citigroup Inc., which said the company is best positioned to benefit from a recovery in urban consumption.
Reliance Industries Ltd. (RIL IN) lost 2.9 percent to 1,885.85 rupees. India’s most valuable company is looking to sell a stake of as much in 15 percent in the Rewas port project, Mint reported, citing two people briefed on the matter. Reliance needs to sell the stake both to fund the project and to bring in specialists because it does not have expertise in handling cargo such as containers, according to the report.
Unitech Ltd. (UT IN) fell 3.2 percent to 82.5 rupees. The nation’s second-biggest real estate developer said its telecom unit, Unitech Wireless Ltd., has got a 50 billion rupee-loan from State Bank of India.
Wednesday, August 19, 2009
World emerges from recession, IMF claims
It's official: the recovery has begun – although recovery will be unpredictable and protracted, according to the International Monetary Fund's chief economist.
"The recovery has started," claims Olivier Blanchard in a paper to be published by the IMF on Wednesday. "Sustaining it will require delicate rebalancing acts, both within and across countries."
He warned that recovery would be slow and complicated: "The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
His comments followed the news on Monday that Japan became the latest major economy to return to growth in the second quarter, following a recovery in German and French GDP. The British economy shrank by 0.8pc in the second quarter according to the Office for National Statistics (ONS). Adam Posen, who will join the Bank of England's Monetary Policy Committee next month, conceded yesterday that the UK, along with the US, Italy and Spain, was "lagging" in economic recovery. He added he was "surprised" by news of recovery in Germany and France.
Official figures released yesterday showed that inflation remained at 1.8pc in July for the second month in a row, close to the 2pc target. Economists had predicted a fall to 1.5pc. The figures underlined unexpected resilience to deflationary pressures,
The ONS data suggested that the relative weakness of the pound was responsible, pushing up the price of imported goods and keeping inflation in positive territory despite the recession.
Charles Davis, economist at the Centre for Economics and Business Research, said: "Part of this is due to the sterling depreciation which, despite gains over the last month, is significantly weaker than a year ago."
It means the UK is the only one of the world's six biggest economies to avoid deflation. The pound rose more than
2 cents against the dollar after the inflation figures were published, closing at $1.653.
In July, price rises in games, toys, and hobby-related items – which are largely imported – helped to keep inflation at 1.8pc, offsetting falls in food inflation. Kerri Maddock at Barclays Capital said that the trend should "steer the economy away from the tail risk of outright deflation".
Although falling prices provide some relief for struggling households during recession, a sustained period of deflation in the UK caused by weak demand would likely damage the economy further, prompting businesses to produce less and therefore shed jobs, leading to higher unemployment which would in turn hit spending even further.
The continued strength of the CPI has taken the Bank of England by surprise. Governor Mervyn King said last week that despite the so-called "stickiness" shown by UK prices, the CPI rate was "more likely than not" to fall below 1pc in the coming months.
Despite the figures, economists said that inflation should start to fall again in the coming months as the impact of the weaker pound fades, while electricity and gas bills fall, food inflation drops and the full disinflationary impact of the spare capacity in the economy feeds through.
In a further surprise, the broader retail prices index (RPI), which also includes housing and mortgage costs, actually rose to -1.4pc in July from -1.6pc.
"The recovery has started," claims Olivier Blanchard in a paper to be published by the IMF on Wednesday. "Sustaining it will require delicate rebalancing acts, both within and across countries."
He warned that recovery would be slow and complicated: "The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
His comments followed the news on Monday that Japan became the latest major economy to return to growth in the second quarter, following a recovery in German and French GDP. The British economy shrank by 0.8pc in the second quarter according to the Office for National Statistics (ONS). Adam Posen, who will join the Bank of England's Monetary Policy Committee next month, conceded yesterday that the UK, along with the US, Italy and Spain, was "lagging" in economic recovery. He added he was "surprised" by news of recovery in Germany and France.
Official figures released yesterday showed that inflation remained at 1.8pc in July for the second month in a row, close to the 2pc target. Economists had predicted a fall to 1.5pc. The figures underlined unexpected resilience to deflationary pressures,
The ONS data suggested that the relative weakness of the pound was responsible, pushing up the price of imported goods and keeping inflation in positive territory despite the recession.
Charles Davis, economist at the Centre for Economics and Business Research, said: "Part of this is due to the sterling depreciation which, despite gains over the last month, is significantly weaker than a year ago."
It means the UK is the only one of the world's six biggest economies to avoid deflation. The pound rose more than
2 cents against the dollar after the inflation figures were published, closing at $1.653.
In July, price rises in games, toys, and hobby-related items – which are largely imported – helped to keep inflation at 1.8pc, offsetting falls in food inflation. Kerri Maddock at Barclays Capital said that the trend should "steer the economy away from the tail risk of outright deflation".
Although falling prices provide some relief for struggling households during recession, a sustained period of deflation in the UK caused by weak demand would likely damage the economy further, prompting businesses to produce less and therefore shed jobs, leading to higher unemployment which would in turn hit spending even further.
The continued strength of the CPI has taken the Bank of England by surprise. Governor Mervyn King said last week that despite the so-called "stickiness" shown by UK prices, the CPI rate was "more likely than not" to fall below 1pc in the coming months.
Despite the figures, economists said that inflation should start to fall again in the coming months as the impact of the weaker pound fades, while electricity and gas bills fall, food inflation drops and the full disinflationary impact of the spare capacity in the economy feeds through.
In a further surprise, the broader retail prices index (RPI), which also includes housing and mortgage costs, actually rose to -1.4pc in July from -1.6pc.
Key Financial Ratios – EBITA, PAT, EPS, PE Ratio
What Does EBITDA Margin Mean?
Formula: Operating Profits/ Net sales.
EBITDA Margin is also known as operating margin. It is a ratio which is used to determine operating efficiency of the company. The ratio is used to measure company’s operating profits i.e. what would be the earnings of the company after paying of fixed and variable costs of production. The higher the operating margins its good for the company as it has a higher income available to take care of its other fixed cost such as interest on debt. One must look at the operating margin ratio on Y-O-Y and Q-O-Q basis and also compare the same with the peer group.
What Does PAT Margin Mean?
Formula: PAT/ Net sales.
PAT margin is also known as net margins. It is a ratio which is used to determine the final earnings of the company on every one Rupee of sales generated. It is used to determine the net earnings of the company after paying the production as well as finance expenses. It is a useful tool in analyzing the company’s earnings after tax. For example, a company’s sales could rise, but if costs also rise, that leads to a lower profit margin than what the company had when it had lower profits. This is an indication that the company needs to curb its expenses.
What Does Earnings Per Share (EPS) Mean?
Formula: (PAT – Preference Share Dividend) / Total outstanding equity shares
EPS is the net earnings of the company allocated to each outstanding share of the company. An increasing trend in EPS shows that the company is performing better. While we are looking at the EPS we must also look at the Diluted EPS as it the equity may expand in future if there are convertibles or warrants outstanding in the outstanding shares number.
What Does Price-Earnings Ratio – P/E Ratio Mean?
Formula: CMP / Earnings Per Share (EPS).
PE i.e Price of earnings ratio is a valuation ratio of a company’s current share price compared to its per-share earnings. The P/E is also referred to as the "multiple", because it shows how much investors are willing to pay for per Rupee of earnings. For example, if a company is currently trading at Rs.100 a share and earnings over the last 12 months were Rs.10 per share, the P/E ratio for the stock would be 10 (100/10). EPS is usually from the last four quarters (trailing P/E), but when EPS is taken from the expected earnings of next four quarters then the PE is known as projected PE.
Formula: Operating Profits/ Net sales.
EBITDA Margin is also known as operating margin. It is a ratio which is used to determine operating efficiency of the company. The ratio is used to measure company’s operating profits i.e. what would be the earnings of the company after paying of fixed and variable costs of production. The higher the operating margins its good for the company as it has a higher income available to take care of its other fixed cost such as interest on debt. One must look at the operating margin ratio on Y-O-Y and Q-O-Q basis and also compare the same with the peer group.
What Does PAT Margin Mean?
Formula: PAT/ Net sales.
PAT margin is also known as net margins. It is a ratio which is used to determine the final earnings of the company on every one Rupee of sales generated. It is used to determine the net earnings of the company after paying the production as well as finance expenses. It is a useful tool in analyzing the company’s earnings after tax. For example, a company’s sales could rise, but if costs also rise, that leads to a lower profit margin than what the company had when it had lower profits. This is an indication that the company needs to curb its expenses.
What Does Earnings Per Share (EPS) Mean?
Formula: (PAT – Preference Share Dividend) / Total outstanding equity shares
EPS is the net earnings of the company allocated to each outstanding share of the company. An increasing trend in EPS shows that the company is performing better. While we are looking at the EPS we must also look at the Diluted EPS as it the equity may expand in future if there are convertibles or warrants outstanding in the outstanding shares number.
What Does Price-Earnings Ratio – P/E Ratio Mean?
Formula: CMP / Earnings Per Share (EPS).
PE i.e Price of earnings ratio is a valuation ratio of a company’s current share price compared to its per-share earnings. The P/E is also referred to as the "multiple", because it shows how much investors are willing to pay for per Rupee of earnings. For example, if a company is currently trading at Rs.100 a share and earnings over the last 12 months were Rs.10 per share, the P/E ratio for the stock would be 10 (100/10). EPS is usually from the last four quarters (trailing P/E), but when EPS is taken from the expected earnings of next four quarters then the PE is known as projected PE.
Asian Stocks Fall as China Approaches Bear Market; Qantas Rises
Aug. 19 (Bloomberg) -- Asian stocks fell, with China’s key index approaching levels signaling a bear market, after Maanshan Iron & Steel Co. reported losses and Japanese regulators said new guidelines will hurt insurers’ solvency ratios.
Maanshan Steel, China’s No. 4 listed steelmaker, sank 6.9 percent in Shanghai. Tokio Marine Holdings Inc. dropped 2 percent in Tokyo. Honda Motor Co., Japan’s No. 2 automaker, added 1.7 percent after Nomura Holdings Inc. upgraded Japan’s auto industry. Qantas Airways Ltd., Australia’s biggest airline, advanced 4.6 percent as it signaled improving passenger volumes.
The MSCI Asia Pacific Index fell 0.3 percent to 110.33 as of 2:54 p.m. in Tokyo, erasing an earlier gain of 0.6 percent. The gauge has rallied 56 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
“The earnings season has been surprising,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $95 billion. “It’s given investors confidence the recovery is coming through and that valuations will be supported by strong earnings. Still, markets have rallied a long way and are vulnerable to bad news.”
Maanshan Steel, China’s No. 4 listed steelmaker, sank 6.9 percent in Shanghai. Tokio Marine Holdings Inc. dropped 2 percent in Tokyo. Honda Motor Co., Japan’s No. 2 automaker, added 1.7 percent after Nomura Holdings Inc. upgraded Japan’s auto industry. Qantas Airways Ltd., Australia’s biggest airline, advanced 4.6 percent as it signaled improving passenger volumes.
The MSCI Asia Pacific Index fell 0.3 percent to 110.33 as of 2:54 p.m. in Tokyo, erasing an earlier gain of 0.6 percent. The gauge has rallied 56 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
“The earnings season has been surprising,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $95 billion. “It’s given investors confidence the recovery is coming through and that valuations will be supported by strong earnings. Still, markets have rallied a long way and are vulnerable to bad news.”
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