RIL has announced its FY08 results. The company's FY08 consolidated net profit was up 62% at Rs 19523 crore versus Rs 12075 crore.
Its Q4 stanalone net profit up 24% at Rs 3912 crore versus 3156 crore.
Its standalone net sales up 36% at Rs 37,286 crore versus Rs 27,448 crore.
Its GRM at USD 15.50 per barrel versus USD 15.40 per barrel, QoQ.
Petchem Margins at 10.4% versus 11%; Refining Margins at 9.9% versus 10.8%.
Oil & Gas margins at 54% versus 55.29%.
the company's Q4 net sales were seen up 32.3% to Rs 36319 crore from Rs 27448 crore.
Its EBITDA was seen up 18.7% to Rs 6137.9 crore from Rs 5169 crore.
Its net profit was expected to go up 28.9% to Rs 4067.7 crore from Rs 3156 crore.
Monday, April 21, 2008
India-Oman trade jumps 66% to $1.5 bn
Trade between India and Oman has registered the highest growth rate of 66 per cent and amounted to $1.5 billion in 2007 from $900 million in 2006.
India-Oman economic and commercial relations have gained sufficient momentum in recent years to lend a strategic nature to the bilateral engagement, Indian Ambassador to Oman, Anil Wadhwa, yesterday said at a University's function here.
"The political relations between India and Oman are guided by mutual respect and commonality of views on major regional and international issues," he said.
Recent years have witnessed a two-way flow of significant investments in various fields, including oil and gas, heavy engineering, chemicals and pharmaceuticals, IT and infrastructure.
The ambassador mentioned that the steady growth of tourists traffic between the two countries was a result of increase in air connectivity between the two countries.
The ambassador also presented the University with 300 books on diversified subjects, such as Indian history, culture, literature and Economy.
The Embassy had earlier presented 100 books each to the Sur College of Applied Sciences and Sur University College for setting up "India Corner" in their respective libraries.
India-Oman economic and commercial relations have gained sufficient momentum in recent years to lend a strategic nature to the bilateral engagement, Indian Ambassador to Oman, Anil Wadhwa, yesterday said at a University's function here.
"The political relations between India and Oman are guided by mutual respect and commonality of views on major regional and international issues," he said.
Recent years have witnessed a two-way flow of significant investments in various fields, including oil and gas, heavy engineering, chemicals and pharmaceuticals, IT and infrastructure.
The ambassador mentioned that the steady growth of tourists traffic between the two countries was a result of increase in air connectivity between the two countries.
The ambassador also presented the University with 300 books on diversified subjects, such as Indian history, culture, literature and Economy.
The Embassy had earlier presented 100 books each to the Sur College of Applied Sciences and Sur University College for setting up "India Corner" in their respective libraries.
NOT BEAR MARKET IT IS BEAR PHASE OF LONG TERM BULL MARKET
The Nifty/Sensex monthly chart highlights the long term trendline commencing from the May 2003
days. On the Nifty, the May 2004, June 2006 and the recent January‐March falls have been supported by
this trendline signifying its importance. While on the Sensex, the May 2004, June 2006 earlier falls have
been held but the recent fall has seen the breach below this long term trendline.
The striking similarity in all three falls on both the indices is their magnitude which amounted to 30‐
32%. Assuming the recent bottom was formed on 22 January on the Nifty at 4448 level and the 14677 on
the Sensex on 18 March, the fall from the lifetime high at 21206/6357 amounts to 30%.
The recent fall has been painful in terms of price (shed 30%) as well as time as it commenced in the
month of January. The fall has affected almost all the sectoral indices, while some of the stocks from the
mid cap and small cap universe have shed 50‐70% from its peak.
On the quarterly charts, the month of March has displayed a long red candle; this has been preceded by
‘Three White Soldiers’ and can be considered as a phase of consolidation. As long as the next quarter
holds the low formed in the quarter ending March, we expect the uptrend to resume.
We expect a higher bottom/higher top to be formed by the indices and on a longer term basis, the
14500/4400 levels to serve as a bottom. Any sharp fall would only be a short term event, considering
the momentum in the daily and weekly indicators. We expect the indices to once again test the
21000/6200 levels within the next six‐eight months. This ensures that long term investors must view
the current levels and dips as buying opportunity in select frontliners and mid caps as the risk
reward is extremely favourable.
Typically, corrections beginning from the month of January terminate in the month of May creating a
long term bottom. Thus, we are likely to see another month of pain before reversal is seen. The 16700‐
18300/5000‐5300 levels will be the stiff resistances that the indices are likely to encounter incase of
reversal. Considering all the above charting developments, we conclude that:
• Despite the 6000 point crash in Sensex and the 1900 point crash in Nifty, there is no sign of a bear
market in Indian markets,
• The 4448/14677 levels are most likely to serve as a long term bottom and consolidation is likely to
continue at current levels until May.
• A higher bottom may be the first sign of reversal from the current pain.
Considering the longer term picture, the risk reward is favourable at current levels. We suggest going
long at lower supports levels of 15000‐15500/4500‐4600. We expect the indices to form a base around
May and thereon start a gradual recovery process. The slower the recovery, the more convincing it
will be in terms of stability and fewer fluctuations. Volumes and overall sectoral participation will be
the key elements to watch out for once the indices reverse trend. The 14000/4400 levels can be the
appropriate stop loss for all long term positions.
days. On the Nifty, the May 2004, June 2006 and the recent January‐March falls have been supported by
this trendline signifying its importance. While on the Sensex, the May 2004, June 2006 earlier falls have
been held but the recent fall has seen the breach below this long term trendline.
The striking similarity in all three falls on both the indices is their magnitude which amounted to 30‐
32%. Assuming the recent bottom was formed on 22 January on the Nifty at 4448 level and the 14677 on
the Sensex on 18 March, the fall from the lifetime high at 21206/6357 amounts to 30%.
The recent fall has been painful in terms of price (shed 30%) as well as time as it commenced in the
month of January. The fall has affected almost all the sectoral indices, while some of the stocks from the
mid cap and small cap universe have shed 50‐70% from its peak.
On the quarterly charts, the month of March has displayed a long red candle; this has been preceded by
‘Three White Soldiers’ and can be considered as a phase of consolidation. As long as the next quarter
holds the low formed in the quarter ending March, we expect the uptrend to resume.
We expect a higher bottom/higher top to be formed by the indices and on a longer term basis, the
14500/4400 levels to serve as a bottom. Any sharp fall would only be a short term event, considering
the momentum in the daily and weekly indicators. We expect the indices to once again test the
21000/6200 levels within the next six‐eight months. This ensures that long term investors must view
the current levels and dips as buying opportunity in select frontliners and mid caps as the risk
reward is extremely favourable.
Typically, corrections beginning from the month of January terminate in the month of May creating a
long term bottom. Thus, we are likely to see another month of pain before reversal is seen. The 16700‐
18300/5000‐5300 levels will be the stiff resistances that the indices are likely to encounter incase of
reversal. Considering all the above charting developments, we conclude that:
• Despite the 6000 point crash in Sensex and the 1900 point crash in Nifty, there is no sign of a bear
market in Indian markets,
• The 4448/14677 levels are most likely to serve as a long term bottom and consolidation is likely to
continue at current levels until May.
• A higher bottom may be the first sign of reversal from the current pain.
Considering the longer term picture, the risk reward is favourable at current levels. We suggest going
long at lower supports levels of 15000‐15500/4500‐4600. We expect the indices to form a base around
May and thereon start a gradual recovery process. The slower the recovery, the more convincing it
will be in terms of stability and fewer fluctuations. Volumes and overall sectoral participation will be
the key elements to watch out for once the indices reverse trend. The 14000/4400 levels can be the
appropriate stop loss for all long term positions.
The top 13 single-day falls of the Sensex has occurred on the following dates
1. Jan 21, 2008 --- 1,408.35 points
2. Mar 17, 2008 --- 951.03 points
3. Jan 22, 2008 --- 857 points
4. Feb 11, 2008 --- 833.98 points
5. May 18, 2006 --- 826 points
6. Mar 13, 2008 --- 770.63 points
7. Dec 17, 2007 --- 769.48 points
8. Mar 31, 2007 --- 726.85 points
9. Oct 17, 2007 --- 717.43 points
10. Jan 18, 2007 --- 687.82 points
11. Nov 21, 2007 --- 678.18 points
12. Aug 16, 2007 --- 642.70 points
13. Apr 2, 2007 --- 616.73 points
2. Mar 17, 2008 --- 951.03 points
3. Jan 22, 2008 --- 857 points
4. Feb 11, 2008 --- 833.98 points
5. May 18, 2006 --- 826 points
6. Mar 13, 2008 --- 770.63 points
7. Dec 17, 2007 --- 769.48 points
8. Mar 31, 2007 --- 726.85 points
9. Oct 17, 2007 --- 717.43 points
10. Jan 18, 2007 --- 687.82 points
11. Nov 21, 2007 --- 678.18 points
12. Aug 16, 2007 --- 642.70 points
13. Apr 2, 2007 --- 616.73 points
Citigroup Digs Deep, Google Rides High
NEWS AT A GLANCE
Citigroup loses $5.11 billion
Citigroup, the largest U.S. bank, posted a $5.11 billion quarterly loss, its second in a row, after writing down at least $15 billion in assets tied to mortgages and leveraged loans. Revenue fell 48 percent. (MarketWatch) The results were worse than analysts expected, but Citigroup shares rose in early trading. (Reuters) CEO Vikram Pandit, nearing the end of a comprehensive companywide review, has replaced his chief risk officer, cut 6,000 jobs, and replenished capital reserves to return the bank to fiscal health. "It was a difficult quarter," said Peter Kovalski at Alpine Woods Investments, but "Pandit is doing what needs to be done," given the tough market.
Google beats expectations
Google reported a 30 percent rise in quarterly profits, to $1.31 billion, easily topping analysts' forecasts. Google said it didn't see any impact yet from the U.S. economic slowdown, but much of its growth came from a strong push into international markets. For the first time, more than half of Google's revenue came from outside the U.S. Google's stock, down sharply this year, shot up 18 percent in extended trading, to $529.38 a share. "It's a good time to be a Google bull," said analyst Colin Gillis at Canaccord Adams. "The boys delivered." If Yahoo! similary beats expectations next week, analysts say, it could help it demand a higher bid from Microsoft.
RBS exploring stock sale
Royal Bank of Scotland, the U.K.'s No. 2 lender, said it is considering selling shares to raise capital, reversing earlier assertions that it didn't need fresh capital. RBS's reserves have been depleted by more than $5 billion in writedowns and its part in the $114.5 billion acquisition of Dutch bank ABN Amro. (Bloomberg) The details of the rights offer are expected next week. Analysts said RBS could bring in as much as $18 billion. "After all the denials by RBS that there was a need for any capital raising initiatives, it's unlikely that the market will take this as a positive," said Martin Slaney at GFT. (Reuters)
Iceland's credit freeze
Iceland is a country of extremes, and it is now on the verge of swinging from a period of remarkably robust growth to its first recession since 1992. The trouble started in Iceland's banking sector, which holds assets worth more than 10 times the country's GDP. Questions about their liquidity started hitting the banks early this year, even though they never bought the risky U.S. mortgage-back securities that got other countries in trouble. Icelanders and outside investors agree that things are getting bad, but disagree on why, with the foreigners arguing that Iceland is due for a steep correction and locals alleging market manipulation by speculators.
Fighting food inflation
U.S. shopper are facing the "worst food-price inflation in more than a decade," says Jeffrey Strain in TheStreet.com. Other household costs are rising too, but the grocery bill at least has "some wiggle room," if you know how to "exploit some areas within the system." Some examples: Make a database of good prices, so you'll know a good sale and can stock up. Buy in bulk, as long as you use all of the item, but not at a faster-than-normal rate. Buy only what you need, so no soda or desserts, say. Go ahead and "play the coupons game" -- you can save hundreds -- and only buy the sale items. And this "may seem obvious," but "don't throw food away."
Fighting starvation
"Tossed food" is the "third most common refuse found at landfills" in the U.S., says Thomas Kostigen in MarketWatch. And that is especially shameful when an unprecedented "food crisis" has left "millions of people living on the brink of starvation." While U.S. shoppers face higher prices with "little more than a grimace and a shrug," other countries have met the three-year doubling of food prices with "violent protests." The $200 million in emergency food aid released by President Bush is an "admirable" start, but it is "a Band-Aid." We need to commit more food aid. The U.S. is the most overweight country in the world, and "we need to stop eating and start feeding."
GOOD DAY FOR: Korean BBQ, after South Korea agreed to ease its mad-cow-driven embargo of U.S. beef. Korea imported $815 million worth of U.S. beef in 2003, before imports were stopped, putting it only behind Japan and Mexico. Some imports resumed in 2006. The easing could help passage of the $29 billion free-trade pact between Korea and the U.S. (Bloomberg)
BAD DAY FOR: Green living, as rising food prices are making organic-minded shoppers rethink their commitment to already-higher-priced natural foods. The organics market has grown 126 percent in five years, to $16.7 billion. But "man, $6.99 for a gallon of milk is pushing it," said Perry Abbenante at Whole Foods. "We have to be very careful about not pricing organics out of the market."
NOTED: Nalgene, the maker of hard polycarbonate water bottles, said it will stop using that plastic due to customer concerns over the chemical bisphenol-A, or BPA. The Canadian government is reportedly moving to label BPA as a toxic chemical, and Wal-Mart Canada is pulling items with BPA, like baby bottles and toddler sip cups, from its shelves this week. U.S. Wal-Mart stores will replace bottles containing BPA by next year.
Citigroup loses $5.11 billion
Citigroup, the largest U.S. bank, posted a $5.11 billion quarterly loss, its second in a row, after writing down at least $15 billion in assets tied to mortgages and leveraged loans. Revenue fell 48 percent. (MarketWatch) The results were worse than analysts expected, but Citigroup shares rose in early trading. (Reuters) CEO Vikram Pandit, nearing the end of a comprehensive companywide review, has replaced his chief risk officer, cut 6,000 jobs, and replenished capital reserves to return the bank to fiscal health. "It was a difficult quarter," said Peter Kovalski at Alpine Woods Investments, but "Pandit is doing what needs to be done," given the tough market.
Google beats expectations
Google reported a 30 percent rise in quarterly profits, to $1.31 billion, easily topping analysts' forecasts. Google said it didn't see any impact yet from the U.S. economic slowdown, but much of its growth came from a strong push into international markets. For the first time, more than half of Google's revenue came from outside the U.S. Google's stock, down sharply this year, shot up 18 percent in extended trading, to $529.38 a share. "It's a good time to be a Google bull," said analyst Colin Gillis at Canaccord Adams. "The boys delivered." If Yahoo! similary beats expectations next week, analysts say, it could help it demand a higher bid from Microsoft.
RBS exploring stock sale
Royal Bank of Scotland, the U.K.'s No. 2 lender, said it is considering selling shares to raise capital, reversing earlier assertions that it didn't need fresh capital. RBS's reserves have been depleted by more than $5 billion in writedowns and its part in the $114.5 billion acquisition of Dutch bank ABN Amro. (Bloomberg) The details of the rights offer are expected next week. Analysts said RBS could bring in as much as $18 billion. "After all the denials by RBS that there was a need for any capital raising initiatives, it's unlikely that the market will take this as a positive," said Martin Slaney at GFT. (Reuters)
Iceland's credit freeze
Iceland is a country of extremes, and it is now on the verge of swinging from a period of remarkably robust growth to its first recession since 1992. The trouble started in Iceland's banking sector, which holds assets worth more than 10 times the country's GDP. Questions about their liquidity started hitting the banks early this year, even though they never bought the risky U.S. mortgage-back securities that got other countries in trouble. Icelanders and outside investors agree that things are getting bad, but disagree on why, with the foreigners arguing that Iceland is due for a steep correction and locals alleging market manipulation by speculators.
Fighting food inflation
U.S. shopper are facing the "worst food-price inflation in more than a decade," says Jeffrey Strain in TheStreet.com. Other household costs are rising too, but the grocery bill at least has "some wiggle room," if you know how to "exploit some areas within the system." Some examples: Make a database of good prices, so you'll know a good sale and can stock up. Buy in bulk, as long as you use all of the item, but not at a faster-than-normal rate. Buy only what you need, so no soda or desserts, say. Go ahead and "play the coupons game" -- you can save hundreds -- and only buy the sale items. And this "may seem obvious," but "don't throw food away."
Fighting starvation
"Tossed food" is the "third most common refuse found at landfills" in the U.S., says Thomas Kostigen in MarketWatch. And that is especially shameful when an unprecedented "food crisis" has left "millions of people living on the brink of starvation." While U.S. shoppers face higher prices with "little more than a grimace and a shrug," other countries have met the three-year doubling of food prices with "violent protests." The $200 million in emergency food aid released by President Bush is an "admirable" start, but it is "a Band-Aid." We need to commit more food aid. The U.S. is the most overweight country in the world, and "we need to stop eating and start feeding."
GOOD DAY FOR: Korean BBQ, after South Korea agreed to ease its mad-cow-driven embargo of U.S. beef. Korea imported $815 million worth of U.S. beef in 2003, before imports were stopped, putting it only behind Japan and Mexico. Some imports resumed in 2006. The easing could help passage of the $29 billion free-trade pact between Korea and the U.S. (Bloomberg)
BAD DAY FOR: Green living, as rising food prices are making organic-minded shoppers rethink their commitment to already-higher-priced natural foods. The organics market has grown 126 percent in five years, to $16.7 billion. But "man, $6.99 for a gallon of milk is pushing it," said Perry Abbenante at Whole Foods. "We have to be very careful about not pricing organics out of the market."
NOTED: Nalgene, the maker of hard polycarbonate water bottles, said it will stop using that plastic due to customer concerns over the chemical bisphenol-A, or BPA. The Canadian government is reportedly moving to label BPA as a toxic chemical, and Wal-Mart Canada is pulling items with BPA, like baby bottles and toddler sip cups, from its shelves this week. U.S. Wal-Mart stores will replace bottles containing BPA by next year.
MARKET PREDICTION
AFTER DISCOUNTING THE NEWS OF CITI BANK & MERILL LYNCH LOSS GLOBAL CUE IS EXTREMLY POSITIVE,INDIA WILL FOLLOW THE STEP.TOTAL MARKET OI INCREASED TO 67 K CR FROM 62 K CR (APROX).PUT CALL RATIO IS 1.22%.
LEVEL OF NIFTY WOULD BE 4820-4910-5000-5050.
CRR HIKE WOULD BE NEGATIVE FOR THE BANKING SECTOR BECAUSE OF RS 18000 ODD SOME CR WILL BE SUCKS FROM MARKET TO CONTROL INFLATION.
BUY FROM LOWER SUPPORT 4910 WITH SL OF 4880 IN ENEYGY AND OIL&GAS.
HAVE A NICE TRADING DAY
-MR. SAM
LEVEL OF NIFTY WOULD BE 4820-4910-5000-5050.
CRR HIKE WOULD BE NEGATIVE FOR THE BANKING SECTOR BECAUSE OF RS 18000 ODD SOME CR WILL BE SUCKS FROM MARKET TO CONTROL INFLATION.
BUY FROM LOWER SUPPORT 4910 WITH SL OF 4880 IN ENEYGY AND OIL&GAS.
HAVE A NICE TRADING DAY
-MR. SAM
Saturday, April 19, 2008
Chidambaram says RBI move to moderate inflation
India expects demand and inflation to moderate following a recent monetary tightening by the central bank and after fiscal steps taken by the government, the finance minister said on Friday.
The Reserve Bank of India (RBI) said on Thursday it was raising the cash reserve ratio, the proportion of deposits banks must keep with it, by 50 basis points to 8 percent to calm inflation in Asia's third largest economy. The rise will take place in two phases, on April 26 and May 10.
"It will moderate demand. Therefore, it will have a moderating effect on prices," Finance Minister Palaniappan Chidambaram told reporters after a function.
But he added: "It will take some time. Don't expect miracles."
Government data showed on Thursday the wholesale price index rose 7.14 percent in the 12 months to April 5, slightly less than expected and falling from the previous week's rate of 7.41 percent, which was the highest since November 2004.
The RBI had said it wanted to keep inflation at close to 5 percent by the end of the 2007/08 fiscal year on March 31 and its medium-term aim is to contain inflation around 3 percent.
The RBI's surprise move on Thursday follows several duty cuts and export bans ordered by the government in recent weeks to ease price pressures.
Chidambaram said inflation in India has been fueled by global price spikes in crude oil, metals and food products.
"We can take some steps domestically but we don't have control over international prices," he said.
"We will be able to moderate inflation," he added.
At a separate function, Trade Minister Kamal Nath said the government was considering steps to curb price rise in steel.
"Steel prices have risen faster than input costs. We want steel companies to make profit. (But) we don't want them to profiteer," he said.
The Reserve Bank of India (RBI) said on Thursday it was raising the cash reserve ratio, the proportion of deposits banks must keep with it, by 50 basis points to 8 percent to calm inflation in Asia's third largest economy. The rise will take place in two phases, on April 26 and May 10.
"It will moderate demand. Therefore, it will have a moderating effect on prices," Finance Minister Palaniappan Chidambaram told reporters after a function.
But he added: "It will take some time. Don't expect miracles."
Government data showed on Thursday the wholesale price index rose 7.14 percent in the 12 months to April 5, slightly less than expected and falling from the previous week's rate of 7.41 percent, which was the highest since November 2004.
The RBI had said it wanted to keep inflation at close to 5 percent by the end of the 2007/08 fiscal year on March 31 and its medium-term aim is to contain inflation around 3 percent.
The RBI's surprise move on Thursday follows several duty cuts and export bans ordered by the government in recent weeks to ease price pressures.
Chidambaram said inflation in India has been fueled by global price spikes in crude oil, metals and food products.
"We can take some steps domestically but we don't have control over international prices," he said.
"We will be able to moderate inflation," he added.
At a separate function, Trade Minister Kamal Nath said the government was considering steps to curb price rise in steel.
"Steel prices have risen faster than input costs. We want steel companies to make profit. (But) we don't want them to profiteer," he said.
RURALISATION STARTS
Standard Chartered is poised for an expansion unprecedented in scale and one that will transform the bank by giving it a sizeable presence in the rural areas, including a consumer finance brand.
Already the largest foreign bank in India, Standard Chartered has sought the Reserve Bank of India’s permission to open 100 rural branches, which are in addition to its annual plan of 40 new branches and 300 ATMs this year, which it has submitted to RBI for approval.
Asked if the rural thrust was influenced by the United Progressive Alliance government’s war cry of inclusive growth, Peter Sands, the UK-based bank’s group chief executive, said: “Absolutely. In all the markets in which we operate, we seek to understand what a community or a government is trying to achieve.”
The bank, which now has 83 branches in 33 cities in the country, has announced that it is investing $250 million to take its total capital base in India to $1.9 billion.
Apart from organic growth, Standard Chartered, which opened its first branch in India in Kolkata in April 1858, has grown rapidly in the last eight years by acquiring ANZ Grindlays, American Express and UTI Securities.
Its current expansion drive appears significant in view of the government’s commitment to open up the sector next year, removing the limitations on operations of wholly-owned subsidiaries of foreign banks and treating them on a par with Indian banks. This will allow them to list on bourses, dilute equity and acquire other banks subject to the equity ceiling of 74 per cent.
The rural expansion that Standard Chartered has planned, the first such by a foreign bank in India, will change it in several ways. “I think it will significantly reposition the bank. If we go on this sort of rural expansion, it will be a dramatic change,” said Sands.
The products and services delivered in small towns will certainly be different from those in the metros.
“The kinds of products and the way you would deliver them would be somewhat different… The products that would appeal to small businesses in rural communities are not the same as the products that will appeal to India’s largest corporate houses,” said Sands.
The Standard Chartered branches in the rural areas will be supplemented by the outlets of Prime Financial, a consumer finance brand it acquired in Hong Kong and brought to India some time ago.
“We are always looking at what more we can offer. Prime Financial is one example. UTI Securities is another. We keep looking at the way our customers’ needs are evolving,” said Sands.
He is determined to go much beyond merely token involvement. “It is often said that an international bank is only interested in serving major corporate houses and certain parts of the population. By unilaterally submitting an application for these 100 rural branches, we are indicating that actually we are ready to serve the border range of the population and business communities,” he said.
The hunt for manpower — it is an issue in the banking industry, even more so for an expanding bank — has already taken Standard Chartered to more than two dozen business schools. Earlier, it would only hire from the top five or six Indian Institutes of Management.
In fact, it has also begun to hire non-MBAs.
The bank is setting up a $500 million micro-finance facility with the target to touch an estimated 4 million people in the emerging markets.
In India, the bank aims to partner with over 20 micro-finance institutions by December this year and extend operations to the North and the North-East.
Already the largest foreign bank in India, Standard Chartered has sought the Reserve Bank of India’s permission to open 100 rural branches, which are in addition to its annual plan of 40 new branches and 300 ATMs this year, which it has submitted to RBI for approval.
Asked if the rural thrust was influenced by the United Progressive Alliance government’s war cry of inclusive growth, Peter Sands, the UK-based bank’s group chief executive, said: “Absolutely. In all the markets in which we operate, we seek to understand what a community or a government is trying to achieve.”
The bank, which now has 83 branches in 33 cities in the country, has announced that it is investing $250 million to take its total capital base in India to $1.9 billion.
Apart from organic growth, Standard Chartered, which opened its first branch in India in Kolkata in April 1858, has grown rapidly in the last eight years by acquiring ANZ Grindlays, American Express and UTI Securities.
Its current expansion drive appears significant in view of the government’s commitment to open up the sector next year, removing the limitations on operations of wholly-owned subsidiaries of foreign banks and treating them on a par with Indian banks. This will allow them to list on bourses, dilute equity and acquire other banks subject to the equity ceiling of 74 per cent.
The rural expansion that Standard Chartered has planned, the first such by a foreign bank in India, will change it in several ways. “I think it will significantly reposition the bank. If we go on this sort of rural expansion, it will be a dramatic change,” said Sands.
The products and services delivered in small towns will certainly be different from those in the metros.
“The kinds of products and the way you would deliver them would be somewhat different… The products that would appeal to small businesses in rural communities are not the same as the products that will appeal to India’s largest corporate houses,” said Sands.
The Standard Chartered branches in the rural areas will be supplemented by the outlets of Prime Financial, a consumer finance brand it acquired in Hong Kong and brought to India some time ago.
“We are always looking at what more we can offer. Prime Financial is one example. UTI Securities is another. We keep looking at the way our customers’ needs are evolving,” said Sands.
He is determined to go much beyond merely token involvement. “It is often said that an international bank is only interested in serving major corporate houses and certain parts of the population. By unilaterally submitting an application for these 100 rural branches, we are indicating that actually we are ready to serve the border range of the population and business communities,” he said.
The hunt for manpower — it is an issue in the banking industry, even more so for an expanding bank — has already taken Standard Chartered to more than two dozen business schools. Earlier, it would only hire from the top five or six Indian Institutes of Management.
In fact, it has also begun to hire non-MBAs.
The bank is setting up a $500 million micro-finance facility with the target to touch an estimated 4 million people in the emerging markets.
In India, the bank aims to partner with over 20 micro-finance institutions by December this year and extend operations to the North and the North-East.
TIME STARTS FOR SME
UK-based financial institutions and banks are keen on investing in Indian small and medium scale enterprises (SMEs) and a large number of establishments are also keen to invest in public-private partnership (PPP) and private finance initiative (PFI) projects in India. Mayor of London David Lewis, on his business delegation visit to Pune, said this on Friday.Lewis pointed out that sectors like infrastructure, pharmaceuticals, health and automobile are at the top priority for UK's financial firms. "The SME sector remains the most attractive segment for UK investors. The private sector in general will grow at a rapid speed in India. We also want companies from this particular segment to enter UK and set up offices there," Lewis stated.The initiatives taken by the UK-India Business Council have also produced excellent results in this particular sector over last three months. Council CEO Sharon Bamford told reporters that since January 1 this year, 26 new business proposals are nearing completion in UK through the council. "We are helping the small Indian companies to set up offices in UK and their investment needs are met through UK-based investors," Bamford stated.The mayor of London, will meet Prime Minister Manmohan Singh in New Delhi next week to discuss ways to further liberalise business processes in India. "At present, the trade from UK to India is worth Rs 70,000 crore and the same can further increase. However, issues like restrictions on foreign banks and law firms in India as well as the red-carpet attitude has put breaks on business processes. We will raise all these concerns with concerned ministers in Delhi," he added.
Discussion Forum on CRR Hike
What do experts read into the rate hike?
MBN Rao, CMD, Canara Bank, said the CRR hike has been triggered by over 7% inflation. “The fact that RBI increased CRR as against increasing the repo rate is to control the money supply availability at the disposal of banks in terms of credit expansion. To that extent, we will take it as a hint that there should be a reallocation of credit to sectors. Banks will have to await RBI policy to review interest rates. This hike does not signal a rate hike,” he added.
ICICI Prudential's Nilesh Shah also shares Rao’s reactions. He feels inflation is a concern right now and probably RBI would like to manage liquidity rather than raise rates. “Somewhere, liquidity management will become key to manage inflation rather than just raising rates, which could be counterproductive with growth. Inflation is a bit driven by supply side limitations and you can only create capacity by lending money, not by restricting money. RBI would like to wait and see the impact of a CRR hike rather than raise rates during the Credit Policy.”
Shubhada Rao, Chief Economist, Yes Bank, said the fact that RBI brought it ahead of the Credit Policy carries some amount of surprise but elevation of inflation at over 7-7.5% is what has prompted it. “The impact of this would be felt a bit later. If one looks at the fiscal measures and CRR, one would tend to think that a repo rate hike possibility is now at abeyance. But I still would not rule out some additional measures on April 29. There could be a possible small hike in the repo rate but the probability has reduced clearly.
HDFC Chairman Deepak Parekh said a CRR hike was expected with this level of inflation. “Rs 18,500 crore mop up over a two-week period is not a very large bump up, the liquidity today in the market is reasonable. If this liquidity continues, we may not even increase interest rates, so it is too early to tell what the impact on interest rates is going to be.”
Parekh does not expect a further increase on April 29. “This will be the last of actions for the next few weeks to come in the foreseeable short future.”
However, Nitin Jain, Primary Dealers Section, ICICI Securities, feels conditions are ripe for a series of action by RBI. “This will be just a precursor to the rate hike in the policy.”
Does this hike imply a rise in deposit rates?
Chanda Kochhar, Joint MD, ICICI Bank, does not think so. She said one should not jump to conclusions that deposit rates would rise as there is currently liquidity in the system. “This measure is going to take away a large part of that liquidity. But it is still not creating a negative gap. We have to watch over the next one month as this becomes effective and how other parts of liquidity in the system moves."
However, Keki Mistry, MD, HDFC, feels deposit rates are not going to go up significantly though wholesale funding cost might go up a little bit. “The hike was expected. We need to see what kind of impact it has on change in costs of funds and deposits, i.e. the rate at which we raise funds. We will then take a call on lending rates."
Will loans get expensive now?
HN Daruwala, Chairperson, Central Bank of India, said the bank will take a holistic view after the April 29 Monetary Policy. “Inflation has to be curtailed and contained, then it goes without saying that we will have to go in for a higher lending rate. RBI Governor YV Reddy may increase interest or increase the repo rate. So, we will take a call on whether to raise rates after the Monetary Policy gets announced.”
The waiting game is also being played by HDFC Bank. Ashish Parthasarthy, Head-Treasury, HDFC Bank said the India’s second largest private sector bank would wait for the policy and take a appropriate decision thereafter.
How will bond markets react on Monday?
HDFC Bank’s Parthasarthy said bond yields would go up. “Though there was an expectation of monetary action now or at policy time, you will see bond yields moving up because of the action. Pure supply could also take the 10-year to 8.25%. However, if repo rates were to go up sometime if not immediately, you could see the 10-year anywhere between 8.25-8.5%. I don’t think it will go beyond that.”
Even ICICI Securities’ Nitin Jain sees the 10-year bond crossing 8.5% post policy. “The 10-year paper could go anywhere on Monday. It depends on how the market takes collectively all these measures and what view they form on Monday. Now, the talk is also of a reverse repo rate hike, not just a repo rate hike. RBI is reducing growth target to 7-7.5%. If that materializes, then the 10-year can cross even 8.5% after the policy.”
JP Morgan’s Krishnamurthy Vijayan said the hike is certainly going to effect investors who are thinking in terms of long-term bond funds. “After the last glorious year of equity, it was only now that people have started thinking in terms of asset allocation. That might affect sentiment a bit. Surprisingly, the bond markets had factored this in last week. Most bond fund managers have already built it into their strategy though NAVs may not be that drastically impacted there.”
MBN Rao, CMD, Canara Bank, said the CRR hike has been triggered by over 7% inflation. “The fact that RBI increased CRR as against increasing the repo rate is to control the money supply availability at the disposal of banks in terms of credit expansion. To that extent, we will take it as a hint that there should be a reallocation of credit to sectors. Banks will have to await RBI policy to review interest rates. This hike does not signal a rate hike,” he added.
ICICI Prudential's Nilesh Shah also shares Rao’s reactions. He feels inflation is a concern right now and probably RBI would like to manage liquidity rather than raise rates. “Somewhere, liquidity management will become key to manage inflation rather than just raising rates, which could be counterproductive with growth. Inflation is a bit driven by supply side limitations and you can only create capacity by lending money, not by restricting money. RBI would like to wait and see the impact of a CRR hike rather than raise rates during the Credit Policy.”
Shubhada Rao, Chief Economist, Yes Bank, said the fact that RBI brought it ahead of the Credit Policy carries some amount of surprise but elevation of inflation at over 7-7.5% is what has prompted it. “The impact of this would be felt a bit later. If one looks at the fiscal measures and CRR, one would tend to think that a repo rate hike possibility is now at abeyance. But I still would not rule out some additional measures on April 29. There could be a possible small hike in the repo rate but the probability has reduced clearly.
HDFC Chairman Deepak Parekh said a CRR hike was expected with this level of inflation. “Rs 18,500 crore mop up over a two-week period is not a very large bump up, the liquidity today in the market is reasonable. If this liquidity continues, we may not even increase interest rates, so it is too early to tell what the impact on interest rates is going to be.”
Parekh does not expect a further increase on April 29. “This will be the last of actions for the next few weeks to come in the foreseeable short future.”
However, Nitin Jain, Primary Dealers Section, ICICI Securities, feels conditions are ripe for a series of action by RBI. “This will be just a precursor to the rate hike in the policy.”
Does this hike imply a rise in deposit rates?
Chanda Kochhar, Joint MD, ICICI Bank, does not think so. She said one should not jump to conclusions that deposit rates would rise as there is currently liquidity in the system. “This measure is going to take away a large part of that liquidity. But it is still not creating a negative gap. We have to watch over the next one month as this becomes effective and how other parts of liquidity in the system moves."
However, Keki Mistry, MD, HDFC, feels deposit rates are not going to go up significantly though wholesale funding cost might go up a little bit. “The hike was expected. We need to see what kind of impact it has on change in costs of funds and deposits, i.e. the rate at which we raise funds. We will then take a call on lending rates."
Will loans get expensive now?
HN Daruwala, Chairperson, Central Bank of India, said the bank will take a holistic view after the April 29 Monetary Policy. “Inflation has to be curtailed and contained, then it goes without saying that we will have to go in for a higher lending rate. RBI Governor YV Reddy may increase interest or increase the repo rate. So, we will take a call on whether to raise rates after the Monetary Policy gets announced.”
The waiting game is also being played by HDFC Bank. Ashish Parthasarthy, Head-Treasury, HDFC Bank said the India’s second largest private sector bank would wait for the policy and take a appropriate decision thereafter.
How will bond markets react on Monday?
HDFC Bank’s Parthasarthy said bond yields would go up. “Though there was an expectation of monetary action now or at policy time, you will see bond yields moving up because of the action. Pure supply could also take the 10-year to 8.25%. However, if repo rates were to go up sometime if not immediately, you could see the 10-year anywhere between 8.25-8.5%. I don’t think it will go beyond that.”
Even ICICI Securities’ Nitin Jain sees the 10-year bond crossing 8.5% post policy. “The 10-year paper could go anywhere on Monday. It depends on how the market takes collectively all these measures and what view they form on Monday. Now, the talk is also of a reverse repo rate hike, not just a repo rate hike. RBI is reducing growth target to 7-7.5%. If that materializes, then the 10-year can cross even 8.5% after the policy.”
JP Morgan’s Krishnamurthy Vijayan said the hike is certainly going to effect investors who are thinking in terms of long-term bond funds. “After the last glorious year of equity, it was only now that people have started thinking in terms of asset allocation. That might affect sentiment a bit. Surprisingly, the bond markets had factored this in last week. Most bond fund managers have already built it into their strategy though NAVs may not be that drastically impacted there.”
INDIAN LUGGAGE INDUSTRIES TEND TO GROW MAFIFOLD
UK-based luggage brand, Antler, today forayed into the Indian market through a marketing tie-up with leading travel goods player, Safari Industries.Antler products will now be available in India in the price range of Rs 4,695-Rs 11,995, and would offer a variety of travel goods in the premium segment, Antler's Head of Export Division, Clarie Willoughby, told reporters here.These include roller cases, trolleys, laptop cases, casual bags and messenger bags, amongst others, Willoughby said, "We outsource our products from China but with increasing labour wages and fluctuating currency of China, we will have to look at other markets like Vietnam, Sri Lanka and India," she said.Safari is eyeing at around 14-15 per cent marketshare from the premium brand in the next three years, Safari Industries' Managing Director, Amul Mehta, said.Safari plans to roll-out 55 outlets by this year-end of which 15 would be premium outlets, he said. "We will invest around Rs 5 crore for rolling-out these outlets," he said, adding that at present, the company had 45 stand-alone outlets.The company decided on a tie-up with Antler as it would be easy to enter the premium-end of the market through an established premium brand, Mehta said."Premium products are driven more by popularity," he said.
Friday, April 18, 2008
Citigroup Reports Loss on $15 Billion of Credit Costs
April 18 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, posted its second straight quarterly loss on at least $15 billion of writedowns and increased loan losses as customers fell behind on home, car and credit-card payments.
The first-quarter net loss of $5.11 billion, or $1.02 a share, compared with earnings of $5.01 billion, or $1.01, a year earlier, New York-based Citigroup said in a statement. While the loss was worse than the $4.75 billion predicted by analysts in a Bloomberg survey, revenue exceeded their estimates. The shares climbed 6 percent to $25.46 in early New York trading.
``I think the worst is largely behind us,'' Malcolm Polley, who manages $1 billion as president of Stewart Capital Advisors LLC, in Indiana, Pennsylvania, said in a Bloomberg radio interview.
Citigroup's writedowns and credit losses from the collapse of the subprime mortgage market now total about $39 billion, more than Zurich-based UBS AG and Merrill Lynch & Co. Vikram Pandit, Citigroup's chief executive officer, has bailed out about 10 investment funds, replaced his chief risk officer, raised $30 billion to replenish capital and cut more than 6,000 jobs since he succeeded Charles O. ``Chuck'' Prince in December.
``It was a difficult quarter,'' said Peter Kovalski, portfolio manager at Alpine Woods Investments in Purchase, New York, which oversees about $12 billion and holds about 32,000 Citigroup shares. ``You're still seeing a deterioration in the residential market, which has really been a driving force in the writedowns, and that's going to continue.''
The first-quarter net loss of $5.11 billion, or $1.02 a share, compared with earnings of $5.01 billion, or $1.01, a year earlier, New York-based Citigroup said in a statement. While the loss was worse than the $4.75 billion predicted by analysts in a Bloomberg survey, revenue exceeded their estimates. The shares climbed 6 percent to $25.46 in early New York trading.
``I think the worst is largely behind us,'' Malcolm Polley, who manages $1 billion as president of Stewart Capital Advisors LLC, in Indiana, Pennsylvania, said in a Bloomberg radio interview.
Citigroup's writedowns and credit losses from the collapse of the subprime mortgage market now total about $39 billion, more than Zurich-based UBS AG and Merrill Lynch & Co. Vikram Pandit, Citigroup's chief executive officer, has bailed out about 10 investment funds, replaced his chief risk officer, raised $30 billion to replenish capital and cut more than 6,000 jobs since he succeeded Charles O. ``Chuck'' Prince in December.
``It was a difficult quarter,'' said Peter Kovalski, portfolio manager at Alpine Woods Investments in Purchase, New York, which oversees about $12 billion and holds about 32,000 Citigroup shares. ``You're still seeing a deterioration in the residential market, which has really been a driving force in the writedowns, and that's going to continue.''
Rice Gains to Record on Concern Trade Curbs to Spread
Rice futures rose for a fifth day, recording the biggest weekly advance in at least seven years, on concern export curbs imposed by China and Vietnam will spread as importing nations struggle to meet their needs.
Rice for May delivery rose as much as 93.5 cents, or 4 percent, to a record $24.235 per 100 pounds on the Chicago Board of Trade. The contract has gained as much as 16 percent this week, and more than doubled in the past year.
India and Egypt have also curbed sales this year to safeguard local supplies. The gain in rice, as well as energy, has prompted warnings that civil unrest may spread as the poor in Africa and Asia can't afford to eat, and their governments can't fund or find sufficient imports.
``More and more countries will have restrictions on exports,'' Frederic Neumann, an economist at HSBC Global Research, said by phone today from Hong Kong. ``There's some pressure on the Thai government to curtail shipments.''
Thailand, the world's largest rice exporter, boosted shipments 66 percent in the first three months, according to Commerce Minister Mingkwan Sangsuwan on April 16. The nation's 100% Grade B White Rice gained 54 percent in the month to April 9, according to data from the Rice Exporters' Association.
The Philippines, the world's biggest rice importer, received offers for just two-thirds of the grain it sought at a tender yesterday at prices about 40 percent higher than in March. The country, which shipped in 1.9 million tons of rice last year, fills 10 percent to 15 percent of local needs from imports.
Slowing Purchases
The jump in rice prices has forced some buyers to cut the size of their orders, said Apichat Chansakulporn, managing director of President Agri Trading Ltd., Thailand's fourth-largest rice exporter.
``Clients are slowing their purchases because the prices are very high,'' Apichat said by phone from Bangkok today. Price gains were ``driven more by psychological impact than real demand and supply. The perception is now toward an uptrend.''
A global food crisis has reached ``emergency proportions,'' United Nations Secretary-General Ban Ki-Moon said April 14. The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest after food and energy costs increased.
China, the world's most populous nation, has started to block or tax some food-related exports to make sure that local supplies remain adequate. The country set a tax on rice shipments at 5 percent this year and started to tax wheat exports at 20 percent.
`Control Exports'
The world's fastest growing major economy announced yesterday that it was increasing the tax on fertilizer shipments to ``control exports'' and damp local prices, according to the Finance Ministry. China also turned down a Philippine request for wheat exports, Trade Minister Peter Favila said April 11.
Sumeth Laomoraphorn, president of C.P. Intertrade Ltd., Thailand's sixth-largest rice exporter, also said the pace of purchases from some nations was beginning to slow.
``Orders from China are slowing, they may perceive that fragrant and white rice from Thailand and Vietnam is overly expensive,'' Sumeth said today. ``Some African countries are chasing prices up, but some in that region are balking at buying more because they have limited financial resources.''
The Chicago rice contract's so-called relative-strength index reached 84 today, and has traded above 70 all this week. A reading above 70 is regarded among traders as a signal the price may be set to drop. The contract was at $24.16 at 8:50 a.m. in London.
Food Summit
The Philippines called this month for an Asian summit on escalating food prices, especially rice, and urged India, China, Japan and the members of the 10-state Association of Southeast Asian Nations to attend.
World leaders ``must come together and identify the issues, including rising fuel prices and rising demand,'' Al-Ghazim Wurie, the World Food Program's country director for the Philippines, said in an interview today. After collective steps to increase output ``we'll begin to see a downward trend in prices.''
Households in poorer countries spend a larger share of their income on food compared with those in richer nations, magnifying the impact of costlier rice, wheat and meat, according to the U.S. Department of Agriculture.
An average household in India spent 32 percent of its income on food last year compared with 6 percent for a household in the United States, data from the department show. The figure for Indonesia was 43 percent, and 36 percent for the Philippines.
``Poorer countries tend to suffer more than developed countries,'' HSBC's Neumann said. ``It is the poor who shoulder the biggest burden.''
Rice for May delivery rose as much as 93.5 cents, or 4 percent, to a record $24.235 per 100 pounds on the Chicago Board of Trade. The contract has gained as much as 16 percent this week, and more than doubled in the past year.
India and Egypt have also curbed sales this year to safeguard local supplies. The gain in rice, as well as energy, has prompted warnings that civil unrest may spread as the poor in Africa and Asia can't afford to eat, and their governments can't fund or find sufficient imports.
``More and more countries will have restrictions on exports,'' Frederic Neumann, an economist at HSBC Global Research, said by phone today from Hong Kong. ``There's some pressure on the Thai government to curtail shipments.''
Thailand, the world's largest rice exporter, boosted shipments 66 percent in the first three months, according to Commerce Minister Mingkwan Sangsuwan on April 16. The nation's 100% Grade B White Rice gained 54 percent in the month to April 9, according to data from the Rice Exporters' Association.
The Philippines, the world's biggest rice importer, received offers for just two-thirds of the grain it sought at a tender yesterday at prices about 40 percent higher than in March. The country, which shipped in 1.9 million tons of rice last year, fills 10 percent to 15 percent of local needs from imports.
Slowing Purchases
The jump in rice prices has forced some buyers to cut the size of their orders, said Apichat Chansakulporn, managing director of President Agri Trading Ltd., Thailand's fourth-largest rice exporter.
``Clients are slowing their purchases because the prices are very high,'' Apichat said by phone from Bangkok today. Price gains were ``driven more by psychological impact than real demand and supply. The perception is now toward an uptrend.''
A global food crisis has reached ``emergency proportions,'' United Nations Secretary-General Ban Ki-Moon said April 14. The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest after food and energy costs increased.
China, the world's most populous nation, has started to block or tax some food-related exports to make sure that local supplies remain adequate. The country set a tax on rice shipments at 5 percent this year and started to tax wheat exports at 20 percent.
`Control Exports'
The world's fastest growing major economy announced yesterday that it was increasing the tax on fertilizer shipments to ``control exports'' and damp local prices, according to the Finance Ministry. China also turned down a Philippine request for wheat exports, Trade Minister Peter Favila said April 11.
Sumeth Laomoraphorn, president of C.P. Intertrade Ltd., Thailand's sixth-largest rice exporter, also said the pace of purchases from some nations was beginning to slow.
``Orders from China are slowing, they may perceive that fragrant and white rice from Thailand and Vietnam is overly expensive,'' Sumeth said today. ``Some African countries are chasing prices up, but some in that region are balking at buying more because they have limited financial resources.''
The Chicago rice contract's so-called relative-strength index reached 84 today, and has traded above 70 all this week. A reading above 70 is regarded among traders as a signal the price may be set to drop. The contract was at $24.16 at 8:50 a.m. in London.
Food Summit
The Philippines called this month for an Asian summit on escalating food prices, especially rice, and urged India, China, Japan and the members of the 10-state Association of Southeast Asian Nations to attend.
World leaders ``must come together and identify the issues, including rising fuel prices and rising demand,'' Al-Ghazim Wurie, the World Food Program's country director for the Philippines, said in an interview today. After collective steps to increase output ``we'll begin to see a downward trend in prices.''
Households in poorer countries spend a larger share of their income on food compared with those in richer nations, magnifying the impact of costlier rice, wheat and meat, according to the U.S. Department of Agriculture.
An average household in India spent 32 percent of its income on food last year compared with 6 percent for a household in the United States, data from the department show. The figure for Indonesia was 43 percent, and 36 percent for the Philippines.
``Poorer countries tend to suffer more than developed countries,'' HSBC's Neumann said. ``It is the poor who shoulder the biggest burden.''
Japan consumer confidence index 36.5 in March
Japanese consumer confidence worsened in March from three months earlier on a seasonallyadjusted basis, a government survey showed on Friday.
The Cabinet Office survey's sentiment index for general households, which includes views on incomes and jobs, was 36.5 in March, the lowest since June 2003 when it was 36.1. It was down from 38.8 in December. Seasonally adjusted figures are released only quarterly. The unadjusted monthly index for March stood at 36.7, up from 36.1 in February and rising for the first time in six months. "General households" are those with two or more people and a reading below 50 suggests consumer pessimism.
The Cabinet Office survey's sentiment index for general households, which includes views on incomes and jobs, was 36.5 in March, the lowest since June 2003 when it was 36.1. It was down from 38.8 in December. Seasonally adjusted figures are released only quarterly. The unadjusted monthly index for March stood at 36.7, up from 36.1 in February and rising for the first time in six months. "General households" are those with two or more people and a reading below 50 suggests consumer pessimism.
U.S. earnings tell tale of two economies
U.S. quarterly earnings so far tell a tale of two economies: those that do big business overseas like IBM are doing well, while companies more dependent on the American consumer like Harley-Davidson Inc are hurting.
There was broad-based weakness in earnings on Thursday from companies exposed primarily to the U.S. economy, as the sharp slowdown crimped demand for goods and services from the iconic Harley motorcycles to Marriott hotel rooms.
Harley-Davidson said it would report full-year earnings well below its forecast, while hotel operator Marriott International Inc said the slowing U.S. economy was taking a toll on travel spending.
"Things that are domestic and exposed to consumer discretionary spending -- absolutely they're having a bad time. This is a recession, and I would say its not time to buy these stocks yet," said David Bianco, chief U.S. equity strategist at UBS in New York.
But investors were encouraged by a strong showing from some of the large multinational companies that benefit from the weak dollar, either through the conversion of overseas profits into greenbacks or because they are more competitive against foreign rivals.
International Business Machines Corp provided the biggest lift to the Dow industrials on Thursday, after the computer services company, which is seen as a bellwether of business activity, raised its 2008 outlook late on Wednesday. IBM gets about two-thirds of its revenue from outside the United States.
The weak dollar and strong demand from emerging economies is also helping commodities producers.
Oil and gas explorer McMoRan Exploration Co posted a profit that significantly beat Wall Street expectations as oil and gas production and prices rose considerably.
As U.S. companies are increasingly exposed to overseas markets, their earnings are weathering the downturn, in contrast to previous recessions.
So far this quarter, the majority of the companies have exceeded their lowered forecasts. Of the 51 companies that have reported so far, 82 percent beat estimates compared with only 43 percent at this point last quarter, according to JPMorgan Securities.
"When we put it all together, the earnings haven't crumbled similar to past recessionary periods, the situation is much more well behaved," said Ned Riley, chief executive at Riley Asset Management.
"We're holding up well, but you only need one blue chip to do badly, or well, for that matter, and the feeding frenzy begins," Riley said.
IBM's strong results followed solid earnings from chip-maker Intel and reassured investors who had been concerned that big technology stocks would be the next victim of the downturn.
"In order for profits to collapse as they normally do in a recession, you need industrials, technology, materials and energy to decline sharply. It's those sectors that usually decimate S&P profits and that is just not happening at all," Bianco of UBS said.
In the fourth quarter of 2007, only three out of 10 sectors reported a decline in earnings, compared with eight out of 11 in the fourth quarter of the 2001 recession, according to a recent report by Thomson Financial.
"It's because those hyper-cyclical sectors have become global-cyclicals," Bianco said. "More than half their revenues come from abroad, so they're positively exposed to commodities and the weak dollar."
But, even among those companies with international exposure, there were some signs of trepidation, with diversified manufacturer United Technologies Corp, whose earnings topped expectations, giving a cautious full-year outlook due to the slowing economy.
"This quarter I am looking for more differentiation as to who is better able to maintain operating margins, who is not using macro(-economic) excuses," said Subodh Kumar, who heads investment firm Subodh Kumar & Associates.
"At the moment, that seems to be your IBMs, your Intels. Some of the industrials, on the other hand, are mentioning the economy and striking a more cautious note."
Financial services companies, however, did not get help from international exposure as their earnings were bludgeoned by the credit crisis. Large banks and brokers, such as Merrill Lynch, posted significant losses because they had more exposure to risky debt, while regional banks on average beat expectations.
But a lot of the bad news seems to already have been built into share prices, and financial-sector stocks have mostly risen this week.
There was broad-based weakness in earnings on Thursday from companies exposed primarily to the U.S. economy, as the sharp slowdown crimped demand for goods and services from the iconic Harley motorcycles to Marriott hotel rooms.
Harley-Davidson said it would report full-year earnings well below its forecast, while hotel operator Marriott International Inc said the slowing U.S. economy was taking a toll on travel spending.
"Things that are domestic and exposed to consumer discretionary spending -- absolutely they're having a bad time. This is a recession, and I would say its not time to buy these stocks yet," said David Bianco, chief U.S. equity strategist at UBS in New York.
But investors were encouraged by a strong showing from some of the large multinational companies that benefit from the weak dollar, either through the conversion of overseas profits into greenbacks or because they are more competitive against foreign rivals.
International Business Machines Corp provided the biggest lift to the Dow industrials on Thursday, after the computer services company, which is seen as a bellwether of business activity, raised its 2008 outlook late on Wednesday. IBM gets about two-thirds of its revenue from outside the United States.
The weak dollar and strong demand from emerging economies is also helping commodities producers.
Oil and gas explorer McMoRan Exploration Co posted a profit that significantly beat Wall Street expectations as oil and gas production and prices rose considerably.
As U.S. companies are increasingly exposed to overseas markets, their earnings are weathering the downturn, in contrast to previous recessions.
So far this quarter, the majority of the companies have exceeded their lowered forecasts. Of the 51 companies that have reported so far, 82 percent beat estimates compared with only 43 percent at this point last quarter, according to JPMorgan Securities.
"When we put it all together, the earnings haven't crumbled similar to past recessionary periods, the situation is much more well behaved," said Ned Riley, chief executive at Riley Asset Management.
"We're holding up well, but you only need one blue chip to do badly, or well, for that matter, and the feeding frenzy begins," Riley said.
IBM's strong results followed solid earnings from chip-maker Intel and reassured investors who had been concerned that big technology stocks would be the next victim of the downturn.
"In order for profits to collapse as they normally do in a recession, you need industrials, technology, materials and energy to decline sharply. It's those sectors that usually decimate S&P profits and that is just not happening at all," Bianco of UBS said.
In the fourth quarter of 2007, only three out of 10 sectors reported a decline in earnings, compared with eight out of 11 in the fourth quarter of the 2001 recession, according to a recent report by Thomson Financial.
"It's because those hyper-cyclical sectors have become global-cyclicals," Bianco said. "More than half their revenues come from abroad, so they're positively exposed to commodities and the weak dollar."
But, even among those companies with international exposure, there were some signs of trepidation, with diversified manufacturer United Technologies Corp, whose earnings topped expectations, giving a cautious full-year outlook due to the slowing economy.
"This quarter I am looking for more differentiation as to who is better able to maintain operating margins, who is not using macro(-economic) excuses," said Subodh Kumar, who heads investment firm Subodh Kumar & Associates.
"At the moment, that seems to be your IBMs, your Intels. Some of the industrials, on the other hand, are mentioning the economy and striking a more cautious note."
Financial services companies, however, did not get help from international exposure as their earnings were bludgeoned by the credit crisis. Large banks and brokers, such as Merrill Lynch, posted significant losses because they had more exposure to risky debt, while regional banks on average beat expectations.
But a lot of the bad news seems to already have been built into share prices, and financial-sector stocks have mostly risen this week.
India Orders Banks to Set Aside More Reserves to Cool Inflation
India's central bank ordered banks to set aside more money to cool lending, adding to government efforts to rein in inflation running near a three-year high.
The Reserve Bank of India will raise the cash reserve ratio to 8 percent from 7.5 percent in two phases by May 10, according to a statement in Mumbai yesterday. The increase, the first in 2008, will drain as much as 185 billion rupees ($4.6 billion) from the financial system.
India's inflation rate has more than doubled in the past four months amid soaring commodity and food prices, undermining support for Prime Minister Manmohan Singh's Congress party ahead of election due in a year's time. The central bank's move came a day after China, fighting to tame 11-year-high inflation, also told commercial lenders to set aside more cash.
``Given the huge political importance of inflation'' in India, we expect the Reserve Bank ``will continue its tightening measures,'' said Tushar Poddar, a Mumbai-based economist at Goldman Sachs Group Inc. ``The guiding principle would be to arrest inflationary expectations and further slow demand.''
The central bank said India's cash reserve ratio would be raised to 7.75 percent starting April 26 and to 8 percent effective May 10. The People's Bank of China increased the required reserve ratio to a record 16 percent.
Prime Minister Singh's Congress party, which was defeated in five of seven state polls in 2007 and failed to secure power in three this year, needs to curb prices to bolster its electoral prospects.
Interest Rates
Reserve Bank Governor Yaga Venugopal Reddy has raised the central bank's key policy interest rates nine times since October 2004 and the cash reserve ratio five times since December 2006 until yesterday.
The level of inflation is unacceptable and the central bank will announce a response in its April 29 monetary policy statement, Reddy said on April 15.
``The cash reserve ratio increase has come at a very right time,'' said Krish Ramkumar, who manages the equivalent of $1.1 billion in Indian debt at Sundaram BNP Paribas Asset Management in Mumbai. ``I still expect the repurchase rate to be hiked to 8 percent from 7.75 percent'' in this month's policy statement.
Yesterday's increase came after several fiscal measures by the government earlier this month, including bans on the export of some food staples such as pulses and types of rice.
Slower Growth
Finance Minister Palaniappan Chidambaram said in parliament this week that apart from fiscal measures, cracking down on hoarding and price cartels, inflationary expectations had to be quelled by reducing liquidity and tempering demand.
India's inflation rate was 7.14 percent in the week ended April 5 from a year earlier, after gaining 7.41 percent in the previous week, the Ministry of Commerce and Industry said in New Delhi yesterday. Economists had expected a 7.23 percent increase.
``The worst seems to be over for inflation,'' said Prasanna Ananthasubramaniam, a fixed-income analyst at ICICI Securities Ltd. in Mumbai. ``Bond yields should peak out now.''
Benchmark bond yields climbed to the highest level since June yesterday after crude oil's surge to a record stoked concern inflation will quicken further. The yield on the 7.99 percent note due July 2017 rose 4 basis points to 8.12 percent at the close in Mumbai. The cash reserve ratio announcement was made after trading ended.
There may be some respite from rising prices if the monsoon forecast is borne out.
India's monsoon rains are expected to be sufficient this year for farmers to plant rice, wheat and oilseeds, Science and Technology Minister Kapil Sibal said April 16. That may reduce the nation's dependence on imports and help stave off pressure on global food prices, which have caused social unrest in 33 countries from Mexico to Yemen.
The Reserve Bank of India will raise the cash reserve ratio to 8 percent from 7.5 percent in two phases by May 10, according to a statement in Mumbai yesterday. The increase, the first in 2008, will drain as much as 185 billion rupees ($4.6 billion) from the financial system.
India's inflation rate has more than doubled in the past four months amid soaring commodity and food prices, undermining support for Prime Minister Manmohan Singh's Congress party ahead of election due in a year's time. The central bank's move came a day after China, fighting to tame 11-year-high inflation, also told commercial lenders to set aside more cash.
``Given the huge political importance of inflation'' in India, we expect the Reserve Bank ``will continue its tightening measures,'' said Tushar Poddar, a Mumbai-based economist at Goldman Sachs Group Inc. ``The guiding principle would be to arrest inflationary expectations and further slow demand.''
The central bank said India's cash reserve ratio would be raised to 7.75 percent starting April 26 and to 8 percent effective May 10. The People's Bank of China increased the required reserve ratio to a record 16 percent.
Prime Minister Singh's Congress party, which was defeated in five of seven state polls in 2007 and failed to secure power in three this year, needs to curb prices to bolster its electoral prospects.
Interest Rates
Reserve Bank Governor Yaga Venugopal Reddy has raised the central bank's key policy interest rates nine times since October 2004 and the cash reserve ratio five times since December 2006 until yesterday.
The level of inflation is unacceptable and the central bank will announce a response in its April 29 monetary policy statement, Reddy said on April 15.
``The cash reserve ratio increase has come at a very right time,'' said Krish Ramkumar, who manages the equivalent of $1.1 billion in Indian debt at Sundaram BNP Paribas Asset Management in Mumbai. ``I still expect the repurchase rate to be hiked to 8 percent from 7.75 percent'' in this month's policy statement.
Yesterday's increase came after several fiscal measures by the government earlier this month, including bans on the export of some food staples such as pulses and types of rice.
Slower Growth
Finance Minister Palaniappan Chidambaram said in parliament this week that apart from fiscal measures, cracking down on hoarding and price cartels, inflationary expectations had to be quelled by reducing liquidity and tempering demand.
India's inflation rate was 7.14 percent in the week ended April 5 from a year earlier, after gaining 7.41 percent in the previous week, the Ministry of Commerce and Industry said in New Delhi yesterday. Economists had expected a 7.23 percent increase.
``The worst seems to be over for inflation,'' said Prasanna Ananthasubramaniam, a fixed-income analyst at ICICI Securities Ltd. in Mumbai. ``Bond yields should peak out now.''
Benchmark bond yields climbed to the highest level since June yesterday after crude oil's surge to a record stoked concern inflation will quicken further. The yield on the 7.99 percent note due July 2017 rose 4 basis points to 8.12 percent at the close in Mumbai. The cash reserve ratio announcement was made after trading ended.
There may be some respite from rising prices if the monsoon forecast is borne out.
India's monsoon rains are expected to be sufficient this year for farmers to plant rice, wheat and oilseeds, Science and Technology Minister Kapil Sibal said April 16. That may reduce the nation's dependence on imports and help stave off pressure on global food prices, which have caused social unrest in 33 countries from Mexico to Yemen.
Thursday, April 17, 2008
LATEST ANNOUNCEMENTS
IL&FS Investsmart to recommend dividend, Board meeting on 29 April 2008
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Petronet LNG recommends dividend
Nuway Organic Naturals India to convene EGM, On 14 April 2008
Visagar Polytex opens new showroom ,At Shree Dungargarh, Bikaner, Rajasthan
Denison Hydraulics India to announce financial results ,Board meeting on 30 April 2008
Hindustan Zinc announces exploration success
KRBL appoints whole time director
Akruti City to announce Q4 results
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Bal Pharma postpones board meeting
Aksh Optifibre to make preferential issue
Stone India to announce financial results
Religare Finvest announces strategic tie-up with Kumar Motors
IFCI to announce financial results
Kamdhenu Ispat allots warrants
Rolta India appoints director
Jindal Steel & Power completes laying down of 400 KVA transmission line from power plant of Jindal Power
GMR Energy acquires 5% stake in Homeland Mining and Energy
SRF to consider buy back of shares
Polaris Software to consider buy back of shares
Manali Petrochemical recommends dividend
Tata Sponge Iron to announce financial results
Sonata Software recommends final dividend
IQMS Software to add 20 additional resources to its KPO services
HB Portfolio to announce financial results
IQMS Software to convene board meeting
Hinduja Ventures to announce financial results
AK Capital Services to announce financial results
India Infoline grants employee stock options
VST Industries recommends dividend
Nagarjuna Agri Tech to convene EGM
Accentia Technologies receives US$ 4.5 million order for its health care receivables management services
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SRF to announce financial results Wendt India to recommend dividend
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Hanung Toys & Textiles signs MOU with Chinese company
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Industrial Development Bank of India to announce financial results
Bhuwalka Steel Industries acquires equity shares of Benaka Sponge Iron
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Cipla to announce Q4 results
Provogue India to increase authorised capital
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R Systems International to announce financial results
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Inflation backs off 3-yr peak, risks remain
Indian inflation backed off three-year peaks in early April, but many analysts expect it to hold at elevated levels in coming weeks, prompting the central bank to tighten cash conditions.
The wholesale price index rose 7.14 percent in the 12 months to April 5, slightly less than expected and falling from the previous week's rate of 7.41 percent, which was the highest since November 2004.
"The lower-than-expected inflation reading is good news," said Sonal Varma, an economist at Lehman Brothers in Mumbai.
"However, we expect inflation to remain above 7 percent in the coming weeks as risks remain skewed firmly to the upside," Varma said.
"With fiscal and trade measures already in place to tackle inflation, we expect the central bank to keep repo and reverse repo rates unchanged in the April policy because of slowing growth," she said.
"But measures to tighten liquidity cannot be ruled out."
The central bank's next scheduled policy review is on April 29.
Thursday's data showed prices of food articles and metals rising most strongly.
Wholesale inflation has shot up since late last year, more than doubling since November as India, like other countries, felt the impact of soaring oil and food prices.
Policy-makers with state and general elections due this year and next have responded with a flurry of duty cuts and export bans to try to ease price pressures.
Expectations the central bank might also take imminent action helped push the yield on 10-year government bonds to a nine-month high of 8.12 percent on Thursday.
Federal and state bond supplies due next week also contributed the rise in yields, which dipped back to 8.10 percent by 0950 GMT.
The stock market was up 1.5 percent, bolstered mainly by gains in overseas markets.
CENTRAL BANK
The repo rate, through which the central bank lends cash to banks, has remained unchanged for the past year at 7.75 percent.
The cash reserve ratio, which is the proportion of cash that banks have to keep with the central bank, was last raised in November to 7.50 percent.
Reserve Bank of India Governor Yaga Venugopal Reddy said this week that inflation was at unacceptable levels and that inflation pressures were rising faster than anticipated, in part due to sharply higher world food prices.
Inflation struck its three-year high of 7.41 percent at the end of the 2007/08 fiscal year, well above the central bank's comfort zone.
The authority had said it wanted to keep inflation at close to 5 percent by the end of that fiscal year.
Finance Minister Palaniappan Chidambaram said on Wednesday that the government would not hesitate to take tough measures against anyone caught hoarding commodities, and the central bank would take more monetary steps soon to tame inflation.
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.
The wholesale price index rose 7.14 percent in the 12 months to April 5, slightly less than expected and falling from the previous week's rate of 7.41 percent, which was the highest since November 2004.
"The lower-than-expected inflation reading is good news," said Sonal Varma, an economist at Lehman Brothers in Mumbai.
"However, we expect inflation to remain above 7 percent in the coming weeks as risks remain skewed firmly to the upside," Varma said.
"With fiscal and trade measures already in place to tackle inflation, we expect the central bank to keep repo and reverse repo rates unchanged in the April policy because of slowing growth," she said.
"But measures to tighten liquidity cannot be ruled out."
The central bank's next scheduled policy review is on April 29.
Thursday's data showed prices of food articles and metals rising most strongly.
Wholesale inflation has shot up since late last year, more than doubling since November as India, like other countries, felt the impact of soaring oil and food prices.
Policy-makers with state and general elections due this year and next have responded with a flurry of duty cuts and export bans to try to ease price pressures.
Expectations the central bank might also take imminent action helped push the yield on 10-year government bonds to a nine-month high of 8.12 percent on Thursday.
Federal and state bond supplies due next week also contributed the rise in yields, which dipped back to 8.10 percent by 0950 GMT.
The stock market was up 1.5 percent, bolstered mainly by gains in overseas markets.
CENTRAL BANK
The repo rate, through which the central bank lends cash to banks, has remained unchanged for the past year at 7.75 percent.
The cash reserve ratio, which is the proportion of cash that banks have to keep with the central bank, was last raised in November to 7.50 percent.
Reserve Bank of India Governor Yaga Venugopal Reddy said this week that inflation was at unacceptable levels and that inflation pressures were rising faster than anticipated, in part due to sharply higher world food prices.
Inflation struck its three-year high of 7.41 percent at the end of the 2007/08 fiscal year, well above the central bank's comfort zone.
The authority had said it wanted to keep inflation at close to 5 percent by the end of that fiscal year.
Finance Minister Palaniappan Chidambaram said on Wednesday that the government would not hesitate to take tough measures against anyone caught hoarding commodities, and the central bank would take more monetary steps soon to tame inflation.
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.
MARKET UPDATES
- Varun has a major 81% share of the total LPG tonnage (on DWT basis) being transported under Indian flag. VSL with a LPG carrier fleet of 12 is the largest in India in terms of both fleet size and cargo carrying capacity of 351621 dwt and is the second largest global player in the mid-size fully refrigerated LPG carrier fleet with a 14.4% market share on cum basis. VSL has allocated USD 400 million capex for acquisitions of additional vessels and plans to acquire through re-sale to take advantage of strong freight rates. The company has more focus towards high technology offshore vessel to capture the boom in the sector.
- State Bank (Q, N,C,F)* of India and Australia`s Macquarie plan to jointly raise a USD 2 billion fund to invest in infrastructure projects in India.
- Gujarat Industries Power Company (GIPCL) plans to set up a 500 mw lignite-based power plant in Surat.
- Power ministry gives nod to transfer NTPC projects to BHEL.
- Inflation for week-ended April 5 has come out at 7.14% versus 7.41% the previous week, reports CNBC-TV18. CNBC-TV18 Poll had expected it at 7.3%.
Gold hits $950 an ounce after strong US consumer inflation data
Gold futures shot up immediately after the release of the CPI numbers from US, increasing the appeal of the precious metal as a hedge against inflation. Inflation rose in March, the Labor Department reported Wednesday, as energy and food costs gained. After virtually no change in February, the consumer price index in March rose 0.3%. The core CPI, which excludes food and energy costs, rose 0.2% in March -- after no growth in the prior month.The US dollar once again headed towards the historical low levels versus the Euro after poor housing data. The starts fell 11.9% in March to a seasonally adjusted 947,000 annualized units, lowest level of starts since March 1991. Building permits, a leading indicator of housing construction, fell 5.8% to a seasonally adjusted annual rate of 927,000. This is the lowest level of permits since April 1991.Putting additional pressure on the greenback was the higher inflation numbers in Euro Zone. March euro-zone consumer inflation stood at an annual rate of 3.6%.MCX gold futures for the June contract hit the high of Rs 12236 per 10 grams, up Rs 256. it was recently seen quoting at Rs 12195 up Rs 204. The resistance is at 12270 and 12310 levels. The US oil inventories will set the further tone of the prices. Most active June contract on NYMEX is trading up $15.2 at $947.2 per ounce. The upside target is at 954 levels.
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