Blackstone Group, a global private equity player, is set to increase its focus on India. After setting the ball rolling on its corporate private equity and recently starting off its real estate opportunity focus, the company during the past week has set up Blackstone Altius Advisors, an event-driven strategy focusing on opportunities in the Asia Pacific region. Event-driven strategies are those where PEs fund merger and acquisitions or bankruptcies scenario.
According to a statement from Blackstone, a global, highly-experienced investment team will be headquartered in Hong Kong, with additional professionals based in Tokyo, Mumbai and New York for the foray.
Estimates indicate that close to $1 billion has already been committed by this player to the Indian market.
The statement from Blackstone further added that its Asia business includes its fund of hedge funds and two close-end mutual funds - The India Fund and The Asia Tigers Fund.
Blackstone Altius Advisors will be led by Aaron Nieman, who previously was with SAC Capital Management as managing director in the Canvas Capital Management division. Stephen A Schwarzman, Chairman, CEO and Co-founder of the Blackstone Group, said in a statement: "Aaron has a superb history of developing teams and investing in Asia. He will add greater depth and intellectual capital to Blackstone's wide range of alternative investment businesses, and we are delighted that he has chosen to join us."
Antony Leung, chairman, Blackstone Greater China, added, "As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region."
"Blackstone has a good global alternative investment platform. The synergies that exist within Blackstone's various businesses will provide us with a significant advantage investing in the Asia Pacific markets," said Aaron Nieman, senior managing director and chief investment officer of Altius Advisors.
Monday, May 19, 2008
Friday, May 16, 2008
TEN GOLDEN RULE FOR THE INVESTOR
Currently, the Indian markets are in doldrums and nobody is talking of stocks or investments. You may think justifiably so, as the markets are headed in no direction. Is it not exactly the opposite of the exuberant times we were witnessing a few months back. Conversely, bottoms are made in turbulent times. It is difficult, if not impossible, to say when the markets will halt their southward journey and change direction for the better. Who knows, we might have already hit the bottom and the markets may soon return back to their upward trajectory. My empirical observation and research have proved it that wealth making in the market has more to do with discipline and the power of time to compound growth than being smart at stock picking and timing the markets just right. To help you in your quest to make wealth in our markets, I suggest you follow the 10 golden rules of markets that will virtually ensure reasonable, steady wealth appreciation.
Bear in mind, you cannot have your cake and eat it too. Saving and consumption do not go hand-in-hand. You need to plan today for the lifestyle you want after you stop working, i.e. the finances you will require after you retire. Accordingly, save the necessary portion of your income to invest in equities. Equities, or stocks, may appear risky, but they are just volatile, they go up and down, and time is the perfect hedge against volatility.
Therefore, Rule No 1: Plan for tomorrow, today. Start saving for it now! Stagger your investments throughout your earning phase. Invest regularly and invest for the long term to buy in at an average price that includes both markets’ up and down ticks. Never wait until you have large amounts of money to invest. However small the amount you are able to save, start early. The earlier you start, the better are your chances of making great wealth. Remember to make great gains. Time is a crucial factor, as wealth creation is a factor of both the power of compounding and the returns on your investments.
Accordingly, Rule No 2: Start early so that the power of compounding begins sooner; time is the magic that converts paise into rupees. In exuberant phases, when we have earned good money from our investments, most of us get greedy, and derivatives and futures provide an outlet for the expression of human greed. While such instruments often satisfy the whims of human greed, if taken to unrealistic levels, irresponsible investment in these securities can lead to financial ruin.
Hence, Rule No 3: Do not leverage, it is difficult, if not impossible, to predict short-term trends. Buy markets, not stocks. We all know that our economy is in a secular phase of prosperity and the stock market is the best proxy for the growth of an economy. To benefit from our soaring economy, buy the market as a whole and not any single stock.
Consequently, Rule No 4: Buy stocks that mirror the broader indexes, but never buy a single, or a handful of stock exposures. This means that you need to spread your risk across various market segments in the event a particular stock does not perform for reasons beyond the company’s control. It is easier to predict company earnings, but difficult to predict stock prices of the same company in the short run. Ironically, over the long term, stock prices mirror growth in a corporation’s earnings.
Therefore, Rule No 5: Look at company earnings, not at stock prices. Stock prices may tempt or give the wrong impression of a company’s welfare. But to build real wealth in equities, you must always rely on declared profits and facts, rather than make decisions based on stock movements. We all tend to sell stocks when we have made profits and keep the ones that have not appreciated. Eventually, we end up holding a portfolio of companies that are not performing! It is only human to sell for profits and not to want to take losses.
Hence, Rule No 6: Keep the winners, sell the losers. Stay on top of your investments. Check constantly for stocks that are not performing and eliminate them from your portfolio if the outlook does not seem promising. This way, you will have all winners left in your portfolio to take you to your goals. In exuberant times, we all tend to believe that the good times will last longer than they actually will. And before D-day, we will be able to sell our investments that were bought at unjustified levels. Just then, it happens that the markets turn and before we can sell out, we are left holding the bag.
For this reason, Rule No 7: Avoid being the “Bigger Fool;” it is imperative that you recognise the difference between price and value. Buy value and not momentum. When investing in stocks, your head should prevail over your heart. Resist the urge to get consumed by market chatter. Ignore hot tips from dealers and friends. It is advisable to do your own home work.
As the result, Rule No 8: Pick stocks with your brain, not your heart. Large-caps are the ones that have already proven themselves over longer periods of time and have the balance sheet acumen, strong cash flow and brains to manage businesses effectively according to prevailing situations and realistic opportunities available.
Hence, Rule No 9: Prefer large-cap stocks to small- and medium-caps. Investment in small and mid-cap stocks requires expertise and strong tracking abilities, that without, your portfolio will under-perform. Do not short sell a stock just because it is going up, and thus, one day it must come down. Newton’s law is not applicable to the markets. What goes up does not necessarily come back down! If companies are able to sustain earnings’ growth for long periods, then its stock may go up, up and up, or it can even remain high without any reason for a long period of time.
Because of this, Rule No 10: Markets can remain irrationally up, or continually climb for the right reasons. Therefore, never go short. It will expose you to unnecessary risks.
Bear in mind, you cannot have your cake and eat it too. Saving and consumption do not go hand-in-hand. You need to plan today for the lifestyle you want after you stop working, i.e. the finances you will require after you retire. Accordingly, save the necessary portion of your income to invest in equities. Equities, or stocks, may appear risky, but they are just volatile, they go up and down, and time is the perfect hedge against volatility.
Therefore, Rule No 1: Plan for tomorrow, today. Start saving for it now! Stagger your investments throughout your earning phase. Invest regularly and invest for the long term to buy in at an average price that includes both markets’ up and down ticks. Never wait until you have large amounts of money to invest. However small the amount you are able to save, start early. The earlier you start, the better are your chances of making great wealth. Remember to make great gains. Time is a crucial factor, as wealth creation is a factor of both the power of compounding and the returns on your investments.
Accordingly, Rule No 2: Start early so that the power of compounding begins sooner; time is the magic that converts paise into rupees. In exuberant phases, when we have earned good money from our investments, most of us get greedy, and derivatives and futures provide an outlet for the expression of human greed. While such instruments often satisfy the whims of human greed, if taken to unrealistic levels, irresponsible investment in these securities can lead to financial ruin.
Hence, Rule No 3: Do not leverage, it is difficult, if not impossible, to predict short-term trends. Buy markets, not stocks. We all know that our economy is in a secular phase of prosperity and the stock market is the best proxy for the growth of an economy. To benefit from our soaring economy, buy the market as a whole and not any single stock.
Consequently, Rule No 4: Buy stocks that mirror the broader indexes, but never buy a single, or a handful of stock exposures. This means that you need to spread your risk across various market segments in the event a particular stock does not perform for reasons beyond the company’s control. It is easier to predict company earnings, but difficult to predict stock prices of the same company in the short run. Ironically, over the long term, stock prices mirror growth in a corporation’s earnings.
Therefore, Rule No 5: Look at company earnings, not at stock prices. Stock prices may tempt or give the wrong impression of a company’s welfare. But to build real wealth in equities, you must always rely on declared profits and facts, rather than make decisions based on stock movements. We all tend to sell stocks when we have made profits and keep the ones that have not appreciated. Eventually, we end up holding a portfolio of companies that are not performing! It is only human to sell for profits and not to want to take losses.
Hence, Rule No 6: Keep the winners, sell the losers. Stay on top of your investments. Check constantly for stocks that are not performing and eliminate them from your portfolio if the outlook does not seem promising. This way, you will have all winners left in your portfolio to take you to your goals. In exuberant times, we all tend to believe that the good times will last longer than they actually will. And before D-day, we will be able to sell our investments that were bought at unjustified levels. Just then, it happens that the markets turn and before we can sell out, we are left holding the bag.
For this reason, Rule No 7: Avoid being the “Bigger Fool;” it is imperative that you recognise the difference between price and value. Buy value and not momentum. When investing in stocks, your head should prevail over your heart. Resist the urge to get consumed by market chatter. Ignore hot tips from dealers and friends. It is advisable to do your own home work.
As the result, Rule No 8: Pick stocks with your brain, not your heart. Large-caps are the ones that have already proven themselves over longer periods of time and have the balance sheet acumen, strong cash flow and brains to manage businesses effectively according to prevailing situations and realistic opportunities available.
Hence, Rule No 9: Prefer large-cap stocks to small- and medium-caps. Investment in small and mid-cap stocks requires expertise and strong tracking abilities, that without, your portfolio will under-perform. Do not short sell a stock just because it is going up, and thus, one day it must come down. Newton’s law is not applicable to the markets. What goes up does not necessarily come back down! If companies are able to sustain earnings’ growth for long periods, then its stock may go up, up and up, or it can even remain high without any reason for a long period of time.
Because of this, Rule No 10: Markets can remain irrationally up, or continually climb for the right reasons. Therefore, never go short. It will expose you to unnecessary risks.
INFLATION INCHED UP TO 7.83%VS 7.61%
The annual inflation was at 7.83% for the week ended May 03 versus 7.61% the previous week. The data for the week ended March 8 has been revised to 7.78% versus 5.92% (provisional). The markets seem to have discounted the inflation figures. The food articles index was up at 0.5% whereas the manufacturing products index was up by 0.3%. Fuel, power index was up by 0.8%. “The benefits of the fiscal measures like excise and import duty cuts have been negated by currency depreciation. Rise in food prices has also been a contributor”, says HDFC chief economist Abheek Baruah. FY-08 subsidy burden seen over Rs 20,000 cr versus Rs 17,000 crore. The wholesale price index is forecast to have risen 7.5 per cent in the 12 months to May 3, below 7.61 per cent a week earlier that was its highest since November 13, 2004. It will be the ninth consecutive week that inflation has held above 5.5 per cent, the central bank's target for inflation by the end of the fiscal year ending in March 2009.
The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices. Policymakers have also signalled their intent to take more steps to tame inflation if needed. In April, the RBI raised the proportion of deposits that banks must set aside by 75 basis points to a seven-year high of 8.25 per cent, to suck out inflation-fuelling excess cash from the banking system. The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.
The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices. Policymakers have also signalled their intent to take more steps to tame inflation if needed. In April, the RBI raised the proportion of deposits that banks must set aside by 75 basis points to a seven-year high of 8.25 per cent, to suck out inflation-fuelling excess cash from the banking system. The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.
MARKET OUTLOOK
GLOBAL MARKET IS IN POSITIVE MODE AFTER OIL SLIPPED A BIT.NIFTY CLOSE ABOVE PSYCHOLOGICAL LEVEL OF 5100,MARKET O I IS INCHED UP TO 76 K CR AND PUT CALL RATIO HOVERING AROUND 1.45.
LEVEL OF NIFTY IS 5030-5100-5150-5200.MARKET WITNESSING SHORT OF 5200 CE & 5300 CE AND SIMULTANIOUSLY SHORT OF 4800-4900 PE .IT MEANS MARKET WILL MOVE IN BROADER RANGE OF 4900-5250.SECTOR TO BE WATCHED OUT IN MARKET IS PHARMA AD FOR MANSOON FORCAST SUGAR AND FERTILIZER SECTOR.
INFLATION DATA IS GOING TO CONFUSE TODAY IT IS EXPECTED AROUND 7.5-7.6.
HAVE NICE WEEKEND TRADING DAY.
LEVEL OF NIFTY IS 5030-5100-5150-5200.MARKET WITNESSING SHORT OF 5200 CE & 5300 CE AND SIMULTANIOUSLY SHORT OF 4800-4900 PE .IT MEANS MARKET WILL MOVE IN BROADER RANGE OF 4900-5250.SECTOR TO BE WATCHED OUT IN MARKET IS PHARMA AD FOR MANSOON FORCAST SUGAR AND FERTILIZER SECTOR.
INFLATION DATA IS GOING TO CONFUSE TODAY IT IS EXPECTED AROUND 7.5-7.6.
HAVE NICE WEEKEND TRADING DAY.
Thursday, May 15, 2008
Citigroup Raises $500 Million for Fund in India
Citigroup Inc. the largest U.S. bank by assets, raised $500 million to invest in roads, ports and utilities in India, the world's second-fastest growing economy.
Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.
Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.
The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.
``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''
Citigroup operates 39 branches in 27 cities in India.
Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.
Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.
The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.
``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''
Citigroup operates 39 branches in 27 cities in India.
ICICI Seeks $3 Billion for India Private Equity, Property Funds
ICICI Bank Ltd. India's second biggest lender, plans to raise as much as $3 billion for two funds as it competes with Morgan Stanley and Deutsche Bank AG to invest in the world's second-fastest growing major economy.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
European Expansion Accelerates More Than Forecast
European economic growth accelerated more than economists forecast in the first three months of 2008 as stronger expansions in Germany and France masked slowdowns in Spain and Italy.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
`BRIC' Nations Summit Seeks to Turn Economic Might Into Clout
First came the booming economies. Then came the rush of investors. Now the so-called BRIC nations -- Brazil, Russia, India and China -- are talking about forming a political alliance.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
MARKET PREDICTION
GLOBAL MARKET IS IN POSITIVE MODE.. INDIA COULD FOLLOW THE TREND.
LEVEL OF NIFTY 4970-5000-5050-5130..BUY FROM LOWER SUPPORT OF 5000 IN PHARMA SECTOR AND IF MARKET DOES NOT HOLD 5100 GO SHORT IN REALTY SPACE WITH S L OF 5130.
TOTAL O I IS 74 K CR PUT CALL RATIO IS HOVERING AROUND 1.41.
HAVE A NICE TRADING DAY...
-MR. SAM
LEVEL OF NIFTY 4970-5000-5050-5130..BUY FROM LOWER SUPPORT OF 5000 IN PHARMA SECTOR AND IF MARKET DOES NOT HOLD 5100 GO SHORT IN REALTY SPACE WITH S L OF 5130.
TOTAL O I IS 74 K CR PUT CALL RATIO IS HOVERING AROUND 1.41.
HAVE A NICE TRADING DAY...
-MR. SAM
Wednesday, May 14, 2008
Oil eases, Iran comment soothes
Oil eased on Wednesday after a reassurance from Iran that it had no plans to cut oil exports.
The market had hit a new record of nearly $127 the previous session, after Iranian President Mahmoud Ahmadinejad had said a proposal to cut crude output was under review.
A top Iranian official said on Wednesday Tehran is continuing sell oil to international customers as usual and has no plans to cut exports to world markets.
U.S. light crude for June delivery was down 50 cents at $125.30 a barrel by 1059 GMT. It has hit a string of record highs over the past week and reached a peak of $126.98 a barrel on Tuesday.
London Brent crude was down $1.04 cents at $123.06 a barrel.
The comment from the National Iranian Oil Company official soothed the volatile market.
"There is no plan to cut exports and we keep our promises (to clients) ... and we export as usual," said Hojjatollah Ghanimifard, executive director of international affairs at NIOC.
Concern in the oil market that Tehran's dispute with the West over its nuclear programme may lead to a disruption in its crude exports have helped drive oil to record highs.
DISTILLATES
The market awaited weekly fuel inventory data from the United States, due at 1430 GMT, forecast to show an 800,000 barrel rise in distillate stocks and a 1.8 million barrel increase in crude inventories, their fourth increase in a row.
The view that supplies of distillates such as heating oil and diesel fuel are tightening helped drive U.S. heating oil futures to a record of $3.6989 a gallon on Tuesday, which boosted the entire oil complex.
"Distillates are clearly driving the market and U.S. distillate inventories will have to be watched this week," said Marc Lansonneur, Societe Generale's head of commodities derivatives in Asia.
European middle distillate stocks fell sharply in April to 361.28 million barrels, down 1.4 percent from March and 7.2 percent lower than a year ago, data from industry monitor Euroilstock showed on Tuesday.
The market had hit a new record of nearly $127 the previous session, after Iranian President Mahmoud Ahmadinejad had said a proposal to cut crude output was under review.
A top Iranian official said on Wednesday Tehran is continuing sell oil to international customers as usual and has no plans to cut exports to world markets.
U.S. light crude for June delivery was down 50 cents at $125.30 a barrel by 1059 GMT. It has hit a string of record highs over the past week and reached a peak of $126.98 a barrel on Tuesday.
London Brent crude was down $1.04 cents at $123.06 a barrel.
The comment from the National Iranian Oil Company official soothed the volatile market.
"There is no plan to cut exports and we keep our promises (to clients) ... and we export as usual," said Hojjatollah Ghanimifard, executive director of international affairs at NIOC.
Concern in the oil market that Tehran's dispute with the West over its nuclear programme may lead to a disruption in its crude exports have helped drive oil to record highs.
DISTILLATES
The market awaited weekly fuel inventory data from the United States, due at 1430 GMT, forecast to show an 800,000 barrel rise in distillate stocks and a 1.8 million barrel increase in crude inventories, their fourth increase in a row.
The view that supplies of distillates such as heating oil and diesel fuel are tightening helped drive U.S. heating oil futures to a record of $3.6989 a gallon on Tuesday, which boosted the entire oil complex.
"Distillates are clearly driving the market and U.S. distillate inventories will have to be watched this week," said Marc Lansonneur, Societe Generale's head of commodities derivatives in Asia.
European middle distillate stocks fell sharply in April to 361.28 million barrels, down 1.4 percent from March and 7.2 percent lower than a year ago, data from industry monitor Euroilstock showed on Tuesday.
States wheel in 'green power' into their energy portfolio
12 States firm up renewable purchase obligation .
States are increasingly warming up to the idea of including ‘green power’ in their energy portfolio.
At the last count, power regulators across 12 States had firmed up Renewable Purchase Obligation (RPO), which makes it mandatory for all distribution utilities in that State to source a minimum quantum of electricity annually from renewable sources - a move that could boost installation of ‘green power’ capacities.
Expressed as a percentage of its total consumption, the RPO varies from one per cent to 10 per cent across the States that have implemented it so far, with regulators in States such as Karnataka, Madhya Pradesh and Tamil Nadu pegging the limit at up to 10 per cent.
On an pan-India basis, the total RPO commitment by these 12 States cumulatively adds up to around 35,518 million units (MUs), which is around 5.33 per cent of the total power consumed by in the country during 2007-08 (estimated at 6,66,007 MUs according to latest CEA data).
With the RPO mechanism still in the evolution stage in India, more States are likely to follow the example of the 12 States, where regulators have already implemented the scheme. Coming at a time when prices of hydrocarbon resources across the world are touching all-time highs, the mandatory purchase of ‘green power’ by regulators is expected to give a new lease of life for the renewables sector, according to Government officials.
Rajasthan, where the State regulator has fixed the RPO at 7.5 per cent, has gone a step further to prescribe a renewable energy surcharge payment, under which any short fall to meet the RPO will be subject to payment of surcharge by the distribution licensee. The surcharge collected is to be credited to a fund to be utilised for the creation of transmission system infrastructure of renewable energy projects.
States are increasingly warming up to the idea of including ‘green power’ in their energy portfolio.
At the last count, power regulators across 12 States had firmed up Renewable Purchase Obligation (RPO), which makes it mandatory for all distribution utilities in that State to source a minimum quantum of electricity annually from renewable sources - a move that could boost installation of ‘green power’ capacities.
Expressed as a percentage of its total consumption, the RPO varies from one per cent to 10 per cent across the States that have implemented it so far, with regulators in States such as Karnataka, Madhya Pradesh and Tamil Nadu pegging the limit at up to 10 per cent.
On an pan-India basis, the total RPO commitment by these 12 States cumulatively adds up to around 35,518 million units (MUs), which is around 5.33 per cent of the total power consumed by in the country during 2007-08 (estimated at 6,66,007 MUs according to latest CEA data).
With the RPO mechanism still in the evolution stage in India, more States are likely to follow the example of the 12 States, where regulators have already implemented the scheme. Coming at a time when prices of hydrocarbon resources across the world are touching all-time highs, the mandatory purchase of ‘green power’ by regulators is expected to give a new lease of life for the renewables sector, according to Government officials.
Rajasthan, where the State regulator has fixed the RPO at 7.5 per cent, has gone a step further to prescribe a renewable energy surcharge payment, under which any short fall to meet the RPO will be subject to payment of surcharge by the distribution licensee. The surcharge collected is to be credited to a fund to be utilised for the creation of transmission system infrastructure of renewable energy projects.
Government to pump in US$ 177.22 million in GQ healthcare project
The Golden Quadrilateral (GQ) has emerged as a golden opportunity for the healthcare industry in India. The government plans to invest Rs 750 crore to develop health centres in partnership with health majors such as Apollo Group and trauma care centres like Emergency Management and Research Institute (EMRI), Hyderabad. Nearly 140 trauma care centres will be developed along the 6,500 km long north-south and east-west corridors of the four to six lane express highway.
The health centres will be developed at three levels. Firstly, the government will upgrade existing hospitals along the corridor to the level of multi-speciality medical institutes on the lines of All India Institute of Medical Sciences (AIIMS) and PGI, Chandigarh. “The plan is to create one such facility in each state along the quadrilateral,” a senior government official said.
On the second and third level, the government will set up secondary and primary healthcare centres at every 100 km radius. “These hospitals and healthcare centres are slated to be developed over the next two years. The ministry of health will bear 90% of the costs,” he added.
The ministry of health plans to invest around Rs 730 crore on the golden quadrilateral health project. The ministry of road transport and highways will also chip in Rs 14 crore to provide 70 ambulances this fiscal and an equivalent number the year after.
The trauma care division of Apollo hospitals has expressed interest to run these facilities that will be developed by the government. EMRI, a Hyderabad- based trauma management centre which runs fully equipped ambulances to reach trauma victims within minutes. It also runs a call centre to cater emergencies in Andhra Pradesh. The proposed centres will not only handle medical emergencies on the golden quadrilateral but also provide much needed health services in the hinterland.
Thus with government and private players joining hands, large stretches which hardly had any medical facilities will become accessible to the Indian health industry.
The health centres will be developed at three levels. Firstly, the government will upgrade existing hospitals along the corridor to the level of multi-speciality medical institutes on the lines of All India Institute of Medical Sciences (AIIMS) and PGI, Chandigarh. “The plan is to create one such facility in each state along the quadrilateral,” a senior government official said.
On the second and third level, the government will set up secondary and primary healthcare centres at every 100 km radius. “These hospitals and healthcare centres are slated to be developed over the next two years. The ministry of health will bear 90% of the costs,” he added.
The ministry of health plans to invest around Rs 730 crore on the golden quadrilateral health project. The ministry of road transport and highways will also chip in Rs 14 crore to provide 70 ambulances this fiscal and an equivalent number the year after.
The trauma care division of Apollo hospitals has expressed interest to run these facilities that will be developed by the government. EMRI, a Hyderabad- based trauma management centre which runs fully equipped ambulances to reach trauma victims within minutes. It also runs a call centre to cater emergencies in Andhra Pradesh. The proposed centres will not only handle medical emergencies on the golden quadrilateral but also provide much needed health services in the hinterland.
Thus with government and private players joining hands, large stretches which hardly had any medical facilities will become accessible to the Indian health industry.
Falling Re adds to Oil Cos’ woes
The oil companies, which are already bleeding on account of surging crude prices, have in the past 10 days suffered more due to depreciation of Indian rupeeagainst dollar.
The value of rupee, which stood at Rs 40 a dollar about 10 days ago, has tumbled to 42-level, leading to heavy losses on payment of crude, say oil industry officials.
This 5 per cent depreciation of the Indian currency would mean that during this period, if the crude oil worth Rs 1,000 crore was imported, then the loss on account of currency fluctuation would be around Rs 50 crore, added the officials.
Adding to woes is the finance ministry’s indication to issue oil bonds only worth 50 per cent of the under recoveries amounting to Rs 35,300 crore to partially offset the Rs 70,000-crore losses, suffered by oil companies during 2007-08 due to rise in global crude prices.
The oil companies had demanded bonds for 57.1 per cent of the under-recoveries, but that proposal has been turned down.
“The finance ministry is not ready for it, so we have requested the finance minister P Chidambaram to issue as much bond limit as possible”, said petroleum minister Murli Deora after meeting him.
On the tricky question of raising the domestic fuel prices, Murli Deora said there was no discussion on it and that it was a policy decision that could be decided only by the cabinet.
The petroleum ministry officials said it was not discussed in the meeting whether the bonds would be taken as mandatory requirement for banks to park their funds in government securities, known as statutory liquidity ratio.
India imports 73 per cent of its crude oil needs and the cost of imports would spiral as it inches higher, while rupee is trading at a 13-month low.
The value of rupee, which stood at Rs 40 a dollar about 10 days ago, has tumbled to 42-level, leading to heavy losses on payment of crude, say oil industry officials.
This 5 per cent depreciation of the Indian currency would mean that during this period, if the crude oil worth Rs 1,000 crore was imported, then the loss on account of currency fluctuation would be around Rs 50 crore, added the officials.
Adding to woes is the finance ministry’s indication to issue oil bonds only worth 50 per cent of the under recoveries amounting to Rs 35,300 crore to partially offset the Rs 70,000-crore losses, suffered by oil companies during 2007-08 due to rise in global crude prices.
The oil companies had demanded bonds for 57.1 per cent of the under-recoveries, but that proposal has been turned down.
“The finance ministry is not ready for it, so we have requested the finance minister P Chidambaram to issue as much bond limit as possible”, said petroleum minister Murli Deora after meeting him.
On the tricky question of raising the domestic fuel prices, Murli Deora said there was no discussion on it and that it was a policy decision that could be decided only by the cabinet.
The petroleum ministry officials said it was not discussed in the meeting whether the bonds would be taken as mandatory requirement for banks to park their funds in government securities, known as statutory liquidity ratio.
India imports 73 per cent of its crude oil needs and the cost of imports would spiral as it inches higher, while rupee is trading at a 13-month low.
RBI survey pegs growth at 8.1 pc
A forecasters survey carried out by the RBI pegged real GDP growth for the current fiscal at 8.1 per cent, weaker than 8.9 per cent projected three months ago and the inflation between 5.5 and 5.9 per cent.
The third round of the survey, released by the RBI indicated that the real GDP growth in first and second quarter was projected at 8.1 and 8.3 per cent, respectively. During the third quarter of current financial year, the GDP growth is placed at 8.1 per cent. The forecasters saw lower chance (25 per cent) that WPI inflation would fall in the range 5-5.4 per cent against their earlier forecast of 38 per cent. The probability assigned to the range of 5.5 to 5.9 per cent has been revised upwards from 15 per cent in the earlier survey to 19.3 per cent in the current survey.
Median forecasts for real GDP originating from agriculture, industry and services sectors in first quarter of 2008-09 are kept at 3, 8.4 and 10 per cent, respectively. These projections were down from 3, 9 and 10.3 per cent, respectively, in the last survey. For the second quarter also, the sectoral growth forecasts have been revised downwards. For the third quarter of current financial year, the forecasters have kept the growth rates at 2.9, 8.6 and 9.8, respectively.
The survey was the third 'Survey of Professional Forecasters' on major macro-economic indicators of short to medium-term economic developments carried out by RBI to gain from the professional expertise and experience of these forecasters. The Reserve Bank has also introduced such a survey from the second quarter ended September 2007 covering component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, Forex reserve, money supply, credit growth, stock market movements and corporate profit.
Long-term forecasts for real GDP during the next five years is projected at 8.5 per cent and 8.9 per cent for the next 10 years. Over the next five years, the forecasters expect WPI inflation to be 5 per cent, which is revised upwards from the last survey. CPI-IW inflation will average to 5.5 per cent, same as expected in last survey. Over the next ten years, the WPI and CPI-IW-based inflation are expected to be 4.5 and 5 per cent, respectively.
The third round of the survey, released by the RBI indicated that the real GDP growth in first and second quarter was projected at 8.1 and 8.3 per cent, respectively. During the third quarter of current financial year, the GDP growth is placed at 8.1 per cent. The forecasters saw lower chance (25 per cent) that WPI inflation would fall in the range 5-5.4 per cent against their earlier forecast of 38 per cent. The probability assigned to the range of 5.5 to 5.9 per cent has been revised upwards from 15 per cent in the earlier survey to 19.3 per cent in the current survey.
Median forecasts for real GDP originating from agriculture, industry and services sectors in first quarter of 2008-09 are kept at 3, 8.4 and 10 per cent, respectively. These projections were down from 3, 9 and 10.3 per cent, respectively, in the last survey. For the second quarter also, the sectoral growth forecasts have been revised downwards. For the third quarter of current financial year, the forecasters have kept the growth rates at 2.9, 8.6 and 9.8, respectively.
The survey was the third 'Survey of Professional Forecasters' on major macro-economic indicators of short to medium-term economic developments carried out by RBI to gain from the professional expertise and experience of these forecasters. The Reserve Bank has also introduced such a survey from the second quarter ended September 2007 covering component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, Forex reserve, money supply, credit growth, stock market movements and corporate profit.
Long-term forecasts for real GDP during the next five years is projected at 8.5 per cent and 8.9 per cent for the next 10 years. Over the next five years, the forecasters expect WPI inflation to be 5 per cent, which is revised upwards from the last survey. CPI-IW inflation will average to 5.5 per cent, same as expected in last survey. Over the next ten years, the WPI and CPI-IW-based inflation are expected to be 4.5 and 5 per cent, respectively.
MARKET PREDICTION
MARKET WILL BE VERY VOLATILE OR MAY BE NEGATIVE COZ OF OIL CONCERN..
PUT CALL RATIO IS AROUND 1.43
OPTION DATA
CALL OPTION WRITING @ 5000/5100
PUT OPTION WRITING @ 4800/4900
MARKET WILL MOVE B/W 4800-5100
TODAY'S VIEW
@ 4900 LONG POSITION CAN BE BUILT WITH SL OF 4880
SHORT POSITION CAN BE BUILT @ 5000 WITH SL 4880...MAINLY IN ENERGY SECTOR..
SECTOR TO WATCH
MIDCAPIT
HAVE A NICE TRADING DAY...
-MR. SAM
PUT CALL RATIO IS AROUND 1.43
OPTION DATA
CALL OPTION WRITING @ 5000/5100
PUT OPTION WRITING @ 4800/4900
MARKET WILL MOVE B/W 4800-5100
TODAY'S VIEW
@ 4900 LONG POSITION CAN BE BUILT WITH SL OF 4880
SHORT POSITION CAN BE BUILT @ 5000 WITH SL 4880...MAINLY IN ENERGY SECTOR..
SECTOR TO WATCH
MIDCAPIT
HAVE A NICE TRADING DAY...
-MR. SAM
Tuesday, May 13, 2008
TO BECAME WORLD LARGET CONGLOMARATE IN IT SPACE
market is volatite,rangebound and moving sidesways due to some political instability of UPA govt and current iip data also injected inflationfigure making street confused.
It would be HP's biggest deal in six years.
HP is the world's largest maker of personal computers, while Texas-based EDS provides technology services to the governments and companies around the world.
The sale is expected to close in the second half of this year and more than double HP's revenue from services, which was $16.6 billion in 2007. EDS had $22.13 billion in revenue last year.
Their combined services business would have 210,000 employees -- although some analysts expect HP would trim jobs -- and operations in more than 80 countries.
HP said the business would be based at EDS' headquarters in Plano, Texas, and led by EDS chairman and Chief Executive Ronald A. Rittenmeyer.
HP said it expects the deal would produce "significant" cost savings and add to earnings by next year.
Palo Alto-based HP and EDS had said Monday that they were in "advanced discussions" about a possible combination without providing additional details.
In Tuesday's announcement, the companies said the deal would have an enterprise value of $13.9 billion without defining what that included. But based on 502.6 million EDS shares outstanding as of April 25, the acquisition would be worth $12.57 billion.
HP ended January with nearly $10 billion in cash and has a market value of about $115 billion.
If the deal is completed, it would be HP's biggest acquisition since it bought Compaq Computer Corp. for $19 billion in 2002. That acquisition paved the way for HP to supplant Dell Inc. as the world's largest PC maker.
Buying EDS would give HP more tools to challenge IBM Corp. in the lucrative technology services field. HP already has replaced IBM as the world's largest technology company, based on revenue.
The demand for data management and technology consulting services has steadily grown during the past two decades as the automation of corporate America and the rise of the Internet prompted more businesses to hire contractors to help run their computer software and hardware.
IBM's technology services division brought in $54 billion in revenue last year, accounting for half of the company's total sales. Combined, EDS and HP's technology services division had about $39 billion in revenue last year.
In one of its biggest previous attempts to expand its technology services, HP attempted to buy PricewaterhouseCoopers' consulting division in 2000. IBM wound up buying the unit instead.
HP has been on a roll since it hired Mark Hurd as chief executive three years ago. Propelled by earnings growth that has consistently exceeded analyst expectations, the company's stock price has more than doubled since Hurd's arrival.
Acquiring EDS could yield more government work for HP, which had about $500 million in prime federal contracts in fiscal 2007. EDS is far better connected, with deals worth about $2.5 billion -- putting it among the top 10 among government technology contractors.
Combined, HP and EDS still would lag significantly behind government contractors like Lockheed Martin Corp. and Boeing Co.
As in many corporate marriages, cultural clashes between HP and EDS could ruin the union, said AMR Research analyst Dana Stiffler. "Palo Alto versus Plano wrangling will destroy any short-medium term benefit unless there's a strong integration roadmap," she predicted.
HP earned $7.3 billion on $104 billion in revenue last year while EDS made $716 million on $22.1 billion in revenue.
EDS has been linked with possible deals previously, including a reported interest by Deutsche Telekom late last year and Dell before that. No suitors ever confirmed reports that they were talking.
Former IBM salesman H. Ross Perot started EDS in 1962 to help run other companies' computer systems -- a specialty generally known as information-technology or IT services.
Perot sold EDS to General Motors Corp. for $2.5 billion in 1984 and eventually became so disillusioned with how that deal worked out that he sold his remaining EDS shares to the automaker so he could start a new rival service bearing his name.
An outspoken billionaire, Perot became even more famous for running for U.S. president in 1992 and 1996. GM spun off EDS as an independent company in 1996 and remained its largest customer.
EDS was riding high at the start of the decade, despite the dot-com bubble's bursting. But in late 2002, earnings shortfalls led to investor lawsuits, a Securities and Exchange Commission investigation, the ouster of the chief executive, and a sharp drop in the stock price.
The company lost $1.7 billion in 2003 but gradually righted itself under CEO Michael Jordan, a retired CBS and Westinghouse CEO. He fixed some money-losing contracts, including a multibillion-dollar deal to build a communications network for the Navy and Marine Corps, and began cutting costs by sending thousands of jobs to low-cost countries such as India.
Although he hasn't seen any signs to suggest EDS has been looking for a buyer, Jefferies & Co. analyst Joseph Vafi said the company's board might have decided a sale would create a quicker payoff for shareholders than continuing to try to grow the company in the highly competitive technology services industry.
Under Hurd's leadership, HP bought business software maker Mercury Interactive Corp. for $4.9 billion in 2006 and last year paid $1.7 billion for data management service Opsware Inc., which had sold a large chunk of its operations to EDS in 2002.
AP Business Writers Jennifer Malloy in New York, David Koenig in Dallas and Dibya Sarkar in Washington, D.C., contributed to this report.
It would be HP's biggest deal in six years.
HP is the world's largest maker of personal computers, while Texas-based EDS provides technology services to the governments and companies around the world.
The sale is expected to close in the second half of this year and more than double HP's revenue from services, which was $16.6 billion in 2007. EDS had $22.13 billion in revenue last year.
Their combined services business would have 210,000 employees -- although some analysts expect HP would trim jobs -- and operations in more than 80 countries.
HP said the business would be based at EDS' headquarters in Plano, Texas, and led by EDS chairman and Chief Executive Ronald A. Rittenmeyer.
HP said it expects the deal would produce "significant" cost savings and add to earnings by next year.
Palo Alto-based HP and EDS had said Monday that they were in "advanced discussions" about a possible combination without providing additional details.
In Tuesday's announcement, the companies said the deal would have an enterprise value of $13.9 billion without defining what that included. But based on 502.6 million EDS shares outstanding as of April 25, the acquisition would be worth $12.57 billion.
HP ended January with nearly $10 billion in cash and has a market value of about $115 billion.
If the deal is completed, it would be HP's biggest acquisition since it bought Compaq Computer Corp. for $19 billion in 2002. That acquisition paved the way for HP to supplant Dell Inc. as the world's largest PC maker.
Buying EDS would give HP more tools to challenge IBM Corp. in the lucrative technology services field. HP already has replaced IBM as the world's largest technology company, based on revenue.
The demand for data management and technology consulting services has steadily grown during the past two decades as the automation of corporate America and the rise of the Internet prompted more businesses to hire contractors to help run their computer software and hardware.
IBM's technology services division brought in $54 billion in revenue last year, accounting for half of the company's total sales. Combined, EDS and HP's technology services division had about $39 billion in revenue last year.
In one of its biggest previous attempts to expand its technology services, HP attempted to buy PricewaterhouseCoopers' consulting division in 2000. IBM wound up buying the unit instead.
HP has been on a roll since it hired Mark Hurd as chief executive three years ago. Propelled by earnings growth that has consistently exceeded analyst expectations, the company's stock price has more than doubled since Hurd's arrival.
Acquiring EDS could yield more government work for HP, which had about $500 million in prime federal contracts in fiscal 2007. EDS is far better connected, with deals worth about $2.5 billion -- putting it among the top 10 among government technology contractors.
Combined, HP and EDS still would lag significantly behind government contractors like Lockheed Martin Corp. and Boeing Co.
As in many corporate marriages, cultural clashes between HP and EDS could ruin the union, said AMR Research analyst Dana Stiffler. "Palo Alto versus Plano wrangling will destroy any short-medium term benefit unless there's a strong integration roadmap," she predicted.
HP earned $7.3 billion on $104 billion in revenue last year while EDS made $716 million on $22.1 billion in revenue.
EDS has been linked with possible deals previously, including a reported interest by Deutsche Telekom late last year and Dell before that. No suitors ever confirmed reports that they were talking.
Former IBM salesman H. Ross Perot started EDS in 1962 to help run other companies' computer systems -- a specialty generally known as information-technology or IT services.
Perot sold EDS to General Motors Corp. for $2.5 billion in 1984 and eventually became so disillusioned with how that deal worked out that he sold his remaining EDS shares to the automaker so he could start a new rival service bearing his name.
An outspoken billionaire, Perot became even more famous for running for U.S. president in 1992 and 1996. GM spun off EDS as an independent company in 1996 and remained its largest customer.
EDS was riding high at the start of the decade, despite the dot-com bubble's bursting. But in late 2002, earnings shortfalls led to investor lawsuits, a Securities and Exchange Commission investigation, the ouster of the chief executive, and a sharp drop in the stock price.
The company lost $1.7 billion in 2003 but gradually righted itself under CEO Michael Jordan, a retired CBS and Westinghouse CEO. He fixed some money-losing contracts, including a multibillion-dollar deal to build a communications network for the Navy and Marine Corps, and began cutting costs by sending thousands of jobs to low-cost countries such as India.
Although he hasn't seen any signs to suggest EDS has been looking for a buyer, Jefferies & Co. analyst Joseph Vafi said the company's board might have decided a sale would create a quicker payoff for shareholders than continuing to try to grow the company in the highly competitive technology services industry.
Under Hurd's leadership, HP bought business software maker Mercury Interactive Corp. for $4.9 billion in 2006 and last year paid $1.7 billion for data management service Opsware Inc., which had sold a large chunk of its operations to EDS in 2002.
AP Business Writers Jennifer Malloy in New York, David Koenig in Dallas and Dibya Sarkar in Washington, D.C., contributed to this report.
High rates, rupee hurt India manufacturing - minister
A strong rupee and high interest rates are responsible for a slowdown in India's manufacturing growth, which the government hopes to reverse with new industry initiatives, the minister of state for industries said.
Industrial output grew at its weakest annual pace in six years in March, data showed on Monday, knocking the rupee to a one-year low and fanning speculation the Reserve Bank of India (RBI) may hold off tightening policy further in its fight against soaring inflation.
"The hardening of the rupee has adversely impacted our exports, which account for a major chunk of manufacturing," Ashwani Kumar told Reuters in an interview.
"The high interest rate burden which has hit the consumer durables industry is responsible for a decline in manufacturing."
He said a new thrust by the government to boost investment and technology in leather, textiles, food processing and electronic hardware would help reverse the slowing trend in manufacturing.
"As soon as interest rates soften and there is a general pick-up in the economy, we will be able to reverse the trend."
He expected the economy to maintain a robust rate of growth despite sluggishness in other parts of the world.
"Despite a general slowdown that one is witnessing in the global economy, particularly in the lead economy of the United States, India will be able to maintain an annual GDP growth rate of 8 percent-plus," Kumar said.
"I have full reason to believe that the India growth story is a continuing one."
He expected wholesale price inflation, which hit a 3-½ year high of 7.6 percent in late April, to moderate sooner than expected.
"It will take about 8 to 12 weeks for the impact of the preliminary measures of the government to be felt on prices," Kumar said.
An "unprecedented and extraordinary" rise in global food and energy prices would have an adverse impact, but the government was looking to insulate the economy from such shocks.
"We are not allowing a hike in global prices so far to hit the common man, and the oil companies and the government are absorbing the loss," Kumar said.
"But this is a serious situation and we are concerned."
Industrial output grew at its weakest annual pace in six years in March, data showed on Monday, knocking the rupee to a one-year low and fanning speculation the Reserve Bank of India (RBI) may hold off tightening policy further in its fight against soaring inflation.
"The hardening of the rupee has adversely impacted our exports, which account for a major chunk of manufacturing," Ashwani Kumar told Reuters in an interview.
"The high interest rate burden which has hit the consumer durables industry is responsible for a decline in manufacturing."
He said a new thrust by the government to boost investment and technology in leather, textiles, food processing and electronic hardware would help reverse the slowing trend in manufacturing.
"As soon as interest rates soften and there is a general pick-up in the economy, we will be able to reverse the trend."
He expected the economy to maintain a robust rate of growth despite sluggishness in other parts of the world.
"Despite a general slowdown that one is witnessing in the global economy, particularly in the lead economy of the United States, India will be able to maintain an annual GDP growth rate of 8 percent-plus," Kumar said.
"I have full reason to believe that the India growth story is a continuing one."
He expected wholesale price inflation, which hit a 3-½ year high of 7.6 percent in late April, to moderate sooner than expected.
"It will take about 8 to 12 weeks for the impact of the preliminary measures of the government to be felt on prices," Kumar said.
An "unprecedented and extraordinary" rise in global food and energy prices would have an adverse impact, but the government was looking to insulate the economy from such shocks.
"We are not allowing a hike in global prices so far to hit the common man, and the oil companies and the government are absorbing the loss," Kumar said.
"But this is a serious situation and we are concerned."
Steel cos to invest Rs 89240 crore: Survey
Indian steel firms plan to invest Rs 89240 crore in coming months to expand capacity by 31 million tonnes to meet rising demand in a fast growing economy, a survey said on Monday. The survey by Associated Chambers of Commerce and Industry said price pressures could ease if two-third of the planned capacity expansion was carried out in the coming months. Companies like Tata Steel, Bhushan Steel and Vedanta Resources announced major expansion plans in recent months in eastern states, it said. "With steel prices increasing by more than 30 per cent in 2008, the industry announced capacity expansion plans of 31 million tonnes in the last quarter of 2007-08 in order to meet the fast growing demand." The government has persuaded steel firms not to raise prices for three months and imposed an export tax to increase local supplies and fight inflation that hit a 3-½ year high in late April. While steel production grew by 5.2 per cent to 55.26 million tonnes in 2007-08, consumption grew by 11.72 per cent to 51.80 million tonnes. More-than-expected growth in demand and rising raw material prices have been pushing steel prices up, ASSOCHAM said.
‘IT exports to touch $80 b in three years’
IT exports from India are poised to reach $80 billion within three years effectively doubling from $40 billion achieved in 2007-08. In the process it would create about two million more direct jobs, according to Mr Jainder Singh, Union Secretary, Information Technology and Communication.
The sector also provides two million jobs to IT professionals directly and another 7-8 million people indirectly and contributes about 5 per cent of the country’s gross domestic product, and 33 per cent of exports. The sector contribution to GDP is set to go up significantly, he said.
While the Indian IT brand is well established, it is faced with the challenge of increasing the employable pool of engineers to sustain the growth, Mr Singh said launching ‘Prepare Future’, a Faculty Updation Programme here.
Mr Singh said of the 4 lakh who graduate out of engineering colleges in the country, about 25 per cent are actually employable. Thrust on Training
Therefore, the accent is on increasing the employable pool. However, this time, instead of focus on the student and his training, the thrust is on training teachers.
The importance of training can be gauged from the fact that about Rs 4,000 crore would be spent by IT companies on training their employees during the year, he said.
The IT department has chosen the Centre for Development of Advanced Computing (C-Dac), Hyderabad as the nodal centre to design, develop and help train faculty of engineering colleges.
The focus has shifted on to training teachers as the engineering colleges are faced with shortage of trained teaching staff, who require to update skills and brace up with new technologies and curriculum.
The C-DAC will provide both instructor-led training and online modules from Media Lab Asia, IIT-Chennai and IIITs, Dr. Sharat Chandra Babu, Director of C-DAC, said.
The Managing Director of Nvidia India, Mr JA Chowdary, said unlike in the past it was not enough to have some specialisation to secure an IT job.
No one is in without matching the company requirements. This opens up opportunity for specialised training.
The sector also provides two million jobs to IT professionals directly and another 7-8 million people indirectly and contributes about 5 per cent of the country’s gross domestic product, and 33 per cent of exports. The sector contribution to GDP is set to go up significantly, he said.
While the Indian IT brand is well established, it is faced with the challenge of increasing the employable pool of engineers to sustain the growth, Mr Singh said launching ‘Prepare Future’, a Faculty Updation Programme here.
Mr Singh said of the 4 lakh who graduate out of engineering colleges in the country, about 25 per cent are actually employable. Thrust on Training
Therefore, the accent is on increasing the employable pool. However, this time, instead of focus on the student and his training, the thrust is on training teachers.
The importance of training can be gauged from the fact that about Rs 4,000 crore would be spent by IT companies on training their employees during the year, he said.
The IT department has chosen the Centre for Development of Advanced Computing (C-Dac), Hyderabad as the nodal centre to design, develop and help train faculty of engineering colleges.
The focus has shifted on to training teachers as the engineering colleges are faced with shortage of trained teaching staff, who require to update skills and brace up with new technologies and curriculum.
The C-DAC will provide both instructor-led training and online modules from Media Lab Asia, IIT-Chennai and IIITs, Dr. Sharat Chandra Babu, Director of C-DAC, said.
The Managing Director of Nvidia India, Mr JA Chowdary, said unlike in the past it was not enough to have some specialisation to secure an IT job.
No one is in without matching the company requirements. This opens up opportunity for specialised training.
State Bank of India, Australia's IAG in insurance JV
State Bank of India, the country's top lender, and Insurance Australia Group have signed a memorandum of understanding for a general insurance venture to tap the fast-growing Indian market, the firms said on Tuesday.
The firms will finalise an agreement and apply for regulatory approvals, they said in a joint statement, without specifying financial details.
SBI will hold 74 percent in the venture, with IAG holding the remaining 26 percent, the maximum allowed under Indian law.
"Establishing a general insurance joint venture is a key element of SBI's strategy to pursue emerging, high-growth opportunities," Deepak Chawla, SBI's deputy managing director for corporate strategy, said in a joint statement.
The venture hopes to start business in the current financial year and aims to be "amongst the top three players in general insurance in a period of about 10 years," the statement said.
State-run SBI, which has more than 10,000 branches and 100 million customers, has a venture with Cardiff, a unit of BNP Paribas, for life insurance.
"Forming a general insurance partnership in India ... is a significant step in IAG's Asian expansion strategy," IAG Chief Executive Michael Hawker said.
"We identified India four years ago as a market we wanted to enter as part of our stated strategy to diversify into fast-growing general insurance markets in Asia," he said.
IAG expects to fund the venture from internal accruals which "will not be at a material level in the context of the group," the statement said.
India's general insurance sector has grown at a compounded annual rate of 14 percent over the past five years, and is forecast to grow 15-20 percent per annum over the next 10 years, Hawker said.
India, which has 18 life and 18 non-life insurance firms, has one of the lowest penetration levels in Asia. Recent entrants into general insurance include a venture of India's Future Group and Italy's Generali, and a venture of India's Housing Development Finance Corp and Germany's Ergo.
The firms will finalise an agreement and apply for regulatory approvals, they said in a joint statement, without specifying financial details.
SBI will hold 74 percent in the venture, with IAG holding the remaining 26 percent, the maximum allowed under Indian law.
"Establishing a general insurance joint venture is a key element of SBI's strategy to pursue emerging, high-growth opportunities," Deepak Chawla, SBI's deputy managing director for corporate strategy, said in a joint statement.
The venture hopes to start business in the current financial year and aims to be "amongst the top three players in general insurance in a period of about 10 years," the statement said.
State-run SBI, which has more than 10,000 branches and 100 million customers, has a venture with Cardiff, a unit of BNP Paribas, for life insurance.
"Forming a general insurance partnership in India ... is a significant step in IAG's Asian expansion strategy," IAG Chief Executive Michael Hawker said.
"We identified India four years ago as a market we wanted to enter as part of our stated strategy to diversify into fast-growing general insurance markets in Asia," he said.
IAG expects to fund the venture from internal accruals which "will not be at a material level in the context of the group," the statement said.
India's general insurance sector has grown at a compounded annual rate of 14 percent over the past five years, and is forecast to grow 15-20 percent per annum over the next 10 years, Hawker said.
India, which has 18 life and 18 non-life insurance firms, has one of the lowest penetration levels in Asia. Recent entrants into general insurance include a venture of India's Future Group and Italy's Generali, and a venture of India's Housing Development Finance Corp and Germany's Ergo.
MARKET PREDICTION
GLOBAL MARKETS ARE IN POSITIVE MODE DUE TO EASING OF OIL PRICE..
YESTERDAY MARKET SLIPPED DUE TO POOR IIP DATA..
LEVEL OF NIFTY 5000-5030-5100-5150 GO LONG FROM 5030 WITL SL OF 5000
IN IT AND TEXTILE.
GO SHORT IF NIFTY DOES NOT HOLD 5100 LEVEL WITH SL OF 5130 IN CONSTRUCTION AND BANKING SECTOR.
TOTAL MARKET OI IS 71 K CR AND PUT CALL RATIO SHOOT UP TO 1.46.
HAVE A NICE TRADING DAY
-MR SAM
YESTERDAY MARKET SLIPPED DUE TO POOR IIP DATA..
LEVEL OF NIFTY 5000-5030-5100-5150 GO LONG FROM 5030 WITL SL OF 5000
IN IT AND TEXTILE.
GO SHORT IF NIFTY DOES NOT HOLD 5100 LEVEL WITH SL OF 5130 IN CONSTRUCTION AND BANKING SECTOR.
TOTAL MARKET OI IS 71 K CR AND PUT CALL RATIO SHOOT UP TO 1.46.
HAVE A NICE TRADING DAY
-MR SAM
Monday, May 12, 2008
India Won't Import Wheat This Year on Local Purchases
India, the world's second-biggest wheat consumer, won't import the grain this year as purchases from domestic farmers reach a record, likely pressuring global prices of the commodity.
``There's no question of importing this year,'' Agriculture Minister Sharad Pawar told reporters today in New Delhi. Imports totaled 1.8 million tons in 2007.
Wheat has slumped 41 percent from its February record amid prospects of bigger harvests in producing nations. That's forced private suppliers such as Cargill Inc. to shun auctions in India, enabling the government to make record purchases since harvesting began April 1, Food Corp. of India. Chairman Alok Sinha said.
Food Corp. of India, the nation's biggest buyer of grains, may have 21 million tons in reserves on July 1, enough to meet demand for more than 20 months, Sinha said last week. The state- run company bought 18 million tons since April 1, double from a year earlier, the government said May 9. The company only bought 11.1 million tons of wheat last year.
Wheat futures for July delivery fell 2.1 percent to $8.045 a bushel in Chicago on May 9 after the U.S. government said world output of the grain will rise to a record, rebuilding stockpiles that are forecast to fall to a 30-year low.
The grain has rallied 71 percent in the past year, reaching a record $13.495 a bushel on Feb. 27, as world inventories were forecast to drop to 110 million tons on May 31, the lowest level since 1978. Production for the year that begins June 1 will rise 8.2 percent to a record 656 million metric tons, boosting global reserves before next year's harvest by 13 percent, the U.S. Department of Agriculture said May 9.
India's wheat production, second only to that of China, may climb to a record 76.8 million tons in the year ending June, up 1 million tons from last year, according to the government.
Separately, India does not plan to ban futures trading in more agricultural commodities, Pawar said. The government last week banned trading in soybean oil, potatoes, chick peas and natural rubber to cool the fastest inflation since 2005.
The government, which buys grains at guaranteed prices from farmers to sell to the poor at subsidized rates, needs at least 25 million tons of rice and 12 million tons of wheat annually.
``There's no question of importing this year,'' Agriculture Minister Sharad Pawar told reporters today in New Delhi. Imports totaled 1.8 million tons in 2007.
Wheat has slumped 41 percent from its February record amid prospects of bigger harvests in producing nations. That's forced private suppliers such as Cargill Inc. to shun auctions in India, enabling the government to make record purchases since harvesting began April 1, Food Corp. of India. Chairman Alok Sinha said.
Food Corp. of India, the nation's biggest buyer of grains, may have 21 million tons in reserves on July 1, enough to meet demand for more than 20 months, Sinha said last week. The state- run company bought 18 million tons since April 1, double from a year earlier, the government said May 9. The company only bought 11.1 million tons of wheat last year.
Wheat futures for July delivery fell 2.1 percent to $8.045 a bushel in Chicago on May 9 after the U.S. government said world output of the grain will rise to a record, rebuilding stockpiles that are forecast to fall to a 30-year low.
The grain has rallied 71 percent in the past year, reaching a record $13.495 a bushel on Feb. 27, as world inventories were forecast to drop to 110 million tons on May 31, the lowest level since 1978. Production for the year that begins June 1 will rise 8.2 percent to a record 656 million metric tons, boosting global reserves before next year's harvest by 13 percent, the U.S. Department of Agriculture said May 9.
India's wheat production, second only to that of China, may climb to a record 76.8 million tons in the year ending June, up 1 million tons from last year, according to the government.
Separately, India does not plan to ban futures trading in more agricultural commodities, Pawar said. The government last week banned trading in soybean oil, potatoes, chick peas and natural rubber to cool the fastest inflation since 2005.
The government, which buys grains at guaranteed prices from farmers to sell to the poor at subsidized rates, needs at least 25 million tons of rice and 12 million tons of wheat annually.
India Factory Output Rises at Slowest Pace Since 2002
India's industrial production grew at the slowest pace since 2002 as borrowing costs at a six-year high discouraged consumers from buying cars, motorcycles and other goods.
Production at factories, utilities and mines rose 3 percent in March from a year earlier after gaining 8.6 percent in February, the statistics office said in New Delhi today. The increase was the smallest since February 2002. Economists surveyed expected a 5.8 percent increase.
Output is likely to be moderate this year as the fastest price gains in more than three years make it difficult for the central bank cut interest rates to stimulate demand. Sales at Maruti Suzuki India Ltd., the maker of half the cars sold in India, fell for the first time in more than two years in March.
``Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand,'' said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. ``There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.''
The Reserve Bank of India last month twice raised the proportion of deposits that lenders must set aside as reserves to prevent money supply in the system from adding to inflation. The ratio is now at a seven-year high of 8.25 percent. The bank wants to cool inflation, which is currently running at the fastest pace in more than three years.
Six-Year High
Borrowing costs near a six-year high are discouraging spending by consumers, who rely on loans to buy cars and motorbikes. Car sales rose 12 percent in the fiscal year, slower than the 22 percent gain in the previous period.
Sales at Bajaj Auto declined 10 percent in March and Maruti Suzuki said it sold fewer vehicles last month than last year.
``Higher interest rates have significantly impacted the businesses dependent on consumer loans,'' said Sunil Kant Munjal, Managing Director of Hero Group, which owns Hero Honda Motors Ltd., India's biggest motorcycle maker. ``There is a need for rates to come down.''
Manufacturing, which accounts for about 80 percent of India's industrial production, gained 2.9 percent in March from a year ago, according to today's report. Electricity output rose 3.7 percent and mining grew 3.8 percent. Production grew 8.1 percent in the year ended March 31.
``Given the current situation of high inflationary pressures, we do not expect interest rates to come down and consumer spending, may therefore, remain subdued during the next six months,'' said Kaushal Sampat, an analyst at Dun & Bradstreet.
18 Percent Decline
Concern that growth will slow, hurting profits, have contributed to 18 percent decline in the Bombay Stock Exchange's Sensitive Index, or Sensex, this year.
Still, Finance Minister Palaniappan Chidambaram's Feb. 29 budget announcement to reduce the tax burden on individuals and the proposed higher salaries for 4 million government employees may help accelerate consumption and spur industrial growth, economists said.
Chidambaram raised the income tax exemption limit to 150,000 rupees ($3,626) from 110,000 rupees, leaving more money in the hands of citizens. Later, on March 24 a government-appointed panel recommended higher salaries for workers, that may cost the government 79.75 billion rupees in the current fiscal. The government is yet to decide on raising salaries.
``The budget proposals of cutting excise duties on several items and raising the threshold on taxable income could boost consumer spending,'' Shashank Bhide, an economist with the New Delhi-based National Council for Applied Economic Research said.
Production at factories, utilities and mines rose 3 percent in March from a year earlier after gaining 8.6 percent in February, the statistics office said in New Delhi today. The increase was the smallest since February 2002. Economists surveyed expected a 5.8 percent increase.
Output is likely to be moderate this year as the fastest price gains in more than three years make it difficult for the central bank cut interest rates to stimulate demand. Sales at Maruti Suzuki India Ltd., the maker of half the cars sold in India, fell for the first time in more than two years in March.
``Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand,'' said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. ``There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.''
The Reserve Bank of India last month twice raised the proportion of deposits that lenders must set aside as reserves to prevent money supply in the system from adding to inflation. The ratio is now at a seven-year high of 8.25 percent. The bank wants to cool inflation, which is currently running at the fastest pace in more than three years.
Six-Year High
Borrowing costs near a six-year high are discouraging spending by consumers, who rely on loans to buy cars and motorbikes. Car sales rose 12 percent in the fiscal year, slower than the 22 percent gain in the previous period.
Sales at Bajaj Auto declined 10 percent in March and Maruti Suzuki said it sold fewer vehicles last month than last year.
``Higher interest rates have significantly impacted the businesses dependent on consumer loans,'' said Sunil Kant Munjal, Managing Director of Hero Group, which owns Hero Honda Motors Ltd., India's biggest motorcycle maker. ``There is a need for rates to come down.''
Manufacturing, which accounts for about 80 percent of India's industrial production, gained 2.9 percent in March from a year ago, according to today's report. Electricity output rose 3.7 percent and mining grew 3.8 percent. Production grew 8.1 percent in the year ended March 31.
``Given the current situation of high inflationary pressures, we do not expect interest rates to come down and consumer spending, may therefore, remain subdued during the next six months,'' said Kaushal Sampat, an analyst at Dun & Bradstreet.
18 Percent Decline
Concern that growth will slow, hurting profits, have contributed to 18 percent decline in the Bombay Stock Exchange's Sensitive Index, or Sensex, this year.
Still, Finance Minister Palaniappan Chidambaram's Feb. 29 budget announcement to reduce the tax burden on individuals and the proposed higher salaries for 4 million government employees may help accelerate consumption and spur industrial growth, economists said.
Chidambaram raised the income tax exemption limit to 150,000 rupees ($3,626) from 110,000 rupees, leaving more money in the hands of citizens. Later, on March 24 a government-appointed panel recommended higher salaries for workers, that may cost the government 79.75 billion rupees in the current fiscal. The government is yet to decide on raising salaries.
``The budget proposals of cutting excise duties on several items and raising the threshold on taxable income could boost consumer spending,'' Shashank Bhide, an economist with the New Delhi-based National Council for Applied Economic Research said.
India Cheapest BRIC Market, May Get Cheaper on Materials Costs
Investors are punishing stocks in India more than in any of the other largest emerging markets as government measures to curb inflation cut profits at companies from Steel Authority of India Ltd. to Grasim Industries Ltd.
Steel Authority, India's second-largest producer of the metal, is valued at 9 times projected earnings, 41 percent less than at the start of 2008. The ratio for Grasim, the nation's third-biggest cement maker, dropped 32 percent to 8.5. Price-to- earnings for the entire Indian market slumped 33 percent as foreign investors turned net sellers for the first time since at least 2000, more than in Brazil, Russia and China, where they fell 10 percent to 31 percent, data compiled by Bloomberg show.
Investors are showing less faith in India -- even after the benchmark Sensitive Index jumped 13 percent from its March low -- because companies produce fewer commodities than Russia and Brazil, the nation's gross domestic product is growing slower than China's and a scarcity of coal, oil and iron ore drove inflation to a three-year high.
``I'm just not finding a compelling reason to be in India,'' said Uri Landesman, who oversees $5.5 billion as head of global growth and international equities at ING Groep NV's asset management unit in New York. ``With little natural resources given their population, inflation might be a problem and the government might end up quashing some of the GDP growth.''
India is the only so-called BRIC market where Landesman, 46, isn't invested after he sold the last of his Indian stocks at the start of the month. He declined to name them. BRIC is an acronym coined by Goldman Sachs Group Inc. in November 2001 to encompass four emerging markets it predicted would join the U.S. and Japan as the world's biggest economies by 2050.
Dumping Shares
India is also the only BRIC nation where economic growth is forecast to slow for a second consecutive year in 2008, according to the Washington-based International Monetary Fund.
Overseas fund managers pulled a net $3.03 billion out of Indian equities in the first three months of the year, Bloomberg data show. That's the first time foreigners have been net sellers on a quarterly basis since the data were first compiled in 2000.
``There are no triggers really for the markets to move up,'' said Mahesh Patil, who helps manage $8.8 billion at Birla Sun Life Asset Management in Mumbai.
The declines have made stocks too cheap for some investors to pass up. Prudential ICICI Asset Management Co., India's biggest money manager, and Merrill Lynch & Co.'s local management unit are among those betting on India's plan to spend $1 trillion this decade on roads, railways and airports.
Six-Year Streak
``We remain very positive,'' said Michael Konstantinov, Frankfurt-based chief investment officer for emerging market equities at RCM, a division of Allianz Global Investors, which oversees $435 billion. ``I'm looking for the right time to increase our holdings.''
UBS AG, the top-rated research firm for Asian equities in Asiamoney magazine's 2007 broker poll, is more skeptical. The Zurich-based investment bank predicted last month that rising prices will cause India's central bank to tighten monetary policy, which will curtail earnings growth and end six years of stock gains that lifted the 30-company Sensex 522 percent.
``India's probably going to remain out of favor,'' said Geoff Lewis, the Hong Kong-based head of investment services at JF Asset Management Ltd., which oversees $110 billion. ``It's not the time to be putting more money in.''
Lowest Among BRICs
Indian shares are valued at 10.9 times analysts' estimated 2008 earnings, based on the median of 573 companies analyzed by Bloomberg. That's the lowest among the four BRIC markets. Makers of steel, cement and other materials have the biggest discounts, with a median price-earnings ratio of 8.
Prime Minister Manmohan Singh's government last month asked companies to consider sacrificing some profits to help contain inflation, which doubled in the past four months. Wholesale prices increased 7.61 percent in the week ended April 26 from a year ago, the fastest since November 2004, India said last week.
Mumbai-based Tata Steel Ltd. and JSW Steel Ltd., and New Delhi-based Steel Authority -- India's three biggest steelmakers -- cut prices for a second time since April after meeting with Singh last week. Higher costs may cut margins ``substantially,'' JSW Steel said. The industry agreed last month to pay three times more for coking coal and 65 percent more for iron ore.
India last week said it's also seeking to persuade cement makers to cut prices. Grasim on April 29 forecast that profit margins at its cement and yarn units will narrow this fiscal year because of higher raw-material costs.
Valuation Disparity
The 8.5 times estimated earnings investors pay for Grasim is the lowest since at least March 2002, compared with reported profits, Bloomberg data show. The stock lost 36 percent in 2008.
In contrast, valuations for Anhui Conch Cement Co., China's biggest maker of the construction material, dropped 11 percent in Hong Kong. The company, based in Wuhu City in eastern China's Anhui province, said last month first-quarter profit doubled because it was able to increase prices.
China, which has $1.68 trillion in foreign reserves, more than five times India's balance, has beaten out its South Asian rival on the purchases of over $10 billion in oil and gas assets from Nigeria, Kazakhstan and Canada in the past two years.
``The Chinese government just has their act together more than the Indian government does,'' Landesman said. ``I have no idea what I'm going to get from India.''
Steel Authority, India's second-largest producer of the metal, is valued at 9 times projected earnings, 41 percent less than at the start of 2008. The ratio for Grasim, the nation's third-biggest cement maker, dropped 32 percent to 8.5. Price-to- earnings for the entire Indian market slumped 33 percent as foreign investors turned net sellers for the first time since at least 2000, more than in Brazil, Russia and China, where they fell 10 percent to 31 percent, data compiled by Bloomberg show.
Investors are showing less faith in India -- even after the benchmark Sensitive Index jumped 13 percent from its March low -- because companies produce fewer commodities than Russia and Brazil, the nation's gross domestic product is growing slower than China's and a scarcity of coal, oil and iron ore drove inflation to a three-year high.
``I'm just not finding a compelling reason to be in India,'' said Uri Landesman, who oversees $5.5 billion as head of global growth and international equities at ING Groep NV's asset management unit in New York. ``With little natural resources given their population, inflation might be a problem and the government might end up quashing some of the GDP growth.''
India is the only so-called BRIC market where Landesman, 46, isn't invested after he sold the last of his Indian stocks at the start of the month. He declined to name them. BRIC is an acronym coined by Goldman Sachs Group Inc. in November 2001 to encompass four emerging markets it predicted would join the U.S. and Japan as the world's biggest economies by 2050.
Dumping Shares
India is also the only BRIC nation where economic growth is forecast to slow for a second consecutive year in 2008, according to the Washington-based International Monetary Fund.
Overseas fund managers pulled a net $3.03 billion out of Indian equities in the first three months of the year, Bloomberg data show. That's the first time foreigners have been net sellers on a quarterly basis since the data were first compiled in 2000.
``There are no triggers really for the markets to move up,'' said Mahesh Patil, who helps manage $8.8 billion at Birla Sun Life Asset Management in Mumbai.
The declines have made stocks too cheap for some investors to pass up. Prudential ICICI Asset Management Co., India's biggest money manager, and Merrill Lynch & Co.'s local management unit are among those betting on India's plan to spend $1 trillion this decade on roads, railways and airports.
Six-Year Streak
``We remain very positive,'' said Michael Konstantinov, Frankfurt-based chief investment officer for emerging market equities at RCM, a division of Allianz Global Investors, which oversees $435 billion. ``I'm looking for the right time to increase our holdings.''
UBS AG, the top-rated research firm for Asian equities in Asiamoney magazine's 2007 broker poll, is more skeptical. The Zurich-based investment bank predicted last month that rising prices will cause India's central bank to tighten monetary policy, which will curtail earnings growth and end six years of stock gains that lifted the 30-company Sensex 522 percent.
``India's probably going to remain out of favor,'' said Geoff Lewis, the Hong Kong-based head of investment services at JF Asset Management Ltd., which oversees $110 billion. ``It's not the time to be putting more money in.''
Lowest Among BRICs
Indian shares are valued at 10.9 times analysts' estimated 2008 earnings, based on the median of 573 companies analyzed by Bloomberg. That's the lowest among the four BRIC markets. Makers of steel, cement and other materials have the biggest discounts, with a median price-earnings ratio of 8.
Prime Minister Manmohan Singh's government last month asked companies to consider sacrificing some profits to help contain inflation, which doubled in the past four months. Wholesale prices increased 7.61 percent in the week ended April 26 from a year ago, the fastest since November 2004, India said last week.
Mumbai-based Tata Steel Ltd. and JSW Steel Ltd., and New Delhi-based Steel Authority -- India's three biggest steelmakers -- cut prices for a second time since April after meeting with Singh last week. Higher costs may cut margins ``substantially,'' JSW Steel said. The industry agreed last month to pay three times more for coking coal and 65 percent more for iron ore.
India last week said it's also seeking to persuade cement makers to cut prices. Grasim on April 29 forecast that profit margins at its cement and yarn units will narrow this fiscal year because of higher raw-material costs.
Valuation Disparity
The 8.5 times estimated earnings investors pay for Grasim is the lowest since at least March 2002, compared with reported profits, Bloomberg data show. The stock lost 36 percent in 2008.
In contrast, valuations for Anhui Conch Cement Co., China's biggest maker of the construction material, dropped 11 percent in Hong Kong. The company, based in Wuhu City in eastern China's Anhui province, said last month first-quarter profit doubled because it was able to increase prices.
China, which has $1.68 trillion in foreign reserves, more than five times India's balance, has beaten out its South Asian rival on the purchases of over $10 billion in oil and gas assets from Nigeria, Kazakhstan and Canada in the past two years.
``The Chinese government just has their act together more than the Indian government does,'' Landesman said. ``I have no idea what I'm going to get from India.''
MARKET PREDICTION
GLOBAL MARKETS ARE MIXED TODAY ...OILPRICE IS CREEPING UP ON THE CONCERN OF VENEZULA...AND CHINA ENTERING INTO DANGER INFLATION LEVEL.
GRADUALY,INFLATION IS HOVERING AROUND 7-8%.
INDIAN MARKET IS CORRECTED SIGNIFACANTLY AFTER TOUCHING NIFTY 5250 PSYCOLOGICAL LEVEL.
BELOW 5000 NIFTY COULD TOUCH 4920 LEVEL BUT FOR INTRADAY 5030 ONE CAN GO LONG WITH S L OF 5000.
IF MARKET DOES NOT SUSTAIN 5000 GO SHORT WITH S L OF 5050...
TOTAL OI IS IN MARKET 69 K CR AND PUT CAL RATIO IS 1.37.
CLOSER OF LONG PULLING DOWN MARKET. NITY LEVEL 4920-5000-5050-5100
BUY IN IT STOCK FROM 5030 LEVEL IF MARKET HOLD AND GO SHORT IN AUTO,BANKING,CONSTRUCTION IF MARKET DOES NOT SUSTAIN 5030 WITH S L OF 5050.
HAVE A NICE TRADING DAY.
-MR SAM
GRADUALY,INFLATION IS HOVERING AROUND 7-8%.
INDIAN MARKET IS CORRECTED SIGNIFACANTLY AFTER TOUCHING NIFTY 5250 PSYCOLOGICAL LEVEL.
BELOW 5000 NIFTY COULD TOUCH 4920 LEVEL BUT FOR INTRADAY 5030 ONE CAN GO LONG WITH S L OF 5000.
IF MARKET DOES NOT SUSTAIN 5000 GO SHORT WITH S L OF 5050...
TOTAL OI IS IN MARKET 69 K CR AND PUT CAL RATIO IS 1.37.
CLOSER OF LONG PULLING DOWN MARKET. NITY LEVEL 4920-5000-5050-5100
BUY IN IT STOCK FROM 5030 LEVEL IF MARKET HOLD AND GO SHORT IN AUTO,BANKING,CONSTRUCTION IF MARKET DOES NOT SUSTAIN 5030 WITH S L OF 5050.
HAVE A NICE TRADING DAY.
-MR SAM
Gas jumps above $3.67, oil passes $126 on Venezuela concerns
Oil rose above $126 a barrel for the first time Friday, bringing its advance this week to nearly $10, as investors questioned whether a possible confrontation between the U.S. and Venezuela could cut exports from the OPEC member. Gas prices, meanwhile, rose above an average $3.67 a gallon at the pump, following oil's recent path higher.
On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the U.S. could impose sanctions on one of its biggest oil suppliers.
"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices."
Light, sweet crude for June delivery vaulted to a new record of $126.25 on the New York Mercantile Exchange before retreating slightly to settle up $2.27 at a record $125.96. Oil futures set new records for the fifth straight day, and ended the week up $9.64, or 8.3 percent.
Even if Chavez cut oil shipments to the U.S., Venezuelan oil would still make its way to the U.S. via middle men, who would buy it from Venezuela and resell it to the U.S., Flynn said. But that new layer in the supply chain would bump up costs.
Oil prices also were boosted Friday by the dollar, which declined against the euro. The European Central Bank said it was unlikely to consider interest rate cuts to cool the strong euro against the slumping dollar. Investors often buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil less expensive to overseas investors.
Many analysts believe the dollar's protracted decline has much to do with the doubling in oil prices since this time last year. Another school of thought thinks tight global supplies of oil, driven by growing demand in countries such as China, Brazil and India, is the primary factor driving oil higher.
Oil's surge is pushing retail gas prices higher. The national average price of a gallon of regular gas jumped 2.6 cents overnight to a record $3.671 a gallon according to a survey of stations by AAA and the Oil Price Information Service. The Energy Department expects prices to peak at a monthly average of $3.73 in June, though many analysts say national average prices could rise as high as $4. Consumers in many regions, including parts of California and Hawaii, are already paying that much.
Demand for diesel fuel is also growing worldwide, but supplies of distillates, which include diesel and heating oil, fell unexpectedly last week, the Energy Department said Wednesday. That's pushing U.S. diesel prices to record highs and inflating heating oil prices in the futures market; heating oil futures are often viewed as a proxy for diesel.
Heating oil for June delivery rose 12.62 cents to settle at $3.636 on the Nymex after earlier setting a trading record of $3.6524. At truck stops, retail diesel prices rose 1.8 cents overnight to a record national average of $4.269 a gallon,
Diesel is used to move most of the world's food, consumer and industrial goods via truck, ship and rail. Skyrocketing diesel prices are part of the reason food and consumer goods prices are so high.
In other Nymex trading Friday, June gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising to its own record of $3.2038, and June natural gas futures rose 27.4 cents to settle at $11.537 per 1,000 cubic feet.
In London, June Brent crude futures rose $2.56 to settle at $125.40 a barrel on the ICE Futures Exchange.
Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.
On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the U.S. could impose sanctions on one of its biggest oil suppliers.
"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices."
Light, sweet crude for June delivery vaulted to a new record of $126.25 on the New York Mercantile Exchange before retreating slightly to settle up $2.27 at a record $125.96. Oil futures set new records for the fifth straight day, and ended the week up $9.64, or 8.3 percent.
Even if Chavez cut oil shipments to the U.S., Venezuelan oil would still make its way to the U.S. via middle men, who would buy it from Venezuela and resell it to the U.S., Flynn said. But that new layer in the supply chain would bump up costs.
Oil prices also were boosted Friday by the dollar, which declined against the euro. The European Central Bank said it was unlikely to consider interest rate cuts to cool the strong euro against the slumping dollar. Investors often buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil less expensive to overseas investors.
Many analysts believe the dollar's protracted decline has much to do with the doubling in oil prices since this time last year. Another school of thought thinks tight global supplies of oil, driven by growing demand in countries such as China, Brazil and India, is the primary factor driving oil higher.
Oil's surge is pushing retail gas prices higher. The national average price of a gallon of regular gas jumped 2.6 cents overnight to a record $3.671 a gallon according to a survey of stations by AAA and the Oil Price Information Service. The Energy Department expects prices to peak at a monthly average of $3.73 in June, though many analysts say national average prices could rise as high as $4. Consumers in many regions, including parts of California and Hawaii, are already paying that much.
Demand for diesel fuel is also growing worldwide, but supplies of distillates, which include diesel and heating oil, fell unexpectedly last week, the Energy Department said Wednesday. That's pushing U.S. diesel prices to record highs and inflating heating oil prices in the futures market; heating oil futures are often viewed as a proxy for diesel.
Heating oil for June delivery rose 12.62 cents to settle at $3.636 on the Nymex after earlier setting a trading record of $3.6524. At truck stops, retail diesel prices rose 1.8 cents overnight to a record national average of $4.269 a gallon,
Diesel is used to move most of the world's food, consumer and industrial goods via truck, ship and rail. Skyrocketing diesel prices are part of the reason food and consumer goods prices are so high.
In other Nymex trading Friday, June gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising to its own record of $3.2038, and June natural gas futures rose 27.4 cents to settle at $11.537 per 1,000 cubic feet.
In London, June Brent crude futures rose $2.56 to settle at $125.40 a barrel on the ICE Futures Exchange.
Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.
China Inflation Quickens; Close to Fastest Since 1996
China's inflation accelerated to close to the fastest pace in 11 years, underscoring the government's challenge of taming prices without triggering an economic slump as export demand fades.
Consumer prices rose 8.5 percent in April from a year earlier, the National Bureau of Statistics said today, after gaining 8.3 percent in March. That compared with the 8.2 percent median estimate of 22 economists surveyed by Bloomberg News.
Food prices climbed 22.1 percent and rising commodity, energy and labor costs are adding pressure to inflation. Export growth cooled in April as economies around the world weakened, Ministry of Commerce data showed last week.
``Price pressures are still very big,'' said Isaac Meng, senior economist at BNP Paribas SA in Beijing. ``Higher inflation makes people's daily lives harder and weaker growth threatens jobs -- both are important social issues and the government can't ignore either.''
The yuan traded at 6.9832 versus the dollar as of 10.20 a.m. in Shanghai from 6.9833 before the data was released.
Consumer prices rose 8.7 percent in February, the biggest gain since 1996.
Central bank Governor Zhou Xiaochuan said May 5 that there's a possibility interest rates will rise. The benchmark one-year lending rate is at a nine-year high of 7.47 percent after six increases last year.
`Number One Issue'
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled and blizzards closed factories.
``Inflation is China's number one economic issue,'' said Donald Straszheim, vice chairman of Newport Beach, California- based Roth Capital Partners.
The jump in food prices was more than the 21.4 percent increase in March. Non-food prices climbed 1.8 percent, an unchanged pace.
Accelerating inflation keeps pressure on the government to allow faster appreciation of the yuan to cool import costs and rein in the trade surplus that is pumping money into the economy.
Gains by the currency have slowed since the start of April. The government is concerned that interest rates higher than in the U.S. and the strengthening yuan are attracting overseas money to an economy flooded with cash.
First-Quarter Gains
The yuan has climbed about 0.4 percent versus the dollar since March 31 after a 4.2 increase in the first quarter that was the biggest jump since the end of a fixed exchange rate in 2005.
International Monetary Fund Managing Director Dominique Strauss-Kahn said last week that China's currency appreciation needs ``to go further, and faster.''
China's central bank has ordered lenders to set aside more deposits as reserves three times this year, pushing the ratio to a record 16 percent. It also sells bills to drain cash from the financial system.
The People's Bank of China will raise interest rates at least once this year, according to 11 of 15 economists surveyed by Bloomberg News last month.
The government is targeting inflation of 4.8 percent this year, the same as in 2007.
The average wage in Chinese urban areas climbed 18.3 percent in the first quarter from a year earlier to 6,524 yuan ($935). Producer prices jumped 8.1 percent in April from a year earlier, the fastest pace since November 2004.
Consumer prices rose 8.5 percent in April from a year earlier, the National Bureau of Statistics said today, after gaining 8.3 percent in March. That compared with the 8.2 percent median estimate of 22 economists surveyed by Bloomberg News.
Food prices climbed 22.1 percent and rising commodity, energy and labor costs are adding pressure to inflation. Export growth cooled in April as economies around the world weakened, Ministry of Commerce data showed last week.
``Price pressures are still very big,'' said Isaac Meng, senior economist at BNP Paribas SA in Beijing. ``Higher inflation makes people's daily lives harder and weaker growth threatens jobs -- both are important social issues and the government can't ignore either.''
The yuan traded at 6.9832 versus the dollar as of 10.20 a.m. in Shanghai from 6.9833 before the data was released.
Consumer prices rose 8.7 percent in February, the biggest gain since 1996.
Central bank Governor Zhou Xiaochuan said May 5 that there's a possibility interest rates will rise. The benchmark one-year lending rate is at a nine-year high of 7.47 percent after six increases last year.
`Number One Issue'
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled and blizzards closed factories.
``Inflation is China's number one economic issue,'' said Donald Straszheim, vice chairman of Newport Beach, California- based Roth Capital Partners.
The jump in food prices was more than the 21.4 percent increase in March. Non-food prices climbed 1.8 percent, an unchanged pace.
Accelerating inflation keeps pressure on the government to allow faster appreciation of the yuan to cool import costs and rein in the trade surplus that is pumping money into the economy.
Gains by the currency have slowed since the start of April. The government is concerned that interest rates higher than in the U.S. and the strengthening yuan are attracting overseas money to an economy flooded with cash.
First-Quarter Gains
The yuan has climbed about 0.4 percent versus the dollar since March 31 after a 4.2 increase in the first quarter that was the biggest jump since the end of a fixed exchange rate in 2005.
International Monetary Fund Managing Director Dominique Strauss-Kahn said last week that China's currency appreciation needs ``to go further, and faster.''
China's central bank has ordered lenders to set aside more deposits as reserves three times this year, pushing the ratio to a record 16 percent. It also sells bills to drain cash from the financial system.
The People's Bank of China will raise interest rates at least once this year, according to 11 of 15 economists surveyed by Bloomberg News last month.
The government is targeting inflation of 4.8 percent this year, the same as in 2007.
The average wage in Chinese urban areas climbed 18.3 percent in the first quarter from a year earlier to 6,524 yuan ($935). Producer prices jumped 8.1 percent in April from a year earlier, the fastest pace since November 2004.
Friday, May 09, 2008
30 Fortune 100 firms, 10 Nobel winners by 2022: Prahalad
Indians need to "straddle the pyramid" to make the India@75 vision happen, says management guru.
Coimbatore Krishnarao Prahalad, the guru of post-modern management, today threw the dream of leadership in the new world order by 2022 at a large and influential section of India Inc.
India, Prahalad said, can have by 2022 the world's largest pool of trained manpower (500 million skilled workers), 30 companies in the Fortune 100 list, 10 per cent of world trade and 10 Nobel Prize winners. On the softer side, it can become the source for global innovation and a new moral voice for people around the world.
He spelt out his vision for India@75 at a five-star hotel in capital city, where over 700 members of the Confederation of Indian Industry (CII), a third of them on video link, listened to him in rapt attention. Several bureaucrats too were seen in the audience.
Briefing a select group of journalists earlier in the morning, Prahalad said he had deliberately kept the means of getting there out so that the focus could be kept on the goals. But he said that even in the current circumstances the probability of meeting the targets was high.
The vision has been adopted by CII, which will now look at how to make it happen. Sources at the industry association said the need for such a target was felt after Prime Minister Manmohan Singh told the new leadership under ICICI Bank Managing Director & CEO KV Kamath a few days ago to work out a long-term vision.
CII did not have to go far in search of such a piece of work. Prahalad, who is a professor at the University of Michigan, had actually spelt out the details of his vision, India@75, at the India@60 celebrations of CII at New York in September 2007. He touched down in New Delhi late last night.
Prahalad said his earlier targets for India were no less audacious but were still met. "I had talked of Indian multinationals in the mid-1990s. Who would have believed it," he said, adding: "Seven years ago, I had suggested a target of 10 per cent growth (in gross domestic product). Many in India had said we don't have resources for 10 per cent growth."
Still, it would be tough to achieve the targets of India@75. To begin with, India faces an acute shortage of workforce across sectors. Several businessmen now identify it as the biggest impediment to their growth. The target of trained 500 million workers, experts said, is a far cry.
The country's share in world trade is 1.5 per cent - way below his target of 10 per cent. And not a single Indian company finds a slot in the list of top 100 companies, though India has turned into a nursery for billionaire businessmen.
Having exhorted companies the world over to seek their fortune at the bottom of the value pyramid, Prahalad today said that Indians need to "straddle the pyramid" to make the India@75 vision happen.
On the civic side, he said the prerequisites for growth were an emphasis on individual rights as against group rights and the urgent need to treat corruption as treason. "A nation becomes less corrupt before it gets rich," he had said at the India@60 event.
Coimbatore Krishnarao Prahalad, the guru of post-modern management, today threw the dream of leadership in the new world order by 2022 at a large and influential section of India Inc.
India, Prahalad said, can have by 2022 the world's largest pool of trained manpower (500 million skilled workers), 30 companies in the Fortune 100 list, 10 per cent of world trade and 10 Nobel Prize winners. On the softer side, it can become the source for global innovation and a new moral voice for people around the world.
He spelt out his vision for India@75 at a five-star hotel in capital city, where over 700 members of the Confederation of Indian Industry (CII), a third of them on video link, listened to him in rapt attention. Several bureaucrats too were seen in the audience.
Briefing a select group of journalists earlier in the morning, Prahalad said he had deliberately kept the means of getting there out so that the focus could be kept on the goals. But he said that even in the current circumstances the probability of meeting the targets was high.
The vision has been adopted by CII, which will now look at how to make it happen. Sources at the industry association said the need for such a target was felt after Prime Minister Manmohan Singh told the new leadership under ICICI Bank Managing Director & CEO KV Kamath a few days ago to work out a long-term vision.
CII did not have to go far in search of such a piece of work. Prahalad, who is a professor at the University of Michigan, had actually spelt out the details of his vision, India@75, at the India@60 celebrations of CII at New York in September 2007. He touched down in New Delhi late last night.
Prahalad said his earlier targets for India were no less audacious but were still met. "I had talked of Indian multinationals in the mid-1990s. Who would have believed it," he said, adding: "Seven years ago, I had suggested a target of 10 per cent growth (in gross domestic product). Many in India had said we don't have resources for 10 per cent growth."
Still, it would be tough to achieve the targets of India@75. To begin with, India faces an acute shortage of workforce across sectors. Several businessmen now identify it as the biggest impediment to their growth. The target of trained 500 million workers, experts said, is a far cry.
The country's share in world trade is 1.5 per cent - way below his target of 10 per cent. And not a single Indian company finds a slot in the list of top 100 companies, though India has turned into a nursery for billionaire businessmen.
Having exhorted companies the world over to seek their fortune at the bottom of the value pyramid, Prahalad today said that Indians need to "straddle the pyramid" to make the India@75 vision happen.
On the civic side, he said the prerequisites for growth were an emphasis on individual rights as against group rights and the urgent need to treat corruption as treason. "A nation becomes less corrupt before it gets rich," he had said at the India@60 event.
U.S. Stocks Decline on AIG's Loss; Delta Retreats on Record Oil
U.S. stocks fell, sending the market to its first weekly drop in a month, as American International Group Inc.'s plan to raise $12.5 billion to cover writedowns renewed concern more losses are coming in the financial industry.
AIG, the world's biggest insurer, tumbled to a two-month low and posted the steepest decline in the Dow Jones Industrial Average Delta Air Lines Inc. and Carnival Corp. led declines among companies hurt by higher fuel costs as oil climbed to a record for a fifth day. Mylan Inc., the largest U.S. maker of generic medicines, retreated the most since February after posting a wider first-quarter loss and sales that trailed analysts' estimates. Stocks slumped in Europe and Asia.
The Standard & Poor's 500 Index sank 10.3, or 0.7 percent, to 1,387.38 at 10:15 a.m. in New York, giving it a 1.9 percent decline this week. The Dow slid 104.86, or 0.8 percent, to 12,761.92. The Nasdaq Composite Index lost 11.37, or 0.5 percent, to 2,439.87. More than two stocks fell for each that rose on the New York Stock Exchange.
``We're still cautious on the financials,'' said Julie Van Cleave, who oversees $4.5 billion as head of large U.S. growth stocks at Deutsche Asset Management in Milwaukee. ``People have been looking for the easy turn. It will take another couple of quarters before we're at a point where we feel more comfortable making a bigger allocation.''
The S&P 500 is down 5.7 percent this year as losses at the world's largest financial firms have climbed to more than $321 billion following the collapse of the subprime mortgage market. Profits have slumped 18 percent on average for the 420 companies in the index that have reported first-quarter results so far, led by an 86 percent decline at financial companies, data compiled by Bloomberg show.
AIG Tumbles
AIG tumbled $2.67, or 6.1 percent, to $41.48. The insurer reported a first-quarter net loss of $7.81 billion, compared with earnings of $4.13 billion a year earlier. AIG wrote down contracts it had sold to protect investors by $9.11 billion in the quarter to comply with rules that require the company to estimate their present market value. Standard & Poor's and Fitch Ratings cut the company's credit grades after the announcement.
Citigroup Inc. the biggest U.S. bank by assets, slipped 7 cents to $24.23 on plans to ``wind down'' about $400 billion of assets as part of a program to return to profitability. The bank announced the wind-down today in a presentation posted on the company's Web site. The New York-based company, which lost $5.1 billion in the first quarter, has recorded more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year.
Delta, Mylan
Delta Air Lines dropped 2.6 percent to $7.37. Crude oil rose to a record above $126 a barrel, set for the biggest weekly gain in more than a year, on speculation Nigerian export cuts may curb U.S. supplies during the peak summer driving season.
Carnival, the largest cruise-line company, slumped 1.6 percent to $39.81.
Fuel expenses for the U.S. major airlines now represent about 40 percent of total costs for the industry, according to a research report by Merrill Lynch & Co. distributed yesterday.
Mylan fell 8.3 percent to $11.43, the second-biggest drop in the S&P 500. The largest U.S. maker of generic medicines reported a wider first-quarter loss on costs tied to the $6.9 billion purchase of Merck KGaA's generics division in October.
McDonald's Corp. fell 45 cents to $59.32. Goldman Sachs Group Inc. removed the world's largest restaurant company from its ``conviction buy list'' and added Burger King Holdings Inc. McDonald's had risen 16 percent since being added to the list June 12, and additional gains may be ``muted'' in the coming months, Goldman analysts led by Steven T. Kron wrote in a report. Burger King may benefit from price increases and extended summer hours, Goldman said.
Burger King fell 37 cents to $27.80.
Priceline.com
Priceline.com Inc. surged $15.63, or 13 percent, to $139.41. The Internet travel agency featuring William Shatner as its spokesman said annual profit, excluding some items, may be as much as $5.65 a share. That topped the average analyst estimate of $5.09 a share. First-quarter revenue gained 34 percent as international sales more than doubled, the company said.
Stocks failed to pare losses after the government said the U.S. trade deficit narrowed more than forecast in March as imports dropped by the most in more than six years, reflecting the economic slowdown. The gap shrank to $58.2 billion, the lowest this year, from a revised $61.7 billion in February, the Commerce Department said.
AIG, the world's biggest insurer, tumbled to a two-month low and posted the steepest decline in the Dow Jones Industrial Average Delta Air Lines Inc. and Carnival Corp. led declines among companies hurt by higher fuel costs as oil climbed to a record for a fifth day. Mylan Inc., the largest U.S. maker of generic medicines, retreated the most since February after posting a wider first-quarter loss and sales that trailed analysts' estimates. Stocks slumped in Europe and Asia.
The Standard & Poor's 500 Index sank 10.3, or 0.7 percent, to 1,387.38 at 10:15 a.m. in New York, giving it a 1.9 percent decline this week. The Dow slid 104.86, or 0.8 percent, to 12,761.92. The Nasdaq Composite Index lost 11.37, or 0.5 percent, to 2,439.87. More than two stocks fell for each that rose on the New York Stock Exchange.
``We're still cautious on the financials,'' said Julie Van Cleave, who oversees $4.5 billion as head of large U.S. growth stocks at Deutsche Asset Management in Milwaukee. ``People have been looking for the easy turn. It will take another couple of quarters before we're at a point where we feel more comfortable making a bigger allocation.''
The S&P 500 is down 5.7 percent this year as losses at the world's largest financial firms have climbed to more than $321 billion following the collapse of the subprime mortgage market. Profits have slumped 18 percent on average for the 420 companies in the index that have reported first-quarter results so far, led by an 86 percent decline at financial companies, data compiled by Bloomberg show.
AIG Tumbles
AIG tumbled $2.67, or 6.1 percent, to $41.48. The insurer reported a first-quarter net loss of $7.81 billion, compared with earnings of $4.13 billion a year earlier. AIG wrote down contracts it had sold to protect investors by $9.11 billion in the quarter to comply with rules that require the company to estimate their present market value. Standard & Poor's and Fitch Ratings cut the company's credit grades after the announcement.
Citigroup Inc. the biggest U.S. bank by assets, slipped 7 cents to $24.23 on plans to ``wind down'' about $400 billion of assets as part of a program to return to profitability. The bank announced the wind-down today in a presentation posted on the company's Web site. The New York-based company, which lost $5.1 billion in the first quarter, has recorded more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year.
Delta, Mylan
Delta Air Lines dropped 2.6 percent to $7.37. Crude oil rose to a record above $126 a barrel, set for the biggest weekly gain in more than a year, on speculation Nigerian export cuts may curb U.S. supplies during the peak summer driving season.
Carnival, the largest cruise-line company, slumped 1.6 percent to $39.81.
Fuel expenses for the U.S. major airlines now represent about 40 percent of total costs for the industry, according to a research report by Merrill Lynch & Co. distributed yesterday.
Mylan fell 8.3 percent to $11.43, the second-biggest drop in the S&P 500. The largest U.S. maker of generic medicines reported a wider first-quarter loss on costs tied to the $6.9 billion purchase of Merck KGaA's generics division in October.
McDonald's Corp. fell 45 cents to $59.32. Goldman Sachs Group Inc. removed the world's largest restaurant company from its ``conviction buy list'' and added Burger King Holdings Inc. McDonald's had risen 16 percent since being added to the list June 12, and additional gains may be ``muted'' in the coming months, Goldman analysts led by Steven T. Kron wrote in a report. Burger King may benefit from price increases and extended summer hours, Goldman said.
Burger King fell 37 cents to $27.80.
Priceline.com
Priceline.com Inc. surged $15.63, or 13 percent, to $139.41. The Internet travel agency featuring William Shatner as its spokesman said annual profit, excluding some items, may be as much as $5.65 a share. That topped the average analyst estimate of $5.09 a share. First-quarter revenue gained 34 percent as international sales more than doubled, the company said.
Stocks failed to pare losses after the government said the U.S. trade deficit narrowed more than forecast in March as imports dropped by the most in more than six years, reflecting the economic slowdown. The gap shrank to $58.2 billion, the lowest this year, from a revised $61.7 billion in February, the Commerce Department said.
Oil Climbs Above $126 to Record as Euro Advances Against Dollar
Crude oil rose above $126 a barrel in New York to a record as the euro and yen advanced against the dollar, prompting investors to buy commodities.
The euro strengthened on signs the European Central Bank will keep rates at a six-year high to cut inflation. Dollar-based commodities like oil are often bought to counter the currency's weakness. Nigerian output fell to the lowest this decade in April because of a strike and attacks on oil installations.
``Oil is a safe haven because of the weak dollar and how badly the financial sector has been doing,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There are also geopolitical concerns about places like Nigeria and Venezuela that are propping prices up.''
Crude oil for June delivery rose $2.09, or 1.7 percent, to $125.78 a barrel at 9:28 a.m. on the New York Mercantile Exchange. The contract surged to a record $126.20 today. Prices are up 8.4 percent this week, the biggest weekly gain in more than a year. Futures are more than double from a year ago.
Brent crude oil for June settlement climbed $2.86, or 2.3 percent, to $125.70 a barrel on London's ICE Futures Europe exchange. The contract touched a record $125.90 today.
Goldman Sachs analyst Arjun N. Murti wrote in a report on May 6 that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Fund Buying
``There's been a paradox, prices have surged over the last week while we've had bearish headlines,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Clearly there's been a lot of fund buying on the back of Goldman's super-spike repot. They were right on the nose last time.''
The Organization of Petroleum Exporting Countries, the producer of more than 40 percent of the world's oil, may meet before September to consider increasing output in an attempt to rein in record crude-oil prices, Libya's Shokri Ghanem said.
``We would consider among other options the possibility of increasing output as a way to ensure market stability,'' Ghanem, who is the chairman of Libya's National Oil Corp., said in a telephone interview today from Tripoli.
The euro strengthened on signs the European Central Bank will keep rates at a six-year high to cut inflation. Dollar-based commodities like oil are often bought to counter the currency's weakness. Nigerian output fell to the lowest this decade in April because of a strike and attacks on oil installations.
``Oil is a safe haven because of the weak dollar and how badly the financial sector has been doing,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There are also geopolitical concerns about places like Nigeria and Venezuela that are propping prices up.''
Crude oil for June delivery rose $2.09, or 1.7 percent, to $125.78 a barrel at 9:28 a.m. on the New York Mercantile Exchange. The contract surged to a record $126.20 today. Prices are up 8.4 percent this week, the biggest weekly gain in more than a year. Futures are more than double from a year ago.
Brent crude oil for June settlement climbed $2.86, or 2.3 percent, to $125.70 a barrel on London's ICE Futures Europe exchange. The contract touched a record $125.90 today.
Goldman Sachs analyst Arjun N. Murti wrote in a report on May 6 that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Fund Buying
``There's been a paradox, prices have surged over the last week while we've had bearish headlines,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Clearly there's been a lot of fund buying on the back of Goldman's super-spike repot. They were right on the nose last time.''
The Organization of Petroleum Exporting Countries, the producer of more than 40 percent of the world's oil, may meet before September to consider increasing output in an attempt to rein in record crude-oil prices, Libya's Shokri Ghanem said.
``We would consider among other options the possibility of increasing output as a way to ensure market stability,'' Ghanem, who is the chairman of Libya's National Oil Corp., said in a telephone interview today from Tripoli.
MARKET PREDICTION
OIL IS MOVING TOWARDS NEW HIGH AND SOME OF OUR ANALYST MR VISHNU ESTIMATING IT TO TOUCH $130 LEVEL WITHIN A MONTH...WHICH COULD TURNS THE THINGS IN WORST.
OVER THE LAST FEW DAYS WE HAVE SEEN DRASTIC DECREASE IN VOLUME, WHICH CLEARLY SHOWS THAT INVESTORS ARE WAITING FOR RIGHT TIME.
BUT BESIDE ALL THESE THINGS WE HAVE SEEN SOME ADDITION IN OI WHICH CLEARLY SPECIFY THAT INVESTORS BECOME CHOOSY.
MARKET VIEW
SUPPORT: 5000
SL : 4970 FOR ALL INTRADAY LONG POSITION
WEEKLY TRGT: 5200/5210.
STOCKS
OVER THE LAST FEW DAYS WE HAVE SEEN DRASTIC DECREASE IN VOLUME, WHICH CLEARLY SHOWS THAT INVESTORS ARE WAITING FOR RIGHT TIME.
BUT BESIDE ALL THESE THINGS WE HAVE SEEN SOME ADDITION IN OI WHICH CLEARLY SPECIFY THAT INVESTORS BECOME CHOOSY.
MARKET VIEW
SUPPORT: 5000
SL : 4970 FOR ALL INTRADAY LONG POSITION
WEEKLY TRGT: 5200/5210.
STOCKS
- TATA STEEL, GTOFFSHORE, ARVINDMILL.
- APIL(WITHSL 590)
HAVE A NICE TRADING DAY...
-MR SAM
Thursday, May 08, 2008
Govt committed to check inflation: PM
Reiterating his government’s stand to shield the poor and vulnerable from rising prices, Prime Minister Manmohan Singh on Thursday said the government was committed to tame inflation. Addressing a rally organized by the Karnataka Pradesh Congress Committee here, the PM said, "I am satisfied and I am confident that in the coming months, we will tame inflation and bring it back to reasonable levels. This is our commitment," he said. Kerosene and LPG prices have been hardly touched in the last four years and even petrol and diesel price rises have been marginal, he said. The government was bearing a huge cost to shield the poor, Singh said. "Foodgrain issue prices for BPL rice and wheat have not been touched while wheat and rice support prices have been doubled for the benefit of our farmers. This year, we hope to have a bumper crop and procurement has been excellent," he added.
Oil Trades Near Record on Insufficient Gasoline Output Concern
Crude oil was little changed near a record in New York on concern gasoline production in the U.S. may be insufficient to meet peak demand during the summer driving season.
U.S. refineries operated at 85 percent last week, down from 89 percent a year earlier, the Energy Department said yesterday. Worker productivity in the world's biggest energy consumer climbed at a higher rate in the first quarter than the previous three months, the Labor Department said yesterday. Oil jumped to a record $123.93 a barrel yesterday.
``People are more focused on the idea that we may have more demand than we expected,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``That's going to be a big problem with the refinery runs being as soft as they are for this time of year.''
Crude oil for June delivery was at $123.52 a barrel, down 1 cent, at 11:32 a.m. in Singapore in after-hours trading on the New York Mercantile Exchange. Yesterday, futures rose $1.69, or 1.4 percent, to settle at $123.53 a barrel, the highest close since trading began in 1983.
Prices have climbed 98 percent in the past year on concerns that supplies from outside the Organization of Petroleum Exporting Countries are declining as demand from China, India and the Middle East has increased.
``This is the time of year when prices would normally be taking a breather, the lull between the winter peak and the summer peak in the Northern Hemisphere, but we're not seeing that happen,'' said Gavin Wendt, a senior resources analyst at Fat Prophets in Sydney.
U.S. gasoline demand typically peaks from Memorial Day on May 28 through Labor Day in September as holiday travel puts cars on the road.
Exxon Resumes
Price gains were tempered after Exxon Mobil Corp. said that it was working to reduce the effect of supply disruptions after a strike in Nigeria caused a halt in exports from the fifth- largest oil exporter to the U.S.
``Exxon Mobil Nigerian affiliates have notified the relevant authorities in Nigeria that the industrial action that led to notice of force majeure has been resolved,'' said company spokeswoman Margaret Ross in a e-mail to Bloomberg News. ``The affiliates are working with customers to minimize any supply impacts.''
Workers in the Petroleum & Natural Gas Senior Staff Association of Nigeria, known as Pengassan, went on strike on April 24, causing Exxon to stop about 800,000 barrels a day of exports. The two sides reached an agreement on May 2 and the company resumed production.
Brent crude oil for June settlement was at $122.27 a barrel, down 5 cents, on London's ICE Futures Europe exchange at 11:42 a.m. Singapore time. The contract yesterday climbed $2.01, or 1.7 percent, to $122.32 a barrel. The contract touched $122.70 a barrel, a record intraday price.
Inventories Climb
Oil fell as low as $120.54 a barrel yesterday after an Energy Department report showed that crude supplies in the world's largest oil consumer rose more than forecast last week.
Supplies surged 5.65 million barrels, or 1.8 percent, to 325.6 million barrels last week, amid increased crude imports, an Energy Department report showed yesterday. Analysts in a Bloomberg News survey had forecast a gain of 1.63 million barrels. Gasoline inventories also rose by 794,000 barrels.
Refiners have operated at lower rates than is typical for this time of year as the profit margin, or crack, for producing gasoline has remained at below average levels. The price difference between the motor fuel and crude oil was at $7.75 a barrel today compared with $30.33 a barrel last year.
``You have more crude coming in but it's just sitting there, no one is turning it into gasoline,'' said Hudson Capital's Kornafel. ``The margin is so cheap, you can't blame them.''
U.S. refineries operated at 85 percent last week, down from 89 percent a year earlier, the Energy Department said yesterday. Worker productivity in the world's biggest energy consumer climbed at a higher rate in the first quarter than the previous three months, the Labor Department said yesterday. Oil jumped to a record $123.93 a barrel yesterday.
``People are more focused on the idea that we may have more demand than we expected,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``That's going to be a big problem with the refinery runs being as soft as they are for this time of year.''
Crude oil for June delivery was at $123.52 a barrel, down 1 cent, at 11:32 a.m. in Singapore in after-hours trading on the New York Mercantile Exchange. Yesterday, futures rose $1.69, or 1.4 percent, to settle at $123.53 a barrel, the highest close since trading began in 1983.
Prices have climbed 98 percent in the past year on concerns that supplies from outside the Organization of Petroleum Exporting Countries are declining as demand from China, India and the Middle East has increased.
``This is the time of year when prices would normally be taking a breather, the lull between the winter peak and the summer peak in the Northern Hemisphere, but we're not seeing that happen,'' said Gavin Wendt, a senior resources analyst at Fat Prophets in Sydney.
U.S. gasoline demand typically peaks from Memorial Day on May 28 through Labor Day in September as holiday travel puts cars on the road.
Exxon Resumes
Price gains were tempered after Exxon Mobil Corp. said that it was working to reduce the effect of supply disruptions after a strike in Nigeria caused a halt in exports from the fifth- largest oil exporter to the U.S.
``Exxon Mobil Nigerian affiliates have notified the relevant authorities in Nigeria that the industrial action that led to notice of force majeure has been resolved,'' said company spokeswoman Margaret Ross in a e-mail to Bloomberg News. ``The affiliates are working with customers to minimize any supply impacts.''
Workers in the Petroleum & Natural Gas Senior Staff Association of Nigeria, known as Pengassan, went on strike on April 24, causing Exxon to stop about 800,000 barrels a day of exports. The two sides reached an agreement on May 2 and the company resumed production.
Brent crude oil for June settlement was at $122.27 a barrel, down 5 cents, on London's ICE Futures Europe exchange at 11:42 a.m. Singapore time. The contract yesterday climbed $2.01, or 1.7 percent, to $122.32 a barrel. The contract touched $122.70 a barrel, a record intraday price.
Inventories Climb
Oil fell as low as $120.54 a barrel yesterday after an Energy Department report showed that crude supplies in the world's largest oil consumer rose more than forecast last week.
Supplies surged 5.65 million barrels, or 1.8 percent, to 325.6 million barrels last week, amid increased crude imports, an Energy Department report showed yesterday. Analysts in a Bloomberg News survey had forecast a gain of 1.63 million barrels. Gasoline inventories also rose by 794,000 barrels.
Refiners have operated at lower rates than is typical for this time of year as the profit margin, or crack, for producing gasoline has remained at below average levels. The price difference between the motor fuel and crude oil was at $7.75 a barrel today compared with $30.33 a barrel last year.
``You have more crude coming in but it's just sitting there, no one is turning it into gasoline,'' said Hudson Capital's Kornafel. ``The margin is so cheap, you can't blame them.''
MARKET PREDICTION
THINGS WILL NEVER BE SAME WHEN THERE IS A MOVEMENT IN OIL MARKET..YESTERDAY CRUDE OIL TOUCHES $123..WHICH HAD A IMPACT ON WORLD MARKET.
INDIAN MARKET WILL ALSO HAVE SOME IMPACT.
MARKET WILL BE RANGE BOUND i.e. b/w 5000-5400
IN OPTION MARKET WE HAVE SEEN WRITING IN BOTH PUT & CALL OPTION AT A LEVEL OF 5000/5100 & 5300/5400.
TODAY'S VIEW
MARKET WILL BE VOLATILE
LONG POSITION CAN BE BUILT FROM 5050 LEVEL WITH SL OF 5000.
SHORT POSITION CAN BE BUILT @ 5200 LEVEL WITH SL OF 5250.
TODAY'S SECTOR
INDIAN MARKET WILL ALSO HAVE SOME IMPACT.
MARKET WILL BE RANGE BOUND i.e. b/w 5000-5400
IN OPTION MARKET WE HAVE SEEN WRITING IN BOTH PUT & CALL OPTION AT A LEVEL OF 5000/5100 & 5300/5400.
TODAY'S VIEW
MARKET WILL BE VOLATILE
LONG POSITION CAN BE BUILT FROM 5050 LEVEL WITH SL OF 5000.
SHORT POSITION CAN BE BUILT @ 5200 LEVEL WITH SL OF 5250.
TODAY'S SECTOR
- IT
- PHARMA
HAVE A NICE TRADING DAY...
-MR SAM
Tuesday, May 06, 2008
World Food Crisis Where Lies the Solution
Condoleezza Rice has finally told the world reason of prevailing food crisis. According to her, people of China and India started consuming good food, their intake has increased and this is the reason why world grocery has come to the extinct level. Everyone had listened in his or her childhood stories of fairytales in which demons eat so much that entire village use to starve.
If the US secretary of State was to be believed, -- she would be as she is on very responsible post of a country like USA, something of that sort had happened. Although the current US president himself is been caught lying on many occasions just for defending his misadventure in Iraq. Forget everything for a while lets believe that we are living in the wonderland of Alice and due to something, food is vanishing, and there is a crisis. If Condoleezza Rice is to be believed, (I mentioned the reason why we should) then no crisis has gripped the world agricultural sector and everything is in the right direction. I had never listened that people die due to over eating, yes over eating lead to obesity, and other such very sophisticated modern ailments but not lead to death, but of course, hunger can kill you. Malnutrition is one of the main concerns and India is one of the flag bearers in malnutrition. Starvation deaths are also a common feature in our nation and all of us know Kalahandi. People in India sometime also eat Chappati of grass, but herbivorous four legged animals cannot complain about the shortage of grass because they cannot speak but Condoleezza Rice can and she is speaking, so nothing to feel bad about it. If the sum production of the agricultural products has not gone down and everything other than the dietary problem of people of China and India is ok then it simply means that, earlier the world was eating our share of food and now we are eating our just part. When we started eating then food fell short and now there is a crisis.
There should be no blame game as a crisis is prevailing and we should try to find out a solution for it. After enough thought I am right now in the position to suggest two solutions, one for us and second for the US. I must talk, first talk about the solution, which we can do, it is necessary also because we are the culprits and eating food of the others. Before coming to the solution I want to make one thing clear that I am only talking of my countrymen and not for China (If I talk of China then some may call me pro-Tibet, and frankly speaking I don’t want to be pro or anti of any nation). In India, we have glorious tradition of keeping fast if someone seriously follows Hindu religious scriptures everyday can be utilised for making some or other deity happy. In this way, we can go for a salvation and we can make others to eat who are not getting enough to eat because we are eating more. This can also save the nation form a new ailment of obesity (even the old ones are not been controlled). The other thing is in the hands of our Prime Minister, once in past also Lal Bahadur Shastri had given a national call of eating for one time and that was essential to solve a crisis at that time. Mr. Manmohan Singh should consider this option; I think if once George Bush will assert the reason of Condoleezza Rice then he will do. Manmohan Singh considers George Bush as one of his best friend (see some of the statements given by Manmohan Singh during the controversy of Indo-US nuclear deal) and friend in need is a friend indeed. George Bush care very much for the human civilisation. He himself had said that invading Iraq was vital for the shake of world peace and stability because Saddam Hussein possess Weapon of Mass Destruction and its use can lead to extinction human civilisation (although it is a different matter that he and all the US force did not able to locate one WMD in the entire Iraq – TILL DATE). The statement of Condoleezza Rice might be showing the legitimate concern of Gorge Bush, and George Bush might have maintained a strategic silence because India is a friend and Manmohan Singh is his one of the best friend.
The other solution is not of mine but I am forced to think, as I am a student of international relations and had some idea of US foreign policy. There are three countries, which were considered as the axis of evil, I fear (let it not be true); India can be declared as the nation of evils who are eating food of the rest. This will compel the kingdom of peace (USA) to start a crusade against the evils who are eating more than what they use to eat in the past. Therefore, the second solution involves lot of risk we all know the capacities of US air force that are perfect in destroying any nation and recently it had done a good practice in Afghanistan and Iraq. I prefer the first one, and will go for the fast from the next possible day and request all of you to accept my humble suggestion. If you cannot do fast for all the seven days, then there is one more solution and it is to eat only homemade food. Stop going to Pizza huts, Mac D, Stop drinking Coke, Pepsi etc say no to all brand of Lays, kurkure, Uncle Chips and whatever fast food you take. Yes Indian are eating hell lots of American made eateries giving them profits and getting blame in return, and this lead to world food crisis. So ‘No to American Junks – Yes to solution of World Food Crisis’. Let them eat their junks.
If the US secretary of State was to be believed, -- she would be as she is on very responsible post of a country like USA, something of that sort had happened. Although the current US president himself is been caught lying on many occasions just for defending his misadventure in Iraq. Forget everything for a while lets believe that we are living in the wonderland of Alice and due to something, food is vanishing, and there is a crisis. If Condoleezza Rice is to be believed, (I mentioned the reason why we should) then no crisis has gripped the world agricultural sector and everything is in the right direction. I had never listened that people die due to over eating, yes over eating lead to obesity, and other such very sophisticated modern ailments but not lead to death, but of course, hunger can kill you. Malnutrition is one of the main concerns and India is one of the flag bearers in malnutrition. Starvation deaths are also a common feature in our nation and all of us know Kalahandi. People in India sometime also eat Chappati of grass, but herbivorous four legged animals cannot complain about the shortage of grass because they cannot speak but Condoleezza Rice can and she is speaking, so nothing to feel bad about it. If the sum production of the agricultural products has not gone down and everything other than the dietary problem of people of China and India is ok then it simply means that, earlier the world was eating our share of food and now we are eating our just part. When we started eating then food fell short and now there is a crisis.
There should be no blame game as a crisis is prevailing and we should try to find out a solution for it. After enough thought I am right now in the position to suggest two solutions, one for us and second for the US. I must talk, first talk about the solution, which we can do, it is necessary also because we are the culprits and eating food of the others. Before coming to the solution I want to make one thing clear that I am only talking of my countrymen and not for China (If I talk of China then some may call me pro-Tibet, and frankly speaking I don’t want to be pro or anti of any nation). In India, we have glorious tradition of keeping fast if someone seriously follows Hindu religious scriptures everyday can be utilised for making some or other deity happy. In this way, we can go for a salvation and we can make others to eat who are not getting enough to eat because we are eating more. This can also save the nation form a new ailment of obesity (even the old ones are not been controlled). The other thing is in the hands of our Prime Minister, once in past also Lal Bahadur Shastri had given a national call of eating for one time and that was essential to solve a crisis at that time. Mr. Manmohan Singh should consider this option; I think if once George Bush will assert the reason of Condoleezza Rice then he will do. Manmohan Singh considers George Bush as one of his best friend (see some of the statements given by Manmohan Singh during the controversy of Indo-US nuclear deal) and friend in need is a friend indeed. George Bush care very much for the human civilisation. He himself had said that invading Iraq was vital for the shake of world peace and stability because Saddam Hussein possess Weapon of Mass Destruction and its use can lead to extinction human civilisation (although it is a different matter that he and all the US force did not able to locate one WMD in the entire Iraq – TILL DATE). The statement of Condoleezza Rice might be showing the legitimate concern of Gorge Bush, and George Bush might have maintained a strategic silence because India is a friend and Manmohan Singh is his one of the best friend.
The other solution is not of mine but I am forced to think, as I am a student of international relations and had some idea of US foreign policy. There are three countries, which were considered as the axis of evil, I fear (let it not be true); India can be declared as the nation of evils who are eating food of the rest. This will compel the kingdom of peace (USA) to start a crusade against the evils who are eating more than what they use to eat in the past. Therefore, the second solution involves lot of risk we all know the capacities of US air force that are perfect in destroying any nation and recently it had done a good practice in Afghanistan and Iraq. I prefer the first one, and will go for the fast from the next possible day and request all of you to accept my humble suggestion. If you cannot do fast for all the seven days, then there is one more solution and it is to eat only homemade food. Stop going to Pizza huts, Mac D, Stop drinking Coke, Pepsi etc say no to all brand of Lays, kurkure, Uncle Chips and whatever fast food you take. Yes Indian are eating hell lots of American made eateries giving them profits and getting blame in return, and this lead to world food crisis. So ‘No to American Junks – Yes to solution of World Food Crisis’. Let them eat their junks.
MARKET PREDICTION
US MARKET WAS AFFECTED BY THE FAILURE OF MICROSOFT-YAHOO DEAL.
IN INDIAN MARKET WE HAVE SEEN THE INCREASE IN VOLUME.
NIFTY MAY FUTURE ADDED 2.5 LAKHS NEW SHARES.
MARKET WILL BE RANGE BOUND ...HIGHER LEVEL WILL BE 5250...AND LOWER LEVEL WILL BE 5150.
5165 IS THE LEVEL FROM WHICH ONE CAN GO FOR LONG.
SORT LEVEL IS 5250 WITH FINAL SL 5150.
SECTOR
MAINLY FOCUS ON MIDCAP
1. CONSTRUCTION
2. CAPITAL GOODS......SUZLON & BHEL
3. ENERGY...ABAN
4. AUTO...TATAMOTORS & M&M
HAVE A NICE TRADING DAY
-MR SAM
IN INDIAN MARKET WE HAVE SEEN THE INCREASE IN VOLUME.
NIFTY MAY FUTURE ADDED 2.5 LAKHS NEW SHARES.
MARKET WILL BE RANGE BOUND ...HIGHER LEVEL WILL BE 5250...AND LOWER LEVEL WILL BE 5150.
5165 IS THE LEVEL FROM WHICH ONE CAN GO FOR LONG.
SORT LEVEL IS 5250 WITH FINAL SL 5150.
SECTOR
MAINLY FOCUS ON MIDCAP
1. CONSTRUCTION
2. CAPITAL GOODS......SUZLON & BHEL
3. ENERGY...ABAN
4. AUTO...TATAMOTORS & M&M
HAVE A NICE TRADING DAY
-MR SAM
Cement production to grow 11.5 per cent in FY 2009: CMIE
Cement demand outlook this fiscal remains healthy, driven by rising investment in construction and real estate sectors, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report.
The CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY’09, boosting the production growth.
“We expect the production to grow 11.5 per cent during FY09 backed by the Northern region, which has seen additional capacity of around 15 million tonnes in FY08. The year 2009 would see an addition of another 7-8 million tonnes in the region,” the CMIE said.
Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in these regions, it said.
Sales volumes would drive the sector’s growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sector’s profitability, CMIE added.
After decelerating in the previous three months, cement production and consumption growth rate picked up during February 2008.
Coming over a low base, production and consumption grew a robust 12.6 per cent and 14.8 per cent, respectively, during the month. The growth was driven by a healthy performance of the northern region, which saw its production and consumption rising 25 per cent each, the CMIE added.
Meanwhile, CMIE also projected in its monthly report that agricultural crop production to grow at a modest rate of 2.3 per cent in FY09.
The CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY’09, boosting the production growth.
“We expect the production to grow 11.5 per cent during FY09 backed by the Northern region, which has seen additional capacity of around 15 million tonnes in FY08. The year 2009 would see an addition of another 7-8 million tonnes in the region,” the CMIE said.
Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in these regions, it said.
Sales volumes would drive the sector’s growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sector’s profitability, CMIE added.
After decelerating in the previous three months, cement production and consumption growth rate picked up during February 2008.
Coming over a low base, production and consumption grew a robust 12.6 per cent and 14.8 per cent, respectively, during the month. The growth was driven by a healthy performance of the northern region, which saw its production and consumption rising 25 per cent each, the CMIE added.
Meanwhile, CMIE also projected in its monthly report that agricultural crop production to grow at a modest rate of 2.3 per cent in FY09.
Subscribe to:
Posts (Atom)