Thursday 13 November 2008

Party’s over for the analyst community

When the Sensex moved from a level of 3,000 in April 2003 to a dizzy 21,000 earlier this year, it was an unbelievable good time for anyone
involved with the markets. One such benefactor was the analyst community. That was then.

Today’s scenario with the Sensex being at around half the level down from that peak has left a lot of people in a quandary. The analyst community has been one such affected party. Five years ago, an equity analyst needed an MBA and a good reference. That was good enough for a job at a domestic broking house.

Typically, an analyst would spend a year before another broking house would grab him at an impressive hike — often twice as much. If things went to plan, in three years, the analyst would find himself inundated with offers from foreign broking outfits at mind-boggling salaries. Clearly, the journey to 21,000 fuelled a lot of ambitions and the mismatch between demand and supply was working overtime.

Meanwhile, broking outfits wanted research analysts to recommend stocks to their clients. This in turn would generate brokerage income for them. It was the large research team that owners of broking outfits would use as the selling point to prospective private equity investors. The effort seemed worthwhile for the analysts since the money was coming in.

Typically, an analyst with an experience of three years would command an annual salary of Rs 10 lakh and one with around twice that experience would draw as much as Rs 15-20 lakh. This was as far as domestic broking firms were concerned. If one was to head to a foreign firm, the salary would be twice as much as what was being made at the domestic broking firm.

That story is hugely different today. “Many analysts came back to their own company after six months at double the salary,” says an industry observer a little wryly.

With cost cutting now the buzzword, broking outfits are looking closely at equity research which is a huge cost centre. Today, with some sectors such as real estate being under intense stress and even mid-caps going off the radar, research analysts in those segments will lose favour.

There is a school of thought which looks at analysts a little sceptically. “Most of them form an opinion after meeting the company management. Very few of them bother to talk to clients or rivals of the company,” says a fund manager with a domestic fund house. That’s not the end of the story. “Not many analysts have seen multiple bull and bear cycles,” says Churiwala Securities managing director Alok Churiwala. With the demand-supply scene easing off now, it may be possible to obtain some quality analysts.

A broker looks at the weakness a little differently. “Not many were able to identify a stock in advance,” says a broker. He says the idea comes from the superior in the office which was followed by some number crunching. Some of them made fancy presentations to fund managers to generate business for the fund house. There are many such instances.

A leading foreign broking house in April upgraded its target price for Suzlon from Rs 290 to Rs 380. Another foreign outfit in early March had a target of Rs 450 on the stock. The stock currently trades at Rs 65. There are similar stories for a lot of other mid-cap companies. Industry watchers, say analysts, often have no explanation in such cases.

The downturn in the market has separated the wheat from the chaff. Broking houses that are serious about the business would try and retain its people and also get an opportunity to choose from a large pool. It does look like there will be semblance that will come in sooner than later.

Source: EconomicTimes

After slowdown, now frauds hit India Inc, says KPMG

Banks might see their bad debts rise in the days ahead not because of the economic slowdown, but because they were hoodwinked by applicants, with cases doubling in the last six months compared to a year ago.

"We have seen the number of cases of fraud that we monitor double in the last six months over the same period last calendar year," KPMG Head (Forensic service) Deepankar Sanwalka told PTI.

The resultant Non-Performing Assets are not because of a bad credit decision, but because documentation was not complete or false information was furnished, the loan could not be recovered, he said.

Sanwalka said Indian industry was not prepared to deal with fraudulent practices that has come to hit it now.

"There was a franctic expansion in the last four years. But controls did not keep pace. Business expansion took precedence over getting control systems in place," he said.

As companies look to cut costs further, the firms might be again overlooking to plug such loopholes that might result in monetary losses, he added.

According to a KPMG study released earlier this year, 11 per cent of the organisations surveyed had estimated financial losses in the range of Rs one to 10 crore, while five per cent of them had losses exceeding Rs 10 crore, which was directly attributable to the frauds detected.

Source: EconomicTimes

Wellcare shares plunge 65 pc as filings delayed

Shares of Wellcare Health Care Plans Inc lost 65 percent of their value on Thursday, plunging to their lowest price ever, after the company
said it is unable to file past quarterly financial reports.

In a government filing posted after the markets closed on Wednesday, Wellcare said it could not estimate when they would be filed. In a separate filing, the company said medical costs were up significantly.

The shares were down $13.00 at $6.87 on the New York Stock Exchange. Wellcare, which administers Medicare and Medicaid programs for state agencies, has been under a cloud since October 2007, when federal and state agents raided the company's Tampa headquarters.

In the filings, Wellcare revealed weakening operations with declining margins. Medicaid performance is expected to deteriorate further as states cope with a recession, analysts noted. The company said it was cooperating with ongoing investigations.

"We do not know whether, or the extent to which, any pending investigations might result in our payment of fines or penalties or the imposition of operating restrictions on our business; however, if we are required to pay fines or penalties, the amount could be material," the company said in the filing.

With regard to the Department of Justice's investigation into a number of whistleblower lawsuits against the company, Wachovia analyst Matt Perry said: "Given that Wellcare has admitted to essentially overcharging the State of Florida in behavioral health, the presence of employee whistleblowers is not surprising.

These lawsuits can drag on for years and it's impossible to judge the merits at this point since they remain under seal." In a research note, Perry also noted that Wellcare is in default on its senior credit facility of $153 million.

The debt will become payable on May 13, 2009, but the lenders could accelerate the payback date and/or increase the interest rate. The company has engaged an investment bank to help it secure alternative financing, he added.

Carl McDonald, an analyst with Oppenheimer, noted that lower investment income has been a big drag on its earnings. "Investment income will likely be down by more than 50 percent this year, costing the company about $40 million, or almost 60 cents per share," McDonald wrote in a note.

Source: EconomicTimes

Dubai property boom gets hit by financial crisis

This Arab Gulf boomtown _ so business-friendly it's been called ``Dubai Inc.'' _ is suddenly getting a nasty taste of
the global financial crisis.

Housing prices are falling for the first time in years, and shares are plummeting.

One major property developer has begun laying off staff, and another is reviewing its recruiting needs. Others are scaling back ambitious growth plans as financing for both companies and homebuyers freezes up.

``What happens in Dubai is very linked to the financial crisis,'' Markus Giebel, chief executive of Dubai-based builder Deyaar Development Co., said in an interview at his office overlooking the sprawling city's skyscrapers on Thursday. ``There's actually no way to swim against the stream. If the stream goes left, you'd better swim with it.''

Deyaar encapsulates the forces now buffeting Dubai's housing sector _ one of the key drivers of this city's wealth in recent years.

In April, the company's former CEO and other officials were detained amid allegations of financial impropriety _ an early salvo in a wider anti-corruption sweep. Analysts praised the crackdown, but it also rattled investors just as the global financial crisis was heating up.

Deyaar's stock has fallen sharply since. The company's shares ended the trading week Thursday at 78 fils (21 cents), down 74 percent from a year earlier.

Other real estate and banking shares are tumbling too. The Dubai Financial Market is down 25 percent this week alone.

At the same time, Dubai developers _ like their counterparts in the West _ are finding it harder to raise funds. Deyaar has shelved recently announced plans to raise more than $1 billion through the sale of Islamic bonds and is paring its international growth plans from about 10 countries to about three, Giebel said.

Others are also scrambling to cope with a change of fortunes that appears to have caught many by surprise. Only last month, the industry was busy unveiling audacious new projects, including a tower about two-thirds of a mile (one kilometer) high.

At least for now, the good times appear over. After years of unrelenting growth, home prices on the secondary market in Dubai fell by 4 percent from September to October, according to a report this week by HSBC Holdings PLC. Prices for high-end ``villas,'' typically stand-alone houses, are down 19 percent and face ``protracted weakness'' if lending rules remain tight, analysts at the bank said.

The report provides hard evidence for what real estate agents have been saying privately for weeks: many would-be buyers are spooked, and those that want to buy face a tough time getting mortgages.

Mary Nicola, an economist at Standard Chartered Bank in Dubai, said there are two main factors putting pressure on housing prices _ tight credit markets and increasingly negative sentiment among investors globally.

As recently as a few months ago, speculators enticed by low borrowing rates and little money down helped drive the prices of unbuilt, or ``off-plan,'' property up to the levels of finished developments, she said.

``Access to cheap credit led to an increase in borrowing and people were just going out and putting their assets in the property market,'' she said. ``People were able to put minimum money down and then flipping the property within days.''

Over time, bank deposits failed to keep up with the rapid credit growth, pressuring local lenders. At the same time, credit markets were tightening up around the globe.

Now the city is bracing for what some fear could be a painful correction. Morgan Stanley predicted in August prices will drop 10 percent by 2010 but could fall far more sharply in a more dire scenario.

Emaar Properties, the UAE's leading publicly traded developer, said Thursday it is reevaluating its recruitment policies to ensure they meet the company's long-term interests.

Also this week, privately held Damac Holding said it will cut 200 jobs, or 2.5 percent of its staff.

The question now is whether the rest of the industry can adapt in time.

``It was an ever-growing market,'' Giebel said, suggesting that some developers may be unprepared to manage the shift to what could be a prolonged downturn.

``Whether all of the companies are prepared for something like this ... I don't know. But very seldom do you have leaders who are good at both the good times and the bad times,'' he said.

Source: EconomicTimes

Oil falls to near $56, demand wilts

Oil dropped to just above $56 a barrel on Thursday after the latest evidence of a deep drop in demand offset news OPEC might take emergency
action to curb supplies.

US crude was seven cents lower at $56.09 by 1627 GMT, recovering from a session low of $54.67 - the weakest level since January 30, 2007. London Brent crude dropped $1.12 to $51.25.

"The only thing supporting the market is the possibility of OPEC cuts at the end of the month, but the production cuts would probably only be in step with falls in demand," said Christopher Bellew of Bache Financial.

Selling gathered fresh momentum after the latest set of US inventory data showed another fall in U.S. gasoline demand and a rise in stocks of refined products.

Overall crude stocks were unchanged against expectations of an increase. But gasoline inventories rose by two million barrels, more than analyst expectations for a 300,000 barrel rise and gasoline demand over the previous four weeks was 1.9 per cent lower than a year ago.

The International Energy Agency in a monthly report slashed its global oil demand growth forecast for next year and said this year's increase in consumption had been the slowest since 1985.

It predicted demand would next year expand by only 350,000 barrels per day (bpd) - down 340,000 bpd from its forecast in last month's report.

Faced with the prospect stocks will swell as consumers stop buying, pushing prices even lower, the Organization of the Petroleum Exporting Countries said it was considering an emergency meeting at the end of November in Cairo.

Only last month, it agreed to cut output by 1.5 million bpd at emergency talks in Vienna. Oil has lost more than 60 percent of its value since hitting an all-time high above $147 a barrel in July.

The average price so far this year is still only just below $90 a barrel, but OPEC is focused on the price it receives for its oil. The OPEC basket on Wednesday dropped below $50 a barrel for the first time since January last year.

Source: EconomicTimes

Rupee may return to strength by early to mid 2010: Mecklai

Worried over the sharp depreciation of the rupee? Here's some solace for you. Risk management consultancy major Mecklai Financial has predicted the rupee will begin to rise again by late 2009 and could return to strength by early to mid 2010.

In its latest research report, Mecklai has said that capital flows will take some time to return to 'normal'. However, "we believe that by late 2009, we should see investment flows resume, which should be the trigger for some modest strength in the rupee ...which could return to strength by early to mid 2010."

Even today "the silver lining for India is that the sharp depreciation of the rupee has rendered exports much more competitive. So, too, the dramatic fall in oil will make the trade balance much more manageable," the report says.

Of course, capital flows remain a major negative for the rupee. After having more than quadrupled to $108bn over the previous two years, capital inflows are expected to fall to $31bn in 2008-09. Portfolio flows are forecast to decrease by $10bn, as compared to an increase of $29bn in the previous fiscal, while borrowings are expected to fall from $41bn to $15bn. FDI has been the only bright spot this year, doubling to $10bn for Apr-Aug 2008; despite the crisis, the net figure should easily surpass last year's level of $15bn.

However, with equity prices having fallen 60% this year, as a result of which many, many companies are cheap even compared to their cash assets, and the credit market slowly on its way to normalcy, "we would expect capital flows to begin to show improvement by the second half of 2009," the report says.

The RBI's recent decision to reverse all restrictions it had placed on ECBs, NRI deposits, and FII flows through participatory notes is timely and will boost flows as and when the environment improves. Interestingly, one of the fallouts of this crisis is that "we will have a more liberal external account when the smoke clears."

Of course, the overall balance of payments is expected to be negative in fiscal 2009 and has already resulted in a substantial drawdown of reserves. However, in view of the factors listed above, "we believe fiscal 2010 should see a surplus of around $20bn, which should support a return to a modestly stronger rupee," the report says.

Source: EconomicTimes

Government not 'cure-all' for economic woes: Bush

US President George W. Bush said on Thursday that the global economic crisis was not "a failure of the free market system" and warned against seeing government intervention as "a cure-all."

"The crisis was not a failure of the free market system. And the answer is not to try to reinvent that system," Bush said in a prepared speech to lay out his agenda at Friday and Saturday talks with world leaders in Washington.

"We must recognize that government intervention is not a cure-all," said the US president, who rejected any effort to blame a lack of US regulation for the international meltdown that began with the burst of the US housing bubble.

"Some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations and still experienced problems almost identical to our own," he said.

It was unclear to whom Bush's warnings about dismantling international capitalism were addressed, and the White House would only say that the US president was restating a commitment to free trade as an engine for growth.

Bush aides have said the talks would aim to forge agreement on the underlying causes of what many call the worst crisis since the Great Depression of the 1930s and principles for a coordinated international response.

"The leaders attending this weekend's meeting agree on a clear purpose: To address the current crisis, and lay the foundation for reforms that will help prevent a similar crisis in the future," Bush said.

"We also agree that this undertaking is too large to be accomplished in a single discussion. So this summit will be the first in a series," said Bush, who hands the keys to the White House to Barack Obama on January 20.

Created in 1999, the G20 comprises major rich and developing countries, accounting for 85 percent of the world economy and about two-thirds of its population.

Its members are the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

International Monetary Fund and World Bank officials are also expected to attend the Washington summit.

Amid calls for enhancing those international institutions' role, Bush said both must "reform" and "modernize" the way they make decisions.

"They should consider extending greater voting power to dynamic developing nations -- particularly as they increase their contributions to these institutions. They should also consider ways to streamline their executive boards, and make them more representative," he said.

Bush, who worked with the US Congress to craft a 700-billion-dollar bailout of troubled US banks, praised international cooperation thus far but warned: "This crisis did not develop overnight, and it will not be solved overnight."

"There will be more difficult days ahead. But the United States and our partners are taking the right steps to get through the crisis, and they are working," said the US president.

With many looking to blame lax US regulatory structures for the meltdown, Bush said "outdated regulatory structures and poor risk management practices" had particularly hurt large international financial institutions.

Source: EconomicTimes

Global econominc crisis to slow worldwide IT spending in 2009

Silicon Valley, Nov 13 (PTI) Worldwide spending on information technology, especially in the United States will slow "significantly" in 2009 due to the global financial crisis, a leading IT market intelligence firm has forecast.
Worldwide IT spending will grow 2.6 per cent year over year in 2009, down from the pre-crisis forecast of 5.9 per cent growth, according to a newly revised forecast from IDC.

In the United States, IT spending growth is expected to be 0.9 per cent in 2009, much lower than the 4.2 per cent growth forecast in August.

"Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy," said John Gantz, chief research officer at the IDC.

"Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains. As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace." On a regional basis, spending growth in Japan, Western Europe, and the US will hover around one per cent in 2009. In contrast, the emerging economies of Central and Eastern Europe, the Middle East and Africa, and Latin America will continue to experience healthy growth, but at levels notably lower than the double-digit gains previously forecast.

On a sector basis, software and services will enjoy solid growth while hardware spending, with the exception of storage, is expected to decline in 2009, the IDC said in a press release. PTI

Inflation foxes Govt economists, again!

New Delhi, Nov 13 (PTI) Inflation has not only burdened the common man but foxed economists and policy planners with its erratic movement. Whenever they predicted a downslide, it has jupmed or vice versa.
This has made our economists sound like a church choir, whose lyrics made little sense.

All senior economists in the government felt that the wholesale price index-based inflation would continue to be in double digits till early 2009, but the rate of rising prices for the week ending November 1 dropped hurriedly to 8.98 per cent.

This is what senior economists have had to say on inflation and how the rate of prices have risen or fallen: June 5, 2008: Planning Commission Deputy Chairman Montek Singh Ahluwalia said, "It would be lower than the current level four months down... The direct effect of what has just been done (petroleum price hike) will probably be about 0.5%..." Inflation for the week ending June 7 shot up to 11.05 per cent from 8.75 per cent a week ago, within days of government increasing the prices of a litre of petrol and diesel by Rs 5 and Rs 3, respectively and cooking gas by Rs 50 per cylinder.

August 13, 2008: Former chairman of Prime Minister's Economic Advisory Council C Rangarajan said, "For some more time inflation can increase. It could touch 13 per cent... But by December it will start declining and is likely to moderate to 8-9 per cent by March 2009." Inflation inched up to 12.82 per cent for the week ending August 16, but never touched 13 per cent. PTI

Bone marrow transplant suppresses AIDS in patient

BERLIN (Reuters) - A bone marrow transplant using stem cells from a donor with natural genetic resistance to the AIDS virus has left an HIV patient free of infection for nearly two years, German researchers.

The patient, an American living in Berlin, was infected with the human immunodeficiency virus that causes AIDS and also had leukemia. The best treatment for the leukemia was a bone marrow transplant, which takes the stem cells from a healthy donor's immune system to replace the patient's cancer-ridden cells.

Dr. Gero Hutter and Thomas Schneider of the Clinic for Gastroenterology, Infections and Rheumatology of the Berlin Charite hospital said on Wednesday the team sought a bone marrow donor who had a genetic mutation known to help the body resist AIDS infection.

The mutation affects a receptor, a cellular doorway, called CCR5 that the AIDS virus uses to get into the cells it infects.

When they found a donor with the mutation, they used that bone marrow to treat the patient. Not only did the leukemia disappear, but so did the HIV.

"As of today, more than 20 months after the successful transplant, no HIV can be detected in the patient," the clinic said in a statement.

"We performed all tests, not only with blood but also with other reservoirs," Schneider told a news conference.

"But we cannot exclude the possibility that it's still there."

The researchers stressed that this would never become a standard treatment for HIV. Bone marrow stem cell transplants are rigorous and dangerous and require the patient to first have his or her own bone marrow completely destroyed.

Patients risk death from even the most minor infections because they have no immune system until the stem cells can grow and replace their own.

HIV has no cure and is always fatal. Cocktails of drugs can keep the virus suppressed, sometimes to undetectable levels. But research shows the virus never disappears -- it lurks in so-called reservoirs throughout the body.

Hutter's team said they have been unable to find any trace of the virus in their 42-year-old patient, who remains unnamed, but that does not mean it is not there.

"The virus is tricky. It can always return," Hutter said.

The CCR5 mutation is found in about 3 percent of Europeans, the researchers said. They said the study suggests that gene therapy, a highly experimental technology, might someday be used to help treat patients with HIV.

Goldman suspends GM rating, sees $22 billion bailout

DETROIT (Reuters) - Goldman Sachs suspended its rating on General Motors Corp on Thursday and said the automaker needs at least $22 billion in federal aid to survive a deepening industry downturn.

Goldman Sachs forecast the No.1 U.S. automaker will end 2008 with $12.5 billion in cash, within the $11 billion to $14 billion minimum range GM has said it needs to operate, requiring GM to look toward the government for aid.

GM's shares, which hit a 65-year low this week, slipped about 5 cents, or 1.6 percent, to $3.03, as the market awaited details on whether the U.S. government would push forward with a rescue plan for the auto industry.

Goldman Sachs said a new program to support the auto industry is most likely, though the timing was uncertain.

Also on Thursday, JPMorgan cut its GM rating to "neutral" from "overweight" and said the automaker needs "something immediately" to make it through the end of the year.

JPMorgan, which also slashed its target price for GM stock to $1.84 from $3.08, said a government bailout could easily reach $30 billion unless GM reforms its vast liability structure.

The warnings are the latest in a series of gloomy forecasts from Wall Street banks in the wake of GM's deeper-than-expected third-quarter loss and cash burn announced on Friday.

Analysts have warned that any government assistance, which they believe is a must for GM to survive through early 2009, would come at a significant cost to existing shareholders.

U.S. lawmakers have said in recent days they might support efforts to aid the struggling industry over and above $25 billion of low-interest loans previously approved to support capital investment to meet new fuel economy mandates.

Lawmakers will hold a hearing next week to consider a bill to provide another $25 billion in federal loans to U.S. auto manufacturers, possibly using part of the $700 billion financial market rescue law enacted last month.

But the White House said on Thursday it was not the intent of Congress to use the financial rescue package to help ailing U.S. automakers.

GM, Ford Motor Co and Chrysler are all burning through cash amid a global credit crunch that has accelerated the decline in U.S. auto sales and placed severe limits on corporate and consumer borrowing.

GM ended September with $16.2 billion in cash, down from $21 billion at the end of the second quarter.

Jobless claims hit 25-year high, imports plunge

WASHINGTON (Reuters) - The number of workers drawing jobless benefits hit a 25-year high this month and U.S. imports suffered a record drop in September, according to reports on Thursday that underscored a rapid drop-off in the U.S. economy.

The number of U.S. workers filing new claims for jobless benefits rose by an unexpectedly steep 32,000 last week to 516,000, the highest level since the weeks following the September 11, 2001 attacks, the Labor Department said.

In addition, the number of workers still on the benefit rolls after drawing an initial week of aid hit 3.9 million in the week to November 1, the highest since January 1983.

"This is obviously (a) very, very serious deterioration in the labor market, more than a lot of people had expected even a couple of months ago," said Scott Brown, chief economist with Raymond James & Associates in St. Petersburg, Fla.

"We are looking at the biggest financial crisis since the Great Depression and the biggest economic crisis we have had in the United States since the early 1980s."

The U.S. economy has been suffering from a housing market crash, a lack of credit and an auto industry that is struggling to survive. One source of growth through the first half of the year has been exports, but that appeared to be stalling.

U.S. exports fell at the fastest pace since September 2001 as the credit crunch slowed economies around the world.

U.S. stocks fell in early trading as the big jump in claims for unemployment insurance added to growing concerns that the current economic slump could be deeper and longer than initially expected. The dollar weakened against the euro.

"EVERYBODY IS HURTING"

A report from the Commerce Department showed a record drop in imported oil prices and the lowest auto imports since February 2004, factors that helped trim the monthly trade gap to $56.5 billion, slightly below the $57 billion expected on Wall Street.

U.S. imports from China hit a record $33.1 billion in September, but imports from the European Union fell 3.8 percent and imports from the Organization of Petroleum Exporting Countries slumped 27.1 percent as imported oil fell by a record $12.41 per barrel in September.

"The drop in oil price is a factor no doubt about it. People are just not driving that much more," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. "We are seeing a decline in everything -- imports and exports ... It tells me everybody is hurting."

U.S. goods exports fell by a record $10.4 billion, with all major categories showing a decline. A sharp drop in exports of capital goods was led by civilian aircraft, after posting big numbers in the two prior months.

A separate report showed consumer spending continues to drop. U.S. retail sales fell for a second straight month, dipping 1.5 percent in October, according SpendingPulse data, which excludes auto sales.

Wal-Mart Stores Inc., the country's largest retailer, continues to benefit as the struggling consumers flocked to the discounter, which posted better earnings than analysts had expected.

Asian shares sink on global economy fears

Evaporating confidence in the global economy boosted regional bonds, while knocking down oil and metals such as platinum

Asian shares sank on Thursday to their lowest this month on uncertainty about whether the United States can succeed in its massive banking rescue and a revenue warning from Intel Corp.

The Japanese yen retreated against the euro and the dollar after soaring on Wednesday on a flight-to-quality. Other Asian currencies fell, while Australia’s central bank stepped in to support its tumbling Australian dollar.

Evaporating confidence in the global economy boosted regional bonds, while knocking down oil and metals such as platinum.

Asian shares followed Wall Street lower after the US Treasury on Wednesday backed away from using a $700 billion bailout fund to cleanse bank balance sheets of bad mortgage debt to focus on buying stakes in US banks.

The shift in focus not only created uncertainty, but came as Europe reported more gloomy economic news, heightening fears of a global recession.

News that Intel Corp slashed its fourth-quarter revenue forecast, citing weak demand across the world for all its products added to the worries.

The MSCI index of Asian stocks outside Japan fell more than 4.5% to its lowest level since 30 October.

Japan’s Nikkei average dropped 5%, with exporters such as Honda Motor hit amid concerns about the impact from a stronger yen.

Other stock markets were also battered: South Korea, Australia, Hong Kong and Taiwan tumbled more than 4% each, and Shanghai fell about 1%.

Aussie dollar rescue

The US dollar edged up to around 95.57 yen as investors took profits on the yen’s strong gains the previous session.

The euro also rebounded, rising to 119.15 yen up 0.3% from late US trade, after briefly falling as low as 117.65 yen on trading platform EBS earlier in Asian trade.
Traders said thin liquidity in the market was exaggerating price movements.
Other Asian and Pacific currencies fared worse. The battered Australian dollar edged up to $0.6410 after the central bank said it had intervened to support a sliding currency that fell to $0.6347 on Wednesday - its lowest in two weeks.

Regional government bonds gained from the volatility elsewhere, with Japan’s December 10-year JGB futures up 0.45 point to 138.54, after climbing as high as 138.79.

Commodities dropped amid concern that sputtering economic growth would curb demand for everything from oil to grain and on widespread risk aversion.
US crude futures fell 72 cents to $55.45, while platinum sank to $785.00 from its New York notional close of $810.

Source: Livemint

LSE halts share buy-back, shares plummet

Markets would remain “difficult and uncertain”, the British bourse said, just as a spate of new market entrants are forcing it to cut fees

London Stock Exchange Group halted its $773.3 million share buy-back programme on Thursday, sending shares lower even as it announced a 57% rise in operating profit.
“Following the significant changes in global financial market conditions, it is currently prudent to retain a more robust balance sheet and to provide financial flexibility to pursue investment opportunities,” it said.

Markets would remain “difficult and uncertain”, the British bourse said, just as a spate of new market entrants are forcing it to cut fees.

By 1:55pm, LSE stock was down 9.2%. The FTSE 100 Index of blue chips was 0.4% weaker.
LSE shares have fallen 70% since the start of the year, a sign of concern that increasing competition after the introduction of new European Union financial rules, known as MiFID, will put the bourse’s revenue under pressure.

“We believe the impact of competition will not be limited to trading but will be extended to its information services division as well,” said MF Global analyst Mamoun Tazi.

For the six months ending September, the British bourse said operating profit before amortisation and exceptionals rose by 57% to $278.2 million, above Reuters Estimates forecasts of 164 million pounds.

Source: Livemint

German economy now in recession

Europe’s biggest economy recorded negative growth for a second consecutive quarter in the third quarter

New government data show that the German economy is officially in recession. Europe’s biggest economy recorded negative growth for a second consecutive quarter in the third quarter.

The Federal Statistical Office said Thursday that gross domestic product contracted by 0.5% in the July-September period compared with the previous quarter.
The economy contracted by 0.4% in the second quarter - its first decline since late 2004.

A technical recession is defined as two consecutive quarters of negative growth.

Source: Livemint

Right time to invest in stocks?



The recent carnage in the stock market has seen major indices losing more than half their peak values. By the first week of November ’08, the Sensex had fallen by 52.3% from its peak of 21,206.8 in early January ’08. The Nifty lost nearly 53% during the same period. While investors are concerned about the future performance of the stock market, they appear to be less familiar about an interesting fact. The market crash has resulted in stock prices falling below the book value of companies in most cases.

Book value represents the value of a company’s assets net of its liabilities. In other words, it tells what you will be left with, if the company were to shut down, its assets sold and liabilities paid off.

So, logically, a company that is a viable profit-making business will always be worth more than its book value due to its ability to generate earnings and growth. Hence, shares trading below their book value are a sure sign of gross under-valuation and indicate low risk for investors.

An analysis of BSE 500 stocks reveals that one out of every three stocks is currently trading below its book value. A sample of 479 companies with latest book value information was selected for the study from the 500 companies that comprise the BSE 500 index. The stock prices of these companies were then divided by their respective book values to arrive at the price-book value ratio (P/BV).

According to the study, as many as 170 companies reported stock prices lower than their book values. Interestingly, on January 21, ’08, the day when the market temporarily halted trading due to massive losses, only 26 companies out of the sample set were trading below their book values.

The study also revealed that as on November 3, ’08, nine out of 10 companies were trading at P/BV multiples which were lower than their value on January 21, ’08. Real estate companies dominated the list of companies that saw erosion in their book values during the said period. Among the top 10 such companies, five were from the realty sector.

There are two reasons for this erosion in P/BV. Not only have stock prices of companies fallen sharply, but in many cases, the book value has also increased. Every four out of five companies reported a jump in book value between January ’08 (BV in FY07) and November ’08 (BV in FY08). Investors can use the information on P/BV multiple as one of the decisive indicators while taking investment decisions in a falling market.

A P/BV multiple of less than one reflects lower risk for investors in case the company faces bankruptcy. Further, talking about stock recommendations by ETIG, some stocks have seen a considerable decline in their current P/BV compared to that on January 21, ’08.

Aban Offshore, Allied Digital Services, Bank of India, Adhunik Metaliks and Jain Irrigation are some of our recommendations that have seen a drop in their P/BV multiples, which are now between one and three. Moreover, India Glycols and Ratnamani Metals & Tubes are currently trading at P/BV of less than one.

Source: EconomicTimes

Sterlite Industries, attractive bet for long-term investors



Institutional Holding: 13.6%

Dividend Yield: 1.38%

P/E: 12.8

M-Cap: Rs 17,439 cr

CMP: Rs 246



The commodity cycle has taken a U-turn and so have the stock prices of many companies producing these commodities. A full-blown global financial crisis has further blighted their beleaguered fortunes, as investors have taken a hurried flight to safety.

As earnings of metal producers are highly co-related to economic cycles, there has been a sharp fall in stock prices of most metal companies. In many cases, the fall in stock prices hardly matches the expected fall in earnings of the commodity producers in the near-to-mid term. On the other hand, the market capitalisation (m-cap) of a stock like Sterlite Industries has fallen so sharply that the sum-of-parts valuation makes the scrip very attractive. This throws open attractive opportunities for longterm investors to accumulate the stock at current levels.

Business:

Sterlite Industries mainly produces non-ferrous metals, especially copper, aluminium, zinc and lead. Its copper business contributes 50% to the topline, but only 10-15% towards operating profit. This is because Sterlite mostly gets treatment and refining charges in copper, which are relatively lower. Zinc is the most profitable business out of the three and accounts for 30% of the company’s revenue and 60% of the total operating profit.

Sterlite operates the zinc business through its listed subsidiary, Hindustan Zinc. In the aluminium business, Sterlite has a production capacity of 0.4 million tonnes (mt) and plans to expand it further. In the aluminium and zinc business, it is an integrated player (partially in case of aluminium) and is one of the lowest cost producers in the world. The average unit cost of production for zinc and aluminium is $686/tonne (excluding royalty) and $1,750/tonne respectively. The cost of production for aluminium will further come down once Sterlite completes its backward integration by CY09.

Financials:

The company’s net sales (on consolidated basis) have more than tripled over past three years to Rs 26,400 crore. The net profit increased by seven times during the same period. Interestingly, it has never made any loss in the past 15 years, not even at the bottom of the last commodity downward cycle. It is also the largest zinc producer in India with an operating margin of 55-60%.

Even at the current price level (~$1,200 per tonne) of zinc, which is much below the marginal cost of production for many players across the globe, Sterlite can manage to maintain an operating margin in the range of 40-45%. The company has an operating margin of 25% in the aluminium business, which is a little lower than its competitors like Nalco and Hindalco. This is because it is still not fully integrated backwards in the aluminium business and meets its alumina requirements partly from the open market. It has a return on capital employed (RoCE) of around 25%, with the highest being in the zinc business (~90%).

Expansion plans:

Sterlite is ramping up its zinc and aluminium capacity significantly. The company will increase its zinc capacity to 1 mt by FY10. Similarly, the aluminium smelting capacity in Korba in Chhattisgarh will expand by 0.32 mt — almost double that of the current capacity.

Post-expansion, the aluminium production capacities at Jharsuguda and Lanjigarh in Orissa, which fall under Vedanta Alumina (VAL), will also increase by 1.25 mt. Sterlite holds 29.5% in VAL and will benefit to that extent. Its parent company, Vedanta Resources, has recently obtained clearance for mining bauxite reserves in Orissa, which will help it lower the cost of aluminium production. The merchant power generation business will be another growth driver. The first phase of the 2,400-mw power plant is expected to get commissioned by the end of calendar year ’09.

Valuations:

Since Sterlite holds stakes in different operating subsidiaries and also operates on its own in certain business lines, ETIG valued the company by the sumof-the-parts (SOTP) and the discounted cash flow (DCF) methods. It holds a 64.9% stake in Hindustan Zinc, a listed entity. At its current price level, the stake is valued at around Rs 8,662 crore. Further, Sterlite had investments in different liquid mutual fund (MF) schemes valued at Rs 7,700 crore at the end of March ’08.

The net asset values of many of these fund schemes (mainly debt funds) have either remained flat or have increased over the past six months. The overall portfolio was discounted by 10% to arrive at a conservative current market value of Rs 7,000 crore. Sterlite’s stake in Hindustan Zinc and its MF investments add up to Rs 15,662 crore of the company’s total value. Further, Sterlite’s earnings before interest, depreciation, amortisation and tax (EBITDA) has been taken as proxy for its operating cash flow for its copper and aluminium businesses.

Assuming a conservative 5% growth in EBITDA level for seven years, a flat terminal growth rate and 25% discounting factor, Sterlite’s present value comes close to Rs 13,000 crore, as per the DCF model. If the values arrived at from the SOTP and DCF methods are combined and further adjusted for Rs 3,200 crore of debt, Sterlite’s fair m-cap comes to Rs 25,575 crore, much higher than the current mcap of Rs 17,439 crore.

The values that are expected to be realised from the energy business, zinc and aluminium expansion plans were excluded to arrive at the fair value. These will certainly add much more value to Sterlite in the future, once the expansion process concludes. Long-term investors can include this stock in their portfolio.

Source: EconomicTimes

Buy Dishman Pharma, target Rs 185: Reliance Money

Reliance Money has recommended a buy rating on Dishman Pharmaceuticals and Chemicals, with a 12-month price target of Rs 185, in its report dated October 31, 2008. "Dishman Pharmaceuticals & Chemicals reported 35% growth in its consolidated revenues to Rs 2520 million during Q2FY09, which was in line with our expectations. To capture the market wide correction in the valuations, we are revising down our target price to Rs 185 (i.e 8x FY10EPS) from our earlier DCF based target price of Rs 320. Thus, we maintain our rating on Dishman Buy with revised target price of Rs 185," says Reliance Money's report.

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

Source: Moneycontrol

Buy Gateway Distriparks, target Rs 97: KRChoksey

KRChoksey Research has recommended a buy rating on Gateway Distriparks, with price target of Rs 97, in its report dated October 23, 2008. "The company remains cautious on the pricing outlook of its CFS business, amidst slowing container volumes. We expect the margins of its rail business to improve, as the impact of the price hikes would be seen in the subsequent quarters. The company is confident of maintaining healthy growth on the back of its robust expansion plan. At CMP of Rs 75, the stock is trading at 8.3x on FY09E EPS of Rs 9.0. We recommend a BUY on this stock with target price of Rs 97, which represents an upside potential of 29%," says KRChoksey's research report.

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

Source: Moneycontrol

Buy 3i Infotech, target of Rs 58: PINC

PINC Research is bullish on 3i Infotech and has maintained buy rating on stock with a target of Rs 58, in its November 11, 2008 report, "At the CMP of Rs 43, 3i is trading at a P/E of 3.0x and EV/EBIDT of 3.8x its FY09 estimates. We believe that 3i’s exposure to the BFSI vertical, a leveraged balance sheet and its ability to fund new growth would continue to be concern areas in the coming quarters but we believe the recent de-rating of valuations factors in these concerns to a large extent. Hence, we believe that at current levels the stock offers value vis-a-vis growth rates and hence we maintain our ‘BUY’ recommendation with a 12 month price target of Rs 58," says PINC's research report.

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

Source: Moneycontrol

Buy Patel Engg, target Rs 347: KRChoksey

KRChoksey Research has maintained its buy rating on Patel Engineering, with price target of Rs 347. "At the CMP of Rs 169 the stock is trading at a forward P/E of 7.3x, based on its FY09E EPS and 6.0x its FY10E EPS. We anticipate slowdown in order inflow and an increase in interest expense, which will impact the net profit margins of the company. We therefore downgrade our target price from Rs 501 to Rs 347, however, maintaining a BUY rating," says KRChoksey's research report.

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

Source: Moneycontrol

Buy Indraprastha Gas, target of Rs 154.5: Parag Parikh

Parag Parikh Financial Advisory Services has recommended a buy rating on Indraprastha Gas with a target price of Rs 154.5 in its November 1, 2008 research report. "For the quarter ended 30th September, 2008 Indraprastha Gas Limited (IGL) has posted 24.5% growth in net sales to Rs 2,166.7 million as compared to Rs 1,740.96 million for the quarter ended 30th September 2007. We have valued the company on DCF as well as PE multiple basis and recommend a BUY for the scrip at the current levels with a price target of Rs 154.5 giving an upside of 49.20%. At our target price, the stock will trade at 11.5x FY09 earnings," says Parag Parikh Financial Advisory Services' research report.

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

Source: Moneycontrol

Buy Reliance Infra: Indiabulls Securities

Indiabulls Securities Research has recommended a buy rating on Reliance Infrastructure in its report dated October 29, 2008. "We have revised our estimates for the Company largely on account of our conservative outlook towards the overall economy in the near-to-medium term. However, we believe that the recent correction in the Company’s stock price provides a good buying opportunity. Our SOTP valuation gives us a fair market price of Rs. 605, implying an upside of 41% from the current market price. Therefore, we have upgraded our rating to Buy," says Indiabulls Securities' research report.

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

Source: Moneycontrol

Buy Sintex India, target of Rs 314: Hem Securities

Hem Securities is bullish on Sintex India and has recommended buy rating on the stock with a target of Rs 314, in its November 11, 2008 research report. “Sintex Industries’ consistent performance in both top line and bottom line, vig-orous growth in order book and it’s recent acquisitions show phenomenal growth in the company’s financials. Due to its ability to quickly deliver affordable housing projects, the company has secured a strong order book of Rs. 14 billion for monolithic construction which will be executed over 1-2 years. The company has got approval from 16 states for its prefab business which is the biggest entry barrier for any new entrant. So, the company is shifting its focus from textiles to plastic division to grab the growing opportunities and thereby continue on its growth trajectory. Therefore, the company’s revenue which is coming from 3-4 segments shall provide a hedge against cyclicality of its operations.”

“The stock at the current market price of Rs 218 will trade 11.24 times to its earnings of Rs 19.38 (TTM) and 1.97 times to its book value of Rs. 110.74 and is expected to provide huge upside potential in medium term. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 314 in the medium term investment horizon with an appreciation of approximately 44%,” says Hem Securities' research report.

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

Source: Moneycontrol

Buy Shiv Vani Oil, target of Rs 544: Nirmal Bang

Nirmal Bang has maintained its buy rating on Shiv Vani Oil & Gas Exploration Services with a revised target price of Rs 544.1 in its November 5, 2008 research report. "Shiv Vani Oil registered strong top line growth of 92.4% y-o-y to Rs 187.2 crore for 2Q 09. We reiterate our BUY rating on Shiv Vani Oil. However, we are revising the target price to Rs 544.1 based on our FY10 earnings to factor in the slowdown of the economy in general and sector in particular," says Nirmal Bang's research report.

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

Source: Moneycontrol

Expect good upside in SBI: ULJK Securities

ULJK Securities believes that SBI’s provides a good potential for an upside in the near to medium term period in its November 12, 2008. "The net profit of the Bank has gone up by 40.2% YoY and stands at Rs 22597.1 million. This impressive growth in the net profit is on the back of a strong growth in the business mix and improvement in the NIM margin. The Bank is able to maintain its NIM margin at 3.16% during the quarter on the back of the high growth in advances, which increased the interest from the advances. Overall, the performance of the bank is impressive with an ROA of 1.13% as compared to 0.99% in Q2FY08. We believe the SBI’s stock provides a good potential for an upside in the near to medium term period,“ says ULJK Securities' research report.

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

Source: Moneycontrol

Not much upside in ICICI Bank: ULJK Securities

ULJK Securities doesn’t see much upside in ICICI Bank in the near term as there is a concern of growth for the bank is and issues related to NPA management. "ICICI Bank has reported a subdued kind of performance during the quarter ended September 2008. Net profit remained flat at Rs 10,142 million as compared to Rs 10,026 million in September 2007. We feel the current market price has factored out all the negative news in the stock as it is currently trading at a P/BV of 1x based on book value of Rs 437 as on September 2008. The stock is fairly priced but we don’t see much upside in the near term as there is a concern of growth for the bank is and issues related to NPA management," says ULJK Securities' research report.

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

Source: Moneycontrol

Hold Ultratech Cement, target Rs 369: Indiabulls Securities

Indiabulls Securities Research has recommended a hold rating on Ultratech Cement, with price target of Rs 369, in its report dated October 29, 2008. "We have valued the Company’s stock by using the DCF methodology. Our key assumptions include a 5% terminal growth rate, a 12.6% cost of capital, and an 8% risk free rate. Our fair value estimate of Rs 369 reflects an upside potential of 10% from the current market price. Hence we reiterate our Hold rating on the stock," says Indiabulls Securities' research report.

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

Source: Moneycontrol

ULJK Securities bullish on PNB

ULJK Securities remains bullish for the Punjab National Bank, PNB considering the performance. "Punjab National Bank (PNB), the second largest PSB, has been able to post a strong performance for the quarter ended September 2008. The Bank has posted a net profit of Rs 7070.9 million, a growth of 31% on YoY basis on the back of a strong 33% growth in net interest income and a 42% growth in the non-interest income. Overall, we remain bullish for the Bank considering the performance. At the CMP of Rs.486 the stock is trading at approx 1.13x P/BV on the book value of Rs.429 as on September 2008, "says ULJK Securities research report.

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

Source: Moneycontrol

Hold India Cements: PINC Research

PINC Research has recommended a hold rating on India Cements, in its November 11, 2008 report. "At the CMP of Rs 85, ICL is trading at a P/E of 3.7x, EV/EBIDTA of 2.3x and EV/mt of USD59 its FY10E earnings. Due to delays in capacity expansion we estimate despatch volumes of 10.1mn mt in FY09E and 12.6mn mt FY10E. We expect realisations to come under pressure due to sedate demand growth in FY10E. While operating cost could ease, we anticipate the same to set in with a lag of 2-3 months, post the easing in realisations. We have revised downwards our revenue estimates to Rs 36.2 billion and Rs 44.7 billion for FY09E and FY10E and cut our profit estimates to Rs 5.7 billion and Rs 6.8 billion respectively, after factoring exceptional items and higher depreciation. Despite the significant correction in ICL’s share price from its historical highs, the CMP discounts the fundamentals of the stock adequately. Hence, we maintain our 'HOLD' recommendation and will revisit the same in the coming quarters," says PINC's research report.

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

Source: Moneycontrol

Hold Wockhardt, target Rs 250: KRChoksey

KRChoksey Research has recommended a hold rating on Wockhardt, with price target of Rs 250, in its report dated October 22, 2008. "At the CMP of Rs 142, the stock is trading at 4.02x FY07 EPS of Rs 35.3 and 4.01x FY08E EPS of Rs 35.4. We maintain our HOLD recommendation with a target price of Rs 250, implying an upside potential of 76%. At the target price, the stock would be valued at 7.06x FY08E EPS of Rs 35.4," says KRChoksey's research report.

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

Source: Moneycontrol

Hold Idea Cellular, target of Rs 58: Indiabulls Securities

Indiabulls Securities Research has downgraded its rating on Idea Cellular to hold with a target price of Rs 58 in its November 5, 2008 research report. "Idea Cellular Ltd. (Idea) ended the second quarter with a mere 5.8% qoq revenue growth and a 15.8% decline in the EBITDA. At the CMP of Rs. 48, Idea’s stock is trading at a forward P/E of 18.9x FY09E and 11.4x FY10E. We have valued the stock by using SOTP and have arrived at a target price of Rs 58. Considering the reduction in the EBITDA margin and the heavy CAPEX, our DCF-based value of the core business has fallen to Rs. 39. We have reduced our value for Idea’s 16% stake in Indus Tower from Rs. 28 per share to Rs. 19 as valuation levels have cooled off considerably in the last quarter. Thus, we have downgraded our rating to Hold," says Indiabulls Securities' research report.

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

Source: Moneycontrol

Buy Kesoram Industries, target of Rs 666: SKP Securities

SKP Securities has a buy rating on Kesoram Industries with a target price of Rs 666 in its November 6, 2008 research report. "Net sales were up by 32.77% to Rs. 889.56 crores in Q2FY09 over Q2FY08. Considering the supply glut in the cement industry and discounting the external economic environment, we are reducing our target price. We recommend a BUY on the stock with a target price of Rs 666 at 5 x FY10E earnings," says SKP Securities' research report.

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

Source: Moneycontrol

Buy Sun TV, target of Rs 220: KRChoksey

KRChoksey Research has recommended a buy rating on Sun TV Network with a target price of Rs 220 in its November 11, 2008 research report. "On Y-o-Y basis, advertising revenue (including radio business) and broadcast fee (Time slot model) grew 30% to Rs 136.0 crore and Rs 39.0 respectively. We recommend a BUY with a target price of Rs 220 representing an upside potential of 37% from current levels. At target price, the stock valued at 19.6x FY09E EPS of Rs 11.2," says KRChoksey's research report.

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

Source: Moneycontrol

Buy Jagran Prakashan, target of Rs 70: KRChoksey

KRChoksey Research has recommended a buy rating on Jagran Prakashan with a target price of Rs 70 in its November 11, 2008 research report. "On Y-o-Y basis, advertising revenue had shown a growth of 23.2% to Rs 143.7 crore and subscription revenue of 2.0% to Rs 47.2. We recommend a BUY with a target price of Rs 70 representing an upside potential of 36% from current levels," says KRChoksey's research report.

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

Source: Moneycontrol

Buy GE Shipping, target of Rs 284: ICICIdirect.com

ICICIdirect.com believes the current fall in GE Shipping price is due to the overall weakness in market which presents a compelling buying opportunity with target price of Rs 284 in its November 3, 2008 report. "GE Shipping (Gesco) reported a strong operating performance for Q2FY09, which was better than our expectations. Revenues grew 43.7% to Rs 864.09 crore. The growth in revenues has been achieved despite a 12.7% decrease in operating days. We believe the current fall in its share price due to the overall weakness in market presents a compelling buying opportunity. We have valued Gesco on multiple valuation parameters using global benchmarks and arrived at a target price of Rs 284, an upside of 35%," says ICICIdirect.com's research report.

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

Source: Moneycontrol

Hold Info Edge, target of Rs 450: ICICIdirect.com

ICICIdirect.com has maintained its hold rating on Info Edge with a price target of Rs 450 in its November 4, 2008 report. "Info Edge posted a topline of Rs 65.42 crore, registering the lowest YoY growth of 24.36% in the past six quarters. PAT grew 3.50% YoY at Rs 15.67 crore. On a QoQ basis, PAT margins improved by 235 bps due to lower tax rate and higher other income. Given the macro conditions and slowdown in recruitment, we have lowered the future earning growth rate and altered our DCF assumptions. Using the DCF approach we have arrived at a target price of Rs 450.22. The target price discounts the FY10E EPS of Rs 27.63 by 16.3x. We maintain our rating as Hold," says ICICIdirect.com's research report.

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

Source: Moneycontrol

Buy GSPL, target of Rs 36: KRChoksey

KRChoksey Research has maintained its buy rating on Gujarat State Petronet (GSPL) with a target price of Rs 36 in its November 4, 2008 research report. "GSPL reported net sales of Rs 118.5 crore, up 24.4% y-o-y; volume was below our expectation and declined to 14.9 mmscmd. We maintain a BUY on the stock with target price of Rs 36, giving an upside potential of 21%. At the target price the stock would be valued at 5.0x its FY10E CEPS of Rs 7.1, and 1.5x P/BV, " says KRChoksey's research report.

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

Source: Moneycontrol

SKP Securities bullish on IMP Powers

SKP Securities continue to be bullish about IMP Powers future growth prospects in its November 4, 2008 report. "IMP Powers net sales has risen to Rs 514 million for the quarter ended September 2008, an increase of 94%. This is mainly due to utilization of its recently expanded production capacity. EBIDTA margin of the company has decreased to 16.46% in Q1 FY09 as compared to 17.16% in Q4 FY07. This is due to the increase in the raw material and salary cost. Raw material to sales increased to 74% in the quarter from 71% in the corresponding quarter last year. Salary cost increased by 74%. The bottomline of the company has gone up from Rs 20.89 million in Q1 FY08 to Rs 33.04 million in Q1 FY09, an increase of around 58%. We continue to be bullish about company’s future growth prospects," says SKP Securities' research report.

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

Source: Moneycontrol

Buy ITC: Motilal Oswal

Motilal Oswal has maintained its buy rating on ITC in its November 5, 2008 research report. "High conversion of plain to filter is a big positive and concern of a sharp volume decline has been arrested. Margins are expected to improve as the full impact of price increase will be reflected in 3QFY09 onwards. New FMCG business would continue to remain under investment mode and is likely to post a loss of Rs 4 billion in FY09."

"Management has indicated new personal care launches in 4QFY09. Operating margins in the Paper & paperboard segment are expected to improve in the coming quarter as there is a decline in coal prices and 120000 TPA pulp units capacity will get stabilized. New 100,000 TPA writing and printing paper units will boost the performance going forward. Management has guided for lower sales and profit growth in Hotel business due to global melt down. The stock trades at 18.9x FY09E EPS of Rs 9 and 16.3x FY10E EPS of Rs 10.5. We maintain Buy," says Motilal Oswal's research report.

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

Source: Moneycontrol

Buy United Spirits: Motilal Oswal

Motilal Oswal has recommended a buy rating on United Spirits in its November 5, 2008 research report. "Volumes are expected to grow at 12% CAGR in the long term and outlook with respect to regulatory changes continues to be positive. Raw material prices are expected to ease off on back of sharp decline in crude prices. Molasses prices are expected to ease from the beginning of crushing season in Nov 2008. USL has domestic borrowings of Rs 14 billion and international borrowings of USD 619 million (Citibank) and GBP 325 m (ICICI Bank)."

"The overall cost of borrowing from Citibank is Libor + 250bp (total cost including hedge is 8.5%). Repayment of Citibank loans will start in FY10 and internal cash generation and cash in hand is adequate for repayment in FY10. We are downgrading EPS (excluding treasury stock) estimates for FY09 from Rs 56.6 to Rs 47.6 and for FY10 from Rs 77.6 to Rs 67.6. The stock is trading at 18.7x FY09E EPS of Rs 47.6 and 12.8x FY10E EPS of Rs 67.6. Buy," says Motilal Oswal's research report.

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

Source: Moneycontrol

Ranbaxy Labs an underperformer: Anagram

Anagram Research has kept an underperformer rating on Ranbaxy Laboratories in its November 8, 2008 research report. "Ranbaxy’s Q3CY08 results have been disappointing, the USFDA import ban on the 30 products from its two units at Paonta Sahib and Dewas has hugely impacted its performance and also cast a shadow over its future prospects considering the ban came into effect only from September. Also as there is no certainty when this issue would settle and whether Ranbaxy would be able to recapture the market it has lost puts a question over the future performance of Ranbaxy."

"We are though positive on the Daiichi-Ranbaxy deal as it would significantly strengthen its balance sheet, as cash infused by Daiichi would help reduce its debts significantly and also give opportunities for organic and inorganic growth in the long run. At CMP of 218 the stock is trading at 2x its Trailing Sales. We are keeping “Underperformer” on the stock," says Anagram's research report.

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

Source: Moneycontrol

Buy Kesoram Inds: Motilal Oswal

Motilal Oswal has maintained its buy rating on Kesoram Industries in its November 10, 2008 research report. "Cement business would benefit from the ongoing capacity addition (1.6mt), which would commission by Dec’08. Tyre business would benefit from Greenfield capacity at Uttarakhand, and would enjoy fiscal incentives, thereby driving volume growth and margin expansion. Also, softening rubber prices would also enhance profitability."

"We have revised our earnings estimate downwards by 6% for FY09E to Rs 75.9 and 15.8% for FY10E to Rs 68.6. Valuation at 1.8x FY09E EPS and 3.2x EV/EBITDA are very attractive and doesn’t fully reflect the upside of the capex being undertaken. Maintain Buy," says Motilal Oswal's research report.

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

Source: Moneycontrol

Motilal Oswal neutral on Idea Cellular

Motilal Oswal has downgraded its rating on Idea Cellular to neutral in its November 6, 2008 research report. "Idea’s 2QFY09 PAT declined 45% QoQ and 35% YoY to Rs 1.44 billion. While revenues grew 5.8% QoQ (in-line). We have downgraded our EBITDA estimates by 7% for FY09 and 3% for FY10 on lower margin expectation and corresponding earnings are cut by 23%. IDEA trades at 14.7x FY09E EPS and 6.9x FY09E EV/EBITDA. We have downgraded to Neutral based on (1) higher-than-expected pressure on margins from new launches, (2) low return ratios - RoE of 12% and RoIC of 10%, and (3) FY08-10E EPS CAGR of only 9% v/s 24% forecast earlier," says Motilal Oswal's research report.

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

Source: Moneycontrol

Buy Indiabulls Real Estate: Motilal Oswal

Motilal Oswal has recommended a buy rating on Indiabulls Real Estate in its November 10, 2008 research report. "Management has indicated that they would re-evaluate all their development plans and adopt a risk-averse development strategy. IBREL will focus on pre-sales ahead of commencing development, at least to the extent of the construction cost, as a risk-mitigation strategy."

"We have revised our NAV for IBREL to Rs 294 per share, to account for: (1) delay and postponement in development of retail and commercial projects, (2) lower rental assumption for Mumbai projects to Rs 225/sf per month from Rs 275/sf per month, (3) increased cap rates for Mumbai’s commercial office properties to 12% v/s 11% earlier, and (4) lower net cash. The stock is trading at 48% discount to our current NAV estimate of Rs 294 per share. Buy," says Motilal Oswal's research report

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

Source: Moneycontrol

Hold Gujarat State Fert, target of Rs 107: Emkay

Emkay Global Financial Services has maintained its buy rating on Gujarat State Fertilizers Company (GSFC) with a target of Rs 107 in its November 12, 2008 research report. "Company’s revenues increased by 59% YoY to Rs 17.4 billion. Profit growth was boosted by 2.7x increase in profit from fertiliser on account of 534bps YoY improvement in margins to 13.6% while chemical segment reported lowest ever margins in last 4-5 years at 13.6%, -830bps YoY. Given the weak outlook on company’s chemicals portfolio (primarily includes caprolactum) and delays in few ongoing projects we are downgrading our FY10E net revenues by 7.2% from Rs 46 billion to Rs 42.8 billion, APAT (excluding provision for contribution to Gujarat state development fund) by 37.6% from Rs 4.5 billion to Rs 2.8 billion and AEPS estimates by 37.6% from Rs 56.4 to Rs 35.2."

"We have provided 30% of company’s PBT for FY09E and FY10E for Gujarat state contribution since there has been no clarity on this issue till now. We are also downgrading our price target from Rs 227 to Rs 107, which is 50% discount to its FY09E book value of Rs 214 and maintain our HOLD recommendation," says Emkay Global Financial Services' research report.

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

Source: Moneycontrol

Siemens posts 2.4 billion-euro loss in 4th quarter

Industrial conglomerate Siemens AG on Thursday reported a net loss of 2.4 billion euros ($3 billion) for its fiscal fourth quarter, a
figure that was weighed down by large one-time charges including about 1 billion euros ($1.24 billion) to settle a bribery investigation.

However, the Munich-based company said full-year net profit rose by 46 percent, climbing to 5.9 billion euros ($7.4 billion) from the previous year's 4 billion euros.

The fourth-quarter figure compared with a loss of 74 million euros a year earlier. Siemens said that a major factor was a 1.16 billion euro ($1.46 billion) loss from discontinued operations related mainly to its sale of a 51 percent stake in the Siemens Enterprise Communications unit.

Siemens also has said it would book a charge of about 1 billion euros ($1.24 billion) in the fourth quarter to settle any costs related to an ongoing bribery investigation.

Sales for the quarter rose 4 percent to 22.2 billion ($27.5 billion) from 21.3 billion euros a year earlier.

Source: EconomicTimes

BT cutting 10,000 jobs as part of costs drive

Britain's BT Group said on Thursday it was in the process of cutting 10,000 jobs, as it reported second-quarter core earnings and revenues
just ahead of revised forecasts.

BT warned less than two weeks ago it would miss original earnings forecasts due to the poor performance of its Global Services unit which had struggled to introduce cost savings.

It said at the time it expected to report group revenue ahead of original forecasts but that earnings per share and earnings before interest, tax, depreciation and amortisation (EBITDA) would be slightly below forecasts. Its second quarter EBITDA, reported on Thursday, was down 1 percent but ahead of forecasts at 1.43 billion pounds ($2.21 billion), underlying earnings per share was 5.9 pence and revenues were up 4 percent at 5.30 billion pounds.

Analysts had been expecting EBITDA of 1.38 billion pounds, earnings per share of 4.9 pence and revenues of 5.28 billion pounds, according to a Reuters poll of 7 brokers who revised their forecasts after the warning. As part of an ongoing group drive to cut costs, BT said it would reduce its total workforce by around 10,000 this financial year, with around 4,000 from its direct BT staff and the remainder from contractors, consultants and agency staff.

BT has a global workforce of around 160,000 direct and indirect staff. The company said it was halfway through this process and had already cut 4,000 jobs to date. It said it hoped to achieve the cuts through natural turnover and that the direct jobs were mostly coming from Britain.

The profit warning spooked BT investors, sending its shares crashing to an all-time low, and also raised fears that the group would have to cut its full-year dividend due to the weakness in its "growth engine" Global Services and its pension contributions.

The group had free cash inflow of 369 million pounds, up by 198 million on last year. Its pension was in surplus by 0.6 billion pounds net of tax, compared with a surplus of 2 billion pounds at the end of March 2008. "We continue to expect BT group revenue to grow for the full year," Chief Executive Ian Livingston said in a statement. "However because of the reduction in profitability in BT Global Services, group EBITDA is likely to show a small decline in the current financial year."

Source: EconomicTimes

Obama should resist China-bashing: Morgan Stanley

US President-elect Barack Obama should reaffirm his support for globalisation and resist attempts at "China-bashing", the Asia chief of
US bank Morgan Stanley said on Thursday.

Stephen Roach said there is a risk that anti-China legislation would be introduced in the US Congress if the incoming American leader fails to stop those calling for a more inward-looking trade policy. "Trade policy was a big issue in the election and, toward the end of the general election campaign, Senator Obama did make some hostile statement towards China as being a currency manipulator," Roach said.

Speaking to journalists on the sidelines of a Morgan Stanley Asia Pacific conference, Roach said he was hopeful that, after he takes office in January, Obama's trade policy will differ from his campaign statements.

"One of the things I'm very hopeful of is that as president, Barack Obama reaffirms his support for globalisation, says no to China-bashing, says no to other types of trade frictions that continue to resonate a lot in the halls of the US Congress," he said.

"If he can't resist that -- and there is certainly a risk of that in this environment -- then you do have to worry about the possibility of anti-China trade legislation being introduced," he added.

"That will have a pretty negative impact on China and the rest of this region. I hope that's not the case."
With the United States, the world's biggest economy, struggling in a global financial crisis there are fears the US could respond by imposing tougher trade rules.

As Illinois senator, Obama opposed a free trade deal with South Korea, fearful of giving South Korean carmakers unfettered access to US markets. He also resisted a proposed trade pact with Colombia. Obama also insisted he would work to renegotiate the North American Free Trade Accord (NAFTA) with Mexico and Canada, backing opposition to the deal from American labour unions.

Source: EconomicTimes

No major lay-offs yet due to slowdown: Edelweiss

Mumbai-based financial services provider Edelweiss today said there has not been any mass job cuts, in the company even though its income
has been impacted by the economic slowdown, except for a "few" non-performers, who were asked to leave.

"Across the board people were sacked for non-performance. Edelweiss has regular appraisal process twice a year in April and October. This was part of the exercise... There have been no mass lay-offs however," a company spokesperson said.

Responding to reports of 30 people being fired by the company, the spokesperson said the step was not a cost-cutting measure and had not been taken due to the economic recession.

"This has nothing to do with slowdown, in fact the company has hired 35 people alone in the month of October and around 200 in the year so far," he added.

Though the income of the company had been impacted by the economic slow down, the financial services firm would look at retaining the areas where it had foothold, he said.

Currently, Edelweiss has 1,800-strong staff from 1,600 people in the beginning of the year.

Being a diversified financial services company, it operates across investment banking, institutional equities, asset management, wealth management, private client brokerage, insurance brokerage and wholesale financing.

Source: EconomicTimes

RBI might slash CRR and Repo rate by 50 bps: D&B

Global consultancy firm Dun and Bradstreet expects the Reserve Bank to ease money supply further to spur economic activity in the wake of
slowing industrial growth.

"Given the increasing downside risks to the growth momentum coupled with tight liquidity conditions we expect RBI to cut CRR and Repo rate by 50 basis points each in near future," D&B said in its Economic Forecast.

The report added, the slew of measures taken by RBI, which include cut in reserve ratios and short term lending rate, Repo, have restored financial stability in the system.

"The recent cut in the policy rates have reduced the cost of borrowing for banks which they are likely to pass on to their customers in terms of lower PLR. This might provide some required impetus to the investment activity," D&B said.

The RBI has injected over Rs 2,60,000 crore through cuts in reserve ratio (CRR and SLR) and policy rate, prompting many banks to cut benchmark lending rates.

However, the current slump in exports and subdued domestic demand conditions coupled with credit crunch faced by the corporates will adversely impact industrial production in the near future, "We therefore expect IIP growth to moderate and remain close to 5.1 per cent during 2008-09," it said.

The latest IIP data showed that industrial growth rebounded to 4.8 per cent in September after a meagre 1.4 per cent in August, but many fear the growth would decline from October onwards.

It added the high input costs and the rising interest rates have adversely impacted the growth momentum during the first half of the current fiscal. Industrial growth declined to 4.94 per cent in the first half of this fiscal against 9.49 per cent a year ago.

Source: EconomicTimes

ISB to set up campus in Mohali

Indian School of Business, (ISB), one of the top 20 business schools in the world, will set up a new campus at Mohali in Punjab.

Source: EconomicTimes

Indian billionaires club halves with 27 exits in a year

Meltdown in equity and property markets has lead to 27 Indians moving out of India's billionaires club, the size of which has now
halved from 54 members a year ago.

According to the latest Forbes 40 richest Indian list, there are only 27 billionaires with 10-figure fortunes, where as last year there were 54 of them. This year the number of billionaires are even less than 2006, when there were 36 billionaires.

This year's Forbes list has six dropouts who collectively lost USD 7.9 billion. They have been replaced by four newcomers and two, who made it to the list after a gap of one year.

Forbes noted, "The party is over for now. Mallya's net worth tumbled to USD 390 million as his liquor stocks got hit; his main holding, United Breweries (Holdings), is down 87 per cent since its January high and the news could get worse still."

Other major dropouts include Ballarpur Industries' Gautam Thapar and real estate baron Rakesh Wadhawan, whose Housing Development & Infrastructure stock was pounded amid rumours that the company was overstretched, Forbes added.

The other major dropouts include -- Vikas Oberoi of Oberoi Constructions, Anu Aga of Thermax and Lanco Infratech's L Madhusudhan Rao.

The four newcomers include Micky Jagtiani, who oversees a retailing empire in the Middle East and Hemant Shah, son of a Bollywood film producer, who made his fortune in construction.

While, Yusuf Hamied, head of generics producer Cipla, and Brijmohan Lall Munjal, patriarch of Hero Group have made it to the list after a gap of one year.

Interestingly, Chinese billionaires also met with similar fate as the number of billionaires this year are just 24 as against 66 in 2007, due to global economic woes.

Source: EconomicTimes

Sharp dip in inflation makes room for rate cuts

NEW DELHI (Reuters) - Indian inflation dropped sharply to its lowest in nearly six months in early November as prices of metals and fuels fell, and analysts said the unexpectedly low figure gave the Reserve Bank room to cut rates.

The substantial easing in inflation comes at a time when Indian policy makers are struggling to protect growth and shield the economy from the impact of the global economic slowdown.

India's wholesale price index, the most widely watched inflation measure, rose 8.98 percent in the 12 months to Nov. 1, well below forecasts for a rise of 10.37 percent, data showed on Thursday.

It was the lowest reading since May 24, when the rate was 8.90 percent and well below early August's peak of 12.91 percent.

Analysts said a decline in global commodity prices, robust domestic agricultural output and a fall in demand in a slowing economy helped bring the rate to single-digits well ahead of earlier expectations.

"Taking comfort from the decline in inflation and responding to the worsening demand outlook, we expect the Reserve Bank of India to cut the reverse repo rate by 100 basis points and the repo rate by 150 points by March 2009," said A. Prasanna, an economist at ICICI Securities.

He said inflation was likely to ease to 4.5 percent by March 2009. The repo is the Reserve Bank's main lending rate while the reverse repo is the rate at which it absorbs excess cash from the banking system.

Strong evidence that India's $1 trillion economy, Asia's third largest, is slowing has emerged in recent weeks. Factory output has been sharply lower, manufacturers have trimmed output and put expansion plans on hold. Government excise receipts -- factory gate taxes -- contracted in October.

Maharashtra bans film on migrants

MUMBAI (Reuters) - Maharashtra has banned a film on hardships faced by migrants in Mumbai for fears it could stoke fresh attacks on immigrants in a city often swept up in violent regional rivalries.

The film "Deshdrohi" (Traitor) revolves around the often violent confrontation between immigrants and Mumbai locals who resent being overrun by job-seekers from poor northern and eastern states for whom the city holds hope for a better life.

"Some of the scenes in the film are such that they can provoke a law-and-order situation, so the police had recommended a ban for 60 days," said a police spokesman in Mumbai.

"The state has agreed with our view."

The low-budget film, a departure from the typical Bollywood fare of racy thrillers and lavish musicals, was scheduled to be released on Friday.

The Mumbai police had watched a special screening last week, the spokesman said, after promotional ads sparked concerns it might incite a fresh wave of violence in the city which last month witnessed some of the worst anti-immigrant attacks.

Job-seekers from Uttar Pradesh and Bihar were attacked by local right-wing Maharashtra Navnirman Sena party, whose leader was then arrested.

Protests against the arrest flared through the state and sparked tit-for-tat attacks and protests in Bihar, where about 100 people were injured and one boy was killed.

Local Marathis make up less than half of Mumbai's population of more than 17 million, and rising anti-immigrant rhetoric is widely seen as a sign of the strain of lopsided economic development.

India at G20 meet shows changing global economy - PM

NEW DELHI (Reuters) - India's presence at an emergency summit in Washington to decide on how to contain the damage from the financial crisis shows the changing landscape of the global economy, Prime Minister Manmohan Singh said.

Emerging economies of the G20 are expected to demand a greater say in global financial decision-making at their summit with industrialised nations after the crisis put major nations on the verge of recession.

Singh, who left on Thursday for this weekend's summit, said in a statement India would push for greater inclusivity in the international financial system and emphasise the need to ensure growth prospects of the developing countries do not suffer.

"As a major developing economy which is getting increasingly integrated with the global economy, India has a vital stake in the stability of the international economic and financial system," Singh said.

Policy makers are struggling to fend off damage to the economy from the global credit crisis and have taken a number of measures, including rate cuts, to protect growth in Asia's third-largest economy.

The Bush administration said on Wednesday the G20 meeting should be able to identify some specific measures for calming anxious financial markets and said it was timely for them to meet now.

British officials in Washington chimed in with support for the meetings on Friday night and on Saturday, saying it might help restore battered confidence in markets by showing key developed and emerging-market countries were working together.

India's impressive growth of over 9 percent in the past few years has attracted global attention and investors have moved in to take part in the long-term growth prospects.

Its economic clout has meant India is an important voice in major global economic and political foras and New Delhi has been acknowledged as a leader of developing countries at world trade talks.

But the global credit crisis has hurt its stock market, the rupee, exports and the manufacturing sector and prospects of a major slowdown in growth from around 9 percent in the last three years look real.

"It has become clear over the last several weeks that the effects of the crisis are spreading. In varying degrees, all countries will be impacted. We are facing the prospect of a global economic slowdown, Singh said before leaving.

"The summit also has an important role to play in considering corrective measures to prevent future recurrence of such events. The issues involved are complex and will require sustained deliberation over a period of time."

Leaders of the G20, which includes top industrial and developing economies such as France, Great Britain, Italy, China, Brazil and India are taking part in the part in the summit.

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.