Wednesday, 26 November 2008


Monday, 24 November 2008

Day Trading Guide 1 - November 25, 2008


The stock is hovering just above the support level of Rs 305. Utilise the declines to buy the stock while maintaining tight stop-loss at Rs 305.


Initiate fresh long-position only if the stock exceeds Rs 1,218 level, with stiff stop-loss.


The near-term outlook is cautious for the stock. Desist trading in this counter for the day.


As long as the stock trades above Rs 660, the outlook remains positive. We recommend a buy with tight stop-loss at Rs 660.

Reliance Capital

After recording a 52-week low of Rs 405 recently, the stock has been gradually trending up, with good volume. We are positive on the stock and recommend a buy.

Reliance Communications

Fresh long-position can be initiated if the stock moves beyond Rs 212, with tight stop-loss.

Reliance Industries

In the last trading session, the stock was choppy and formed a dragonfly doji candlestick pattern indicating bullishness. We recommend a buy.

Satyam Computer

Initiate fresh short-position if the stock penetrates the support level Rs 220, with tight stop-loss.


The stock is experiencing selling pressure at higher levels. Utilise rallies to sell the stock with tight stop-loss at Rs 1178.


Sell the stock in rallies with tight stop-loss at Rs 550.

Source: TheHinduBusinessLine

Indian Oil Corporation (Rs 406.55): Buy

We recommend a buy in Indian Oil Corporation from short-term horizon. It is evident from the charts that Indian Oil Corporation (IOC) has been consolidating sideways in a broad price range between Rs 300 and Rs 450 since this July. After taking support at around Rs 300 in late October, the stock has been on a steady medium-term uptrend within this range. While trending up, the stock breached the 21-day moving average. Subsequently on November 24, IOC reinforced the medium-term uptrend by jumping up by 7 per cent with good volume, penetrating the 50-day moving average. The daily relative strength index (RSI) has entered in to the bullish zone from the neutral region and weekly RSI is rising in the neutral region. Moreover, the moving average convergence and divergence is on the brink of entering the positive territory. Our short-term forecast is bullish for the stock. We expect the stock’s current up move to continue until it hits our price target of Rs 450, which is a key resistance level, in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 385.

Source: TheHinduBusinessLine

‘Property slowdown to have ripple effect’

This can impact economy, says Goldman Sachs.

BL Research Bureau

The ripple effect of a slowing property market is likely to result in a substantial impact on the Indian economy, states a report by the Asia Economics Research Team at Goldman Sachs.

Strong linkages

According to the report, a slowdown in the realty industry results in an inevitable slowdown in construction activity. While construction activity accounts for 7.3 per cent of the GDP, the sector’s multiplier effect would be felt in other industries that account for an estimated 14 per cent of the GDP.

Construction has strong backward linkages to sectors such as iron, steel, cement and forward linkages to segments such as hotels, trade and transport, thus bringing about a ripple effect.

The report estimates that the realty sector along with its linkages will reduce about 0.7 percentage point from India’s GDP in FY09 (compared to previous year) and an additional 0.4 percentage point in FY10.

Drawing parallels

The report also draws parallels to the previous cooling off of the property market in 1996 and the accompanying periods of relatively low economic growth.

It is to be noted that during 1994-95, India’s GDP growth had shot up to 6.4 per cent, a sharp acceleration from the less than 2 per cent growth in 1991-92. The country was also challenged by double digit inflation. Interest rates, then too, were raised to contain the inflation leading to turmoil in the property market and an overall liquidity crunch. With constrained money supply as well as demand, the country’s GDP declined to 4.3 per cent in 1997-98.

According to the Goldman Sachs report, residential real estate prices on an average rose 70 per cent cumulatively over the three years preceding the property bust in 1996 and declined by a cumulative 40 per cent in three years after 1996. The report notes that it took a good five years for the prices to recover from the slump.

Placed in a similar context, residential property prices over the last three years to 2008 have surged by a total of 80 per cent on an average. Inflation-adjusted real estate prices in the four major cities of Delhi, Mumbai, Kolkata and Chennai have also gone past the previous peak in 1996.

The report, released on Monday, suggests that residential property prices in some regions may have to decline by 30 per cent from current levels to improve affordability.

Source: TheHinduBusinessLine

Chidambaram pegs 2008-09 growth rate at 7-8%

New Delhi, Nov. 24 After three years of plus 9 per cent growth in gross domestic product (GDP), India’s growth rate in the current year may moderate to a level between 7 and 8 per cent, the Union Finance Minister, Mr P. Chidambaram, said on Monday.

Addressing economic editors’ conference here, Mr Chidambaram, however, asserted that the country would still be the second fastest growing large economy in the world in the current juncture of global economic slowdown.

The Finance Minister said that the global financial crisis had already impacted the Indian equity and foreign exchange markets, but noted that the macroeconomic impact of the crisis had been muted due to the overall strength of domestic demand and predominantly domestic nature of financing of investment.

Stating that a lot had to be done in the infrastructure sectors — both economic and social – the Finance Minister said that increasing expenditure in the infrastructure sector was an important part of the counter-cyclical measures that were being contemplated to address the impact of the global slowdown.

‘No recession’

Even as India faced a difficult situation on account of the global financial turmoil, which has also affected the country’s money, debt and credit markets, Mr Chidambaram sought to emphasize that India was nowhere near a recession.

“The growth estimate for the first quarter of 2008-09 was 7.9 per cent and the second quarter would, undoubtedly, show high positive growth. Therefore, we must banish the thought of recession,” he said.

The financial crisis that had enveloped the world since 2007 has become worse and many developed countries including Germany, Japan, the UK and the Netherlands were officially in recession.

Many more including the US and France are expected to slip into a recession shortly, Mr Chidambaram noted.

The Finance Minister said that India needs to seize the opportunity to review and revisit pending reforms in the next few years even while insulating to the extent feasible from the adverse changes in the global economic environment.

To a question on infrastructure investment, the Finance Minister noted that efforts would be made to find domestic resources, in the wake of drying up of overseas credit.

He, however, highlighted that India was in talks with the World Bank to double its annual loan assistance to India from the current $3 billion to $6 billion.

FII investments

Meanwhile, on foreign institutional investors (FIIs), Mr Chidambaram said that FII investments in India have turned positive in November 2008, after net selling by them in September and October 2008 due to redemption pressures from abroad.

He expressed hope that the turnaround in November 2008 would be sustained in the coming months also.

On fiscal consolidation, the Finance Minister said that the Government had also provided for more expenditure in the current year as a counter cyclical measure. “As a consequence, we may need one more year to achieve the FRBM target of eliminating the revenue deficit and containing the fiscal deficit to below 3 per cent of GDP,” he said.

On the proposed income tax code, the Finance Minister said that the tax code was ready, but the discussion paper, which is expected to be first placed in public domain, was being finalised.

Source: TheHinduBusinessLine

Accenture staff to work longer hours

Bangalore, Nov. 24 In a bid to boost productivity levels at its India Delivery Centre, Accenture, management consulting, technology services and outsourcing company, plans to increase its work hours by an hour daily from January 1.

The company, in an internal communication to employees, said that after much consultation with the leadership and a careful review of the market place, it has decided to extend the work hour for professionals at its India Delivery Centre for technology from 40 hours to 45 hours a week effective January 1, 2009.

The company told its employees that for the past few months it has been looking at how it can continue to best serve clients while enhancing its competitive positioning, and one of the areas it has been looking at is its work hours.

5-day week

However, Accenture would continue to have a five-day work week. “Doing this (increasing work hours) will enable us to be even more competitive in the market place,” Accenture told its employees.

The India-based competitors of Accenture such as TCS, Infosys and Wipro are now facing uncertain times as customers in the crisis-hit US delay or hold back their spending on deploying new technology, and these vendors are trying to be more competitive.

Accenture officials did not comment on the development. The company employs over 37,000 people across development centres in cities such as Bangalore, Chennai, Hyderabad, Mumbai, Pune and Gurgaon. Its Chairman, Mr Bill Green, said in April that the company would increase India headcount to about 50,000 within a year.

It might be recalled that HCL Technologies Ltd had increased its work hours in October 2006 by 30 minutes from the existing eight-and-a-half hours a day (excluding a half-hour lunch break) to nine hours a day.

The company had said increased work hours will aid employee training besides help the company follow the industry standard of a 45-hour week.

Source: TheHinduBusinessLine

Kingfisher, AI to lower fares

New Delhi, Nov. 24 Domestic flying will become cheaper in the next few days. On Monday night, Kingfisher Airlines announced that it will lower fares.

In a statement, the airline said it will immediately reduce fares across the board as soon as ‘declared goods’ classification is approved for aviation turbine fuel.

Meanwhile, official sources indicated that Air India also is to reduce fares from December 1. In the case of Air India the reduction might be as much as 12 per cent; the exact quantum was being worked out, official sources said.

Currently, ATF accounts for 45-50 per cent of the operating cost of most domestic airlines.

Source: TheHinduBusinessLine

India gold seen up on safe-haven buying, weak rupee

MUMBAI (Reuters) - India's gold futures are expected to rise this week on safe-haven buying, a weak rupee and hopes of a rise in oil prices, analysts said.

"It has outperformed all other assets...liquidity problems are also easing which may bring fresh buying," said Harish Galipelli, head of research, Karvy Comtrade Ltd.

Gold has rallied since a crisis struck global financial institutions, diverting funds away from stocks as investors turned to the safe-haven appeal of the yellow metal.

The benchmark December contract has gained about 11 percent so far in November, while the 30-share BSE Index fell 9 percent during the period.

A weak rupee is also supporting the sentiment, said Debjyoti Chatterjee, associate vice president, MAPE ADMISI Commodity Research.

India, the world's largest gold consumer, imports most of its demand. A weak rupee makes imports costlier and pushes up domestic prices.

Another major indicator would be the OPEC meet on Nov. 29, which may boost the bullion prices further, said Devarsh Vakil, head of research, Anagram Capital Ltd.

Venezuela said on Sunday the Organization of the Petroleum Exporting Countries should cut supply further, while Iran made similar remarks on Monday. OPEC oil ministers meet for informal talks in Cairo on Nov. 29.

FACTBOX - Who's who on Obama's economic team

REUTERS - U.S. President-elect Barack Obama on Monday announced his choice of Timothy Geithner to be the next Treasury secretary, Lawrence Summers to head the National Economic Council and Christina Romer to chair the White House Council of Economic Advisers.

Following are thumbnail sketches of his picks:


Timothy Geithner, 47, has been president of the New York Federal Reserve Bank since November 2003, a post that has put him at the heart of the battle to contain the credit crisis.

He was closely involved in the rescue of Citigroup Inc late on Sunday, as well as the bailout of Bear Stearns and American International Group, and the controversial decision to let Lehman Brothers go bankrupt in September. Panic quickened after that failure and the government was forced to pledge $700 billion of U.S. taxpayer money to backstop U.S. banks.

Geithner already has extensive experience at the Treasury, which he joined in 1988 and where he worked his way up to the influential post of under secretary for international affairs. He held this position from 1998 to 2001 under Secretaries Robert Rubin and Lawrence Summers.

After departing Treasury, Geithner worked at the International Monetary Fund, where he was the director of the Policy Development and Review Department from 2001-03. He has studied Japanese and Chinese language, and has lived in East Africa, India, Thailand, China and Japan.

Geithner has a Masters degree from Johns Hopkins University's School of Advanced International Studies.

The position requires Senate confirmation.


Lawrence Summers, 53, an economics professor at Harvard University, served as Treasury secretary between 1999 and 2001.

He has been picked to head the National Economic Council, a group that advises the president on policy and helps coordinate between different government departments and agencies. The position could give him enormous sway over policy.

Summers has a reputation for brilliance, as well as not suffering fools gladly, and Obama called him "one of the great economic minds of our time" during a news conference on Monday.

"I will rely heavily on his advice as we navigate the uncharted waters of this crisis," Obama said. Summers had been a key Obama economic adviser during the election campaign and some had thought he might get his old job back at Treasury.

Like Geithner, Summers is a time-tested crisis manager who gained experience helping direct the U.S. response to the Asian financial crisis in the late 1990s as the No. 2 Treasury official under Secretary Robert Rubin. Time magazine put Summers, Rubin and Federal Reserve Chairman Alan Greenspan on its cover in 1999 as "The Committee to Save the World."

Summers was president of Harvard between 2001 and 2006. He stepped down amid criticism for remarks about whether innate differences accounted for the fact that more men than women entered science and engineering courses.

He earned a Ph.D. in economics from Harvard in 1982 and taught both there and at the Massachusetts Institute of Technology. He was chief economist at the World Bank between 1991 and 1993.

The position does not require Senate confirmation.


Christina Romer, Obama's pick to chair the White House Council of Economic Advisers, is an economics professor at the University of California, Berkeley and a member of the National Bureau of Economic Research's business cycle dating committee, which is the arbiter of U.S. recessions.

Together with her husband, David Romer, she has written widely on the history of the U.S. economy, the causes of the Great Depression and the impact of fiscal policy.

The Romers published three papers this month alone analyzing U.S. tax policy and its fallout for the economy and government spending. Obama plans a major fiscal stimulus

package to kick-start U.S. growth that he hopes will be enacted once he is inaugurated on Jan. 20, 2009.

The three-member CEA acts as a policy think-tank within the White House and produces an annual economic report for Congress.

Romer got her Ph.D. at MIT in 1985 and taught at Princeton University before moving to Berkeley in 1988, where she has been a professor since 1993.

The position requires Senate confirmation.

Wall St jumps on Citi bailout

NEW YORK (Reuters) - U.S. stocks rallied on Monday as investors applauded the decision by Washington to inject $20 billion into Citigroup in an effort to prevent a bank collapse which could have endangered the global financial system.

Dow component Citigroup, the second-largest U.S. bank, surged over 50 percent to $5.92 and was among the Dow's top-weighted advancers as the bailout plan eased jittery investors' concerns regarding the financial sector. Last week, Citigroup's stock tumbled to its lowest level in about 15 years amid uncertainty over the bank's future.

"The markets love a bailout," said Brian Gendreau, investment strategist at ING Investment in New York. "It seems to have instilled a bit of confidence in the sector itself."

The government's cash infusion for Citi represented the biggest U.S. bank bailout to date, lifting shares of major financial stocks. JPMorgan Chase rose 19 percent to $27.02, while Bank of America surged 24.1 percent to $14.23. The S&P financial index climbed 15.6 percent.

The Dow Jones industrial average ran up 376.97 points, or 4.68 percent, to 8,423.39. The Standard & Poor's 500 Index was rose 49.17 points, or 6.15 percent, to 849.20. The Nasdaq Composite Index was jumped 75.02 points, or 5.42 percent, to 1,459.37.

Wall Street briefly pared gains after President-elect Barack Obama named his economic team, as expected, but did not offer any specific dollar figures or other new details on a stimulus plan,

Shares of iPod maker Apple Inc advanced 12 percent to $92.50 and gave the biggest boost to the Nasdaq 100. Microsoft was up 5.1 percent at $20.67.

Campbell Soup Co, considered a recession-proof play, however, surprised investors with a disappointing full-year profit outlook, citing a stronger U.S. dollar. Campbell Soup's stock slid 7.6 percent to $33.50 on the NYSE.

Xerox Corp shot up 16.6 percent to $6.12 after the world's top supplier of digital printer and document management services forecast 2009 profits generally in line with analysts' expectations due to repeat customers and recent cost-cutting measures.

On the economic front, U.S. existing home sales fell 3.1 percent in October to 4.98 million units, while the median home price dropped to its lowest in more than four years, according to a report from the National Association of Realtors. The 11.3 percent drop in the median home price from October 2007 was the largest price drop on record, the NAR said.

Nevertheless, a Dow Jones index of U.S. home builders' stocks leaped 15.3 percent in late Monday afternoon trading.

Citigroup's rescue followed the disappearance this year of

major Wall Street firms Bear Stearns Cos and Lehman Brothers Holdings Inc, as well as the failure of Washington Mutual Inc, the largest U.S. savings and loan.

In addition to the new capital, Washington effectively guaranteed most of Citi's $306 billion in losses on high-risk assets.

UK sets new econ plan, Obama seeks swift action

CHICAGO (Reuters) - President-elect Barack Obama presented the economic team on Monday that will help him navigate the U.S. financial crisis but declined to specify how much his proposed 2-year stimulus package would cost.

Financial markets fell during the long-awaited announcement as traders were dismayed that Obama did not specify the size of a massive financial stimulus package he said he will roll out in January. Other Democrats have said it could cost hundreds of billions of dollars.

Obama also declined to specify whether he would pursue a tax increase for the wealthy or simply allow the 2001 tax cuts to expire after tax year 2010 as scheduled.

Obama said his team was already working on the details of a package designed to jolt the U.S. economy out of its worst financial crisis since the Great Depression.

"I want to see it enacted right away," he said. "It is going to be of a size and scope that is necessary to get this economy back on track."

Obama, who takes over for President George W. Bush on Jan. 20, announced his economic team at a news conference. The big players on his team were already known.

Timothy Geithner, 47, president of the New York Federal Reserve Bank, will become Treasury secretary, and Lawrence Summers, 53, a former Treasury secretary under President Bill Clinton, will be director of the National Economic Council.

Summers is also a possible successor to Federal Reserve Chairman Ben Bernanke, whose term ends in January 2010.

Obama also named University of California, Berkeley, economics professor Christina Romer to head his Council of Economic Advisors and Melody Barnes to head his Domestic Policy Council. Barnes, a former chief counsel on the Senate Judiciary Committee, was a policy advisor to Obama's presidential campaign.


Obama has backed a bailout for Detroit automakers but said he was disappointed that the chief executives for General Motors Inc., Ford Motor Co., and Chrysler LLC did not present a concrete plan when they testified before Congress next week.

"I think Congress did the right thing, which is to say, 'You guys need to come up with a plan and come back before you are going to get any taxpayer money,'" he said.

The scope of the economic crisis has widened in the 20 days since Obama's White House win. Except for one short news conference, Obama has kept a low public profile since his Nov. 4 victory over Republican John McCain, remaining in Chicago to pick his Cabinet but not formally announcing any of his choices.

By breaking that near-silence with the unveiling of his economic team, Obama signaled the priority he places on addressing the economic meltdown.

U.S. stocks rallied late on Friday after news leaks about Geithner's appointment. They rose again on Monday after the U.S. government agreed to inject $20 billion of new capital into Citigroup Inc., but fell during the press conference.

U.S. government bonds edged up from their lows from the day as stocks pared their gains. The dollar, broadly lower against most currencies, strengthened a bit against the euro.

In Washington, Bush said the government stood ready to help the banking system as it did with Sunday's Citigroup deal.

Bush, speaking after a meeting with Treasury Secretary Henry Paulson, said he had also spoken with Obama about the Citigroup rescue and promised to inform the incoming president and his economic team of any future major decisions.

Buy Bharti Airtel, target of Rs 850: Anand Rathi

Anand Rathi Securities has initiated a buy rating on Bharti Airtel with a target price of Rs 850 in its November 22, 2008 research report. "We believe Bharti offers a rare combination of high quality, solid and visible earnings growth at attractive valuations. The company is best placed to ride regulatory bumps, thanks to its superior scale and strong balance sheet. We initiate with a Buy and Sep ’09 target price of Rs 850," says Anand Rathi's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Rolta India, target of Rs 220: Karvy

Karvy Stock Broking has recommended a buy rating on Rolta India with a target of Rs 220 in its November 24, 2008 research report. "We do not expect the margins take any beating and are likely to stay at the current levels of 36%. Even after factoring M-to-M losses of Rs 900 million (as a result of FCCB) in FY09, the profits at the net level would modestly go down by 2.1%."

"The company is contemplating to reduce its foreign currency loans, and if it does reduces the same the company would be entitled reverse the M-to-M losses in FY10, which would give big boost to its earnings, even if the company writes off goodwill over the next 5 years. We have an BUY rating on the stock with a price target of Rs 220," says Karvy Stock Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Reliance Ind Infra above Rs 324: has recommended to buy Reliance Industrial Infrastructure above Rs 324 with a stoploss of Rs 323 for target of Rs 330-340 and higher than that.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy City Union Bank, target of Rs 31: Karvy

Karvy Stock Broking has maintained its buy rating on City Union Bank with a target of Rs 31 in its November 24, 2008 research report. "Going forward, we believe that lending and deposits rates would further moderate and incidence of slippages due to higher interest rates would decline but due to lesser growth prospects across industries slippages would increase eventually increasing gross NPA."

"We estimate the bank's NIM for FY09 to drift down by 21 bps to 3.1%. We estimate that the bank's total business and bottomline would grow at 23% and 11% CAGR (during 2008-10) and the bank's book value and adjusted book value would be Rs 24 and Rs 22 respectively; we value the bank at 1.42x adjusted book value FY2010 at Rs 31. We re-iterate our BUY rating with a target price of Rs 31," says Karvy Stock Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Indian Oil above Rs 374: has recommended to buy Indian Oil above Rs 374 with a stoploss of Rs 373 for a target of Rs 380-390 and higher than that.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Hindustan Zinc above Rs 336: has recommended to buy Hindustan Zinc above Rs 336 with a stoploss of Rs 335 for target of Rs 344-348 and higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Alstom Projects above Rs 231: has recommended to buy Alstom Projects above Rs 231 with a stoploss of Rs 230 for target of Rs 233-235 and higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Larsen and Toubro on declines: India Infoline

India Infoline has suggested traders to buy Larsen and Toubro on declines with a stoploss of Rs 680 and target of Rs 850 and Rs 900. "We suggest traders to buy the stock at current levels and on declines to support of Rs 720-735 with a stoploss of Rs 680 for target of Rs 850 and Rs 900," says India Infoline's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Opto Circuits India: India Capital Markets

India Capital Markets has maintained its buy rating on Opto Circuits India in its November 24, 2008 research report. "We believe that OCIL with its past strong track record, strong visibility of earnings growth & Cash flow has potential to announce positive surprises by its aggressive acquisition strategy. Hence, We maintain a “BUY” rating on the stock," says India Capital Markets' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Gujarat Alkalies above Rs 62: has recommended to buy Gujarat Alkalies and Chemicals above Rs 62 with a stoploss of Rs 61.50 and target of Rs 63/66/higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Everonn Systems above Rs 259: has recommended to buy Everonn Systems India above Rs 259 with a stoploss of Rs 258 and target of Rs 270/300/ higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Nagarjuna Const above Rs 62.15: has recommended to buy Nagarjuna Construction Co above Rs 62.15 with a stoploss of Rs 61.75 and target of Rs 67/78/higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy GVK Power above Rs 16.70: has recommended to buy GVK Power above Rs 16.70 with a stoploss of Rs 16.25 and target of Rs 17.50/20/higher.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Tata Motors, target of Rs 339: Angel

Angel Broking has maintained its buy rating on Tata Motors with a target price of Rs 339 in its November 24, 2008 research report. "Jaguar Land Rover (JLR) is in secret talks with the UK government for a £1-billion loan and an answer to the request would be made in the next fortnight, a media report said. Tata is looking to the government for a bridging loan to help it over the next 24 months, a period in which the industry will come under further financial pressure when it is difficult to access funding markets, the report added. The economic downturn has hit the auto industry hard and at present a number of large UK-based industrial groups are also considering asking the government for financial support."

"The market for JLR cars has fallen 25% around the world and this could further deteriorate in near term. JLR has already cut shifts and production days at Solihull, Halewood and Castle Bromwich. The Society of Motor Manufacturers and Traders, which is representing the interests of the wider British industry, is thought to want between £2 billion and £3 billion of state aid. Meanwhile, Toyota has also cut shifts at its UK plants, and Bentley, the luxury carmaker majority-owned by Volkswagen of Germany, has cut shifts at its plant in Crewe. We maintain Buy on Tata Motors with Target price of Rs 339," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Accumulate Dabur India, target of Rs 80: Angel

Angel Broking has recommended an accumulate rating on Dabur India with a target price of Rs 80 in its November 24, 2008 research report. "Dabur India has acquired 72.15% of Fem Care Pharma Ltd (FCPL), a leading player in the women’s skin care products market, for Rs 204 crore in an all-cash deal. We believe the acquisition to be a positive move by Dabur, although at a slightly higher cost, as it brings to Dabur a portfolio of well-known household brands that enjoy a strong positioning in their respective categories, offering Dabur a strong platform to enter into newer product categories and markets since it was witnessing a slowdown in its core categories like Toothpaste, Hair Oils and Homecare."

"As with the previous acquisition and subsequent integration of Balsara’s Hygiene and Home products businesses, Fem too would offer substantial synergies for expanding the reach of Fem’s brands in all its geographies as well as better management of overall system costs. This provides Dabur an entry into the high-growth skin care market with an established brand name Fem with further potential to extend the brand into newer and related skin care categories. We recommend Accumulate rating on Dabur with a target price of Rs 80," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Visaka Inds, target of Rs 55: Sunidhi Securities

Sunidhi Securities & Finance has recommended a buy rating on Visaka Industries with a target of Rs 55 in its November 24, 2008 research report. "During Q2FY09, sales have gone up by 27 per cent to Rs 121 crore on whereas net profit was placed at Rs 7 crore against net loss of Rs 2.7 crore in Q2FY08. At the CMP of Rs 36, the share is trading at a P/E of 1.8x on FY09E and 1.5x on FY10E. We recommend BUY with a medium to long term target of Rs 55," says Sunidhi Securities & Finance's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Shanthi Gears, target of Rs 56: LKP Shares

LKP Shares has recommended a buy rating on Shanthi Gears with an one-year price target of Rs 56 in its research report. "H1FY'09 results of SGL were below expectations on the revenue front clearly reflecting the slowdown in core sector demand during the second quarter. However SGL has been able to maintain profitability due to reduction in material costs and better product mix towards customized gears. Given the strong balance sheet and virtually debt-free status we believe that SGL trading at 6xFY'10E is a good investment bet and we recommend a BUY with a one-year price target of Rs 56," says LKP Shares' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Abbott India, target of Rs 540: LKP Shares

LKP Shares has recommended a buy rating on Abbott India with a price target of Rs 540 in its research report. "Given the healthy return ratios and dividend yield of 4.5% we believe that the debt-free Abbott India is making the right moves through the share buy-back to enhance value for its stake holders at a time when growth is hard to come by. We recommend a BUY on the stock with a one-year price target of Rs 540," says LKP Shares' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Natco Pharma: LKP Shares

LKP Shares has recommended a buy rating on Natco Pharma in its research report. "Although the generic launch of Copaxone used in treatment of multiple sclerosis is more than two years away during which Natco could face litigation from Teva as it is a USD 1.5 billion drug, we believe that the signing of the exclusive supply and distribution agreement with Mylan for the generic version of the drug is a huge long-term positive for Natco. Natco trading at half its book value has robust EBIDTA margins of 22% and we are positive on the longterm prospects at 3xFY'09E earnings. We rate the stock as a BUY," says LKP Shares' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Aries Agro, target of Rs 75: LKP Shares

LKP Shares has recommended a buy rating on Aries Agro with one-year target of Rs 75 in its research report. "Aries posted a 23% drop in net profit during H1-FY'09. We recommend a BUY on Aries Agro Ltd based on an expected 65% CAGR growth in net profits over the next two years, which would be driven by a 42% growth in revenues during the same period. Given the positioning of the company in the India centric rural domain of micronutrients with a presence across all states we remain bullish on Aries trading at 2xFY'10E and 1.3xFY'11E earnings. BUY with a one-year price target of Rs 75," says LKP Shares' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Reliance Comm has target of Rs 225-229: Bose

Technical Analyst, Rajat K Bose is of the view that Reliance Communications has target of Rs 225-229.

Bose told CNBC-TV18, "Reliance Communications can actually give a good bounce on the upside. If the Nifty rally continues, I think once Reliance Communication trades above Rs 210, then the next target would be something like Rs 225 to Rs 229. If this rally that I am expecting happens, then Reliance Communications would be one of the stocks that would participate in a big way and it can even move up from the current levels by about 15-20% for a minimum."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

HDFC Bank, Axis Bank looks strong: Srivastava

Ajay Srivastava, Dimensions Consulting is of the view that HDFC Bank and Axis Bank are looking strong in the private banking space.

Srivastava told CNBC-TV18, "As an equity holder, you are taking too many risks with the private sector bank with the certainty that if they have to survive; they have to dilute capital and significant amount of capital they have to dilute and also the uncertainties. The Kotak Bank result, which came out was very iffy, I think HDFC Bank and Axis Bank are the only strong banks in the whole space."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

Do not buy Suzlon Energy: Srivastava

Ajay Srivastava, Dimensions Consulting is of the view that one should not buy Suzlon Energy.

Srivastava told CNBC-TV18, "The question is, are you going to buy Suzlon Energy and the answer is no. The question is if you are there, should you sell, if anybody is looking at making a profit out of it till March quarter then the answer is no, you cannot buy and make a profit and if you are already sitting there on a huge loss then you should just carry it through till the end of next year and see what comes out of it but certainly never a buy at this point of time."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

Idea Cellular has support at Rs 34-38: Mathew

Technical Analyst, E Mathew is of the view that Idea Cellular has support at Rs 31-34.

Mathew told CNBC-TV18, "Bharti has undoubtedly shown resilience. But I know there are a lot of FIIs and mutual fund for whom Bharti is a compulsive buy. But I am not so convinced, I think when the market rallies Bharti would certainly participate in a pullback rally, you could see it go up all the way possibly to even by around Rs 150 but I would not go and give a outright buy on Bharti, may be I would give a trading buy right now. I am really wondering that excitement, which was there in this sector earlier the stock market has surely got discounting mechanism, which tells you something in advance. It is not Bharti alone, if you look at Reliance Communications and now coming in specific to Idea the way that stock broke down below Rs 75-77 was alarming to say the least. Of course that happened in the month of October after some pretty bad results came from Idea, but the way it broke down, I think a long-term investor would have also got perturbed."

He further added, "It has very strong support at Rs 34 and Rs 38. So my advice would be, if the market rallies and you have a rally in the telecom sector a trading rally, one should look to get out of Idea Cellular on a rally and if one is lucky enough to get at the price above Rs 54 and if the stock rallies above Rs 54, it may go back to that level of Rs 75 I think that is the level one should plan to get out of the stock."

Disclosure: Analyst, his family members and his group companies do not have any position in the above stock.

Source: Moneycontrol

Sell Sterlite Industries: Joshi

Sharmila Joshi, VP of Systematix Shares & Stocks is of the view that one can sell Sterlite Industries.

Joshi told CNBC-TV18, "Commodities perhaps not my favourite place to be in just now simply because you probably have more to go in terms of the actual prices falling from here. You haven’t seen the Sterlite numbers yet because the product that they are in the scraps copper but normally see it with a lag. So my overall feeling is that if you have to be in commodity play it might be better to get into the ferrous part of the metal play and shift from non-ferrous to ferrous because you do see first consumption coming into steel. So I think from that perspective I think SAIL would look better than Sterlite."

She further added, "As a sector it’s perhaps not my favourite space to be in. So one should quit this sector and perhaps looks at some other sectors or in some other frontline stocks, which to my mind will move faster than a Sterlite will."

Disclosure: Analyst doesn't hold the above stock.

Source: Moneycontrol

Sell Deccan Chronicle: Joshi

Sharmila Joshi, VP of Systematix Shares & Stocks is of the view that one can sell Deccan Chronicle.

Joshi told CNBC-TV18, "For me Deccan Chronicle would be a sell. I too believe that the news flow coming from Deccan Chronicle whether it was their investment in IPL (Indian Premier League) in the team that they bought which was quite an expensive as well as their rollout in the financial additions that they were to start etc sounded quite exciting. But I do not think it has panned out nor has it shown in numbers plus they have to cut their advertising rates etc, I believe that in the cricket team also they would like to sell their 80% investment stake. So I do not think this is the stock to invest in at this point in time. So I would recommend a sell at this point in time."

Disclosure: Analyst doesn't hold the above stock.

Source: Moneycontrol

Enter BHEL: Joshi

Sharmila Joshi, VP of Systematix Shares & Stocks is of the view that one can enter in BHEL.

Joshi told CNBC-TV18, "BHEL is supplying largely to the power sector and the kind of order book that they have, as well as the kind of valuations that you are getting the stock at currently, to my mind the market has given you a chance to enter this stock at a valuation like this. So I don’t think we can expect the kind of run away valuations that we saw but I still think that from this price you can make decent gains. So I do like BHEL at the current price."

Disclosure: Analyst doesn't hold the above stock.

Bhambwani bearish on Unitech, Suzlon

Technical Analyst, Vijay Bhambwani is bearish on Unitech and Suzlon Energy.

Bhambwani told CNBC-TV18, "I am bearish on Unitech and Suzlon. Real estate sector per say is itself has some more way to go down before one could actually see some floor supports being made out there but that floor is far away and the sector is likely to see some more unwinding and underperformance the broader markets in the coming quarter or two."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.

Source: Moneycontrol

Below Rs 190, DLF can slip to Rs 90: N Pillai

Neppolian Pillai of Modern Shares & Stock Brokers is of the view that below Rs 190, DLF can slip to Rs 90.

Pillai told CNBC-TV18, "Unitech and DLF are not looking good because I believe the paper asset slips faster so we have seen the share prices of real estate companies collapse already about 80%-90% from their top but for the physical assets, they will take time to collapse and unless the real estate prices crashes another 30%-40%, I don’t think these stocks are going to look up, level wise.

He further added, "If Unitech slips below Rs 26 which is where the 200 day month averages are, then once it goes below that just don’t forget calculating the lower level I think its going to completely give up its strength below that if not it has already given up and DLF is very crucial level today at around Rs 190 and if it goes below that its going to fall another Rs 100 to about Rs 90 levels, so their up move is going to coincide with the larger correction within the physical asset prices and whenever they crash that’s when the stocks will bottom out, so there is a long way to go because the builders are holding on to their prices and not cutting enough and only when that happens these stocks will look up."

Source: Moneycontrol

See FY09 growth moderating at 7-8% range: FM

Finance Minister P Chidambaram said he expects moderation in growth as well as capital flows due to the financial crisis. According to him, while growth will moderate between 7% and 8%. However, he feels India is nowhere close to a recession despite the crisis having worsened and expects the GDP to return to 9% once the global situation stabilizes. He believes the economy would rebound in H2 of calender 2009.

Speaking at a press conference, the Finance Minister said he expects to contain the FY09 fiscal deficit within the 3% target despite the debt waiver and pay hike.

On a more optimistic note, the Finiance Minister added that he expects the economic fundamentals in India will continue to inspire confidence and added that there has been a marked change in the way India is viewed both within and outside the country. He believes the impact of global crisis on India was muted due to firm local demand.

Chidambaram said that the government has managed to curtail inflation substantially with fiscal and monetary measures. "RBI's policy is biased towards stimulating growth. If inflation declines further rates may also decline."

Accordin to Chidambaram, PSU Banks are seriously evaluating and consolidation strategies and feels banks are slow in disbursing funds to core sector projects. He sees the Fiscal Responsibility and Budget Management (FRBM) targets being achieved only after another year.

"We will introduce bill to get AFT as "declared goods" status in the coming session of Parliament"

Source: Moneycontrol

Obama's economic stimulus plan

Nov 22 - U.S President-elect Barack Obama says his two year stimulus plan will create millions of jobs.

This was the first time that the U.S President- elect went into such detail about the status of the troubled U.S economy. His proposals for a two year plan indicate the large effort involved in reviving the ailing economy.

He said the plan would create around 2.5 million more jobs by 2010. The Labor Department announced that unemployment has reached its highest levels in 16 years.

- Reuters

Boom turns to gloom as crisis hits Dubai

DUBAI (Reuters) - The seaside emirate of Dubai shifted into crisis mode this week as its breakneck building boom stalled, its lending bonanza evaporated and the government pondered wider steps to rescue banks.

Dubai -- self-styled bling capital of the Middle East, nightclub hotspot for the teetotalling Gulf and home to the world's tallest building and biggest mall -- has gone pear-shaped.

"It's gotten pretty ugly out there," analysts at Nomura Investment Banking wrote in a note this week, describing Dubai's property market as "a full-scale frenzy in which speculation went largely unchecked until it was very late."

The result may be a new business model for the emirate, one based less on debt and speculation.

Dubai's response is now being hammered out by a committee of business and government leaders charged with steering the emirate through the crisis and perhaps throwing its high-debt business model out the window.

Big developers have started firing staff and paring projects, banks like Emirates NBD ENBD.DU have blocked consumer credit to employees of companies at risk, and at least one major mortgage company has stopped lending altogether.

"Lenders blinded by rising oil prices and borrowers spellbound by easy returns have helped build a mountain of private sector debt in parts of the region that has generated an illusion of excess and abundance," Nomura said.

Now, investors fear that individuals and corporations alike will have trouble paying back Dubai's non-bank foreign currency debt estimated at just under $70 billion, according to estimates by ratings agency Fitch.

Shares in the region have lost around $1 trillion since the beginning of the year as investors fled. The UAE finance ministry said last month it would inject 70 billion dirhams ($19 billion) into the banking system, and is already looking at doing more to keep interbank liquidity flowing.

Many had hoped that the six countries of the Gulf Cooperation Council (GCC) would escape the crisis due to their massive current account surpluses from energy exports.

"Dubai is the most vulnerable, as it has little oil and has been booming on the oil surpluses from the GCC, Iran and Russia," said analysts at Citibank this week.


Dubai Inc. -- the name applied to the emirate because it is run more as a business than a state -- now faces a major overhaul and has taken on teams of consultants to advise on how it might reshape itself in an era of weaker credit, rising competition, falling speculation and narrower profit margins.

With barely any oil to call its own within the loose UAE confederation, Dubai made its bid for fame by housing banks, retail, media, shipping and logistics enterprises and by billing itself as a safe haven in a volatile region for investors.

Post-crisis, banks and property firms are likely to merge, developers retrench, and the wild culture of speculation grow tame.

"The solution is a comprehensive effort to consolidate the myriad of companies that make up Dubai Inc.," Citibank said.

In addition, some suggest that the monetary regimes in the Gulf -- all, except Kuwait, which peg their currencies to the dollar -- may need to restructure as floating regimes instead, a move likely to spur decades-old goals of monetary union.

Few anticipate default given the widespread view that Dubai is too big to fail and the implicit support provided by its neighbor Abu Dhabi -- home to the largest sovereign wealth fund in the world, ADIA.

"We believe Dubai will pull through with some help," Citibank said.

But with the cost of credit for the Gulf's top 22 financial firms rising from 30 basis points over LIBOR in early 2007 to around 200 now, many expect Dubai's spree to halt, plans to be swept from the drawing board, and existing projects to struggle.

The result, in the end, may be the sustainable growth model that Dubai has sought all along.

Fraud detected more often at bankrupt companies

NEW YORK (Reuters) - Bankrupt companies are three times more likely to have been cited for fraud by U.S. regulators, according to a study released on Monday.

The study from Deloitte Financial Advisory Services LLP DLTE.UL also showed that fraud incidents were much more likely to land a company in bankruptcy court.

"Many of the companies that commit financial statement fraud are dealing with adverse performance issues and committing fraud to cover those up," said Toby Bishop, director of the Deloitte Forensic Center. "A significant proportion of them -- 20 percent -- will end up filing for Chapter 11 (bankruptcy protection)."

Fraud-linked bankruptcies like Enron, WorldCom and Adelphia have kept U.S. courts busy for years, and the study revealed that companies that are cited for financial-statement fraud were twice as likely to file for bankruptcy as those that were not cited.

The study tracked companies with annual revenues of more than $100 million, comparing 519 bankrupt companies to a group of 2,919 non-bankrupt companies from about 2000 through 2007.

About 9 percent of the bankrupt companies were the subject of enforcement actions reported by the U.S. Securities and Exchange Commission, compared with 3 percent of the nonbankrupt companies.

"There are two distinct groups of people who are engaging in these frauds -- people who are attempting to prop up the company in the hopes that the bank gives them more liquidity ... and those that are doing it more for their own personal benefit," said Sheila Smith, head of reorganization services at Deloitte.

Smith said it was not clear whether employees at bankrupt companies are more likely to commit fraud or whether the microscope of bankruptcy makes it easier for regulators to detect it.

The most common type of fraud detected at both bankrupt and nonbankrupt companies was improper revenue recognition.

"Generally revenue is monitored closely by analysts and investors," Bishop said, "and achieving expectations in that area is a high priority to management."

Improper disclosures and manipulation of expenses also showed up frequently in both groups.

In the study, consumer companies received the most SEC enforcement actions, at about 30 percent, followed by telecommunications, media and technology at about 27 percent.

Of those companies that received enforcement actions, about 50 percent of the consumer group filed for Chapter 11 bankruptcy protection, compared with about 30 percent of those in the telecommunications, media and technology sector.


A long history of fraud at a company also had a strong link with bankruptcy, according to the study. Bankrupt companies were twice as likely as nonbankrupt ones to have more than 10 fraud schemes in their corporate history.

That was particularly true for bigger companies. Bankrupt companies with annual revenues of more than $10 billion had about 10.8 fraud schemes on average, while those with annual revenues between $100 million and $10 billion averaged 4.3, the study showed.

In fact, WorldCom and Enron, where top company executives were convicted of fraud, are among the five largest U.S. bankruptcy cases ever filed in the United States, according to tracking firm WorldCom held more than $100 billion in assets when it filed for bankruptcy in 2002, while Enron held more than $65 billion in assets at the time of its filing in 2001.

While it may be tempting for companies to cut back on support staff during tough economic times, Bishop said the link between fraud and bankruptcy showed that they could risk their whole business by loosening their focus on fraud detection efforts.

"This is the time when those efforts are more important than ever because of the heightened risk of people giving into the economic pressures and committing fraud," Bishop said. "Companies have to devote extra effort to that risk."

India business, politics confront global slowdown

NEW DELHI (Reuters) - India has seen 9 percent-plus economic growth for the past three years and many thought it would remain relatively immune to the global financial crisis and the subsequent slowdown.

Earlier self-assurance that India's domestic-driven economy would ride out a storm in global financial markets has dwindled as foreign investors rushed to pull out their money, credit markets ground to a halt and a business boom ran out of steam.

The stock market has tumbled by more than half this year, the rupee is at record lows and all the signs now point to a sharper slowdown than most were anticipating.

Highlighting the speed at which things have changed, Citigroup has twice cut its growth forecasts for India in the space of a month. It now sees growth in 2008/09 at 6.8 percent even with aggressive interest rates cuts.

"Unfortunately, over the past few weeks, incremental data both on the domestic and global front has been worse than anticipated. At this juncture, data points to a marked slowdown in consumption and investment," the bank's analysts said

Corporate expansion plans, capital raising and partial privatizations by the government have all had to go on hold as investors, foreign and domestic, have run scared before the storm which has ripped through financial markets worldwide.

Reuters is holding its third annual India Investment Summit on November 24-26 to examine what the slowdown means for outsourcing, mergers and acquisitions, and for national elections due by May of next year.

Prime Minister Manmohan Singh said on Friday the government would spare no policy tool to deal with the crisis, be it fiscal, monetary, exchange rate or public investment, to give industry confidence.

"All will be deployed to ensure an environment conducive to the growth of enterprise and encouragement of the spirit of adventure and enterprise," Singh said.

Politicians too face a tough year, with national elections due in early 2009 after a difficult 12 months, first of soaring inflation and then of global economic turmoil.

As part of the summit, opposition politician Arun Shourie has already told Reuters India needs to restore confidence by helping struggling industries, boosting infrastructure spending and dramatically improving the country's governance.

Shourie, privatization minister in the previous Bharatiya Janata Party-led government, said his party would not be as slow as the present administration to tackle the crisis.

Vedika Bhandarkar, head of investment banking at JP Morgan (JPM.N: Quote, Profile, Research, Stock Buzz) in India, and Manisha Girotra, her counterpart at UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), will give their views of the outlook for the country's banking industry as M&A activity turns from outbound to inbound, while a view on the prospects for private equity will come from Blackstone country head Akhil Gupta.

Genpact (G.N: Quote, Profile, Research, Stock Buzz) chief executive Pramod Bhasin and senior executives from IBM India (IBM.N: Quote, Profile, Research, Stock Buzz), Wipro (WIPR.BO: Quote, Profile, Research, Stock Buzz) and Infosys BPO, a unit of Infosys Technologies (INFY.BO: Quote, Profile, Research, Stock Buzz), will give the views of the software services and back-office industries as their customers confront the global slowdown.

U.S. bails out Citi with $20 billion capital, guarantees

NEW YORK (Reuters) - The U.S. government has bailed out Citigroup Inc, agreeing to shoulder most of the potential losses on $306 billion of high-risk assets and inject $20 billion of new capital in its biggest move yet to rescue a bank.

The action marks the latest government effort to contain a widening financial meltdown that has caused the disappearance or bankruptcies of companies including Bear Stearns Cos, Lehman Brothers Holdings Inc and Washington Mutual Inc.

Shares of Citi surged 55 percent to $5.83 in electronic trading before the opening bell in New York. The price of insuring $10 million of Citi bonds through credit-default swaps fell by about half to $257,000 per year.

"Clearly, this will stabilize the (banks) group near term, and the stocks this morning should reflect it," Oppenheimer & Co analyst Meredith Whitney said. "We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation."

Whitney, an early critic of the bank, rates the shares as "underperform." Citigroup's stock is still down from $8.90 a week ago and 87 percent this year.


The government's $20 billion of new capital comes on top of $25 billion it had put into the bank, and it will receive preferred shares with an 8 percent dividend in return.

Citigroup received the latest infusion after its shares plunged 60 percent last week to $3.77, amid worry it lacked enough capital to survive. The bank estimated $40 billion of capital benefits, partially from the government guarantee.

In return for the bailout, Citigroup's dividend will be effectively wiped out. The bank cannot pay out more than 1 cent per share per quarter over the next three years without government consent. The quarterly dividend is now 16 cents.

"It looks enormous in size and scope," said Tony Morriss, senior currency strategist at ANZ Bank in Sydney. "Does this mean support for other financial institutions will be this big? Does this mean there will be more problems around calculation of so-called toxic assets?"

Citigroup has the farthest international reach of any U.S. bank, with operations in more than 100 countries. The bank was widely perceived to be too big to be allowed to fail, because any collapse could cause financial havoc around the globe.

"To stabilize the equity, we had to put behind us the issue of Citigroup's ability to withstand whatever would come," Chief Financial Officer Gary Crittenden said in an interview.

The New York-based bank will try to modify troubled mortgages in the $306 billion portfolio as the government tries to keep homeowners out of foreclosure.

Chief Executive Vikram Pandit and other top management will keep their jobs, but the government will have the final say on executive pay. More details on compensation may come next week, government officials said.

Not all investors were pleased. "You're seeing an inept management team being rewarded by the U.S. government," said William Smith, chief executive of Smith Asset Management in New York, which owns Citigroup stock.


If it works, the package may become a template for other U.S. banks expected to face growing losses as the economy sinks into recession. Credit losses, once concentrated in mortgages, are already bleeding into other areas such as credit cards and commercial real estate.

The rescue further magnifies the U.S. government's burden, following bailouts of American International Group Inc, Bear, Fannie Mae and Freddie Mac, and the injection of hundreds of billions of dollars into banks and other financial institutions.

Well over $1 trillion of taxpayer money is at risk, and the Big Three automakers in Detroit are seeking billions more to avert bankruptcy.

The administration of President-elect Barack Obama may also propose a $500 billion to $700 billion economic stimulus.

Citigroup agreed to absorb the first $29 billion of losses on the $306 billion portfolio, plus 10 percent of additional losses, for a maximum total exposure of $56.7 billion.

The Treasury Department could end up absorbing $5 billion of losses, the Federal Deposit Insurance Corp $10 billion, and the Federal Reserve the rest.

The Treasury Department will get $24 billion of preferred shares and the FDIC $3 billion. Of the combined amount, $7 billion constitutes a fee for the government guarantees. The government will also receive warrants to buy $2.7 billion of common stock, comprising about 254 million shares at $10.61 each.

Citigroup estimated the injection will give it a Tier-1 capital ratio of 14.8 percent, more than twice what the government requires. The bank said it will also get increased access to the Fed's discount window, adding liquidity.

The Fed, the Treasury Department and the FDIC called the actions "necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy."

The government announced the package less than a week after Pandit set plans to reduce Citigroup's workforce to 300,000 by early next year from 375,000 at the end of 2007.


Earlier this month, U.S. Treasury Secretary Henry Paulson said the $700 billion industry rescue package would instead be used as a means to provide direct capital injections to banks.

That decision hit Citigroup hard, and the bank's problems were compounded by the tens of billions of dollars of assets that it decided to buy back or move onto its balance sheet.

Citigroup's market value on Friday was just $20.5 billion, down from more than $270 billion two years ago -- and even below the $25 billion initial capital injection.

In Europe, Citi's shares soared on the news of the rescue. In Frankfurt, the bank's shares were up 41.89 percent at 4.2 euros at 0819 GMT.

FACTBOX: Five facts about Citigroup

NEW YORK (Reuters) - Citigroup Inc is looking at putting risky assets in a government-supported "bad bank" -- a step to reassure investors that the rest of its assets were safe, reports said on Sunday.

Following are five facts about Citigroup, whose shares have plummeted 87 percent so far this year.

* City Bank of New York opened for business in New York City on June 16, 1812 with $2 million in capital. Today, Citigroup is New York City's second largest private employer.

* Citicorp merged with financier Sanford Weill's Travelers Group -- itself a combination of insurer Travelers, brokerages Salomon Brothers and Smith Barney and financial planner Primerica -- in 1998.

* Citigroup has 200 million customers in more than 100 countries across six continents. It is the world's largest provider of credit cards.

* Citigroup was the world's largest bank by market value as recently as 2007, when it was worth more than $250 billion. At Friday's close it was worth just $20.5 billion, making it smaller than each of Canada's top three banks.

* Citigroup had been the top U.S. bank by assets until it was overtaken by JPMorgan Chase & Co in October. Citigroup ended September with $2.05 trillion in assets, compared with $2.25 trillion at JPMorgan.

Zimbabwe may soon collapse, say Annan, Carter

JOHANNESBURG (Reuters) - Zimbabwe could soon collapse due to a political and economic crisis, South Africa's ANC leader Jacob Zuma said on Monday, setting out the opinion of prominent figures including former U.N. Secretary-General Kofi Annan.

"They believe the situation is very bad. They believe things could collapse in a few months time in Zimbabwe," Zuma told reporters after meeting Annan, former U.S. President Jimmy Carter and other prominent figures.

Annan, Carter and human rights champion Graca Machel, who is Nelson Mandela's wife, are part of a group of prominent figures and former statesmen called The Elders. They were barred by Zimbabwe from visiting to assess a humanitarian crisis there this weekend.

A cholera outbreak that has killed at least 294 people has seen hundreds of Zimbabweans infected with the disease streaming across the South African border to seek treatment, South African media reported on Monday.

The power struggle between President Robert Mugabe and MDC leader Morgan Tsvangirai has overshadowed daily hardships including food and fuel shortages and hyperinflation that have driven millions of Zimbabweans out of the country and strained regional economies.

Mugabe's ruling ZANU-PF, the Movement for Democratic Change (MDC) and a smaller MDC faction will meet former South African President Thabo Mbeki on Tuesday to seek a breakthrough in stalled power-sharing talks, South African President Kgalema Motlanthe said.

"The agreement is they will meet as of tomorrow and the facilitation team is working on that basis," Motlanthe told reporters after meeting Annan and Carter.

ANC leader Zuma said it was clear that Zimbabwe's crisis had deteriorated to such an extent that there was an urgent need for action.

"The situation has gone (beyond) where we could say 'wait and see'," he said, adding the ANC will be sending a delegation to Zimbabwe to assess the situation in the country.

"We are pleading for the leadership (of the ruling party and opposition) for the sake of the people to find a solution that would help them move forward," Zuma said.

Doubts have grown over Zimbabwe's Sept. 15 power-sharing agreement and Mugabe is trying to push through a constitutional amendment allowing him to name a cabinet alone, which could lead to the unravelling of the deal with the opposition.

Tsvangirai has refused to enter the government, accusing Mugabe of trying to grab the powerful ministries. The main obstacle in talks is the issue of who runs the home affairs ministry, which oversees the police.

StanChart plans $3 bln rights issue - source

SINGAPORE (Reuters) - Asia-focussed bank Standard Chartered is likely to announce later on Monday it plans to offer a $3 billion rights issue, a source familiar with the plan told Reuters.

"The announcement will be likely made later today about the rights issue," said the source, who asked not to be identified because the deal is not public.

Temasek declined comment.

Singapore state investor Temasek Holdings, which owns a 19 percent stake in the UK-based lender, is considering whether it should participate in the rights issue, the source said.

It was unclear if Temasek will raise its stake or buy shares in order to avoid a dilution.

BSE Sensex eases in choppy trade, Citi plan helps

MUMBAI (Reuters) – The BSE Sensex shed 0.14 percent on Monday in choppy trade, with the U.S. government's rescue package for the troubled Citigroup bolstering the market after it fell sharply at the start.

Traders said the $306 billion deal to help Citigroup tackle some of its toxic debt calmed worries the U.S. bank may come under pressure to liquidate some of its large holdings in Indian companies.

However, investors were unwilling to build positions just yet with the outlook marred by concerns of an economic slowdown and as the central bank dragged its feet on an expected easing of monetary policy to support growth.

Financial stocks such as State Bank of India , ICICI Bank and HDFC Bank led the fall as traders had been expecting an interest rate cut over the weekend but it failed to materialise.

"Despite the rescue of Citi by the U.S. government, there is no respite for markets. It is the broader crisis that is engulfing the global economy," said Hitesh Agrawal, head of research at Angel Broking.

"Only time can solve the situation," he said.

Finance Minister Palaniappan Chidambaram said on Monday India's monetary policy was now biased towards stimulating growth in the face of the global financial crisis and the Reserve Bank of India (RBI) would lower rates once inflation starts slowing.

Addressing economic editors in New Delhi, he said the government may have to revisit and revive pending reforms and hoped credit flows to improve by the end of November or December.

The 30-share BSE index ended down 12.09 points at 8,903.12. It fell more than 2 percent early and rebounded to be up over 1 percent after the Citigroup rescue plan was announced, only to backtrack later.

Jigar Shah, senior vice president at Kim Eng Securities, said Citigroup held stake in mortgage firm Housing Development Finance Corp and was a key client for outsourcer Tata Consultancy Services.

"So if Citi had a problem, these companies could also have been affected," he said.

The U.S. government agreed to prop up Citigroup, with more than $300 billion to avoid a collapse that could have wrought financial havoc around the globe.

HDFC fell 1.84 percent to 1,373.60 rupees.

Software exporters added small gains after the bailout of Citigroup. Banks are key clients of Indian outsourcing firms.

Tata Consultancy Services rose 2.8 percent to 520.70 rupees and Infosys Technologies gained 1 percent to 1,196.20 rupees.

The BSE index, which has fallen for eight of the last nine sessions, has lost 56.1 percent so far this year, making it among the worst performers in Asia.

Seventeen of its components fell, while in the broader market losers led gainers 1,386 to 1,065 on moderate volume of 223 million shares.

The 50-share NSE index ended 0.55 percent up at 2,708.25 points.

State Bank of India, the country's largest lender, fell 3 percent to 1,147.30 rupees, while smaller rivals ICICI Bank shed 3.9 percent to 322.55 rupees and HDFC Bank fell 2.9 perccent to 831.55 rupees.

India's RBI has cut its main lending rate by 150 basis points to 7.5 percent in the past two months, and slashed banks' cash reserve requirement by 350 basis points to 5.5 percent, but consumer spending has remained sluggish.

Annual inflation was at 8.90 percent in early November, sharply down from a peak of 12.91 percent in August, helped by falling prices of commodities and crude oil.

Metal producer Sterlite Industries dropped 1.9 percent to 214.60 rupees after a company official said it expected a month-long shutdown at a copper smelter in south India, after a breakdown.


* Steel billet maker Godawari Power & Ispat fell more than 8 percent to 59.9 rupees, its lowest since June 2006, after the firm said it withdrew a proposal to buy back shares to conserve cash. The firm has also cut production of steel billets

and ferro alloys until further review.

* Fem Care Pharma Ltd closed 5 percent higher at 692 rupees after Dabur India said it had bought a 72.15 percent stake and would make an open offer for another 20 percent in line with takeover rules.


* Unitech at 16.6 million shares

* GVK Power at 12.0 million shares

* Suzlon Energy at 10.9 million shares

President-elect Obama moves to reassure mkts

WASHINGTON/LIMA (Reuters) - U.S. President-elect Barack Obama moved to reassure an anxious world over the weekend even before he takes office, picking two respected policymakers to lead the fight against the global financial crisis and setting out his battle plan.

Obama, who will inherit the worst economic mess since the Great Depression when he takes over from President George W. Bush on Jan. 20, plans to nominate Timothy Geithner, president of the New York Federal Reserve Bank, as Treasury secretary, a transition official said.

Geithner, 47, will lead the United States' $700 billion bailout plan for the financial industry.

Lawrence Summers, 53, who was Treasury secretary in the Clinton administration, will help shape policy as director of the White House National Economic Council, the official said.

The appointments should bring some cheer to the furrowed brows in world markets. U.S. stock prices, pummelled for most of last week, rallied more than 6 percent on Friday after word first leaked out that Geithner might take the helm at Treasury.

On Saturday, Obama laid out plans for a two-year economic stimulus package involving the creation of 2.5 million jobs.

He may also consider delaying a roll back in tax cuts on high-income Americans -- an election promise -- as part of his economic recovery strategy, aides said on Sunday.

"The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again, and that's where we're going to be focused in January," senior Obama adviser David Axelrod told Fox news channel.

In the latest international huddle to tackle the crisis, Asian and American leaders meeting in Lima, Peru pledged to push for a so-far elusive global free trade deal which they said would help keep the world from sliding into a deep recession.

Bush, Chinese President Hu Jintao, Japanese Prime Minister Taro Aso and other members of the Asia-Pacific Economic Cooperation group, or APEC, said they would refrain from raising trade barriers over the next 12 months.

They also supported overhauls of the International Monetary Fund (IMF) and the World Bank at a time when more countries need emergency bailouts to avert economic devastation.

"The current situation highlights the importance of ongoing financial sector reforms in our economies," the leaders said in a statement.

They committed to try to reach a breakthrough in the stalled Doha round of trade talks before the end of this year.

China's Hu said leaders must pay attention to the impact of the crisis on the developing world and provide it with support.

Japan was expected to reiterate an offer to give $100 billion to the IMF to prod other countries to chip in funds.


Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon blamed the United States for starting the crisis and called for better banking regulations.

In other developments, Britain prepared plans to inject billions of pounds into the economy to stave off recession amid slumping house prices, rising unemployment, and shrinking manufacturing output.

Finance Minister Alistair Darling will unveil the package of tax cuts and extra public spending expected to total up to 20 billion pounds ($30 billion) on Monday, newspapers said.

A cut in the so-called value added tax or VAT, is aimed at giving a pre-Christmas boost to consumers' spending power.

"Doing nothing is not an option," Prime Minister Gordon Brown said in a speech he will give to businessmen on Monday. "We need timely action now to prevent permanent damage."


China also planned more ways to support its economy, now showing signs of being infected by the crisis after years of extraordinary growth.

State television said provincial governments have made plans to invest a total of more than 10 trillion yuan ($1.5 trillion) over the next several years. It was unclear whether that would be on top of a 4 trillion yuan stimulus package announced by the central government earlier this month.

South Korean officials said they had further policy options to combat the global downturn, putting pressure on the central bank to cut interest rates in Asia's fourth-largest economy.

"We need financial support for small companies and exporters," Prime Minister Han Seung-soo said.

In the Gulf, also feeling the crisis despite its oil riches, Saudi Arabia's central bank slashed its benchmark lending rate from 4 percent to 3 percent, the second reduction in a month to keep credit markets moving and boost liquidity.

In Cairo, President Hosni Mubarak said Egypt's already-wide budget deficit would increase as it spends more to avert economic slowdown. He called for cheaper credit to boost the economy.

WASHINGTON/LONDON (Reuters) - The United States agreed to inject $20 billion of new capital to rescue one of the world's top banks and European leaders said on Monday they would stand by European industry, especially the automobile sector.

Washington, also under pressure to rescue its own ailing motor industry, effectively guaranteed most of Citigroup Inc's, potential $306 billion losses on high-risk assets. It was the biggest bank bailout yet and a measure of the crisis sweeping the world.

The Gulf emirate of Dubai, home to a new luxury mega-resort built on a manmade palm-shaped island visible from space, announced it was reining in a building spree symbolic of extravagant boom years leading up to the current crisis.

The United Arab Emirates began to bail out Dubai's lenders and consolidate its financial sector.

Concerns Europe has entered a deep recession that could last well into next year were reinforced when a key survey of German corporate sentiment hit its lowest level in nearly 16 years in November.

French President Nicolas Sarkozy said after talks with German Chancellor Angela Merkel their "determination to help European industry and notably the automobile industry is total".

The Citigroup intervention had been widely expected in some form, but Asian markets trimmed losses, while European stocks rose 4 percent on news the U.S. Treasury would not allow the number two U.S. bank to fail in the way of rival Lehman Brothers.

U.S. stock index futures pointed to a higher opening on Wall Street. S&P 500 futures were up one percent.

"The move will help the markets not implode today," said Rory Robertson, interest rate strategist at Macquarie in Sydney.

"It's all good stuff but the fact that the Fed has to bail out one of the biggest banks in the world is not exactly a vote of confidence."

Citigroup has the farthest international reach of any U.S. bank, with operations in more than 100 countries. The bank was widely felt to be too big to be allowed to fail.

The plan calls for Citigroup, America's second-biggest bank, to issue $27 billion in preferred shares to the U.S. Treasury and the Federal Deposit Insurance Corp.

The Fed, Treasury and FDIC in return will shoulder most of the potential losses on Citigroup's $306 billion portfolio of debt assets, beyond an initial $29 billion in losses which Citigroup would be responsible for.

"The U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the Federal Reserve, the Treasury Department and FDIC said in a joint statement.


Citigroup, whose shares slumped 60 percent last week, was not the only bank having to raise more funds.

Asian-focused UK bank Standard Chartered said it planned a $2.7 billion rights issue to boost its capital reserves, while other banks were also expected to raise money.

Government sources said Turkey was still talking with the International Monetary Fund on the scale of a new loan accord. Turkey is not under the same strains that have forced other emerging markets countries to seek IMF aid, but has begun to see a sharp slowdown in its $700 billion economy and its currency has lost a third of its value in two months.

The global financial crisis has torn through the Arab Peninsula, until recently thought immune due to massive sovereign savings and earnings from energy exports, with almost the same violence as in Europe and North America.

In a major policy shift, the United Arab Emirates federal government will inject capital into its Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel, a leading official said.

A cash injection would represent the first big step by the federal government, dominated by the conservative oil-exporting emirate of Abu Dhabi, to bail out high-flying banks in neighbouring Dubai, suffering under the global crisis.

The Munich-based Ifo economic research institute said its German business climate index, based on a monthly poll of around 7,000 firms, declined to 85.8 in November from 90.2 in October, the biggest month-on-month drop since Sept. 11, 2001.

"It seems as if a wildfire is running through the German economy at enormous speed," said Carsten Brzeski, an economist at ING Financial Markets. "If you think the third quarter was bad, just wait for the fourth quarter. It might be a disaster."


Aides said U.S. President-elect Barack Obama was considering delaying a campaign promise to rescind tax cuts on high-income Americans, while the British government was set to announce a stimulus package including temporary tax cuts. Obama, who takes over from President George W. Bush on Jan. 20, is ready to announce his top economic team on Monday, holding a news conference at 11 a.m. in Chicago (1700 GMT).

He plans to nominate Timothy Geithner, president of the New York Federal Reserve Bank, as Treasury secretary, a transition official said. Lawrence Summers, 53, Treasury secretary in the Clinton administration, will help shape policy as director of the White House National Economic Council.

The potential size of the latest U.S. stimulus plan appears to be growing from the $100 billion to $300 billion previously suggested by congressional leaders. One influential Democrat, Sen. Charles Schumer of New York, said on Sunday a package of up to $700 billion was needed to support the American economy.

Britain is expected to announce a 20 billion pounds ($30 billion) package, which will cut sales tax and offer help for businesses, low earners and struggling home owners.

"I don't see this as a gamble. I see this as necessary, responsible action," Prime Minister Gordon Brown told the BBC.

India realty sector set for correction - report

MUMBAI (Reuters) - India's property market is poised for a correction and residential property rates will have to drop by up to 30 percent in some geographies for affordability to catch up, a report on said on Monday.

However, such a fall could trigger significant negative effects on the economy with construction, consumption and investment taking a hit, a Goldman Sachs Economic Research report said.

Related industries such as steel and cement on the backend, and hotels, trade and transport on the front-end will be impacted, it said.

Income growth will fall, reducing demand for housing as the economy continues to slow due to the knock-on effects of the global financial crisis, lowering demand for real estate.

Besides income growth, demographics, interest rates, inflation and expectations of future projects affect demand. Commercial real estate demand will also take a beating due to the slowdown in IT and business process outsourcing sectors, it said.

A fall in collateral will hurt firms' balance sheets, increase funding costs, hurt confidence and reduce investment demand, it added.

However, India's favourable demographics, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the property downturn from being protracted, it said.

Sunday, 23 November 2008

Day Trading Guide - November 24, 2008

Source: TheHinduBusinessLine

Aries Agro (Rs 45.30): Buy

We recommend a buy in Aries Agro from a short-term perspective. It is apparent from the charts of Aries Agro that it was on a medium-term down trend from September high of Rs 162 to its 52-week low of Rs 35 recorded in late October.

The stock found support at its 52-week low and began to consolidate sideways in the price range between Rs 35 and Rs 44 for almost four weeks. On November 21, the stock conclusively penetrated its 21-day moving average by gaining Rs 5.50 or 13.8 per cent accompanied with above 2-week average volume.

With this, the daily relative strength index has entered in to the neutral region from the bearish zone and weekly RSI is recovering from the ‘oversold’ territory. The moving average convergence and divergence is steadily rising towards the positive territory.

We are bulling on the stock from a short-term perspective. We anticipate the stock’s up move to prolong further until it hits our price target of Rs 51 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining a stop-loss at Rs 42.

Source: TheHinduBusinessLine

Citi India staff face downsizing; severance offers made

‘Not a bad idea to opt for the package’.

Mumbai, Nov. 22 Some of Citi India’s employees have been sounded out on severance; this comes close on the heels of the parent bank recently announcing it would cut 52,000 jobs in the US over the next year on the back of mounting loan losses.

The bank’s Indian operations — with a staff strength of around 11,000 — would be downsizing too, said insiders. A senior Citi India official, who declined to be identified, said employees across senior, mid, and junior levels face retrenchment. “The severance package is not too bad. It may not be a bad idea to opt for it as the bank could face a takeover sooner or later,” the official said.

Across the group
Offers of a severance package have been made not only to staff from the bank, but also to employees in Citi’s capital markets arm and Citifinancial, the group’s non-banking subsidiary in India, he added.

Developments at the bank come in the wake of Mr Sanjay Nayar, former CEO for India and South Asia, Citibank, moving to Kohlberg, Kravis, Roberts & Co as its first chief executive officer and country head for India. Citigroup has appointed Mr Mark Robinson in Mr Nayar’s place.

A senior Citifinancial official said: “I have no information as yet about lay-offs. As far as business goes, we have restructured our operations by stopping small-ticket retail advances to customers in the Socio-Economic Categories B and C as we have faced a lot of defaults. We are now focussing only on extending big ticket advances to SEC A customers, who have the wherewithal to repay loans.”

The official pointed out that, as part of the cost-cutting exercise, some of Citifinancial’s unviable branches may be closed down. “Earlier, a customer could get a loan from us with minimum fuss. But with loan defaults rising, we have tightened the credit appraisal procedures. We now also have a fraud check mechanism in place. So, a customer now has to wait longer to get a loan from us,” he said.

Incidentally, Citigroup Inc, which reported a $5.1-billion loss in the first quarter of its accounting year, said in April 2008 that its Indian operations suffered higher credit costs (provisions against bad debt and write-offs) and increased recovery costs.

India driven
It said the Indian operations contributed to the decline in Citigroup’s net income from Asia. The group had also said that under its international consumer finance business, “the net loss of $99 million was mainly due to an increase in credit costs of 92 per cent, primarily driven by India, and a repositioning charge.”

In the financial year ended March 31, 2008, Citibank India reported a 100 per cent jump in its net profit to Rs 1,804 crore, against Rs 900 crore in the previous year.

Source: TheHinduBusinessLine

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.