Friday, 7 November 2008

Chrysler cash drains away as crisis deepens: Sources

Chrysler LLC is rapidly burning through cash and being driven to prepare for a possible break-up if it can't clinch a merger with General
Motors Corp or get government funding needed to ride out the economic crisis, people with knowledge of the situation said.

Without new funding or a wrenching restructuring, executives have raised concern about the automaker's ability to finance its operations from existing cash beyond the first half of 2009, said the sources, who were not authorized to discuss Chrysler's performance.

Chrysler has had to pay out over $100 million a month to support strained suppliers on top of a total $200 million support to sales through dealers in August and September as it suspended vehicle lease financing, the sources said.

The $11.7 billion the struggling automaker said it had as of end-June has seen a substantial decline because of the company's deteriorating performance marked by a 35 percent slide in October sales and increasing cash incentives, they said. Chrysler and its owner Cerberus Capital Management LP declined to comment.

Cerberus and GM had agreed last month on the broad terms of a merger of Chrysler's loss-making auto operations and those of its crosstown rival but the deal foundered when the Bush administration rebuffed a request for some $10 billion to support it, sources have said.

That setback has put the focus on winning support for a broader federal rescue package for GM, Chrysler, Ford Motor Co and their suppliers that the industry argues would save jobs and protect benefits for retirees.

But Chrysler has been forced to consider a more drastic set of backup plans that could include selling off key business lines, including Jeep, considered its most valuable brand. It may also outsource its finance and human resources, sources said.

As a step toward that hard-landing scenario, the automaker is moving to split up its replacement parts business based on brand so that its Chrysler, Jeep and Dodge operations could be completely separate, one source briefed on that plan said. That could make it easier to sell off an individual brand.

Lobbying Washington

Chrysler Chief Executive Bob Nardelli joined GM CEO Rick Wagoner and Ford CEO Alan Mulally on Thursday in meetings with US House Speaker Nancy Pelosi and Senate Majority Leader Harry Reed.

The three automakers lobbied the Democratic lawmakers, who increased their power in Tuesday's election that also saw Barack Obama elected president, for up to $50 billion in federal aid, sources said.

The push for aid has been accompanied by increasingly dire warnings from industry executives and their political allies about the cost of inaction and the risk of a failure that would cost tens of thousands of manufacturing jobs. Chrysler does not release financial information.

While executives, including Vice Chairman and President Tom LaSorda, once touted that lack of disclosure as a strength, the same lack of transparency could now complicate the automaker's efforts to seek aid under a federal rescue package.

In addition, analysts have said Chrysler's ownership by Cerberus poses a political problem as a federal rescue could be criticized as a bailout for a secretive Wall Street firm known for its political contacts.

Cerberus is chaired by former Bush administration Treasury Secretary John Snow and its board includes Dan Quayle, who was vice president under former president George H W Bush. Both GM and Ford are expected to post deep quarterly losses on Friday and announce further urgent steps to cut costs and conserve cash in the face of a plunge in auto sales to their lowest in around a quarter of a century.

GM's president for North America Troy Clarke said late on Wednesday the government and industry faced a critical "100-day" window to secure financing and restructure. The sharp decline in US auto sales that began in the summer and has since accelerated has hit Chrysler particularly hard.

A pending asset sale is unlikely to be enough to save the day. Though Chrysler is pushing to complete a sale of its Viper sports car line this year, that is likely to bring in $80 million or less, said a person familiar with the brand's valuation.

US sales of the Chrysler, Jeep and Dodge brands were down almost 26 percent this year through October, and Chrysler's market share has slipped to just 11 percent in October, putting it in an almost dead-heat with Honda Motor Co for the No 4 spot in the US market.

Under Cerberus, Chrysler's captive finance arm, Chrysler Financial, moved quickly to suspend lease financing in August when resale values of its SUV and truck-heavy line-up plunged and threatened deep losses. But Chrysler was forced to increase cash incentives by $2,000 per vehicle to offset the sudden move to drop leasing. That cost some $200 million in August and September, the automaker told dealers in late September.

"The lifeboat is coming. We just have to keep rowing," Chrysler Vice Chairman Jim Press said in a briefing for dealers that also discussed the automaker's lobbying for government support, according to a person who heard the remarks.

Separately, LaSorda told dealers at the same late September event that Chrysler, which depends on the US market for some 90 percent of its sales, was pressing ahead with alliances and believed it was close to a deal for the Russian market.

Source: EconomicTimes

Real scandal: Dead men buying property in Goa

In Goa, forming name-sake companies which allows 100% FDI has been a major route for investing in properties. This easy route, adopted often
in collaboration with locals looking to make a quick buck is responsible for many foreigners violating Fema that governs all land sales made to foreigners in India.

“In many cases, a person with a small shack buys huge land else where. We have also found cases wherein a dead person is named as an Indian partner to the business deal which clearly indicates that the deals are not genuine,” says Anupam Kishore, joint secretary, Debt Management, who headed an inquiry into foreign land deals in Goa.
Senior bank officials too admit that a ‘large share’ of their foreign business in Goa deals with property purchases.

Official records point that since Fema came into force in 1999, nearly 500 foreigners own property in Goa, mostly British and Russians. The state government has now sent 482 transactions for inquiry to the enforcement directorate.

Fema allows a person of foreign national with a business visa to procure land in India after staying in the required state for 182 days in the preceding financial year. The individual must also have papers for either long-term employment in that place or for carrying on business/vocation there. A foreigner can also purchase land purely for personal use — like a holiday home. In both cases the foreigner has to prove his intentions to stay in Goa for an uncertain period of time.

However, land can also be jointly bought/registered with an Indian partner, where the paper work becomes simple after the foreign person spends mandatory 182 days in Goa. According to government sources, this joint route while used to seek permission for commercial purposes like running a restaurant, shack or be rented out; is often also used for drug trafficking — all done hand in glove with the local (Indian) partner.

In a recent meeting with RBI governor Duvvuri Subbarao, Goa chief minister Digambar Kamat has asked for changes in Fema rules granting state greater control in land sold to foreigners. Besides this, the state will soon be empowering registrars to refuse registration of deals made to a foreigner if it’s not in ‘public good’. This, they say, will help put a ‘blanket ban’ on sale of land to foreigners.

The government’s strong move against foreigners has come post the ghastly murder of British teenager Scarlett Keeling last February. While locals have been blamed of murdering the girl, questions were also raised about how tourists were so easily allowed to extend their visas.

Meanwhile, the state government’s move has already frightened many foreigners who claim that they are being simply harassed for being an ‘outsider’. “A lot of people have been left stranded. Being under investigation, they cannot even sell their property and go back.

These people have put in their entire savings here and don’t know what to do,” claims advocate Vikram Verma who has assisted many foreigners in buying their dream homes in Goa. So while enforcement directorate is yet to charge those with fraudulent deals, for Goans, its time the foreigners went home.

Source: EconomicTimes

Tech sector may be next in restructuring wave

Technology companies may be the next group swept up in a restructuring wave that began on Wall Street.

Purchases of computer hardware, software and services have already been affected by the global credit crisis that has slowed lending, and a broad recession that has taken hold of the economy as consumers struggle with unemployment and mortgage payments.

But the economic downturn promises to be particularly severe for technology companies, many of which are laden with debt brought on during the credit boom of recent years. Some of that debt came as banks became more comfortable lending to tech companies, which had typically tapped the equity markets for capital.

But most came as the companies were bought by private equity firms, which, when faced with pricey mergers and acquisitions, turned to their typical method of increasing returns, heaping on leverage or debt.

Many leveraged buyouts were done at debt-to-EBITDA (or earnings before interest, taxes, depreciation and amortization) multiples of up to 8, far higher than the rule-of-thumb multiple of 3, said Peter Falvey, co-founder and managing director of the technology-focused investment banking firm Revolution Partners.

"You're going to get a triple whammy" of highly-levered balance sheets, an overall economic slowdown and shrinking IT budgets at major clients such as financial services firms, Falvey said.

Both the broader economic recession and tight financing are weighing on companies, according to Andrew Hinkelman, a Senior Managing Director in FTI's Corporate Finance practice in San Francisco.

"There are some companies that are completely overleveraged and then there are those cases where the debt is coming due and the banks are not willing or able to refinance since the credit markets have dried up," Hinkelman said. "You are stuck at that point."

"Companies are going to be forced to use bankruptcy as a vehicle to right-size the balance sheet," he said.

Bankruptcies underway

Experts said much of the damage will begin to play out next year, but some companies are already at risk. They pointed to software companies and semiconductor companies as some with high debt loads. And companies that need to raise money now are not having any easy time, experts said.

"These days the capital that is available to be invested, which is quite a bit, is at least temporarily sitting on the sidelines. Those people who need fresh capital to grow their businesses, irrespective of whether it's debt or equity, are going to have a hard time finding it," said Leo Crowley, an insolvency and restructuring lawyer at Pillsbury Winthrop Shaw Pittman LLP in New York.

The bankruptcies have already begun. On Friday, a small personal computer vendor, MPC Corp MPCC.PK, filed for bankruptcy, blaming its professional business unit.

Earlier this week, a small privately-held software company called Solution Technology that provides financial information to insurers and reinsurers filed for Chapter 11 bankruptcy protection.

Meanwhile, shares in smartphone maker Palm Inc fell on Wednesday after an analyst downgraded the stock and questioned in a research report its need for additional capital. The Morgan Keegan report said Palm may be able to turn to private equity firm Elevation Partners, which owns 25 percent of the company.

Source: EconomicTimes

Asia to avoid full-fledged financial crisis: ADB

Asia is expected to avoid a "full-fledged" financial crisis this time as governments and the corporate sector learned their lesson from
the previous crisis that hit the region 10 years ago, the head of the Asian Development Bank said on Friday.

"Combined with the large buildup in foreign exchange reserves, capital outflows can now be handled more effectively than in the past. And reforms have improved financial systems," Haruhiko Kuroda said in a speech to the Asia Society in New York.

"A range of indicators also point to a healthier corporate sector in Asia. The result is that a full-fledged financial crisis in the region is unlikely," he added.

Nevertheless, the region is already feeling the economic impact of the global crisis, Kuroda said, forecasting that the aggregate economic growth for developing Asia will decline by 1.5 percentage points this year from the record 9.0 per cent of 2007.

"The giant economy of China and India, which account for a large portion of the growth estimate, have already seen growth slow significantly," he said.

On a positive note, Kuroda said, inflation is also declining in Asia as commodity prices fall and demand weakens.

Source: EconomicTimes

Is Facebook befriending investors? CEO won't say

Facebook Inc. doesn't need to befriend more investors to finance its rapid growth, but the popular online hangout hasn't ruled out
the possibility of accepting another cash infusion of help pay the bills, its chief executive says.

Mark Zuckerberg, who founded Facebook in a college dorm room and now ranks as the world's youngest billionaire, made the coy remarks on Thursday during an appearance at the Web 2.0 summit in San Francisco.

Questions about Facebook's financing needs have been raised by unsubstantiated reports on blogs that the privately held company's chief financial officer has recently met with potential investors in Dubai.

Palo Alto-based Facebook so far has raised about $500 million, including a $240 million investment from Microsoft a year ago. That round of financing valued Facebook at $15 billion and left Zuckerberg, 24, with an estimated net worth of $1.5 billion, according to Forbes magazine.

Since taking Microsoft's money, Facebook has more than doubled in size. The company now has more than 700 employees and its Web site has about 125 million active users worldwide. The huge audience has required Facebook to invest heavily in new computers to keep up with the demands on its Web site.

The deteriorating economy could pose more problems because it's expected to crimp online advertising - Facebook's primary source of revenue. Many startups already been firing employees to save money, but Facebook is still hiring, Zuckerberg said.

Facebook's revenue this year will be in the ``hundreds of millions'' of dollars, according to Zuckerberg. He said Facebook still doesn't expect to go public for several more years.

Source: EconomicTimes

Daiichi concludes Ranbaxy deal, stake goes up to 63.92%

Japanese pharma company Daiichi Sankyo has completed the $4.5-billion acquisition of India’s largest drugmaker Ranbaxy Laboratories by
picking up the promoter’s remaining 11.4% stake for Rs 3,537.6 crore. With this transaction, Daiichi Sankyo now holds 63.92% stake or 2.6 crore shares in Ranbaxy.

Daiichi Sankyo bought the promoter’s remaining 48 million shares through an off-market transaction at a price of Rs 737 per share on Friday. “As a result of the acquisition, the Singh family has ceased to be the promoters of the company and Daiichi Sankyo has become the promoter of the company with effect from November 7,” Ranbaxy informed BSE.

Last month, the Japanese company acquired 52.5%. This included around 21% of the promoter’s stake, 20% stake from the open offer in addition to the equity acquired through subscription of preferential shares and warrants.

In June this year, Daiichi Sankyo had agreed to acquire at least 50% stake in the Indian drugmaker through multiple transactions, including buying the promoter’s entire 34.8% stake at Rs 737 per share. Ranbaxy’s stocks gained 1.68% to close at 212.10 on Friday on BSE.

Daiichi Sankyo president and CEO Takashi Shoda said: “We are pleased to announce that all the planned transactions of this landmark deal have been successfully completed. We are determined to work with Ranbaxy to realise sustainable growth.” Ranbaxy CEO and MD Malvinder Singh said: “This puts us well on the path to create a hybrid business model that will unlock the strengths of both companies to bring unprecedented value to all stakeholders.”

Ranbaxy will continue to work as an independent and autonomous company. This brings to an end all speculations about one of the biggest buyouts of any Indian company by a global major.

Following the US drug regulator FDA’s legal action and subsequent ban of its drugs in the US, there were speculations that Daiichi might withdrew the deal. Later, the promoter’s had unsuccessfully tried to execute the deal through the stock exchange to save 11% capital tax gain amounting to around Rs 1,000 crore.

The Gurgaon-based company had received Rs 3,585 crore from Daiichi Sankyo for the preferential issue of equity shares and warrants. The fund will be used to drive the company’s growth through organic and inorganic means while retiring some debt at an appropriate time, a Ranbaxy release said.

Source: EconomicTimes

Rupee completes its best week in 12 years

The rupee completed its best week in more than 12 years on optimism that falling borrowing costs worldwide will boost investor demand for emerging market assets.

The currency extended last week’s gains as central banks in the UK, Europe,
Australia, South Korea and India added to last month’s interest rate cuts, helping global stocks rebound. Overseas funds bought $543 million (Rs2,590 crore) more Indian shares than they sold in the four trading days through 4 November, according to data released by the nation’s capital markets regulator.

“The outlook for equities is much better than what it was at the peak of the global credit crisis,” said K.V. Mallik, treasurer at state-owned UCO Bank in Kolkata. “The climate for investments will improve soon and will help the rupee.”

The rupee climbed 3.8% this week to 47.66 a dollar in Mumbai, according to data compiled by Bloomberg. That is the biggest weekly gain since March 1996, making it the best performer among Asia’s 10 most-active currencies outside Japan.

The Bank of England cut its key rate on Thursday to 3%, the lowest level since 1955. The 1.5 percentage-point reduction was the biggest in 16 years. The European Central Bank followed with its second half-point cut in a month. The action in Europe followed decisions last week by the US Federal Reserve and Bank of Japan to lower rates.

Bank of Korea dropped its benchmark on Friday for a third time in a month. Australia’s central bank had cut rates on 4 November, the third reduction in as many months. The Reserve Bank of India cut interest rates for the second time in two weeks on 1 November.

The Bombay Stock Exchange Sensitive Index has rebounded 17% since 27 October. The index added 2.4% on Friday.

The value of equities worldwide recovered to $31.8 trillion on 6 November, from $29.4 trillion, the lowest since 2003, reached on 27 October, Bloomberg data show.

Source: livemint

Should banks lend more in current scenario?

The reason for the credit crunch is that the incremental credit deposit ratio of banks is as high as 97%. During the June-September quarter, the incremental credit deposit ratio of a number of banks—Andhra Bank, Bank of Baroda, Bank of India, Corporation Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank and Union Bank to name a few—was above 100%. Year-on-year credit growth is as high as 29%, which makes it difficult to talk of banks not lending.

Yet there is undeniably a liquidity crunch. One reason is the preemption of credit by the oil companies, because of government policy. The year-on-year growth of bank advances to the “petroleum, coal products and nuclear fuels sector” rose by 91.8% in the year to 29 August 2008.

The growth in advances to this sector accounted for one-fifth of all incremental advances to industry between 23 May and 29 August. That means less money left over for other sectors. For example, the incremental credit extended to the infrastructure sector during this period was 8.2% of all incremental credit to industry.

It’s true that the real estate sector is having trouble getting funds. But loan outstandings to the real estate sector went up by 11.7% in the three months between 23 May 2008 and 29 August 2008.

The solution to the problems in this sector lies in bringing down the price of property, rather than in forcing banks to lend.

Loan outstandings to NBFCs (non banking finance companies) rose by 7% in the three months under consideration, over a period during which the growth of gross non-food bank credit was 6.4%.

The drying up of other sources of finance has forced companies to turn to the domestic banking sector for their funding needs, but forcing banks to lend in the current environment will only result in more bad loans.
Reports have come in of a deterioration in asset quality among credit card receivables, but loan outstandings on credit cards went up 9.2% in the three months to 29 August, well above the rate of growth of non-food credit for the banking sector.

Source: livemint

Receding financial tide is unstoppable

The European Central Bank, the Bank of England and the Swiss National Bank delivered sharp rate cuts on Wednesday: 50, 150 and 50 basis points, respectively. However, central bankers are still in danger of succumbing to the “Canute syndrome”—failing to keep the receding tide of bank funding from leaving the economy high and dry.

Overnight policy rates—3.25% in the euro zone, 3% in the UK and 2% in Switzerland—are low by recent standards. But, the US is at 1%. There will be more cuts in Europe if the financial and economic situation warrants. That looks increasingly likely.
Central bankers have abandoned all fear of inflation and all hope that the banks can manage on their own. Banks still won’t lend to each other, even at high rates, and are trying to shrink their lending to the real economy. That retreat is set to intensify in the face of mounting losses—house prices are still dropping sharply in the UK and problems in eastern Europe weigh on the euro zone.

The infant recession is both an effect and a cause of credit problems. Higher losses reduce banks’ ability and willingness to lend, and shrinking loans reduce economic activity. But the central bank rate cuts are not primarily anti-recessionary moves to stimulate lending. Along with central bank liquidity and government capital programmes, they are part of an effort to prevent collapse—to keep the financial system running. These cuts are impressive, but aren’t likely to do much. When borrowers and banks both want to get their leverage down, even negative real rates aren’t particularly alluring.

When Canute ordered the tides to stop, he didn’t actually think they would obey. The Viking king wanted to make the point that some forces were more powerful than the royal word. The battle between the monetary authorities and the financial tide is more evenly balanced. But the tide is winnng. The authorities will be lucky to get away with a mild recession.

Source: livemint

World has 100 days to fix crisis: EU leaders

European Union leaders backed a 100-day deadline by which the world's leading economies should decide urgent global finance
reforms, French President Nicolas Sarkozy said on Friday.

Sarkozy, who chaired a special meeting of EU nations, said the financial crisis and economic downturn required a quick deal on an overhaul at a Nov 15 summit in Washington bringing together leaders of the world's 20 largest industrialized nations and emerging economies.

"We are in an economic crisis. We have to take this into account," Sarkozy said. "We have to react and we have no time to lose." "I'm not going to take part in a summit where there is just talk for talk's sake," Sarkozy told reporters after talks between the heads of the EU's 27 nations.

The EU is calling for a second global summit next spring to flesh out changes to the way the world economy is governed. They want to see far more supervision of big financial companies and are urging governments to jointly monitor them.

They want to prevent a repeat of the Wall Street excesses that caused havoc in markets worldwide, and are bringing emerging economies China, India and Brazil on board for talks on shaping a new world economic order.

British Prime Minister Gordon Brown said the Washington talks should be a "decisive moment for the world economy." A text agreed by EU leaders says they want an early warning system that would watch for financial bubbles and prevent ``world imbalances'', such as the swelling US trade deficit.

They also suggest making the International Monetary Fund the world's financial watchdog, suggesting it be given more power to curb financial crises and give more money to aid countries in trouble.

The Europeans also want to close loopholes that allow some financial institutions to evade regulation, and ensure supervision for all major financial players, including ratings agencies or funds carrying high amounts of debt.

The leaders in a declaration called for greater transparency in markets that would no longer omit "vast swathes of financial activity from auditable, certifiable accounts." It also said "excessive risk-taking must be overhauled," a reference to the sale of high-risk debt securities and executive pay that may reward risk-taking.

EU leaders will call on the Nov 15 summit to agree immediately on five principles: submit ratings agencies to more surveillance; align accounting standards; close loopholes; set banking codes of conduct to reduce excessive risk-taking; and ask the International Monetary Fund to suggest ways of calming the turmoil.

To date, European governments alone have committed some 2 trillion euros ($2.6 trillion) in cash injections, bank deposit guarantees, interbank loan coverage and partial or full nationalization to prop up consumer and business confidence.

The damage done worldwide is fueling a search for a "new Bretton Woods", a reference to the post-World War II conference that shaped the international financial system.

In Washington, there is little desire in the waning days of the Bush administration for a major overhaul of financial regulations. But the United States and European nations are no longer the only players. China and Brazil and India are jumping at the chance to join a major international effort.

G-20 finance officials nations will meet this weekend in Sao Paulo, Brazil, to prepare next week's summit. This may pave the way for emerging economies to play a larger role in global finance talks. France is suggesting bring them on board as members of the exclusive world club of G-8 industrialized nations which regularly meets to discuss the global economy.

Source: EconomicTimes

Ashok Leyland to work 3 days a week

India’s second largest maker of trucks, buses and other commercial vehicles by sales, Ashok Leyland Ltd has decided to halve the number of days its factories will produce vehicles to three a week, a day after its bigger rival, Tata Motors Ltd announced a three-day shutdown at its Jamshedpur unit to keep inventory levels in check.
The Chennai-headquartered Ashok Leyland said in a statement that during the last few weeks, demand for heavy duty commercial vehicles has fallen owing to inadequate funds for buyers and high interest costs. That has led it to moderate production for the next two months until December-end, the company said.
The decision, the auto maker added, has also been partially influenced by problems encountered by its suppliers as a result of power shortage in some parts of the country. Vinod Dasari, the firm’s chief operating officer, said it hopes the demand to rebound by January 2009.
The production cuts at the two firms follow lowered sales in the past few months. Tata Motors reported a decline of 29% in October 2008 sales to 19,154 units from 27,103 units in the year-ago month. The decline was mainly led by the medium- and heavy-duty vehicles, that shrank by nearly half.
Ashok Leyland reported an overall drop of of 50.2% in its sales in the same period.

Even Eicher Motors Ltd, the third largest player in terms of sales, reported an overall decline of 79% in its domestic sales in September to 1,552 units from 2,539 units, a decline of 39%. The company has yet to release its October sales numbers.
The Indian commercial vehicle industry is reeling under a slowdown in demand triggered primarily by the paucity of and high cost of vehicle financing. Some 95% of commercial vehicles sold in the country are bought or leased with the backing of vehicle finance.
“There is an intrinsic demand in the market, it’s just that there is a lack of finance,” said Siddhartha Lal, managing director, Eicher Motors.
With banks slowing on new sanctions and disbursals of commercial vehicle loans, non-banking finance companies such as Shriram Transport Finance Co. have stepped up their loan portfolio but seem to be unable to fill the void created by reticent banks, experts said.
Still, with liquidity easing in credit markets, Mahantesh Sabarad, an analyst with Centrum Broking, said he expected a reversal of the slowdown. “It’s more of a temporary phenomenon; once the liquidity situation improves, I don’t see any reason for sales to continue on a depressed note,” he said. “Operators have merely postponed and not stopped purchases.”
Despite the slowdown facing the industry, plans of multinational truck makers that got into alliances with Indian partners in the last two years remain unaffected, company executives said.
Rakesh Kalra, managing director of Mahindra Navistar Automotives Ltd, Mahindra and Mahindra Ltd’s commercial vehicle venture, said plans for starting production were on schedule for 2009. “We don’t have any plans to re-look the capital expenditure or volume plans,” he said.
Shares of Ashok Leyland fell 9.33% to Rs17.50 each, shrinking faster than the broader market. Eicher Motors closed at Rs220.40, down 2.48%, and Tata Motors shares sank 12.17% to Rs159.15 each on the Bombay Stock Exchange, whose benchmark Sensex closed down 3.86%.

Source: livemint

Rupee stable at Rs47.71/dollar

After resuming lower, the rupee was quoted stable at Rs47.71 against the US currency in late morning deals on expectations of fresh capital inflows after a cut in lending rates by major world central banks.
In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit resumed sharply lower at Rs47.95 a dollar against overnight close of Rs47.72.
Dealers attributed initial fall in the rupee to weakness in global equity markets amid expectations of capital outflows.
But, some stability in local bourses and recovery in most of the Asian indices helped the rupee to recover to quote at Rs47.71 in late morning deals.
It moved in a range of Rs47.65 and Rs47.95 a dollar.

Source: livemint

Bajaj Auto slows production as sales fall, inventory piles up

The country’s second-largest motorcycle maker, Bajaj Auto Ltd, is shutting production of motorcycles at its Aurangabad plant in Maharashtra for two days this month because of a sluggish demand and an inventory pile-up, a business associate familiar with the development said.
The company has also cut production at two other plants, Pantnagar in Uttarakhand and Chakan, near Pune, the business associate added.
This person, who didn’t want to be named as he is not authorized to speak on the subject, said the move followed slower sales during the October festive season, when vehicle sales typically peak. Bajaj Auto logged a 34% decline in motorcycle sales in October.
“There is a pile-up of some 50,000 vehicles across all three locations, and it does not make sense to produce more when demand is actually expected to be low for the next 2 months at least,” this person said, adding that the shutdown is scheduled for 9 and 16 November, both of which are Sundays. Typically, the unit operates on all days of the week.
Two other business associates, who also did not wish to be named, confirmed the development.
Bajaj Auto managing director Rajiv Bajaj said he was not aware of any planned shutdown of the motorcycle division in Aurangabad.
At the Aurangabad plant, which manufactures the Platina, XCD, Kristal and Discover motorcycles, production declined from 2,000-2,500 units per day in the previous six months to around 1,500 per day in October.
The plant has an inventory of around 18,000 units, another person said. He also didn’t want to be identified.
Bajaj Auto and other auto makers are hurting as economic growth slows and high borrowing costs and tight bank lending deter buyers.
On Wednesday, Tata Motors Ltd, the country’s largest commercial vehicle maker, said it would shut production at its Jamshedpur facility for three days ending Saturday because of slowing demand.
In a statement to the Bombay Stock Exchange on Friday, referring to news about a shutdown at its Pune plant as well, Tata Motors said it adjusts production to meet demand.
A temporary shutdown of its Pune plant would be one measure to avoid unnecessary inventory build-up, Tata Motors said. The passenger car plant is working normally, it added.

Source: livemint

The high barriers facing foreign workers

From technology giants like Microsoft (MSFT) to agricultural employers such as New York State's Torrey Farms, businesses tend to have a pretty straightforward take on immigration policy: If workers from other countries want to come to the US, government should let them in. This is a controversial stance among Americans who fear losing their jobs. But companies say the economy overall will be stronger with more workers, whether they're designing software, milking cows, or performing other tasks that Americans can't or won't do.

Technology companies have pushed for years to let in more skilled workers. The easiest place to start, they say, is by granting green cards for permanent residence to students from overseas who get advanced degrees at US universities, especially in fields such as science, math, and engineering. Today, these students need to apply for residence along with everyone else, and many can't get the papers to stay. "Over half of our PhDs are foreign-born students, and we won't even give them a green card," says William D. Watkins, chief executive of storage equipment maker Seagate Technology (STX). "So we educate them at our universities, which are the best in the world, and then we send them back home. It's crazy."

Tech companies would like to see more experienced workers from overseas, too, both on a temporary and permanent basis. Under the current system, the number of high-skill workers allowed in each year on temporary work visas is capped at 65,000 (with a further 20,000 for those with advanced degrees). Compete America, a lobbying group representing Intel (INTC), Google (GOOG), Oracle (ORCL), and others, wants the cap increased to at least 115,000. Tech companies have many Washington supporters on the issue, but their efforts have been turned back by critics who say the work visa program is subject to misuse and fraud.
Waiting Game

Technology companies also want additional green cards for skilled workers from abroad. The number of so-called "employment-based green cards" is capped at 140,000 per year now, and only 7% of those, or 9,800, can go to workers from any one country. That cap has had the affect of making immigrants from populous countries such as India and China wait five or more years for their green cards, even after the U. S. government decides to approve their applications.

Complete America would like the overall green card cap to be raised and the 7% restriction for each country to be lifted. In addition, the group has asked for green cards that went unused in years past to be reauthorized so they could be issued in the future. This "green-card recapture" would free up 200,000 to 300,000 green cards for current immigrants. James Goodnight, CEO and founder of Cary (N.C.)-based software maker SAS, says the US risks losing talented workers to Canada and Europe if it doesn't adopt more accommodating policies. "They have a policy of welcoming foreign people with PhDs and highly trained workers, whereas for some reason our country doesn't want them anymore," says Goodnight.

Source: EconomicTimes

Panasonic to buy Sanyo, more deals may follow

Panasonic Corp said it would acquire smaller rival Sanyo Electric Co, creating Japan's top electronics maker and foreshadowing further
consolidation in an industry hit by slowing consumer demand.

The acquisition, which one analyst estimated could cost about $8.8 billion, would fortify Panasonic's competitiveness in rechargeable batteries and solar power equipment as demand grows for greener energy sources.

Panasonic would at the same time become the world's second-largest conglomerate with a major electronics division, behind General Electric and surpassing Hitachi Ltd as the biggest electronics maker in Japan.

But the deal carries risks and Panasonic has not said what it might pay for Sanyo, or what it plans to do with the latter's loss-making businesses such as home appliances and microchips.

"Strategically (the deal) makes sense, though it doesn't necessarily make sense for Panasonic to take on every single bit of Sanyo Electric," said Hannah Cunliffe, fund manager at Germany's Union Investment, which holds Panasonic shares. "There has to be some relatively aggressive restructuring."

The announcement was well flagged and sources told Reuters last weekend that Sanyo and Panasonic, which sits on $10 billion in cash, had agreed in principle to a deal.

Panasonic, the world's top plasma TV maker formerly known as Matsushita Electric, wants Sanyo because of its leading position in rechargeable batteries, which are widely used in mobile phones, PCs, music players and increasingly to power cars.

Sanyo supplies nickel metal hydride batteries to Ford Motor Co and Honda Motor Co Ltd and develops lithium-ion batteries for cars with Volkswagen AG, while Panasonic runs a car battery venture with Toyota Motor Corp.

The deal would also enable Panasonic to enter the solar market. Sanyo is the world's seventh-largest solar cell maker, trailing Germany's Q-Cells, Japan's Sharp Corp and Suntech Power Holdings Co Ltd of China.

"Adverse business conditions are making it difficult for us to achieve the kind of growth we have been striving for," Panasonic President Fumio Ohtsubo told a news conference. "We need a new growth engine within our group."

Source: EconomicTimes


I advice the investor to hold only with a long term perspective. The stock must remain above Rs 150 to prevent further downside.: Prabir Sarkar: Senior Technical Analyst: Microsec Capital

Source: ndtvprofit


The investor can book losses. The stock recovered some time back only on account of short covering and there would not be any significant rally from these levels.: Phani Shekhar: Fund Manager PMS: Angel Broking

Source: ndtvprofit


Investors can accumulate this stock at current levels. The counter was completely beaten down but then pulled back from the lows. If Rs 14 is breached then the stock can touch Rs 10.: Prabir Sarkar: Senior Technical Analyst: Microsec Capital

Source: ndtvprofit

Indian car market suffers as economy sours

October was supposed to herald a revolution for Indian automakers. Tata Motors had planned to roll out the Nano, a 100,000 rupee ($2,000) snub-nosed auto that would bring car ownership to the masses.

But a major land dispute has delayed the Nano's launch. And more worrisome: After years of double-digit growth, Indian auto companies face falling sales.

India's growing consumer base has not inoculated them from the global financial crisis. Battered by high interest rates and tight credit, auto sales began to shrink in the summer, falling 1.9 percent in July and August. After a mild comeback in September, reports from major automakers suggest they fell again in October.

For Ganesh Dalvi, an eager young Mahindra-Renault salesman in a pink button-down shirt, that means it has been three months since he has sold enough cars to get a performance bonus.

Dalvi, who himself can only afford a motorbike, has resorted to cold calling.

"I want to own a car," he said. Fluorescent lighting bounced off the largely empty sales floor at the dealership on the northern outskirts of Mumbai. "That's why I'm doing this cold calling. I want money because I want a car."

Few Indians own cars: There are just 7 per thousand people, according to the Society of Indian Automobile Manufacturers, an industry group. That compares to 18 in Indonesia, 57 in Thailand, 453 in the U.S. and 565 in Germany.

Global automakers see potential. Sales reached 1.5 million cars last year, and the middle class is projected to grow from 50 million people today to 583 million by 2025, according to McKinsey & Co.

Toyota Motor Corp., Honda Motor Co., Renault SA, Daimler AG, and Volkswagen AG are all building new factories, and General Motors Corp. and Ford Motor Co. are ramping up production.

But the short-term may present more challenges than opportunites.

The International Monetary Fund downgraded its forecast for India's 2009 economic growth to 6.3 percent on Thursday, a sharp drop from last year's 9.3 percent. The benchmark Sensex stock market index has lost more than half its value since the beginning of the year.

Analysts expect passenger car sales, which averaged 17.2 percent annual growth over the last five years, to grow just 6 to 8 percent this year.

The most recent quarter was a bleak one for India's leading automakers, who reported double-digit declines in profits for the July-September period.

Tata said its profit fell 34.1 percent to 3.47 billion rupees ($70.1 million). Nearly two-thirds of Tata's earnings come from sales of commercial vehicles, which have been hit by slower growth in industrial production.

Farmer protests also forced the company to halt construction of a $350 million Nano factory and find another site. The company still aims for a modest launch by year-end using existing factories, but says it will take 6 to 12 months to ramp up production to 250,000 vehicles at the new location.

Maruti Suzuki, which sells almost half of all passenger vehicles in India, said net profit plunged 36.5 percent to 2.96 billion rupees ($60 million), because of rising materials costs and a falling rupee.

Mahindra & Mahindra Ltd., India's largest SUV and tractor maker, said net profit fell 20.6 percent to 1.86 billion rupees ($37.6 million) for similar reasons.

Tata sold 39,729 vehicles last month, 20 percent less than last year, and Maruti Suzuki reported total sales of 64,490 vehicles, down 7 percent from last year.

In recent weeks, the Reserve Bank of India has cut its key interest rate and taken a host of other measures to ensure that banks have adequate cash to meet debt obligations and make loans.

But commercial banks, stung by the global credit squeeze and growing portfolios of bad loans, have been reluctant to pass on lower rates to consumers.

Eighteen months ago, car loans cost 7 to 9 percent a year; now they are running 17 to 18 percent, according to the Indian automakers group.

In recent days, state run banks, responding to government pressure, have pledged to lower lending rates.

On Thursday, the nation's largest bank, the State Bank of India, said it would cut its prime lending rate by 0.75 percentage points, and Citibank said it would slash its key rate by half a point.

But some economists say rates are not likely to fall fast enough to give a big boost to consumption.

"Bank lending rates are unlikely to fall substantially and immediately, as liquidity conditions remain tight and credit risk remains elevated," Goldman Sachs economist Tushar Poddar wrote in a note to clients this week.

Raw materials prices are falling now, and Ashutosh Goel, an auto analyst at Mumbai's Edelweiss Capital, believes that and lower interest rates will eventually help India's automakers.

"I don't think the long-term trend has changed," he said. "The auto industry is by nature cyclical. While we expect the long-term trend to be 15 percent, passenger car growth can fluctuate. Year to year it might go from zero to 25 percent."

Source: ndtvprofit

Buy Bajaj Auto, target of Rs 535: Indiabulls Securities

Indiabulls Securities Research has upgraded its rating on Bajaj Auto to buy with a target price of Rs 535 in its November 6, 2008 research report. "For the quarter ending September, BAL reported a 9.2% yoy increase in net sales to Rs 24.5 billion, led by a higher sales volume and improved realisations. At the CMP, the stock is trading at a forward P/E of 6.9x and 6.2x for FY09E and FY10E, respectively. We have valued the Company by using the Discounted Cash Flow (DCF) method, assuming a WACC of 16.1% and a terminal growth of 5%. Our valuation suggests a target price of Rs 535, which provides an upside of 28.9% from the CMP. Thus, we have upgraded our rating to Buy," says Indiabulls Securities' research report.

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

Source: Moneycontrol

Buy Bharati Shipyard, target of Rs 185: Asit C. Mehta

Asit C. Mehta has maintained its buy rating on Bharati Shipyard with a target price of Rs 185 in its November 6, 2008 research report. "For Q2 FY09, Bharati Shipyard Limited’s (BSL) net sales increased to Rs 2137.8 million, from Rs 1480.3 million in Q2FY08, registering a growth of 44.4%. We maintain a BUY recommendation on account of the strong order book, to arrive at a target price of Rs 185, which is equivalent to a forward P/E of 6x to its FY10E EPS (excluding subsidy)," says Asit C. Mehta's research report.

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

Source: Moneycontrol

Brokers bullish on Sun TV, DLF, ICICI Bank

Citi has upgraded Sun TV to buy rating, with price target Rs 185

Emkay has kept buy rating on DLF, with price target Rs 330

Emkay has kept buy rating on ICICI Bank, with price target Rs 720

Emkay has kept buy rating on Lakshmi Machine Works, with price target Rs 810

BNP Paribas has kept buy rating on BHEL, with price target Rs 1600

BNP Paribas has kept buy rating on L&T, with price target Rs 1118

BNP Paribas has kept reduce on Power Grid, with price target Rs 60

Indiabulls Sec has kept buy rating on Bajaj Auto, with price target Rs 535

Source: Moneycontrol

Buy Lupin, target of Rs 935: Karvy

Karvy Stock Broking has recommended a buy rating on Lupin with a target price of Rs 935 in its November 7, 2008 research report. "The company's revenues for the quarter have moved up by 38% to Rs 9.3 billion. The domestic formulation revenues have grown by 24 % to Rs 3.03 billion while formulations exports remain the fulcrum of growth with growth of 143 % to Rs 3.8 billion."

"At the current market price of Rs 25.35, the stock is trading at a P/E of 10.71x FY10E earnings of Rs. 2.37 and P/BV 0.64x FY 10E book value of Rs 39.61. We are upgrading our FY 2009 revenues by 4.3 % to Rs 36.7 bn and our FY 2010 revenues by 3.6 % to Rs 42.1 billion on account of greater traction in formulations exports especially in the regulated markets. We upgrade our FY 2009 nos by 8.1 % to Rs 53.6 and our FY 2010 nos by 12.2 % to Rs 62.3 on account of EBDITA margin expansion mainly on back of savings in gross margins and other expenses. We upgrade our price target by 6 % to Rs 935 based on 15x FY 2010E. Buy," says Karvy's research report.

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

Source: Moneycontrol

Buy Praj Industries, target of Rs 100: Karvy

Karvy Stock Broking has maintained its buy rating on Praj Industries with a target price of Rs 100 in its November 7, 2008 research report. "For Q2FY09 (standalone), Praj reported the revenue increase of 17.6% YoY (QoQ increase of 29.4%) to Rs 2 billion. The revenue was 19% lower than our expectations of Rs 1.67 billion. The company has current order book of Rs 9.5 billion. We expect the consolidated profit to increase at a CAGR of 17.3 % over next two years to Rs 1.83 billion in FY10. At current market price of Rs 72, the stock is trading at 8.4xFY09 and 7xFY10 earnings and EV/EBIDTA it is trading at 4.3xFY09. We maintain our valuation at 10xFY10 in line with de-rating in equity market with target price of Rs 100. We maintain BUY," says Karvy's research report.

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

Source: Moneycontrol

Buy INOX Leisure, target of Rs 63: Nirmal Bang

Nirmal Bang has maintained its buy rating on INOX Leisure with a target price of Rs 63 in its research report. "Inox declared its Q2FY09 results which were in line with our expectations on the revenue front. The company reported revenues of Rs 60.0 crore which were in line with our expectations, as against Rs 54.2 crore in Q2FY08 i.e. 10.7% rise YoY basis and Rs 51.9 crore in Q1FY09, a 15.5% rise on QoQ basis. We reiterate our BUY rating on the stock lowering our price target due to slowdown in the economy as a whole, to Rs 63 per share with a long term view," says Nirmal Bang's research report.

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

Source: Moneycontrol

Buy Mercator Lines, target of Rs 56: PINC

PINC Research is bullish on Mercator Lines and has recommended a buy rating on the stock with a target of Rs 56, in its November 06, 2008 report. "Mercator Linesstands at an advantage vis-a-vis comparable peer group as 75% of its fleet is tied up in lucrative time charters, insulating it from the present market collapse. We believe this along with its expanding presence in other segments like dredging, offshore & coal mining should lead to stability on earnings front despite the current industry turmoil. We have valued MLL on a conservative basis, applying a 50% discount to NAV as our target price. Thus, we maintain our ‘BUY’ recommendation with an 18-month revised price target of Rs 56," says PINC's research report.

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

Source: Moneycontrol

Buy Bharti Airtel, target of Rs 897: KRChoksey

KRChoksey Research has maintained its buy rating rating on Bharti Airtel with a revised target price of Rs 897 in its November 1, 2008 research report. "EBITDA excluding OI increased 33.3% y-o-y to Rs 3,424.3 crore in Q2FY09 supported by increasing profitability from the Enterprise services group and cost optimization of employee expenses. At CMP of Rs 649, the stock is trading at 17.4x TTM EPS of Rs 37.2. We maintain our BUY rating on the stock with a revision in target price from Rs 955 to Rs 897 due to sector de-rating and present market dynamics. At the target price the stock would be valued at 20x FY09E EPS of Rs 44.87, implying an upside potential of 38.2%," says KRChoksey's research report.

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

Source: Moneycontrol

Buy PNB, target of Rs 715: Motilal Oswal

Motilal Oswal has maintained its buy rating on Punjab National Bank (PNB) with a target of Rs 715 in its November 3, 2008 research report. "PNB’s 2QFY09 numbers were significantly higher than our estimates. Key highlights: Loans grew 29% YoY to Rs 1.3 t and deposits grew 24% YoY to Rs 1.86 t. CASA declined to 39%. NII grew 33% YoY v/s our estimate of 19% growth; margins improved 30bp YoY and 51bp QoQ to 3.78%. Robust PAT growth of 31% YoY to Rs 5.1 billion."

"We like PNB for its inherent strengths of large branch network in cash rich North India, strong liability side of balance sheet, higher sustainable margins, strong Tier-I at 9%+, and better asset quality. Post 2QFY09 results, we have increased our EPS estimates by 3-5% for FY09-10. The stock trades at 5.6x FY09E EPS and 1.1x FY09E BV. Maintain Buy, target Rs 715," says Motilal Oswal's research report.

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

Source: Moneycontrol

Buy ICICI Bank; target Rs 720: Emkay Global

Emkay Global Financial Services has recommended a buy rating on ICICI Bank, with price target of Rs 720, in its reports dated November 4, 2008. "ICICI Bank’s (ICICI) reported net profit of Rs 10.1 billion, in line with our estimates. The Bank performed well at the operating level as it reported 20.2% yoy growth in NII to Rs 21.5 billion driven by 23 bps expansion in NIMs. Moreover healthy growth in fee income (albeit lower than our estimates) coupled with lower operating expenditure resulted in 42.4% yoy growth in core operating profit during the quarter."

"A slower balance sheet growth (and expanding CASA) has helped the bank to report expansion in NIMs to 2.2%. However, the bank has continued to disappoint on the asset quality as the gross slippages continue to rise. We have downgraded our earning estimates for the stock by 7% for FY09 and 5% for FY10E. The stock is currently quoting at 10.4x FY10E FDPER and 1.0x FY10E ABV. We have revised our price target to Rs 720 taking into account the deteriorating asset quality and contraction in valuation of banking sector itself," says Emkay Global Financial Services' report.

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

Source: Moneycontrol

Buy Godrej Consumer, target of Rs 125: Angel

Angel Broking has maintained its buy rating on Godrej Consumer Products with a revised target price of Rs 125 in its October 31, 2008 research report. "For 2QFY2009, Godrej Consumer Products (GCPL) posted a strong Consolidated Topline growth of 26.4% yoy to Rs 347 crore (Rs 274 crore)."

"We have revised our Earnings estimates downwards by 14.5% and 9.3% for FY2009E and FY2010E to reflect higher than anticipated Margin pressure and higher tax rate (expected to go up due to higher contribution from International business). Nonetheless, we continue to remain bullish on GCPL’s future performance and are extremely enthused by the robust Topline growth. At Rs 100, the stock is trading at 12x FY2010E Earnings of Rs 8.3 making it one of the cheapest stocks in the Consumer space. We maintain a Buy on the stock, with a revised Target Price of Rs 125 (Rs 148)," says Angel Broking's research report.

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

Source: Moneycontrol

Buy Ballarpur Industries; target Rs 37: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Ballarpur Industries, with price target of Rs 37, in its reports dated November 4, 2008. "Ballarpur Industries (BILT) on consolidated basis reported 17.3% growth in revenues and 34.9% growth in EPS in Q1FY09, which was broadly inline with our expectations. However results are not strictly comparable on YoY basis due to financial and business restructuring done by the company during the year. Company reported net revenues of Rs 7.7 billion (+ 17.3% YoY), driven by 3.8% volume growth and 13% realization growth. PAT (after minority interest) declined by 9% YoY to Rs 673 million. However EPS increased by 34.9% to Rs 1.1 due to recent financial and business restructuring. We are downgrading our price target from Rs 45 to Rs 37 based on 10% discount (historical last five year average) of FY09 estimated book value of Rs 41. However given 68% upside from current level, we maintain our BUY recommendation," says Emkay Global Financial Services' report.

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

Source: Moneycontrol

Buy Aban Offshore; target Rs 1365: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Aban Offshore, with price target of Rs 1365, in its reports dated November 5, 2008. "Aban Offshore’s Q2FY2009 & H1FY2009 consolidated net profit is below expectations primarily because of lower than expected EBIDTA margins and lower profitability of its 50% JV Venture Drilling. Revenues for the quarter stood at Rs 8.24 billion ( higher than expectation) registering a yoy growth of 73%, driven by re-pricing of rigs in the standalone entity, higher operating fleet days for Sinvest rigs an addition of Aban VIII in Aban Singapore."

"Even though Aban boasts of high earnings visibility of 90% for FY2009 and 73% for FY2010, its valuation has decline in line with its international peers. Hence to account for sharp decline in valuation of international drilling companies we are downgrading our price target for Aban to Rs 1365. We have valued Aban at 20% discount to valuations commanded by its international peers. We have used average of three valuation measures PER, P/B and EV/EBIDTA. Maintain BUY," says Emkay Global Financial Services' report.

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

Source: Moneycontrol

Accumulate Nestle India, target of Rs 1626: Angel

Angel Broking has maintained an accumulate rating on Nestle India with a target of Rs 1626 in its October 31, 2008 research report. "For 3QCY2008, Nestle reported a strong Topline growth of 22.2% yoy to Rs 1,108 crore (Rs 907 crore). We have marginally revised our estimates for the company factoring in higher Margin pressure (on account of rising input costs and ad expenses). At the CMP of Rs 1,450, the stock is trading at 22.3x CY2009E Earnings. Nestle justifies its premium valuations compared to its peers on account of its global parent support, strong brand recall, excellent Return Ratios and superior EBITDA Margins. We maintain Accumulate on the stock, with a revised Target Price of Rs 1,626 (Rs 1,756)," says Angel Broking's research report.

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

Source: Moneycontrol

Buy Punj Lloyd, target of Rs 318: HDFC Securities

HDFC Securities has recommended buy rating on Punj Lloyd with a target price of Rs 318, in its November 07, 2008 report. “We believe Punj Lloyd reported robust Q2FY09 numbers, which were far better than our expectations, answering medium term concerns on PLL’s numbers. Also given that the overall business momentum is intact, we believe the margin for disappointment is minimal. Hence, we are keeping our estimates unchanged and are quite confident about its growth in FY09E and FY10E.”

“With the new orders, PLL’s Book-to-Bill ratio stands at 2x FY09E revenues. We expect revenue growth of CAGR 29.4% over FY08-10E and a net profit growth of CAGR 37% for the same period. Presently, the stock trades at a PER of 12x & 9x our FY09E and FY10E EPS estimates respectively. With the historical overhang on provisions related to SEC and recent write-offs in Q4FY08 such incidents cannot be ruled out in future as these orders are yet to be completed. We are however cutting our target price to Rs 318 (from Rs 475 earlier) with a target P/E of 15x FY10E compared to 20x earlier and maintain our BUY rating on the stock. We are not valuing anything from its shipyard business as the chances of listing Pipapav Shipyard looks bleak given current bad market conditions,” says HDFC Securities' research report.

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

Source: Moneycontrol

Buy India Cements, target of Rs 147: Motilal Oswal

Motilal Oswal has maintained its buy rating on India Cements with a target of Rs 147 in its November 3, 2008 research report. "Lower interest cost and lower tax boosts recurring PAT to Rs 1.55 billion. Net sales grew by 24% to Rs 9.5 billion, driven by 8% YoY (4.8% QoQ) higher realizations to Rs 3,605/ton and volume growth of 6.9% to 2.43 mt."

"We are maintain our earnings estimates for FY09E at Rs 24.7. However, our earnings estimates for FY10 are revised downward by 11.6% to Rs 21.7 to factor in for change in cement price assumption to Rs 10/bag decline in FY10 (v/s Rs 5/bag decline earlier). Our estimates do not factor in financials of the IPL venture (and hence any value for the IPL venture as of now). The stock trades at 4.2x FY10E EPS (fully diluted, but adj. for treasury stock), 3x FY10E EBITDA and USD 48/ton. Maintain Buy, target of Rs 147," says Motilal Oswal's research report.

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

Source: Moneycontrol

Buy Tata Steel, target of Rs 325: KRChoksey

KRChoksey Research has recommended a buy rating on Tata Steel with a target price of Rs 325 in its October 31, 2008 research report."EBITDA has increased by 43.68% Y-o-Y from Rs 2,733.4 crore to Rs 3,075.9 crore. PAT has increased to 50.13% from Rs 1,488.4 crore to Rs 1787.8 crore. At the CMP of 210 the company is trading at 1.9X of our FY 09 Estimated EPS of Rs 100. We recommend a BUY on the stock despite the growth concerns purely on the basis of attractive valuations with a medium term target price of Rs 325," says KRChoksey's research report.

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

Source: Moneycontrol

Buy HDIL; target Rs 170: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Housing Development and Infrastructures (HDIL), with price target of Rs 170, in its reports dated November 4, 2008. "Housing Development and Infrastructures (HDIL) reported its Q2FY09 results which were below expectation. Revenue for the quarter stood at Rs 4.7 billion as compared to Rs 4.6 billion during Q2FY08. Net profit registered growth of 15.8% to Rs 2.6 billion, primarily due to lower effective tax rate of 5.5%."

"We are downgrading our NAV estimates to take into a) higher cost of equity b) delays in certain projects c) further moderation of TDR prices. We estimate HDIL’s NAV at Rs 425 per share (as compared to our earlier estimate of Rs 873 per share). We are maintaining our BUY rating on the stock with revised target price of Rs 170 (60% discount to NAV)," says Emkay Global Financial Services' report.

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

Source: Moneycontrol

Don't sell Reliance: PN Vijay

PN Vijay, Portfolio Manager is of the view that one should not sell Reliance Industries at this level.

Vijay told CNBC-TV18, "Reliance has suffered because of the fall in gross refining margins across the globe and Reliance is very much dependent on good refining margins and then we had of course this supposed shut-down at Patalganga. But having said that again the fall has been overdone in Reliance because its business model and its assets are very classy and today at these prices we have look at just not earnings growth but replacement cost and market share etc and Reliance scores very highly on those."

He further added, "One should remember that they are going to be getting their gas out, their refinery operations out etc. So at this level I won’t advise people to sell at Rs 1,200-1,300. When to buy? I would say that there are better stocks in the market to buy."

Source: Moneycontrol

Sell Tata Steel, says Sharma

VK Sharma of Anagram Stock Broking is of the view that one can sell Tata Steel.

Sharma told CNBC-TV18, "Whatever the economy indeed is going to slow down and even the die hard Indian fans are also seeing a slowdown in terms of the lowering of the GDP growth rate in all sectors, even IMF pulled it down to 6.3% and the assumption that China will make up for their lost growth of Europe and US is absolutely wrong because the Chinese local consumption is hardly 39% of their GDP and if you had to work out their per-capita consumption, they will have to consume more than 35 times of what an average US investor does. So Tata Steel is still a sell and if you also look at what Arcelor Mittal had to say is four times the size of what Tata Steel is and my own sense is that they have pruned their profits by half and they are going to cut volumes by 20%, so there is a fair indication that the worst is yet to come and you don’t buy commodity stocks when the PE is cheap but you go on to buy when the PE is still high that tells you that the analyst estimates of Tata Steel are going on the wrong side."

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

Source: Moneycontrol

Buy Gitanjali Gems above Rs 98: Mohindar

Rahul Mohindar of Viratechindia is of the view that one can buy Gitanjali Gems above Rs 98 or look at levels between Rs 70-75 in average.

Mohindar told CNBC-TV18, "In Gitanjali Gems I think for any kind of an upmove particularly on a medium to long-term basis to come in we need to now get pass about Rs 98. Keeping that in mind the stock has consolidated in the last six-seven days has been steady. I wouldn’t even say that’s a good sign whilst entire market was running 20-30% in several stocks. This was a stock which stayed steady. So the direct interpretation of that is probably there is still some more downside to it. So the best bet would be to buy in break above Rs 98 or look at levels between Rs 70-75 in average."

Disclosure: No personal holdings.

Source: Moneycontrol

Exit HUL, says VK Sharma

VK Sharma of Anagram Stock Broking is of the view that one can exit HUL.

Sharma told CNBC-TV18, "HUL usually does well in a bear market, it outperforms the markets and of the five bear markets we have seen, it has outperformed in the four, so it’s good for this stock to be in a bear market. But if you are looking for absolute returns I don’t think this is the stock, if you were to look at the last ten years CAGR, the stock hasn’t given you more than 4% returns per annum, so that is not the rate at which you are taking risk in stocks. So my advice at this point of time when the stock is doing well, you need to exit and even if you are having a longer term horizon like 2-3 years, probably buying Tata Steel or any other commodity stock like Hindustan Zinc, one year down the line even if you sit on the cash will give you more returns three years down the line than HUL per se."

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

Source: Moneycontrol

Anantakrishnan optimistic on the banking, infra space

TS Anantakrishnan, Director of Prime wealth management is optimistic in the banking, infrastructure space.

Anantakrishnan told CNBC-TV18, "Power stocks had been beaten down quite a bit. There is a bit of short covering, which is happening but if liquidity is infused in the manner that its been done and not only you have monetary policy but also a fiscal policy you are going to have banks as well as infrastructure plays, which are quite dependent on liquidity infusions to perform well. So we are quite optimistic in the banking and the infrastructure space and are selectively adding at this point."

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% return in RIL: R Shah

Rajen Shah, Chief Investment Officer of Angel Broking is of the view that one can expect about 18-20% kind of return in Reliance Industries by November-December next year.

Shah told CNBC-TV18, "The worst has been factored into the Reliance stock. If you see, the petchem margins and the gross refining margins are obviously going to be under pressure in the coming quarters and I think that has been understood very well by the market. That is precisely the reason why we have lost substantial ground in Reliance. But now it has come to sinner levels. I think I would certainly be a buyer and would certainly look out for about 18-20% kind of return by November-December next year."

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

Source: Moneycontrol

Buy Suzlon Energy: R Shah

Rajen Shah, Chief Investment Officer of Angel Broking is of the view that one can buy Suzlon Energy.

Shah told CNBC-TV18, "We have been staying away from Suzlon Energy, which is quoting at fancy valuations for almost about eighteen months and between. But now we have started liking a lot of frontline stocks and Suzlon obviously is quoting at about 11 times. It has never traded so cheap in the past. I think in the worst case scenario we do expect it to report about Rs 5.5 maybe Rs 5.75 kind of earnings for the current year. It is quoting at about 11-12 times the earnings. So I think I would certainly go ahead and buy Suzlon at current levels."

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

Source: Moneycontrol

R Shah negative on TTML

Rajen Shah, Chief Investment Officer of Angel Broking is negative on TTML.

Shah told CNBC-TV18, "I have been negative on TTML. I think the only hope left for this company is merger with the parent company Tata Teleservices, which is holding about 74% equity in this company. If you see the working of this company, it is reporting almost about 200-300 crore of loss every year and this year is not going to be an exception. So the only remedy left for this company is to get merged with the parent and if that happens then this stock may bounce substantially from the current levels otherwise I think it is going to languish."

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

Source: Moneycontrol

Don't invest in auto space: Anantakrishnan

TS Anantakrishnan, Director of Prime wealth management is of the view that one should not invest in auto space at least for the next two quarters.

Anantakrishnan told CNBC-TV18, "Ashok Leyland just going to operate only on three days, so the pain is going to continue. We have had six months where credit has been difficult and interest rates weren’t coming down. We still have the same situation where the RBI and Finance Minister are trying to bring down rates and are trying to get banks to start lending more. So progressively, we think the situation would improve but for the foreseeable at least for the next two quarters, I don’t really suppose autos would be a place for one to invest."

Source: Moneycontrol

Hindalco has resistance at Rs 84-90: Mathew

Technical Analyst, E Mathew is of the view that Hindalco Industries has resistance at Rs 84-90.

Mathew told CNBC-TV18, "Hindalco has had a magnificent run and from here, the upside is capped to some extent because we are heading into resistance zone and there is stiff resistance between Rs 84 and Rs 90. Relatively speaking, Nalco looks better just from a trading angle and from here it still has a little more steam left and I wont be surprised if Nalco makes a move of another Rs 25 from the current level."

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

Source: Moneycontrol

Buy DLF at Rs 175-180: Mathew

Technical Analyst, E Mathew is of the view that one can buy DLF at Rs 175-180.

Mathew told CNBC-TV18, "As far as DLF is concerned, real estate stocks have been thrashed so badly and it is participating in a pullback rally, I would say now for those who have been lucky enough to get on to this, if one is stretching a little, one could look at extreme possibility to say around Rs 324 to Rs 330 and beyond that I think it would be pushing ones luck too far and as far as Ranbaxy is concerned, it’s a different ballgame here. I think on a reaction I would like to enter the stock, ideally speaking I am hoping that it could come down to around Rs 175 to Rs 180 and I would love to buy somewhere between that range. At this particular point maybe you are playing for another Rs 15 and I wouldn’t buy the stock at this time."

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

Source: Moneycontrol

Book profits in Suzlon Energy at Rs 78-80: Mathew

Technical Analyst, E Mathew is of the view that one can book profits in Suzlon Energy at Rs 78-80.

Mathew told CNBC-TV18, "Suzlon Energy was one stock which had underperformed substantially and today the stock has moved passed a very important resistance zone. The fact that it is sustaining above Rs 55 and that’s very important and we are heading into resistance territory, which is Rs 78 to Rs 80, I think the stock may pause at that particular point and that was the last time from where a lot of supply had come and the immediate target would be there. People who have been lucky enough to ride the stock, I would have advised profit taking around Rs 78 to Rs 80 zone."

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

Source: Moneycontrol

Reliance Infrastructure can test Rs 650: Mathew

Technical Analyst, E Mathew is of the view that Reliance Infrastructure is looking very interesting and it can test Rs 650.

Mathew told CNBC-TV18, "Tata Steel is showing remarkable strength specially when you have so much negative news about the sector and I wouldn’t be surprised that for the brave traders, people who could keep a stoploss of around about Rs 170 odd and one could take a positional trade in Tata Steel and look for something like Rs 220 or Rs 225."

He further added, "Reliance Infra is also looking very interesting. These are all trading bets and Reliance Infra also looks poised for a good run and I wouldn’t be surprised if this move takes it to around Rs 650."

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

Source: Moneycontrol

Hindalco rights were below intrinsic price: Kumar Birla

Commodity bias has stopped the Aditya Birla Group to always be prepared for a downturn. So, in this volatile economic situation, the company with slowing growth and crashing commodity prices is a somewhat familiar challenge here. But sometimes, poor policy can pickle an already souring situation.

The Group's company Hindalco’s Rs 5,047 crore rights issue devolved two weeks ago. When filed, the rights issue, at Rs 96 a share was priced at a considerable discount to the market price of Rs 140. But regulatory processes meant by the time it came to market, the rights price made little sense forcing underwriters to pick up 40% and Kumar Mangalam Birla to pick up 18.6% more than the promoter’s share of 31.4%.

The issue would have succeeded if Sebi allowed fewer time lags in issue pricing, especially in such market conditions. The rights issue proceeds are meant to refinance one-third of the USD 3 billion debt Hindalco took on to make its audacious USD 6 billion purchase of Novelis, a bet that Kumar Mangalam Birla still stands by. After all, he just put his money where his mouth is.

Kumar Mangalam Birla, Chairman, Aditya Birla Group said, "We have a huge sense of confidence in Hindalco." He thinks that the price was far below intrinsic price; it was lower than what the price would be just given the cash on its balance sheet. "So, we had underwritten the issue to the extent of 40% by the banks at 50% and by us as promoters," he added. He further said, "We did get 90% of the cash that we wanted in the kitty. I’ve strongly believed that had it not been for the crisis that we suddenly found ourselves in, I think the issue and the price at which the issue happened would’ve been a huge success.”

The diversified Birla group also owns Idea Cellular. It is amongst the leading players in service providers domain. According to Birla, the best years of telecom are over because of increase in the number of players then you had to start with. “It still remains a very attractive business for existing incumbents - those who have a network or are spreading out their network like Idea is and those who are on the cusp of growing up like Idea and that’s not a spiel for Idea. But, the new players who intend to come in will find it very difficult to survive in this market.”

Source: Moneycontrol

Promoters take advantage of rights issues

Investors have accorded a lukewarm response to rights offers from companies seeking to fund their expansion plans. But promoters appear to hold a more optimistic view.

They have used the rights route to hike their stake in companies at the current rock-bottom valuations.

The high borrowing cost of debt and shortage of funds have prompted many a company to resort to rights offers in recent months. The market, clearly, did not take to this kindly as concerns about equity dilution led to the stocks being beaten down to levels that made the rights offer price quite unattractive.

Shares of companies ranging from Tata Motors and Hindalco to Dish TV and Suzlon Energy were beaten to new lows, after rights announcements. While investors have shied away from their rights entitlements, promoters have stepped in to take up the unsubscribed portions.

Take the case of Hindalco — the promoter and promoter group companies along with other underwriters have fully subscribed to the offer after it received only about 43 per cent subscription from non-promoter shareholders. As a result, the promoter group’s stake in the company has risen from 31.9 per cent to 35.1 per cent post offer. The rights issue of Tata Motors also remained undersubscribed, providing an opportunity for the promoters to take up the rights portion. Their stake stood at 42 per cent post-offer from 33 per cent before it, bringing in a little over Rs 3,000 crore.

More lined up

Despite these offers struggling for subscription, more companies such as Jaiprakash Associates and Religare Enterprise have recently announced rights issues. The former plans to raise about Rs 1,800 crore to fund its capex plans. Interestingly, the company’s announcement to the exchange states that it plans to raise funds through the rights issue “instead of issuing further warrants to promoters on preferential basis”. The promoters have also given a firm commitment to subscribe to the unsubscribed portion, if any.

Religare Enterprises plans a rights issue priced at Rs 355, a premium over the current market price of Rs 330.

The promoter’s stake as of September 2008 stood at 54 per cent. Promoters typically raise their stake in a company, through preferential allotments or creeping acquisitions of shares, both of which are subject to Securities and Exchange Board of India regulations. Picking up the unsubscribed portion of a rights issue may well be a relatively hassle-free route to increase stake.

Incidentally, recent weeks have also seen promoters and top management in some companies such as L&T, IVRCL, Edelweiss Capital take advantage of the current market conditions to pick up shares.

Source: TheHinduBusinessLine

Retail investors in buy mode as FIIs exit

Non-institutional investors, better known as individual or retail investors, bought stocks worth over Rs 4,000 crore over 45 days between Sep
tember 1 and October 23, at a time when foreign portfolio investors were net sellers in the market.

According to an internal analysis carried out by the market regulator SEBI, while net sales registered by foreign portfolio investors or FIIs were Rs 18,800 crore during this period, individual investors ramped up their purchase of shares.

This category of investors bought stocks worth Rs 4,100 crore, which fund managers reckon is a considerable amount especially when domestic mutual funds were net buyers — which is excess of purchase of stocks over sales — to the tune of just Rs 1,300 crore.

India’s insurance firms lent support during this period with net purchases of Rs 14,000 crore since many of them consider the steep fall in stock prices as a good opportunity to top up their investments in well-performing companies. But what has come as a surprise is the amount of buying by individual investors.

“There are many investors who are putting part of their money into stocks of good companies with a longer horizon and seem to be convinced that this is an opportune time to invest,” said an official in the securities market.

A good part of the buying may well have been accounted for by promoters of companies, who would have acquired shares from the secondary market in their individual capacity. Besides, senior management personnel of many corporates also seem to have been active in mopping up shares from the market, given the low valuations.

Over the past month or two, senior management personnel in firms such as L&T, Dabur and Glenmark Pharma have bought shares in their firms, according to the data provided by the exchanges. A senior executive of a bank which has interests in asset management and also the securities business said the purchase by non-institutional investors was quite large considering that it has come at a turbulent phase in the stock markets.

In his reckoning, high net worth investors or HNIs have not been very active this time around. For, local mutual funds, the going has been tough as corporate investors pulled out money from Fixed Maturity Plans due to concerns related to the quality of the investment portfolio of these plans and also owing to the squeeze on liquidity in the inter-bank market.

During the month of October, their assets under management dropped by 18% to Rs 4,31,901.42 crore, their biggest such fall. For foreign portfolio investors, it has been a double whammy. The steep slide in stock prices over the past couple of months, coupled with the weakening of the rupee against the USD, has hit them hard.

Source: EconomicTimes

Sensex rebounds to close higher

Equities ended firm Friday as traders covered shorts and took fresh positions at lower levels. Power and oil & gas stocks ended with maximum gains.

Bombay Stock Exchange’s Sensex closed at 9964.29, up 230.07 points or 2.36 per cent. The 30-share index touched an intra-day high of 10,065.37 and a low of 9,631.59.

National Stock Exchange’s Nifty ended at 2973, up 2.78 per cent or 80.35 points. The broader index touched a high of 3010 and a low of 2860 in today’s trade.

BSE Midcap Index gained 1.11 per cent and BSE Smallcap Index inched 0.51 per cent higher.

Reliance Infrastructure (10.92%), Hindalco Industries (6.61%), Reliance Communications (5.53%), TCS (4.87%) and NTPC (4.78%) were the top Sensex gainers.

Mahindra & Mahindra (-1.83%), ICICI Bank (-0.67%), Maruti Suzuki (-0.38%), ONGC (-0.29%) and Tata Motors (-0.16%) were the losers.

Market breadth was positive on the BSE with 1417 advances and 1125 declines.

Source: EconomicTimes

Power stocks rally as low valuations attract investors

Power stocks, which were battered badly in the last one month, rallied on Friday as low valuations attracted non-institutional buyers in
the last hour of the session. However, foreign institutional investors continued to keep away.

The power index of Bombay Stock Exchange was the top sectoral gainer, surging 4.5 per cent to close at 1,777.57.

Suzlon Energy topped the list with a gain of nearly 18 per cent at Rs 70.70, followed by Neyveli Lignite (up 12% at Rs 169), Reliance Infrastructure (10.92% at Rs 561), GMR Infrastructure and Torrent Power surged nearly 8.5 per cent, Power Grid rose 7.5 per cent, Reliance Power up 6.3 per cent and NTPC advanced nearly 5 per cent.

“Shares in power sector mostly rallied on account of lower valuation as they were pushed at the lowest during the past much meltdown. Now, people have started nibbling at the lower levels and on the other side retail investors have shown their interest in buying,” said a senior industry analyst of Angel Broking.

Further, the power sector has a positive outlook despite unfavourable global financial cues, as majority of companies have already raised cash and their order book is also strong, he added.

Source: EconomicTimes

Stocks to watch: Jet Airways,Videocon,TCS

Stocks are expected to decline for the third consecutive day as global recessionary pressures mount.

World oil prices fell below $ 60 per barrel in Asian trade on fears of slowdown in global economy. New York's main contract, light sweet crude for December delivery briefly traded at $ 59.97 but later regained some ground to trade at $60.52.

Rupee weakened to 47.80 per dollar from the previous close of 47.66/69, on expectations that stocks markets are likely to drag further

India’s two largest private airlines, Kingfisher Airlines and Jet Airways, are likely to cut ticket prices by up to Rs 1,000 on domestic routes by December.

The two carriers are under pressure to act, as the aviation ministry wants them to pass on the benefits of a series of measures announced by the government to bail out the beleaguered industry.

Slackening demand for commercial vehicles has forced Ashok Leyland to cut its working to three days a week until next month. Consequently the company decided to moderate the production plan for the next two months.

Consumer electronics major Videocon Industries has delayed the launch of its direct-to-home venture. The company had earlier said it would start pilot tests in July and launch commercially in August.

With less than two months to go in this year and companies busy finalising their IT budgets, a global survey by investment bank Goldman Sachs has found that budgets could further decline by 5% in 2009 compared with 2008. The drop is the largest decline since the collapse of the dotcom bubble. The investment bank has put a ‘sell’ rating on India’s leading IT providers, Tata Consultancy Services and Wipro, given these sobering findings.

Herbal and nutritional products maker Plethico Pharmaceuticals is picking up around 20% stake in a UAE-based pharma retail chain with operations in the CIS region for around $20-22 million. If the deal goes through, it will be also the first overseas acquisition by an Indian company in the pharma retail space.

Reliance Money, the brokerage company of Reliance Capital, is in advanced stages of negotiations to pick up a majority stake in an upcoming commodity and currency trading exchange in Nigeria. This comes close on the heels of the R-ADAG firm picking up a 15% equity stake in Hong Kong Mercantile Exchange.

NTPC is planning to set up fly-ash-based cement plants across the country and has sought expressions of interest from prospective joint venture partners, say reports.

Source: EconomicTimes

Suzlon among the top gainers, up 8.5%

Wind turbine maker, Suzlon Energy is among the top three gainers. Friday, the stock was up 8.49 per cent at Rs 65.20 on BSE, and has gained a
whopping 46.68 per cent over the last week.

On Thursday, the company informed BSE that the New Zealand based TrustPower Ltd has started the stage 1 of its first Australian wind farm located at Snowtown 170 km north of Adelaide. The said wind farm comprises of 47 numbers of Suzlon S88 turbines.

However, the Suzlon stock is extremely risky to be invested in, feel market participants, as the industry scenario is bleak and the company is exposed to many issues.

Morgan Stanley, on Nov 3, downgraded the stock from overweight to underweight and cut its target price from Rs 450 to a little more than one-tenth to Rs 52.

The investment bank perceives rising risks to its business model. Its has cut is volume estimate for Suzlon by 17 per cent and 24 per cent in FY09 and FY10 respectively due to low visibility of the industry, thanks to massive downtick in oil prices, which is likely to delay the renewal of PTC in the US and pose difficulty in financing wind power projects. This is expected to result in 29 per cent and 40 per cent drop in earnings, respectively.

Growth from access to REpower technology looks unlikely in the short term as the company has decided not to try to exercise the domination and profit transfer agreement with REpower, due to opposition from lenders who will be financing the next round of growth for REpower.

Morgan Stanley also thinks that Suzlon will be funding its growth with large debt on account of cancellation of its rights issue.

Source: EconomicTimes

Buffett, Google's Schmidt in Obama's adviser team

US President-elect Barack Obama has appointed a 17-member high-level team of advisers including billionaire investor Warren Buffett and
Google Chief Executive Eric Schmidt to guide him in channelising the economy, a media report says.

"US President-elect Barack Obama has appointed a team of high-level advisers including billionaire investor Warren Buffett and Google Chief Executive Eric Schmidt to guide his thoughts on the economy ahead of taking office on January 20," the Telegraph report stated.

The team, to be called the Transition Economic Advisory Board (TEAB), will meet for the first time in Chicago today to discuss the state of the economy and the prospect of taking early action.

Warren Buffett, Chairman and CEO, Berkshire Hathaway, would participate through speakerphone in the meeting.
Further, the report stated that Obama might use this opportunity to appoint his first Treasury Secretary.
The advisory board has 17 members including former Fed Chairman Paul Volcker, whose name has also been connected with the Treasury job, and former Treasury Secretary Robert Rubin, who would also be at the meeting at the Chicago Hilton today, the daily said.

At present, Robert Rubin is Chairman and Director of the Executive Committee of global financial services major Citigroup. Besides, corporate America is also well represented in the team, with Time Warner Chairman Dick Parsons and Xerox Chairman Anne Mulcahy and Schmidt, who was a loyal supporter of Obama during his election campaign, it added.

Other members of the board comprise Laura Tyson, one of Obama's key economic aides, former House of Representatives member David Bonior, two former SEC Commissioners Roel Campos and William Donaldson, and Chairman of the Midwest JP Morgan Chase William Daley, the Telegraph report said.

Further, TIAA-CREF President and CEO Roger Ferguson, Michigan Governor Jennifer Granholm, Los Angeles Mayor Antonio Villaraigosa, Classic Residence by Hyatt CEO Penny Pritzker, Robert Reich and Laura Tyson from the University of California and DE Shaw Managing Director Lawrence Summers are on the board, it added.

Source: EconomicTimes

Ford posts $3 billion loss, Toyota shares dive

Ford Motor Co posted a $2.98 billion quarterly operating loss and shares in world No. 1 automaker Toyota Motor Corp plunged on Friday after it warned this year's profits would hit a 13-year low.

Ford also said it would cut salaried expenses by another 10 percent, following on a program that cut such costs 15 percent earlier in 2008.

Analysts on average had expected Ford and General Motors Corp, which reports later on Friday, to post losses of roughly $2 billion each for the third quarter excluding one-time items, according to Reuters Estimates.

In Germany both BMW, the world's largest premium carmaker, and its archrival Mercedes-Benz Cars of Daimler, posted sharp unit sales declines in October, citing continued weakness in U.S. and western European markets. Porsche is expected to report pretax profit fell 5.1 percent in the fiscal year to end-July, later on Friday.

Toyota shares fell as much as 13 percent in reaction to Thursday's results.

Car sales around the world are stalling, and analysts said the Japanese group's policy of breakneck expansion has left it especially exposed to an industry crunch brought on by the global financial crisis.

The credit crisis has meant many consumers are unable to access loan to fund auto purchases.

BMW suffered a comparatively mild 8.3 percent decline in group sales to 113,005 vehicles in October, while Mercedes-Benz Cars saw volumes fall 18.1 percent to 82,500 units.

GM and Ford's results come at the end of a week that started with reports that U.S. auto sales plunged to the lowest annualized rate in a quarter century in the first month of the fourth quarter.

GM has also said it plans to announce more cost cuts as part of quarterly results.

Faced with accelerating cash burn -- U.S. automakers have called for an industrywide rescue package. GM, which burned through more than $1 billion per month in the second quarter, warned on Wednesday the industry's prospects are dwindling fast due to the "near collapse" in demand for cars.

Both BMW and Mercedes have reduced profit forecasts for their automobile businesses in two consecutive quarters following a sharp drop in demand.

Nissan Motor and Suzuki Motor also issued profit warnings last month.

Source: EconomicTimes

Textile industry may lay-off 5-6 lakh employees

The textile industry, which has warned the government of 5-6 lakh lay-offs due to the global downturn, today said the PMO "totally ignored" its interests and the largest employment-generating sector after agriculture was feeling "let down".

The Northern India Textile Mills Association (NITMA) said that none of its representatives was invited to the meeting convened by Prime Minister Manmohan Singh on November 3 to discuss the state of the economy.

"The Prime Minister had appealed to industry to avoid large-scale layoffs in the wake of the global economic crisis ... The textile industry was totally ignored by the Prime Minister's Office. This is the industry which is going to lay off maximum jobs due to increased maximum cotton price and cancellation of orders by the US due to recession," NITMA President Sunil Jain said.

Top industry leaders like Mukesh Ambani and Sunil Bharti Mittal and the heads of three apex chambers - the CII, the FICCI, Assocham - attended the meeting convened by the Prime Minister.

Jain said the spinning sector in particular is in a difficult situation because of increased costs of inputs, mainly cotton.

The industry, directly and indirectly, employs about 35 million people.

Jain said the export sops have been withdrawn in India, while countries like China and Pakistan have substantially increased incentives for their exporters.

Garment exporters have reported a 30-35 per cent drop in volume in the July-September quarter.

The Confederation of Indian Textile Industry (CITI) has estimated 6-7 lakh people are facing job threats because of a slump in export demand.

Source: EconomicTimes

British Airways profits plunge after bleakest period

British Airways announced a 92-percent plunge in half-year profits on Friday following "incredibly difficult trading conditions" and high fue
l prices.

Pre-tax profits dived to 52 million pounds (64 million euros, 82 million dollars) from 616 million during the same six-month period a year earlier.

The airline recorded a net loss of 42 million pounds (53 million euros, 66 million dollars) for the six months to the end of September and said passenger numbers were down by almost four percent.

"This is a good performance given the incredibly difficult trading conditions. The six-month period will be remembered as the bleakest on record," BA chief executive Willie Walsh said in a statement.

"The period was hit by a crisis in the banking sector, record fuel prices and several airlines going out of business."

However, BA said it was confident it would make a "small profit" for its 2008-09 financial year even though fuel costs were expected to total about three billion pounds.

While oil prices have fallen sharply in recent weeks, BA said this benefit was being offset by exchange rate movements.

Revenues for the six months to September 30 were up 6.4 percent, despite a weakening in long-haul premium traffic since the summer, the airline said.

Operating profits, which exclude interest payments and taxation, fell to 140 million pounds from 567 million pounds a year earlier.

The airline was also hit by the chaotic opening of the new Terminal Five at London's Heathrow airport, but Walsh said the terminal was now running smoothly.

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.