Thursday, 6 November 2008

Microsoft extends helping hand to Internet startups

Microsoft on Wednesday launched a programme to help fledgling Internet companies by giving them free access to software, tech support
and introductions to its business partners around the world.

BizSpark is intended to "accelerate the success of entrepreneurs and early-stage startups" using, of course, Microsoft technology, according to the Redmond, Washington-based software colossus.

"Microsoft BizSpark is an exciting way for us to help provide business startups with the development tools, advice and exposure they need," said Microsoft chief executive Steve Ballmer.

"We look forward to working with organisations and development agencies around the globe to foster entrepreneurship and help new companies succeed."

To be eligible for the programme, companies must be privately owned; less than three years old, and have annual revenues of no more than a million dollars.

Startups must be "nominated" by BizSpark Network Partners including economic development agencies, venture capitalists, business incubators, and groups such as global nonprofit The Indus Entrepreneurs (TiE).

"We think Microsoft BizSpark addresses a fundamental challenge startups face: access to current, full-featured tools and technologies that help turn ideas into a thriving business," said TiE chief executive Suren Dutia.

"We are excited to be part of this new effort to propagate entrepreneurship globally, cultivating the future generation of highly successful entrepreneurs."

Source: EconomicTimes

Beware of the Obama virus in inbox

US president-elect Barack Obama, who was swept into the White House on a wave of popularity, has turned out to be even more popular with spamme
rs and virus attackers. Cybercriminals are seeking to capitalise on the results of the closely-watched historic election with mass malicious email campaigns. Web, data and email security solutions provider Websense, which claims to be the first to discover the malicious activity, said that such emails carry information-stealing malware.

Websense regional director of SAARC and India Surendra Singh said, “The activity began from multiple locations immediately after the Obama’s acceptance speech as a huge number of people were waiting to hear him. The email contained a link to a malicious website, purported to contain a video of Obama’s speech. It then downloaded a rootkit into the user’s computer and sent the vital data to multiple command and control servers.”

What this means is that the data goes into cyberspace and the hackers can remotely control your computer. This is particularly critical if e-banking transactions have been carried out, since this data is now available to the hacker. Attackers used the names of well known publications like Time magazine and La República (Peru) in the email subject line to encourage users to click on the links. They used several variations of malicious lures mainly containing videos.

Mr Singh said that attackers had hacked into a well known travel site and used it to host an information-stealing Trojan Horse downloader file called ‘BarackObama.exe’. This file executed and unpacked phishing kits locally. Phishing sites are those that appear to be legitimate, encouraging the user to share personal data.

A spokesperson of Symantec, the software data security major, said that a presidential gift card spam was also prevalent, where recipients were asked to complete a survey on the election with the promise of receiving a free gift card, from which spammers harvested personal information. Spammers also executed a Barackumentary attack, where they offered a free DVD about Barack Obama. However, in order to receive this “free” video, recipients were asked to provide personal credit card details. Spammers had earlier successfully used the Olympics euphoria to target computer users.

According to AC Nielsen, online shopping has caught up with net savvy Indians in a big way. Seventy-eight per cent of Indian respondents (those accessing internet) surveyed in the recent Nielsen Global Online Survey on internet shopping habits, have used the internet to make a purchase. The survey revealed that 84% Indians used a credit card for online purchases, the highest of credit card use for online purchases in any country in Asia Pacific.

Security companies have also warned that spammers would be perilously active till December, since people greet and treat each other during the festive season. They use the Internet at this time of the year to ‘splurge and indulge’, which gives spammers and phishers the perfect occasion to trick users. Experts believe that they could also use the slowdown to spam out gift emails or emails offering products at cheaper prices. They are likely to catch users who might not have fallen prey to such ‘cheap deals’ in peak times.

Mr Singh remarked, “Cyber criminals are not just technocrats but good psychologists, too. They may spam emails offering cheaper deals, and in conditions of economic slowdown, people may not think twice before clicking such links.”

Source: EconomicTimes

Investors bet on commodities as financial turmoil rages on

At a time when most investors are scrambling for funds and nursing losses, some investors have found a way to make decent profits. Many of th
em took a call six months ago that the bull run in commodities was over. They went ‘short’ on metals and energy. Some even took deliveries in gold and silver, making them true hedgers.

After the US housing market collapse last year, many investors sensed that copper consumption would decline. Also, an imminent slowdown of the Chinese economy sent warning signals. “This prompted many investors to go short on copper, and even crude oil much ahead of the larger crisis that has unfolded in the last two months,” said Atul Shah, commodity head of Emkay Commotrade. He avers: “Those with holding capacity can always make good money.”

All those high networth investors who saw their investments in equities washed away with the stock market deluge, found some solace in their commodity investments. High-profile equity investor Rakesh Jhunjhunwala who preferred to call himself ‘a trader’ in commodity markets, said that he was bearish on four commodities – gold, silver, oil and copper – and went short on them. “This is a lucrative market,” he said. It’s widely perceived that like other stock investors he too has taken a hit in recent equity market downturn.

A large number of investors who had foreseen a slackening of demand with slowing economies sold commodities like copper and crude oil in July and repurchased later. These were in fact, not just day-traders but HNIs who took ‘sell-positions’ and held it said Jayant Manglik of Religare Commodities.

A Mumbai-based commodity trader and advisor, Kushal Thaker reiterated that the inherent meaning of an investment is to take a position and hold it. And this does not necessarily mean only buying. “One can also sell his position and sit with it,” he said explaining that the growth stories of world economies were overdone, and it was clear that a slowdown was due.

From mid-September, when the famed investment banks of Wall Street went down one after another pushing world economies into a panic-mode, gold shone as a safe investment option for investors.

“Extraordinarily large number of investors bought gold with a view to take delivery,” said Mr Manglik.

He elaborated that those investors who bought gold futures in the second week of September when prices were hovering around Rs 11,500 per 10 gm levels in India, some actually took deliveries later. They sold them in batches as the price of gold improved with rising safe-haven demand, to Rs 14,000 levels in mid-October.

However, the bullishness in gold is so strong that investors are still buying. Mr Thaker warned that the European Central Bank would sell gold as soon as there was a whiff of trouble in their economies. These supplies would depress the price of gold.

In base metals, there are investors who believe that now is the right time to buy for long-term holding. Over the last year, many investors went short, and bought back the metal when prices began to fall. “Now, with copper, zinc and nickel trading at near or below production costs, prices are very low. We will buy at these levels and hold,” said Dinesh Goyal, MD, Chirag Goyal Enterprises, who imports non-ferrous metals.

Actual users like him have always hedged 50% of their material in eventuality of a crisis. However, this time around even market investors are finding it prudent to use the same hedging strategies to mitigate their losses in such times of distress.

Source: EconomicTimes

Banks slash lending rates by 75 bps

The big state-owned banks on Thursday gave in to the finance minister’s demand for lower lending rates. Several public sector lenders, led by
the country’s biggest lender State Bank of India, have lowered their prime lending rates, the benchmark interest rate, to which all loans are linked. The rate cuts have been around 75 basis points (bps).

The move is expected to finally bring down deposit and lending rates, including home loan rates, across banks. Loans to business would also get cheaper, though the once popular sub-PLR rates to corporates, may still take a long time to return.

Banks, which are in a position to cut their deposit rates along with the lending rates, would be better placed to preserve their profit margins. The release of liquidity through aggressive cuts in the cash reserve ratio that banks maintain with RBI, will also enable the banking industry to earn over Rs 14,000 crore a year by deploying the funds, which would have otherwise earned no interest.

Other banks, which announced rate cuts on Thursday, were Bank of Baroda, Allahabad Bank, Central Bank of India, Oriental Bank of Commerce and Corporation Bank. All of them reduced lending rates by 75 bps to 13.25% with effect from November 10.

Dena Bank cut its PLR to 13.5% from 14.25% and, among foreign banks, Citibank lowered its benchmark lending rates by 50 bps to 15% with immediate effect. Syndicate Bank also revised its PLR by 75 bps to 13.25% from November 4. However, the rate cuts were largely confined to the public sector banks (with the exception of Citibank).

The second-largest bank ICICI and HDFC Bank said they were still maintaining a wait-and-watch stance. Significantly, home loan leader HDFC is yet to revise its rates, since the firm’s borrowing costs have not come down. Besides, the National Housing Bank, which provides refinance to home finance companies, had hiked its refinance rates by 75 bps a month ago.

SBI cut its PLR by 75 bps with effect from November 10 and lowered deposit rates by 25 to 50 bps across all maturities effective December 1. But, SBI chairman OP Bhatt expressed concerns over liquidity conditions. Speaking at a seminar, Mr Bhatt said, “Liquidity is a major issue, short term as well as long term”, while adding that he continued to be bullish on the Indian economy.

Banking analysts said SBI’s decision to lower deposits rates from December 1 could be a reflection of its liquidity concerns. Although the bank has not specifically mentioned when the return on the 1,000-day deposit scheme would be revised, sources said it would be reduced to 10% from 10.5%. Mr Bhatt said SBI deposits are growing at Rs 1,000 crore a day.

Speaking at a seminar organised jointly by FICCI and IBA, Mr Bhatt said banks would need more capital because assets are growing at a higher rate and more capital brings in confidence and stability. He said SBI will have to raise tier II capital in the range of Rs 500-1,000 crore for the year to meet its domestic and overseas operations.

Mr Bhatt said: “Although there is ample liquidity in the system, credit normally picks up during this time of the year, with the busy season. Also government borrowing is higher during this time of the year. Simultaneously, FDI and FII inflows have dried up. All these things put together are likely to put some pressure on liquidity next month.”

Another concern voiced by the SBI chief was the possible rise in bad loans, following a downturn and sharp growth in assets over the past 4-5 years. He said NPAs will rise across sectors, including the diamond industry.

“Some companies will find the going difficult and banks will have to be more mindful of this,” he said. Speaking at the seminar, Sanjay Nayar, CEO, Citi, South Asia said, “Uncertainty is going to be there for some more time. We are not at the end of the crisis.”

Source: EconomicTimes

A cultural divide? While the West axes jobs, Asia cuts pay

From bankers to factory staff, workers in the West face the bleak prospect of losing their jobs as a global recession starts to bite. For colleagues in the East, the pain is more likely to come through a pay cut.

Human resource experts say cultural differences explain why Asian firms try harder to preserve jobs in difficult times, which will stem unemployment and may help keep Asian economies afloat at a time of slowing exports. The more paternalistic East Asian attitude may also make it easier for firms to recover quickly from the economic downturn since they will not need to rehire or train new staff, leaving some experts predicting a Western shift to Eastern flexibility.

"In the Confucian mindset, the right thing to do is to share the burden. There's that sense of collective responsibility whereas in the West, it's more about individual survival," said Michael Benoliel, associate professor of organisational behaviour at Singapore Management University (SMU). In Hong Kong, senior staff at CLSA, the Asian brokerage arm of Credit Agricole, have agreed to a voluntary pay cut of up to 25 per cent to stave off the threat of redundancy.

CLSA made similar cuts in 2003 when business slowed due to SARS. A Western CLSA employee, who declined to be identified, told Reuters he accepted the cut because he would have looked like "scum" in the eyes of his colleagues if he did not agree. Singapore's Chartered Semiconductor also implemented temporary salary reductions of 5-20 percent after posting a loss, with senior management taking the biggest hit. And in Japan, chipmaker Elpida cut its chief executive's pay by 50 percent.

Steven Pang, Asia regional director for Aquent, a headhunting firm, said in many East Asian companies there was an obligation "to take care of members of the family and go through the pain together" even if that meant incurring losses.

In contrast, Western counterparts often felt compelled to make dramatic statements to show investors they were serious about cost-cutting, Pang said. US firms from General Motors to Goldman Sachs plan to lay off workers by the thousands, but at the Asian units of Western multinationals, job cuts will probably be less severe. Firms have to adapt labour practices according to the countries they operate in, which means they tend to be more restrained when sacking staff lest it hurt their ability to sell products and attract people, Benoliel said.

JOB FLEXIBILITY

Mark Ellwood, who heads the Singapore, Malaysian and Thai operations of Robert Walters, an executive search firm, said labour laws in most Western nations favoured employees and made it difficult for firms to reduce salaries without attracting lawsuits from disgruntled employees. "In many cases, it's easier to make the retrenchments."

Employment law in East Asia tended to favour employers, allowing them to be more creative, and there was also government and public support for mea
sures that help save jobs. Singapore, for instance, encourages firms and unions to develop "flexi-wage" packages that allow employers to adjust salaries according to economic conditions. According to the city-state's Manpower Ministry, about 83 percent of people in the private sector were employed under some form of flexible wage system, and 38 percent had variable components built into their monthly wages as at end-2006.

The monthly variable component could run as high as 70 percent in the case of top executives, said Ho Geok Choo, president of the Singapore Human Resources Institute (SHRI). The policy has kept the city-state's unemployment at a low 2.2 percent, versus 1.7 percent in last year's fourth quarter. Japan's jobless rate was 4 percent in September, up from 3.8 percent in January, while Hong Kong's was flat at 3.4 percent. But US unemployment is expected to have jumped to 6.3 percent last month from below 5 percent in January.

WEST MEETS EAST?

Experts say that while there are noticeable differences in labour practices in East and West, the gap will narrow as more firms become more multinational and competition forces firms to adopt the best practices of rivals from abroad. Aquent's Pang noted many large Japanese firms no longer offer jobs-for-life, while Western multinationals now employ a large number of people in Asia.

"With the trend of major Japanese companies being run by non -Japanese CEOs, slowly but surely they are starting to adopt more of a Western management style and philosophy." However, SHRI's Ho said the global crisis has raised questions about the Anglo-Saxon way of doing business, and she predicted a shift towards a more paternalistic work culture. Western firms are trying harder to put on a more human face amid growing distrust among the youth in their home countries.

In the past, layoffs meant an empty box and an escort to the carpark, but firms now offer counselling and consultants to help staff find jobs elsewhere, said SMU's Benoliel. "They'll still kill you, but they now do it gently."

Source: EconomicTimes

Wal-Mart will cut prices every week until Christmas

Wal-Mart Stores Inc will be introducing new rounds of price cuts every week until Christmas as the world's largest retailer reaches out and appeals to cash-strapped shoppers looking to stretch their holiday budgets.

As part of what it is calling "Operation Main Street," Wal-Mart will be slashing prices on thousands of items that it says are "vital" to the holiday season, like food and toys.

The move will build on price cuts the discount retailer implemented in October when it offered 10 popular toys for $10 each. "It's very much along those same lines, only it takes the intensity up massively," Stephen Quinn, Wal-Mart's chief marketing officer, told Reuters, referring to the new price cuts.

Wal-Mart's sales have been outperforming many of its competitors this year as US shoppers, pressured by high food and fuel prices, declining home values, extremely tight credit, and a weak jobs market, flock to its stores in search of bargains.

At its analyst meeting last week, Chief Executive Officer Lee Scott stressed that "Christmas will come on Dec 25" despite the economy and said that Wal-Mart will have the best prices in the market for the holiday season.

Quinn said Wal-Mart has surveyed moms to find out how they are planning to shop over the next eight weeks, from getting their homes set for the holidays, to buying food for Thanksgiving dinner, to purchasing gifts.

Wal-Mart will offer price cuts on merchandise that coordinates with those shopping patterns. "Clearly, this economy has made things tougher for moms and those who are planning budgets for families," he said. "They've never planned more than they are planning now. They feel like they have to manage the budget."

Shoppers can sign up on Wal-Mart's Website, www.walmart.com/mobileinfo, to receive alerts on their mobile phones outlining the weekly price reductions. "These mobile messages are going to be very relevant to the exact time period you're in," Quinn said.

Quinn said Wal-Mart has worked with its suppliers to ensure it has adequate supply of the products it will be promoting. The retailer will be touting its low prices in ads on TV, its Website, on the radio and in newspaper circulars. "We've got more marketing support than we've ever had to make sure people are really are aware of all the values that we have to offer," Quinn said.

Source: EconomicTimes

UK banks on lifeline may cut down tech spending

Struggling British banks accepting a government bailout package will cut IT spending by up to a fifth and face pressure to move their offs
hore call centres in India and other countries back home, a UK-based research firm said.

British banks such as Barclays, Lloyds TSB and Royal Bank of Scotland (RBS), which have accepted government cash to recapitalise, will halt spending on technology until the second quarter of 2009 and even cancel their offshore outsourcing programmes in pursuit of low-risk models, TowerGroup said. Such developments will be extremely bad news for India’s software vendors, for whom the UK is a key market.

According to industry estimates, India exported around $6 billion (Rs 29,000 crore) worth of software and BPO services to the UK during year-ended March 2008, accounting for some 15% of the country’s total software exports.

Lloyds has outsourcing deals with top Indian software vendors Wipro and Satyam Computer Services, while RBS counts among Infosys Technologies’ clients. Furthermore, both Barclays and RBS have captive offshore centres in India.

“National interest may result in the UK banks bringing their call centres back to Britain,” TowerGroup European research director Bob McDowall told ET.

“Banks which have substantial government shareholding will have to consider carefully not only the financial impact, but shareholder reaction if outsourcing and offshoring result in job losses in the UK,” he added. Out of a $792 billion bailout plan for the financial services sector, the British government is setting aside $79 billion to buy stakes in stricken banks.

The partial nationalisation is seen putting pressure on the banks to cut IT spending and reevaluate their offshore outsourcing plans. “One could see a reduction in overall IT spend in the financial services sector of 15-20% in 2009 compared with 2008,” Mr McDowall said. The financial crisis and the worsening economic situation are also triggering rate cuts for all new IT contracts being signed in the UK.

Many UK banks have asked their IT suppliers to take a rate cut of almost 12%. According to the Association of Technology Staffing Companies, hourly rates for IT projects in the UK have fallen to around $69, from $79 in the last quarter of 2007.

“The 12% slump is primarily due to new contracts being signed at lower rates rather than renegotiated deals,” a statement by the association said.

A situation akin to that in the UK might also develop in the US, spelling further trouble for Indian IT companies. The world’s largest economy is implementing a $700 billion financial bailout package of its own and accounts for nearly 60% of software exports from India. “There is already a noticeable freezing of spending on IT development, including suspension of non-critical projects (in the US),” Mr McDowall said.

Source: EconomicTimes

Stocks to watch: Bharti, Alkali Metals, SAIL, NTPC

Stocks are likely to extend losses on Thursday as weak economic concerns on the global front spurred worries that the new administration won'
t be in a position to act fast enough to avert a deep economic downturn.

Oil furthered its fall on Thursday after economic concerns in the US resurfaced. US light crude for December delivery was at $65.05 per after closing at $65.30 on Wednesday.

Rupee plunged by 50 paise to 47.94 following rise in dollar demand on expectations of weak opening of equity markets.

Bharti Airtel has sought the government’s approval to pick up 65% in Bharti Teleports, a newly formed uplinking company. Telports are used by broadcasters to uplink their channels so that these can be downloaded by MSOs, cable operators and Direct-to-Home players. Bharti Teleports is wholly owned by Bharti Enterprises, the holding company of the group.

International Coal Ventures, the special purpose vehicle formed by SAIL, NTPC, NMDC, RINL and Coal India for scouting coal properties abroad, is in talks with mining major Gloucester Resources for acquiring over 10 per cent equity in the company.

Ater seven consecutive years of good growth, auto component majors have begun cutting production by over 25-30%. The move is expected to impact the bottomlines of the industry, which is facing a bleak future because of output cuts by major automobile companies.

Large public sector banks have decided to lower their prime lending rates by 0.75 per cent, in line with the commitment made to Union finance minister P Chidambaram on Tuesday. Bank of India, Canara Bank, Indian Overseas Bank and Syndicate Bank have decided to lower lending rates from 14 per cent to 13.25 per cent.

New listing:

Shares of Alkali Metals will list on the exchanges on Thursday. The public issue of 25.50 lakh equity shares was subscribed 1.03 times. The issue price has been fixed at Rs 103 per share. Alkali Metals manufactures range of fine chemicals, based on related chemistry.

Source: EconomicTimes

Indonesia to blacklist 30 Indian companies

In a move that could sully India’s image in the international market, top vegetable oil supplier, Indonesia, has accused 30 Indian companies, including Nafed, of taking it for a ride.

What’s worse, some of these defaulters are allegedly using public sector companies MMTC, PEC and STC to import oil on their behalf.

Indonesia has, therefore, asked the PSUs to stop “encouraging” these private players and blacklist them to avoid ending up with a similar payment problem. Nafed, a co-operative under the ministry of agriculture, has been importing vegetable oil on behalf of the government for supply through ration shops.

Indian importers are learnt to have been reluctant to pick up expensive cargoes after global palm oil prices crashed last month.

According to Indonesian industry, the list of Indian defaulters includes Nafed, JMD Oils and Fats, Bhatinda Oils and Fats, Kundan Oils and Fats, Raj Agro Oils, Gujarat Spices, Puneet and Company, Sarda Agro, Sudhir Agro, NCS Hyderabad, Mahesh Agro, Golden Oils Kolkata, Coastal Energy, Pradyhuman Overseas, Sara International, Dudhadhari Exports, DDI (Tower International), Budge Budge Refineries, Indumati Refineries, Shree Ganesh Oils, Velani Traders and Sheetal Industries.

In a strongly-worded letter last week to the Union commerce ministry and the Solvent Extractors Association, Indonesia’s leading industry associations, GAPKI and Indonesian Palm Oil Association, said they have decided to blacklist all defaulters, apart from taking individual legal action.

“Our members have informed us that in view of the recent downtrend in palm oil prices, several buyers from India have refused to honour their commitments. Some of the buyers have not opened line of credits and some have resorted to even denying existence of the contracts...We are surprised that the names include government agencies, including Nafed,” it said.

What has particularly peeved Indonesian industry is that India is not reciprocating its honourable behaviour last year. “Last year and early this year, when the market rallied higher and higher, all our members shipped out all the commitments sincerely. It is really worrying and disturbing that some Indian buyers have chosen to default when the markets start sliding,” GAPKI said. “... such unethical acts of non-performance of contracts will tarnish India’s image in the international market not only for palm oil but also for any other commodity for that matter.”

In a special note to the chiefs of MMTC, PEC and STC, the Indonesian industry has requested them to stop shielding defaulters by importing on their behalf. “We very strongly urge that your reputed organisations should not encourage these defaulters by way of importing for them. We understand that some of these buyers are already using your good offices to import,” GAPKI has stated.

For Indian PSUs, any such dent in their international image could be especially worrying because they are entrusted by the government with the task of importing important commodities such as vegetable oil, pulses, wheat and fertilisers.

Till now, Indian PSUs have been preferred to private companies because they are believed to always honour contracts and have ample liquidity. That enables them to contract best terms and prices overseas. If the private sector defaults start tarnishing their image in the international market, it is the Indian taxpayer who will have to pay the real price.

Source: EconomicTimes

Tata shares under severe pressure

Most Tata-promoted stocks were under severe pressure on Thursday with index heavyweights Tata Motors and Tata Steel taking a beating.


The country's largest commercial vehicle maker, Tata Motors, has decided to shut production at its Jamshedpur facility for medium and heavy vehicles for three days beginning Thursday to tide over plummeting demand which had an impact on the auto company's shares. Tata Motors shares slumped 7.45 per cent.

According to media reports, the block closure at Jamshedpur from November 6 to November 8 is to match the production with demand of vehicles produced at the Jamshedpur plant to avoid build-up of inventory either in the company or with the dealers.

Tata Steel extended losses for the second straight day and was trading 7.65 per cent lower after ArcelorMittal's guidance for the current quarter painted a bleaker picture than expected and market participants forecast dismal Corus earnings for the quarter to September 30, 2008.

Slowing global demand has compelled Tata Steel to cut steel production at its Corus units in the UK and the Netherlands. Corus decided to reduce its crude steel production over the next three months by up to 20 per cent or around 1 million tonne, to mitigate the effects of the softening near-term steel demand outlook.

Among other Tata stocks, Tata Power shed 6.76 per cent and Tata Communications lost 3.97 per cent.

Source: EconomicTimes

Chambal Fert (Rs 43.75): Sell



We recommend a sell in Chambal Fertilisers and Chemicals from a short-term perspective. It is evident from the charts that this stock has been trending downwards since June high of Rs 96 (52-week high), forming lower peaks and lower bottoms. However, in early October, the stock found support at around Rs 32, which is a key long-term support level and began to trend up. This uptrend of the stock was a corrective up move and it encountered resistance at Rs 54. Subsequently, shaping a bearish engulfing candlestick pattern, the stock resumed its downtrend. On November 6, the stock tumbled over 8 per cent penetrating the corrective up trendline, reinforcing the bearishness. The daily relative strength index (RSI) is declining in the neutral region towards the bearish zone and the weekly RSI is featuring in the bearish zone. We are bearish on the counter from a short-term horizon. We anticipate the stock’s decline to continue until it hits our price target of Rs 38.5 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 46.

Source: TheHinduBusinessLine

Day Trading Guide - November 7, 2008



ICICI Bank

Sell the stock in rallies with tight stop-loss at Rs 450 level.

Infosys

In the last trading session, the stock plummeted by 5 per cent, penetrating the 21-day moving average. We recommend a sell.

L&T

Utilise rallies to sell the stock while maintaining tight stop-loss at Rs 905.

ONGC

We recommend a sell in this counter.

Reliance Capital

The stock was volatile in this last trading session and it formed a spinning to candlestick pattern indicating indecisiveness. Avoid trading in this counter for the session.

Reliance Communications

The near-term outlook is bearish for the stock. We re-affirm our sell recommendation.

Reliance Industries

In line with our expectation, the stock declined accompanied with high volume on Thursday. The daily relative strength index has re-entered into the bearish zone from the neutral region. We reiterate our sell recommendation in this counter.

Satyam Computer

Sell the stock in rallies with stiff stop-loss at Rs 284.

SBI

Initiate fresh short-position if the stock declines below Rs 1,190, with tight stop-loss.

TCS

We retain our sell recommendation

Source: TheHinduBusinessLine

Microsoft launches innovative project

In a move that could equip millions of Indian students with advanced computer knowledge, global IT giant Microsoft on Wednesday launched a
n innovative project providing free access to its latest software developer and designer tools.

Microsoft chairman Bill Gates launched 'DreamSpark', which will provide access to an estimated 10 million students to the special software.

"We want to do everything we can to equip a new generation of technology leaders with the knowledge and tools they need to harness the magic of software to improve lives, solve problems and catalyse economic growth," he said.

Minister of State for HRD D Purandeswari said that students can get access to software through the government's 'Sakshat' portal. The interested students can avail their ID to get access to the software, she said.

Microsoft is giving special attention to India which offers the largest pool of English speaking professionals. It has entered into an agreement with India under which it will give live service to Indian students, she said.

The latest Microsoft software under the DreamSpark project will provide professional level tools that would inspire students to explore the power of software to achieve career success.

Microsoft launched the 'DreamSpark' project in February this year. It is being run in 11 countries, including India, and aims to cover 35 million students, he said.

The software will be available off-line also through DVDs to be distributed by programme partners like NIIT, Aptech and Hughes Net Fusion Centres.

Source: EconomicTimes

World economies to decline in 2009: IMF

Barely 10 days ahead of the Summit of the Group-20 here called by President George Bush, IMF has revised its global economic outlook and forecast that advanced economies would slip into recession next year, while the growth rate of Asian nations would come down.

In its World Outlook Report published today, the International Monetary Fund (IMF) has predicted that the global growth would slow down by 0.2 per cent in 2008 and 0.9 per cent in 2009, thus leaving the revised growth figures at 3.7 per cent for this year and 2.2 per cent for the next.

The outlook is not too different for India as well, since IMF sees the country's economic growth going down to 6.3 per cent, 0.6 per cent less than what it had projected last month, as the financial meltdown envelops the globe.

With special mention to the US economy, the report says that it would contract by as much as 0.7 per cent in 2009, while the Eurozone has been forecast to shrink by half-a-point next year.

For the advanced economies in general, IMF sees a negative growth of 0.3 per cent and 5.1 per cent for the emerging and low-income countries, a full one per cent decrease over its previous projection.

"...the sharp decrease in demand in advanced countries observed in the last few months has lead us to predict a sharper contraction for the end of 2008 and the first half of 2009. Because of the sharp worsening of credit conditions to emerging countries...and lower exports is why we have substantially revised our forecasts for that part of the world," said Economic Counsellor and Director of Research Department of IMF Oliver Blanchard.

Painting a scary picture of world trade, IMF forecast suggests that the global growth in volume of trade in goods and services would slide from 7.2 per cent to 4.6 per cent in 2008 and dip to 2.1 per cent next year.

The world economic growth is likely to slowdown from 5 per cent in 2002 to 3.37 per cent in 2008, while India's economic growth for this year is expected to dip by just 0.1 per cent to 7.8 per cent than what was forecast last month.

As per the IMF projections, India is likely to record an economic growth of 6.6 per cent during October-December against 8.9 per cent in the corresponding period in 2007. "The downward revisions to 2009 real GDP growth projections are somewhat larger in emerging economies, averaging one per cent," the IMF said.

Blanchard said that this was clearly a period of "very high uncertainty" with two downside risks, "Despite the measures taken to address the financial system, we cannot be sure that there are no hidden land mines left in the field. A worsening of the financial crisis would clearly lead to further contraction of activity.

"Another risk, which a number of commentators have mentioned, is sustained deflation. It is an issue to worry about, but we do not give it high probability at this stage." In line with the market development, IMF has revised petroleum price projection from 100 dollar a barrel to 68 dollar a barrel for 2009.

According to IMF projections, the UK will be the worst hit on account of the global crisis and may witness contraction of its economy by 1.3 per cent in 2009. In addition, the advanced countries which will witness negative growth in 2009 include the US, Germany, France, Italy, Spain and Japan.

Source: EconomicTimes

Fidelity Investments to cut nearly 1,300 jobs

Fidelity Investments is cutting nearly 1,300 jobs this month and the mutual fund company says more layoffs are coming early next year.


Boston-based Fidelity said Thursday it will lay off about 2.9 percent of its more than 44,000-employee work force later this month. The company isn't specifying which of its far-flung locations will be affected.

A second rounds of layoffs is planned in the first three months of next year. Fidelity says the number of those cuts will be determined in coming weeks.

Fidelity says the cuts are a response to global economic conditions and unsettled financial markets.

Source: EconomicTimes

I am still young: L N Mittal on succession

The richest Indian and steel czar Lakshmi N Mittal may have worked hard to create the world's biggest steel entity, but says he's not tire
d and is not yet ready to hang his boots.

"Today, I feel very young at 58," Mittal told the media in a telephonic interview a short while after he along with his son Aditya Mittal addressed the global financial press on Arcelor- Mittal's performance in the quarter ending September 2008 that saw the company's net profit surging 29 per cent to USD 3.8 billion.

Mittal, who turned 58 in June this year, was responding to a query if he was looking for a succession plan and passing on the baton of his empire that controls over 10 per cent of global steel output. "Yes, Sure" was his reply to another query on whether he would be heard and seen in future also.

Source: EconomicTimes

Satyam Computers sacks over 30 employees

Satyam Computers has terminated over 30 employees following internal audit findings that they may have 'fudged' bills after being relocated
to Chennai from Hyderabad.

These project associates allege foul play by the company. "They have taken bills that are almost one and half years old and are asking for us to prove its validity. Even if we are able to prove that the bills are original and not fudged as they claim, they are unwilling to listen to us," a few associates told The Times of India.

While some are planning to take legal recourse, even as their salaries have been withheld by the company and profiles removed from the company records.

"The company is trying to lay us off giving such trivial reasons. The HR is not even willing to listen to us and we are not even given a chance to resign," an employee said.

The bills in question relate to nearly Rs 3,000 incurred by the associates after their transfer last year. The associates insist that they were entitled for this amount and even this was not reimbursed by the company.

"We had used packers and movers a year and half back and how can we prove that we used their service? Satyam management is not willing to listen to us," another employee said.

"They are terminating us because of the meltdown, but are being made scapegoats with such unwarranted reasons. A list of nearly 400 people to be terminated across the country, is being prepared by the company," one of them said. S V Krishnan, Satyam's global head of HR, said this is a 'routine process' of the company, where a separate audit team reviewed bills.

"They might complain that they are being laid off because of the global economic slowdown. But it is never the intent of the company to put people away just to save some amount of money... This is done as part of good governance. The audit is done by an independent body. There were areas with certain bills where doubts over 'potential fraud' arose. For example, two of the associates might have moved their belongings together but might have submitted separate bills as showing they had moved it separately or they might have submitted false bills. We want to be above board on integrity issues."

Source: EconomicTimes

Oil tumbles to 21-month low of $58 a barrel

Oil prices on Thursday tumbled under 58 dollars a barrel, reaching the lowest level for nearly 21 months as recession fears gripped markets,World's top 10 oil producers
traders said.

On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December dived more than four dollars to 57.46 dollars a barrel -- the lowest level since February 2007.

At about 1555 GMT, the contract recovered slightly to stand at 58.08 dollars, down 3.79 dollars compared with Wednesday's close.

On the New York Mercantile Exchange (NYMEX), light sweet crude for December fell dropped 3.80 dollars to 61.50 dollars a barrel.

Fears of a deep recession and hence weaker energy demand intensified on Thursday as European central banks slashed interest rates.

The Bank of England's monetary policy committee cut British borrowing costs by a record 1.50 percentage points to 3.0 percent -- the lowest level in more than half a century. The European Central Bank reduced eurozone borrowing costs by 0.50 percentage points.

"Market participants may be taking the view that for the MPC to slash rates in such a dramatic manner, things must be really bad," said David Evans, an analyst at BetOnMarkets.com.

Oil prices had already tumbled by more than five dollars Wednesday on NYMEX as US data showed demand falling in the world's biggest energy consuming nation, highlighting worries about a slowing global economy.

Source: EconomicTimes

Global recession in 2009, forecasts IMF

The International Monetary Fund (IMF) released its global economic forecast Thursday in the face of a growing credit crisis and predicted
a recession in the US and the world in 2009.

In an update of its World Economic Outlook from October, the IMF said global growth would slow to 2.2 percent in 2009, down from the 3-percent forecast made last month. Growth of under 3 percent is considered a global recession.
The US, the world's largest economy, will contract by 0.7 percent and the euro area by 0.5 percent in 2009. Advanced economies as a whole will contract 0.3 percent, compared to 1.4-percent growth this year, it said.

All figures represent a downward revision of more than 0.7 percent from the IMF's October forecast. Developing and emerging economies by contrast will continue to lead growth in the world, increasing 5.1 percent in 2009. But that is still down from a forecast of 6.1 percent made in October. Growth in the developing world was forecast at 6.6 percent this year.

A global financial crisis has severely impacted the availability of credit around the world, curbing spending in wealthy nations and restricting poorer nations' access to foreign investment.
"There has been a sharp worsening of credit conditions to emerging countries," said chief IMF economist Olivier Blanchard.

The IMF expects sharp slowdowns in Eastern Europe as well as Russia and its neighbours. China's economy will continue to grow at 8.5 percent in 2009, down from 9.7 percent this year and 11.9 percent in 2007.

Source: EconomicTimes

Hold Consolidated Const: PINC Research

PINC Research has downgraded Consolidated Construction Consortium to hold rating in its November 5, 2008 research report. "The company posted net sales of Rs 4.7 billion (+21.9% YoY). OPM for the quarter dipped to 6.8% (down 189bps YoY). Net profits stood at Rs 191 million (down 36.9% YoY). At the CMP of Rs 300, CCCL trades at a P/E of 6.3x and EV/EBIDT of 4.8x its FY10E earnings. The overall economic slowdown impacted CCCL’s project execution in Q2FY09 owing to delays by its commercial & industrial clients. We believe such delays to persist & impact its performance over the next 8-10 months. Hence, we downgrade our earnings estimates by 15% in FY09 & 20% in FY10. Though the stock has undergone a steep correction over the past couple of months, it appears fairly valued at the current levels vis-a-vis our DCF valuation. Thus, we downgrade our recommendation to ‘Hold’." According to research report.

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

Source: Moneycontrol

Buy Champagne Indage, target of Rs 240: LKP Shares

Marico, one of India’s leading FMCG Companies in the beauty and wellness arena, officially inaugurated its third manufacturing factory in Egypt in Sadat City. The new factory will serve as Marico’s regional production hub for Parachute, Region’s most popular hair cream product. As Marico’s flagship product, Parachute will be manufactured at the Sadat factory to meet regional export demand within the MENA region. Parachute is the number 1 Hair Cream product in the UAE. It is widely available across the Gulf Countries with a wide distribution network. With its unique Coconut based formulation, it provides vital nourishment to the hair and has been specially formulated for the Arab consumer

With state-of-the-art manufacturing equipment and technology and processes across the value chain, Marico is committed to applying international best practices to the industry as well as providing new job opportunities.

“As the investment in our newest manufacturing facility demonstrates, Marico is deeply committed to furthering the strong economic & commercial relations between Egypt and India,” said Harsh Mariwala, Chairman and Managing Director of Marico Limited. “With substantial presence in Egypt, Marico is also dedicated to enhancing the technological capabilities and standards of the manufacturing industry in Egypt. Just as Egypt has much to offer us, Marico is striving to provide just as much in return.”

Marico is one of the many Indian companies to tap the growing business opportunities that Egypt is able to offer. As Egypt’s third largest trading partner and twelfth largest investor, India has become one of Egypt’s closest allies in the business world. Elaborating on this point, HE Mr. A. Gopinathan, the Indian ambassador to Egypt commented “India and Egypt are moving towards a very close partnership that reflects not only the civilization and historical ties, but also the evolving relationship that includes trade and investment flows and people-to-people contacts through the significant increase in tourist traffic and air links, and the vast opportunities that Egypt has to offer to Indian entrepreneurs.”

India and Egypt have always had a healthy business relationship, but in recent years with reform policies of His Excellency President Hosny Mubarak this has seen a remarkable upswing. At the beginning of 2008, media reports stated that Indian investments were estimated at $3 billion spread over 40 separate projects. With Marico’s business expansion adding to a number of well-established Indian companies already in Egypt, there are seemingly limitless opportunities or furthering the strong and growing economic and commercial relations between Egypt and India.

Source: Moneycontrol

Buy Puravankara Projects, target of Rs 77: PINC Research

PINC Research has maintained buy rating on Puravankara Projects with a price target of Rs 77 in its November 5, 2008 research report. "The company's sales were flat at Rs 1.4 billion in Q2FY09. OPM shrank 709bps to 34.5% owing to higher selling costs at Rs 82 million (+63%YoY), higher admin. expenses and staff costs. Consequently net profit was down 16% to Rs 505 million. We would assign a discount of 50% to our NAV estimate citing deteriorating property markets and hence arrive at a value of Rs 77/sh. At the CMP of Rs 54, PPL is trading at a 30% discount to our estimated value of Rs77/sh. We maintain a ‘Buy’ recommendation with a price target of Rs 77 (a potential upside of 43%)," according to research report.

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

Source: Moneycontrol

Buy Sarda Energy, target of Rs 90: Sunidhi Securities

Sunidhi Securities & Finance has recommended a buy rating on Sarda Energy and Minerals with a target of Rs 90 in its November 4, 2008 research report. "During Q2FY09, sales have gone up by 158 per cent to Rs 344 crore whereas net profit has shot up by 93 per cent to Rs 46.6 crore. SEML is one of the largest manufacturer and exporter of Premium Grade Ferro Alloys from India. The growth in steel industry, where ferro alloys are used as additives, has pushed the demand of ferro alloys globally."

"The company is strengthening the raw material linkages, which will sharply reduce the cost of production and lead margin expansion by FY10. The company’s integrated pellitization plant, coal mines and captive power plant would significantly enhance profitability in the coming years. The company aims to develop a steel-cum-power business model by increasing its power capacity by 48MW to 213MW in the long run. This will lend stability to earnings as captive power supply will reduce the cost of steel making, while merchant power sales will significantly offset the earnings volatility inherent in the steel business. We recommend BUY with a target price of Rs 90 in the medium term," says Sunidhi Securities & Finance's research report.

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

Source: Moneycontrol

India Infoline positive on FMCG Sector

India Infoline continues to remain positive on the FMCG sector with ITC and Marico as their top picks.

India Infoline's report on FMCG Sector:

Performance of most companies in our universe was in line with our expectations during Q2 FY09. All companies recorded double digit revenue growth led by strong volume growth across segments. However, operating margins remained under pressure due to a sharp rise in raw material prices. Over the past month, most of the key raw material prices like LAB, crude oil and palm oil have started correcting and are expected to ease the margin pressure in the coming quarters. Food companies though, are likely to continue to witness margin pressure on account of firm agri commodity prices. Most players have taken measures like price hikes and reduction in pack sizes to mitigate cost pressures. We continue to remain positive on the sector with ITC and Marico as our top picks.

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

Source: Moneycontrol

Buy Great Offshore; target Rs 536: HDFC Securities

HDFC Securities has recommended a buy rating on Great Offshore, with price target of Rs 536, in its report dated November 5, 2008. "Great Offshore is growing with aggressive fleet addition and diversification into newer segments rather than depending on older assets alone. We expect the overall CAGR growth in the next three years to be 27% in revenue and 11% in profits. At the CMP of Rs 340, the stock trades at 5.7x and 4.5x its FY10E and FY11E earnings of Rs 60 and Rs 75. We have arrived at a DCF based target price of Rs 536, an upside of 57% from current levels. While our bear case target price is Rs 377 (upside of 10%), the bull case target price is Rs 704 (upside of 107%) from current levels. We initiate coverage with a Buy rating on the company," says HDFC Securities' report.

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

Source: Moneycontrol

Monnet Ispat an outperformer: HDFC Securities

HDFC Securities has upgraded its rating on Monnet Ispat & Energy from sell to outperformer, in its report dated November 5, 2008. "Due to sluggish volume growth coupled with weakening steel and sponge iron prices, we are revising FY09E and FY10E EPS by 23% and 28% downwards to Rs 43.3 and Rs 49.3 respectively from Rs 55.9 and Rs 68.8 earlier. Consequently, the EPS CAGR (FY08-10E) has decreased from 46% to 24%. However, due to steep correction in the stock price, the P/E multiple has come down from 9.0x FY09E and 7.3x FY10E to 3.6x and 3.2x respectively. Government interference is expected to provide a cushion to falling steel prices and help it to stabilize at current levels. Therefore, any further drop in raw material prices will have a positive impact on MIEL’s EPS. We are, thus, upgrading the stock to Outperformer from Sell," says HDFC Securities' report.

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

Source: Moneycontrol

Buy Britannia, target of Rs 1398: India Infoline

India Infoline has recommended a buy rating on Britannia Industries with a target of Rs 1398 in its November 3, 2008 research report. "Net sales beat expectations, up 27% yoy at Rs 8.4 billion in Q2 FY09 driven by 17.5% volume growth. Net profit for the quarter increased by 15.6% yoy to Rs 597 million. We expect the company to witness 11.9% CAGR in revenues and 15% CAGR in net profit over FY08-10E. The company is looking at new growth triggers like acquisitions in new categories both in India and the overseas market. Recommend BUY with a one-year price target of Rs 1,398, an upside of 19.1%, says India Infoline's research report.

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

Source: Moneycontrol

Shree Cements an outperformer: Anagram

Anagram Research has upgraded its rating on Shree Cements to outperformer in its November 4, 2008 research report.

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

Source: Moneycontrol

Buy Nestle India, target of Rs 1756: India Infoline

India Infoline has recommended a buy rating on Nestle India with a target of Rs 1756 in its November 3, 2008 research report. "Nestle recorded 22.2% yoy growth in revenues at Rs 11.1 billion. Nestle recorded 13.5% yoy growth in adjusted net profit at Rs 1.3 billion. We believe Nestle is one of the best plays on the healthy growth potential in the Indian food-processing sector. Nestle management has been making attempts to widen the export basket of products and we believe the company to bring exports growth back on track in the near future."

"Strong brand portfolio (like Nestle, Maggi, Nescafe), expansion plans in the food business and new product launches (may also launch products from its global portfolio) will drive growth. We expect Nestle to witness 18.4% CAGR in revenues and 17.7% CAGR in net profit over F12/07-09E. We recommend BUY with a one-year price target of Rs 1,756, an upside of 21.1%," says India Infoline's research report.

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

Source: Moneycontrol

Accumulate Bank Of India: Anagram

Anagram Research has recommended an accumulate rating on Bank Of India (BOI) in its November 6, 2008 research report. "Bank Of India reported phenomenal growth of 79% yoy in its net profit at Rs 763 crore, while 36% growth on sequential basis. This profit is driven by 38% rise in NII and 23% rise in non interest income. Being one of the larger PSU banks, BOI is able to witness strong financial growth driven by improvement in all business parameters. Comfortable level of CASA, acceptable asset slippage level and ROA above 1.5% are the key indicators of consistent performance by the bank. We recommend Accumulate on this stock," says Anagram's research report.

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

Source: Moneycontrol

3i Infotech target of Rs 59: Asit C. Mehta

Asit C. Mehta has reduced target price of 3i Infotech to Rs 59 (7x FY10E EPS of Rs 8.4) from Rs 161 earlier. "The sequential growth in revenues for Q2 FY09 was 28.4%, i.e. from Rs 4,685 million to Rs 6,016 million. Net profit margins declined by 93 bps to 11.4% in Q2 FY09. The decline in net profit margins was also due to the sequential increase in tax rate by 90 bps."

"We have amortized the goodwill arising on consolidation, over a span of 10 years, and considering the same, EPS for FY09E comes to Rs 7 as against Rs 14.7 (without considering amortization) and for FY10E to Rs 8.4 as against Rs 16 (without considering amortization). We reduce our target price to Rs 59 (7x FY10E EPS of Rs 8.4) from Rs 161 earlier," says Asit C. Mehta's research report.

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

Source: Moneycontrol

GMDC has target of Rs 83: Asit C. Mehta

Asit C. Mehta has revised target price of Gujarat Mineral Development Corporation, GMDC to Rs 83 in its November 04, 2008 report. "Despite lower volumes and higher operating expenses we expect GMDC to maintain a CAGR of 32% in sales from FY08-FY10E. PAT is expected to register a growth of 56% for the same period. We value company’s mining business on the basis of relative valuation (P/E multiple) and power business on the basis of Asset replacement cost and arrive at revised price target of Rs 83," says Asit C. Mehta's research report.

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

Source: Moneycontrol

Buy Tata Sponge Iron, target of Rs 223: Motilal Oswal

Motilal Oswal has maintained its buy rating on Tata Sponge Iron with a target of Rs 223 in its October 22, 2008 research report. "2QFY09 adjusted PAT grew 4x YoY to Rs 728 million. Net sales increased 2.5x YoY to Rs2.4b driven by a 90% YoY increase in sponge iron realizations to Rs 22,035/ton and a 30% increase in volumes to 107,944 tons due to liquidation of inventories. The stock trades at attractive valuations of 0.8x FY10 EV/EBITDA, 3x FY10 P/E, and 0.6x FY10 P/BV. Valuations are cheap. Maintain Buy, target of Rs 223," says Motilal Oswal's research report.

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

Source: Moneycontrol

Hold Reliance Industries: S Agarwal

Sanjeev Agarwal, equity-head of Globe Capital Market is of the view that one should hold Reliance Industries and add on declines.

Agarwal told CNBC-TV18, "We had recommended selling Reliance Industries at around Rs 2300 and we had told that this share is going to be the leader of the fall and if you see that Reliance has been the clear leader of this fall, ICICI Bank and Reliance has accounted for maximum damage for Sensex as well as in the Nifty. What we had given yesterday a definite call for a sell and upto a level of Rs 1200 to even Rs 1100 it may come but definitely there is absolutely no sense to get out of this stock at this level because what we are seeing as I told you that the market is likely to bottom out somewhere around at 2750 to around 2630 and Reliance is going to be the leader of the rally and this share is actually moving in tandem with the Sensex or it is moving with the Sensex if you say like it has been leading both the indices."

He further added, "This year is going to be the instrument in the bounce back and definitely we are going to see the bounce back at least minimum to around Rs 1750 levels on the upmove and overall if this share is able to hold above Rs 2,000 then the next upmove will start. But in this move we may go up to around Rs 1800 or Rs 1900 and after that there maybe a correction again for about 2-3 months and as a long tern investor you shouldn’t be looking at this level to get out and these are the levels where you should be adding to your position for a long term gain. So definitely my view is to hold and add up on the down folds."

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

Source: Moneycontrol

Tata Steel has support at Rs 150: Guppy

Daryl Guppy, Founder and Director of Guppytraders.com is of the view that Tata Steel has support level of Rs 150.

Guppy told CNBC-TV18, "Tata Steel is going down rather than continuing up, the rebound is now retreating into a retracement rather than continuation or a rebound; the stock had fairly solid resistance levels at around Rs 280, good support seeing at around Rs 150 and we expect this downtrend to continue to test that support level of Rs 150. We need to look at consolidation at that level before there is any potential for any change in the trend."

Source: Moneycontrol

Reliance Ind has support at Rs 1000: Guppy

Daryl Guppy, Founder and Director of Guppytraders.com is of the view that Reliance Industries has support at Rs 1000.

Guppy told CNBC-TV18, "Reliance a bit like Tata Steel it is defined by an exceptionally strong downtrend. If we apply (GMMA) Guppy Multiple moving average analysis then it shows as the long term group remaining consistent sellers and this is why these rallies fail and every time when the rally developed there was no compression that developed in the long term group of moving averages on the GMMA indicator and that simply tells us that investors are sellers, they are not buyers and these are trading rallies. So with Reliance we got a down tide support at around Rs 1,000 levels at this stage and below that at Rs 800."

Source: Moneycontrol

HDFC Bank has support at Rs 900: Guppy

Daryl Guppy, Founder and Director of Guppytraders.com is of the view that HDFC Bank has strong support at Rs 900. It is much more volatile than ICICI Bank, it gives a shorter-term trading opportunities.

Guppy told CNBC-TV18, "In ICICI Bank, we are going to look at testing support levels at around Rs 270 level. Again the long-term growth for moving averages is widely separated. A rebound will run into resistance initially at Rs 400 and then very strong resistance at around Rs 530. So what we are looking for is a retest of support or test of support at around Rs 270."

He further added, "If you look at HDFC Bank for instance, it is a little bit more optimistic than ICICI. There is a potential rebound level at around Rs 900 level. This is a relatively strong support level. If I need to hold at Rs 900, the downside target is around Rs 740. So HDFC is much more volatile than ICICI Bank, it gives a shorter-term trading opportunities."

Source: Moneycontrol

Expect 15-18% upside in RIL: R Shah

Rajen Shah of Angel Broking is of the opinion that the worst has been factored in Reliance Industries and one can expect about 15-18% of an upside over the next 12 months or so.

Shah told CNBC-TV18, "Reliance Industries is down almost 62% from the top and in fact the price had corrected almost 68% to 70% from the top. But today it stands about 62% down from the top and what it has discounted in the 62% correction is one excess flab, which was there in the Reliance stock has also discounted the fall in the Pet-Chem and the refining margins, which we are going to see in the coming quarters. So most of the bad news has been factored in the stock price and the possibility of the stock touching the low, which we touched on 27th October, is very remote and I do expect it to maybe tumble another 5-7% from here. But the worst has been factored in and one can expect about 15-18% of an upside over the next 12 months or so."

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

Source: Moneycontrol

Exit Panacea Biotech, says R Shah

Rajen Shah of Angel Broking is of the view that one can exit Panacea Biotech and get into something better than this.

Shah told CNBC-TV18, "One should exit Panacea Biotech. I think there are better opportunities in the pharma space than Panacea. The company has reported absolutely dispel numbers in Q2 and there is a huge net loss and even the first half the company has reported Rs 10 crore of loss vis-à-vis about Rs 80 crore of profit. So the performance is going to be impacted even in the Q3 and Q4. I think the stock could drift to maybe Rs 120 levels or so. So I would advices to book losses and exit this space and get into something better than this."

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

Source: Moneycontrol

Limited downside in Deccan Gold: Chugh

Ashish Chugh, investment analyst and author-Hidden Gems is of the view that there is limited downside in Deccan Gold Mines.

Chugh told CNBC-TV18, "Deccan Gold is the only listed company and it is the only first private sector company involved in gold exploration, this company has been promoted by Australian investors, who are involved in similar business in Australia. This company has got a large portfolio of exploration blocks, which are located mainly in four states and these blocks are located in the states of Andhra Pradesh, Kerala, Karnataka and Rajasthan. The total area of the block is an excess of 10,000 sq km. This company has got one of the most prospective blocks in the country in gold exploration."

He further added, "As of now the company has got no revenues because of the fact that they have applied for mining license for few blocks, but they are yet to get the approval from the Central Government and State Government for mining these blocks. The management expects to get the approvals and start producing in the third quarter or fourth quarter of FY10. They expect to do about 4 tonnes of gold every year and 4 tonnes of gold, if multiplied with the gold price of Rs10, 000 per 10 grams this translates into the revenue of Rs 400 crore. If we try to be conservative and say that they are able to do only 50% of what they are talking about, this would translate into Rs 200 crore revenues."

"Gold exploration it is a high margin business, something like oil exploration, where initial expenses may be high but the margins can be pretty good once they are able to start mining gold. So at a marketcap of Rs 80 crore, I think the downside from these levels looks to be very less. Even though I would recommend that the current price is about Rs 14-15, investors can choose to make a staggered purchase, which could be spread over the next 3-6 months at the price of between Rs 10-15."

"In the case of the unusual movement in the stock like the one we saw last year, when the stock went up from Rs 15 to Rs 150. Risk management is very important because this is a high risk stock, high risk because the uncertainty, which is attached with the kind of business it is involved in. But at the same time the returns in case every thing goes well for the company can also be very good."

Disclosure: Analyst has investment in Deccan Gold Mine and VBC Ferro Alloy.

Source: Moneycontrol

Infosys has resistance at Rs 1500-1600: S Agarwal

Sanjeev Agarwal, equity-head of Globe Capital Market is of the view that Infosys has resistance at Rs 1500-1600.

Agarwal told CNBC-TV18, "Infosys is trying to make a bottom somewhere around Rs 1,000 and it has been an underperformer in this move also. What I see is a very strong resistance of Rs 1500 to Rs 1600. One can start taking some exposure at the lower end at around Rs 1100 because the worst has been priced in that share and if you see the whole IT pack is now in a process of bottoming out. So even rupee weakness has actually not helped this time IT pack but over a period of time this sector is bottoming out and you should be seeing an upside of around 20% or 30% in the next move."

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

Source: Moneycontrol

Expect 18-20% upside in Infosys: R Shah

Rajen Shah of Angel Broking is of the view that one can expect 18-20% upside in Infosys Technologies over the next 12 months.

Shah told CNBC-TV18, "I don’t think there will be any major impact on IT companies. The banking and financial industry there has been hit in the US and obviously volumes are going to decline a bit and even the pricing power, which this industry enjoyed for a long time that’s going to be under pressure. But more or less that has been factored into the stock price of Infosys. It's currently quoting at just about 12 times March’10 earnings. So I think Infosys has never over the past 8 years traded so cheaply, so I don’t see any much downside in Infosys from the current levels. I do see upsides of about 18% or 20% over the next 12 months and that’s a bear minimum I expect from Infosys."

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

Source: Moneycontrol

Sell Tata Steel on rise: N Pillai

Neppolian Pillai of Modern Shares & Stock Brokers is of the view that one can sell Tata Steel on rise.

Pillai told CNBC-TV18, "Tata Steel is a commodity stock and the commodity cycle has turned for the worst by the time it comes back into a bullish orbit, it is another 12-18 months away we are on the cycle, so this stock is going to continuously get beaten down. So on the upside; it will be a sell on rise. For the time being on the downside about Rs 165 is the level, which I am kind of looking at for Tata Steel, where we can come in and buy."

He further added, "If Tata Motors closes at the level where it is at Rs 154, it is going below a major support level of Rs 165 and the next major support, not talking of intra day supports but major positional support is close to about Rs 65. So that’s a completely beaten down stock, it can go down further also not to touch that from a buy point of view."

Source: Moneycontrol

Irani negative on metal space

Mehraboon Irani, VP, PMS, Centrum Broking is negative on metal space.

Irani told CNBC-TV18, "We are passing through a bad phase as far as metals go, I have been negative on this sector. Even right now just because prices have come down and the balance sheets would be very healthy, I do not think I would venture out and go and buy the metal stocks now because we need to understand it is a complete slowdown all over the world. I think what ArcelorMittal announced yesterday is a clear indication of the fact that even corporate are accepting the facts. So cut in production definitely while it could be possibly a little bit healthy over a medium-term as far as the demand supply equation goes but for the time being I personally feel that there could be some more pressure on metal stocks because I think you cannot go away from the fact that there is a complete slowdown and it is going to affect this particular sector."

He further added, "We have seen a complete meltdown as far as prices go, I am not talking about the stock price, I am talking about the metal prices itself. I personally feel that this pressure on metal prices is going to continue. So I remain negative on the sector even at the moment while many would feel that otherwise the stocks would look attractive and there is nothing much to fall but that is not the way one should be looking at these stocks. The outlook is uncertain right now so I do not think I am tempted to buy into any metal stock even at the present levels."

Source: Moneycontrol

RIL may continue to underperform: Irani

Mehraboon Irani, VP, PMS, Centrum Broking is of the view that Reliance Industries may continue to underperform and be a little under pressure in the near-term.

Irani told CNBC-TV18, "I have been expecting for quite some time that Reliance should be an underperformer and I was surprised the way the share shot up sharply in the last few days. So the way the stock has faulted over the last two days, I am not too surprised. I personally feel Reliance should possibly find its base sooner rather than later. I do not expect the stock to be a great outperformer because there are problems as far as refining margins and other things goes for the company. But being of the large size that the company has if somebody asks me whether one should sell into a Reliance my answer would be no because for the longer-term a stock like Reliance is something which should be there in the portfolio at least at the present price one should not be exiting. But I was expecting this stock to be an underperformer for the last few months and I think the stock may continue to underperform and be a little under pressure in the near-term."

Source: Moneycontrol

Reliance may retest recent lows: Mohindar

Rahul Mohindar of Viratechindia is of the view that If Reliance Industries slips another Rs 10 odd from the current level; we are heading once again to retest the lows that it recently made.

Mohindar told CNBC-TV18, "Where we are sitting at is very important support. If Reliance slips another Rs 10 odd from the current level, we are heading once again to retest the lows that it recently made. But technically if we look at various short-term as well as medium-term indicators – they all point to a majority point to a probable new low. So that’s what scary and if that’s going to be a situation with Reliance Industries. That’s probably not going to be saving the Nifty too much of grace."

Source: Moneycontrol

Downside left in technology pack: Mohindar

Rahul Mohindar of Viratechindia is of the view that there is significant downside in technology pack.

Mohindar told CNBC-TV18, "I think honestly, while metal look weak, I don’t see a fresh short opportunity building up. From here I don’t see a Hindalco or a Tata Steel losing something like 15-20%, no out and out crash that I see in this sector or for that matter in deeply beaten down sector like real estate, which goes with it. If I really had to pick shorts into the market, I would still continue to focus on the technology pack, which has shown extreme weakness even stocks like Infosys and all continue to look like they have significant downsides still left in them."

Source: Moneycontrol

Infosys has support at Rs 1220-1230: Mohindar

Rahul Mohindar of Viratechindia is of the view that Infosys Technologies has support at Rs 1220-1230. Below this level, it can slip in three-digit, he added.

Mohindar told CNBC-TV18, "I have been exceptionally bearish on technology stocks. In fact, we have been recommending sell for sometime on these. I still think stocks like Infosys etc, we have got some minor support let us say on Infosys is around Rs 1220-1230 – but if this level really breaks down, we are probably going to even get below the four-digit mark. So I see a severe cut in almost all the IT stocks. So despite the fall we have seen in Wipro or TCS, we have seen quite a rapid intraday correction down today. I still think that’s going to continue and probably this is the sector to stay short in."

Source: Moneycontrol

Mkts lose ground after disappointing inflation nos.

What a volatile session this was. Early in the morning, predictably with the rest of the world, which had gone through a sell-off early in the day, we saw a gap-down opening. Within minutes the markets were down about 4%. The market then recovered quite sharply at about two o’clock perhaps on expectations that the inflation number would go to single digits. That was the whiff doing the rounds in the market throughout the morning. Then as the inflation number came in at 10.72% the market slipped once again. So, the end wasn’t good. But we have seen lots of topsy-turvy movements during the course of the day, and finally, Sensex closing 400 points lower at 9,700 and the Nifty too drifted down another 100 points after yesterday’s sell-off, and this time it is below 2,900. So, we have given up quite a bit of ground over the last two days about 8–9% on the Sensex and the Nifty. Yesterday, it was 5% and today about 3–3.5%.

Metals once again got singled out for punishment. We saw big sell-offs in SAIL and Tata Steel. Tata Motors had a big drubbing. Reliance is the big stock which is really putting the market down and other stocks like Bharti are not helping the index at all. Hence, at the end of two days of setback, the big question is how much deeper does this market have to get cut before it stabilises once again.

Source: Moneycontrol

See 5-10% YoY decline in pricing for IT cos: JP Morgan

Bhavin Shah of JP Morgan said volumes and pricing of IT companies would be under pressure. He sees a decline of 5-10% YoY in pricing, expects a decline in IT spending going into 2009, and a downside risk in the tech pack.

Shah sees a steady moderation in sequential growth for most technology companies and feels that technology companies are a lot more cautious due to some project delays.

He does not expect IT outsourcing to be scaled back or the outsourcing budgets to be under pressure.

Source: Moneycontrol

Relief rally over; mkts may retest Oct lows: Daryl Guppy

Daryl Guppy, Founder and Director, guppytraders.com, said the relief rally that took place in global markets has stalled and that markets may retest lows. The Sensex may retest levels of 7,500-8,500, and if it goes below that, it may test 6,000, Guppy said, adding that the Nifty could test 2,500, but major support exists only at 2,200.

Guppy believes the lows seen in October didn’t coincide with long-term supports and that markets will trade lower than those.

Source: Moneycontrol

Buy beaten down mid-, smallcap stocks: Kotak Sec

R Venkat Subramanian of Kotak Securities said from a long-term point of view it’s time to buy on a bottom-up basis and not at index level. "Start looking at stocks from a long–term point of view and don’t worry about newsflow. In terms of price action, the midcap and smallcap side of the market is decimated, there is huge value there. Whereas, the largecap stocks are not particularly cheap given the current economic outlook and the price at which they trading.”

Here is a verbatim transcript of the exclusive interview with R Venkat Subramanian on CNBC-TV18.

Q: What do you think this leg of the pullback is over or do you think it’s just a mild pullback retracement after which we will form a higher range?
A: The pullback was quite good when it lasted. But yesterday’s action was a little disappointing; it didn’t look like a pullback on the rally, it almost looked like a fresh wave of selling. But in terms of price action, there are two sets of market here; the midcap, smallcap side of the market has been completely decimated and there is a huge value there.

Whereas the largecap stocks - you cannot call them particularly very cheap, given the current economic outlook and the price multiples that they are trading at. So maybe there is some scope for some more liquidation at the largecap level, but at the midcap, smallcap level the market has become ridiculously cheap.

The question that investors have to start asking now is – can we look forward to a 6-7% GDP (Gross Domestic Product) growth at least in the next one-two year? Can we expect once the dust settles down to access to international capital? Can we expect the policy action and the government to be proactive and growth oriented? The answer to all these questions will be – Yes we can. So from a longer-term investor point of view this is time to be a buying particularly on a bottom up basis not at an index level even institutional investors looking at this country would start becoming more positive.

So its time to be little substitute; some amount of hope for despair and start looking at talks from a slightly longer-term point of view and not worry about the news flow. The news flow will continue to be negative; we are not going to get a relief from there. If you are buying today and looking for news flow to support it in the next one-two days or two weeks then you are going to be disappointed. From a trading point of view, the market will remind one – it’s easy to make money by selling and buying than by buying and selling. But that’s the trading side of it. From the investment side you are getting to a very attractive levels for the mid and smallcap segment of the market.

Q: What about some of the defensives, would you be comfortable buying FMCG or pharma right now because they have still got a bit of a valuation premium going?
A: No, at this stage the market and when the broader market is completely bombed out and as an investor if you have any amount of risk appetite you should be buying things which can do well as the market improves. This is not the time to hide behind the stocks, which will not fall. If you had done that in the market 15,000 or 20,000 then it would have been god. But at this stage, I would be little more aggressive in looking for stocks, which can go up than to look at stocks which will not go down. So I would avoid FMCG and even pharma for that matter.

Q: What do you do with the entire energy space not just Reliance, yesterday GAIL, RPL, Essar Oil all of them were under pressure and there were big delivery volumes on them as well?
A: We are coming after few years of significant upturn on the refining side and now margins are slowing down. Even for complex refineries like Reliance Petroleum and Reliance the mix of the margin between transportation fuel and other side has turned against them. So when any of these big trends turns down, the market always tries to see where it’s going to bottom out and not anticipate a bottom based on what has happened in the last one-two years. So to that extent till the refining margins stabilise, we can say this is the base minimum that you can work with. The earnings estimates are going to be all over the place. So, that’s not the space where you are going to get any joy in the near-term. I would still be cautious on stocks like Reliance and Reliance Petroleum and would sell them on rallies than look to buy them.

Q: Some of these infrastructure names which have put interesting rallies. Stocks like IVRCL, Hindustan Construction, Lanco etc. What’s your take on that space?
A: I am reasonably positive on that, more because of the prices than anything else. These stocks are trading at cheap valuations. If you believe that these projects and the orders they have on hand will be executed and they or their clients will have the funding to do that, they will, given the government stand on infrastructure etc. Take a case of IVRCL, it has a Rs 15,000 crore order book and even if they make 4-5% margin on it, its about Rs 750 crore and the market cap of the company is about Rs 1,500 crore now. So it’s got to a level where most of the risks are priced in and should the realty in the next 12-18 months turn out to be any better than what we are all trading now, this would look like a ridiculous valuations.

So some of the slightly midcap infrastructure names are definitely stocks you should be looking to buy on every dip and the kind of panic that we get once in a while, you get them really cheap. But the larger names - maybe you can argue that the valuations are still not that cheap particularly when you compare with the midcap names so maybe you want to be little cautious on them. But midcap infrastructures particularly the well run companies with large order books are definitely buy on dips.

Q: What do you do with Tata Motors? The rights issue went horribly wrong, extremely bad news coming with their sales, the shutdowns they are doing. What would you do with that stock?
A: Unfortunately the company is in set of circumstances that are not going to change quickly. It’s something that you have to look beyond the regular auto cycle to look for any upturn in Tata Motors; they have huge strategic decisions that they have made which are going to make it difficult for that company to enjoy any kind of serious profitability in the next two-three years. The acquisition as well as the small car project, both of that is going to weigh down on that company and now we have the downturn because of the domestic economic conditions. I think that’s a stock which from investor’s point of view is a complete avoid. You will get you chance to buy that when things bottom out. But it’s too early to think about investing in Tata Motors. I think it’s sometime away.

Disclaimer: It is safe to assume that I & my clients may have an investment interest in the stocks/sectors that have been spoken about.

Source: Moneycontrol

Indian IT cos will continue to grow business: Gates



Software for students: The Co-Chairperson of Gates Foundation, Mr Bill Gates, during the launch of DreamSpark - a software giveaway for an estimated 10 million-plus qualified students in the country, at IIT Delhi, in the Capital on Wednesday

Lauding Indian IT industry for building an “incredible reputation”, the Microsoft Founder and the second richest man in the world, Mr Bill Gates, said on Wednesday that while Indian IT companies would be impacted by the global economy, they will continue to grow business.

“In terms of IT companies in India that do global projects, they have done fantastic work. They have been great partners of Microsoft…,” Mr Gates said addressing students of the Indian Institute of Technology, Delhi.

He said the world continued to see a shortage of skills in IT services. To a specific query on the extent of the financial crisis in the US, Mr Gates said that although there would be an economic recession in the US, it may not get extended to too many other countries. “I think in some ways the markets have overreacted,” he pointed out.

Admitting that current imbalances could create some weakness, he said, “I cannot predict whether it would be 3-4 years but it is going to be more than six months…then economy will be back on track.”

Microsoft takes a 5-10 year view and is certainly not cutting back on research, he said after unveiling DreamSpark – a software giveaway for an estimated over 10 million students in India. DreamSpark would provide students access to Microsoft developer and designer tools free of cost, with a view to unlocking their potential.

Mr Gates’ ongoing visit to India has been relatively low key. Earlier in the day, the 53-year-old Mr Gates said that he had full faith in Indian pharmaceutical companies and that his foundation would continue to do business with them.

“The science of Indian pharmaceuticals is quite strong. We will continue our involvement with them. The cheap drugs (sourced from India) are benefiting many countries,” he said. This assumes significance in the light of concerns raised by the US FDA on some drugs manufactured by Indian companies, including Ranbaxy and Sun Pharma. “We have association with many companies like Ranbaxy and Dr. Reddy’s Lab,” Mr Gates said.

Meets PM

He also met the Prime Minister, Dr Manmohan Singh, and discussed areas of support between the Melinda and Bill Gates Foundation and the Ministry of Health and Family Welfare. The Foundation has been providing grants for public health activities, notably in the areas of HIV/AIDS prevention and communication.

Mr Gates’ agenda includes discussion on several healthcare issues with a focus on polio eradication. The foundation has so far committed more than $400 million worldwide to support polio eradication efforts with India among its recipients.

Source: TheHinduBusinessLine

Areva T&D (Rs 176.05): Sell

We recommend a sell in Areva T&D India from a short-term trading perspective. It is apparent from the charts of Areva T&D India that it has been on a medium-term downtrend from its September high of Rs 366. The stock commenced its downtrend from a significant resistance level of Rs 360, forming lower troughs and peaks. However, the stock recently found support at around Rs 142 level (a 52-week low) and witnessed a corrective upmove till Rs 200. This upmove retraced 23.6 per cent fibonacci retracement of its prior down leg and encountered twin resistance (key resistance level at Rs 200 and the down trendline). Subsequently, the stock resumed its medium-term downtrend by tumbling 9 per cent accompanied by above average volume on November 5. The daily relative strength index (RSI) has re-entered the bearish zone from the neutral region and the weekly RSI is featuring in this zone. Our short-term forecast for the stock is bearish. We expect the stock’s fall to prolong further until it hits our price target of Rs 158 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 185.

Source: TheHinduBusinessLine

UK banks face abyss, Europe needs capital: Analysts

British banks are "staring into the abyss" and European lenders may need to raise 83 billion euros ($107 billion) more capital as a credit cr
isis bites hard and drives up bad debts, analysts warned on Thursday.

"Things are getting worse, faster than we thought," Jonathan Pierce, analyst at Credit Suisse, said in a note on British banks entitled "Staring into the abyss?"

That could renew strain on capital even after 44 billion pounds ($70 billion) has been raised in recent months, and leave Royal Bank of Scotland facing a loss this year and next, Pierce said.

Banks across Europe face a grim outlook and could need to raise 83 billion euros and slash dividends, said Huw van Steenis, analyst at Morgan Stanley.

"Deleveraging, funding stresses, weaker macro and re-regulation make us think it's still too early to buy the banks sector," van Steenis said in a note. He cut 2009 earnings forecasts by more than 30 percent for many banks.

Trading updates from a batch of European banks this week have flagged a sharp rise in bad debts as consumers and businesses struggle to cope with a deepening credit crisis.

Many are also struggling to reduce their balance sheets, or reported continued asset growth, which could add to strain on capital even after governments have stepped in with rescue funds for banks in Britain, Germany and beyond.

Britain slashed interest rates by a surprising 1.5 percentage points on Thursday and the European Central Bank and Swiss national bank cut rates by 50 basis points in attempts to ward off deep recessions.

CREDIT CYCLE "TURNS SHARPLY"

The deterioration for Britain's banks this quarter and in the first quarter of 2009 "will be relatively severe" as the global credit crisis affects markets and the economy, Credit Suisse's Pierce said.

RBS is his favourite UK bank stock, but it is unlikely to see much good news for some time. "We think the bank will generate a loss at a group level in 2008, and wouldn't rule out losses for next year as well," Pierce said.

RBS warned on Tuesday it faced more writedowns and rising bad debts this quarter, which could drag it to its first ever full-year loss.

"Recent trading statements demonstrate -- if evidence were needed -- that the credit cycle has turned sharply," Pierce said. "The tightening in credit availability in the last few months bodes badly for economic and bank-related news in the coming months, and conditions have, if anything, got worse since government support was announced in October."

Credit Suisse cut its 2009 and 2010 earnings forecasts by a further 40 percent and said the threat of higher bad debts created further substantial risks to forecasts and could reignite concerns about capital "at one or more of the banks".

Pierce predicted none of the domestic UK banks would pay dividends in 2009 and 2010. Analysts at Keefe, Bruyette & Woods forecast Barclays is the only UK domestic bank likely to pay a dividend next year.

By 1400 GMT the DJ Stoxx European bank index was down 3.9 percent as the interest rate cuts added to worries about gloomy prospects across the sector.

Shares in UBS, Credit Suisse, RBS, Lloyds TSB, BBVA, BNP Paribas and Deutsche Bank all fell 5 percent or more.

Source: EconomicTimes

Banking stocks fall as SBI expresses concern over liquidity

Banking stocks fell by 2.5 to 6.5 per cent after the country's largest lender, State Bank of India expressed concern over liquidity in the I
ndian banking system.

Despite government's continued efforts to ease liquidity and advising lending rate cut, banks are facing the challenges of liquidity availability, says a banking analyst with a foreign broking company.

“Indian banking system does have a problem of lack of liquidity,” chief executive of SBI, O.P. Bhatt, said in a banking seminar on Thursday.

Brokers said that market is experiencing another sharp downtrend on worries over global economic recession that would have possible impact on Asian economies, especially the emerging economies.

At 11:00 am, BSE Bankex was down 2.12 per cent led by Yes Bank down by nearly 6.5 per cent. Frontline banks including SBI and ICICI Bank were down by 3 per cent at Rs 1236 and Rs 437, respectively. HDFC Bank was down by 1.76 per cent to Rs 1075.

Source: EconomicTimes

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.