Monday, 17 November 2008

Day Trading Guide - November 18, 2008



ICICI Bank

Sell the stock in rallies with tight stop-loss at Rs 400.

Infosys

The stock is currently testing the key support level of Rs 1,200. Fresh short-position can be initiated if the stock declines below this support level, with tight stop-loss.

L&T

The near-term outlook for the stock is bearish. We recommend a sell in this counter for the session.

ONGC

On Monday the stock was choppy and formed a spinning top candlestick pattern, indicating indecisiveness. Avoid trading in this counter for the day.

Reliance Capital

We recommend a sell in this counter.

Reliance Communications

Buy the stock in dips with stiff stop-loss at Rs 200.

Reliance Industries

The stock is currently pausing at around Rs 1,150 level. Utilize rallies to sell the stock with tight stop-loss at Rs 1,190.

Satyam Computer

In the last trading session, the stock experienced selling pressure at higher level and it lost its intra-day gains. The daily relative strength index has entered in the bearish zone and MACD is indicating a sell. We recommend a sell.

SBI

Desist trading for the session as the stock was volatile and formed doji candlestick pattern indicating neutral stance.

TCS

Initiate short position if the stock breaches the support level Rs 500 with tight stop-loss.


(Note: In a buy recommendation, the resistances would be the targets and the nearest support would be the stop loss; In a sell recommendation, the supports would be the targets and the nearest resistance would be the stop loss; The recommendation would be valid for today's trading only.)

Source: TheHinduBusinessLine

Cummins India (Rs 216.75): Sell



We recommend a sell in Cummins India from a short-term perspective. It is apparent from the charts of Cummins that after recording a 52-week low of Rs 192 in late October, the stock rallied up to Rs 254. However, the stock witnessed resistance at this level and resumed its medium-term downtrend that is in place since September peak of Rs 330. Reinforcing the downtrend, the stock breached the 21-day moving average by tumbling 6 per cent on November 17. Moreover, the stock has been on a long-term downtrend from its October 2007 high of Rs 462, forming lower bottoms and lower peaks. The daily RSI has entered into the bearish zone and weekly RSI is featuring in this zone. Considering that the medium-term down trendline continues to be intact and the long-term trend also is down, we are bearish on the stock from a short-term perspective. We expect the stock’s decline to prolong until it hits our price target of Rs 194 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 227.

Source: TheHinduBusinessLine

ABG Shipyard an outperformer: ICICIdirect.com

ICICIdirect.com has rated ABG Shipyard as an outperformer with a target of Rs 160, in its November 17, 2008 report. "ABG trades at 3.5x FY09E earnings and 2.2x FY10E earnings. Concerns of global economic growth slowing down and the credit crunch have led to decline in stock prices of shipbuilding companies. ABG’s order book in excess of 10x FY08 revenues provides sustained revenue visibility, but concerns of current global trade slowdown and the renewal of subsidy by the Government of India prevail. We value ABG at a 30% discount to global average at 4.21x CY09E earnings, with a revised lower target price of Rs 160, an upside of 38% from current level. Outperformer," 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 Syndicate Bank, target of Rs 71: Karvy

Karvy Stock Broking has maintained its buy rating on Syndicate Bank with a target of Rs 71 in its November 17, 2008 research report. "In 2QFY09, Syndicate Bank's net interest income grew by 53% (Y/Y) to Rs 7.5 billion. Overall the bank posted good set of numbers; we re-iterate our BUY rating on the stock with a target price of Rs 71," says Karvy Stock Broking'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 HCC, target of Rs 60: Motilal Oswal

Motilal Oswal has maintained its buy rating on Hindustan Construction Company (HCC) with a target of Rs 60 in its November 12, 2008 research report. "We expect HCC to report net profit of Rs 844 million in FY09 (a downgrade of 21%) and Rs 1.1 billion in FY10 (a downgrade of 37%), largely driven by slower execution and increased interest costs. This translates to an EPS of Rs 3.3/sh in FY09 (up 19% YoY) and Rs 4.4/sh in FY10 (up 34% YoY)."

"Based on SOTP valuation, we arrive at a price target of Rs 60/sh comprising: core business at Rs 35/sh (8x FY10E), Lavasa at Rs 20/sh (50% discount to NAV), Vikhroli Corporate Park Rs 5/sh (25% discount to NAV). HCC is trading at reported PER of 15.2x FY09E and 11.3x FY10E. 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 IVRCL Infra: Motilal Oswal

Motilal Oswal has maintained its buy rating on IVRCL Infrastructure and Projects in its November 12, 2008 research report. "Strong revenue growth during 1HFY09 was partially aided by benefits accrued on account of price variation clauses. For FY09 management has guided for revenue growth of 35-40% YoY and EBITDA margin of 9.5-9.9% (earlier at 10%). It also indicated that incremental debt requirement during FY09 will be limited to Rs 1.5-2 billion (existing debt Rs 14.5 billion). The net working capital stands at Rs 23 billion as at September 2008 compared with Rs 19.7 billion at end-FY08. Loans and advances currently stand at Rs 4 billion, including Rs 2.6 billion to IVR Prime."

"We expect IVRCL to report net profit of Rs 2.3 billion in FY09 (up 10% YoY) and Rs 3.2 billion in FY10 (up 37% YoY). The stock is trading at 7.6x FY09E earnings and 5.5x FY10E earnings. 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 IVRCL Infra, target of Rs 198: KRChoksey

KRChoksey Research has recommended a buy rating on IVRCL Infrastructure, with price target of Rs 198, in its report. "At the CMP of Rs 140, IVRCL is trading at 7.8x TTM EPS of Rs 17.8 and 8.8x FY09E EPS of Rs 15.6. We anticipate slowdown in order inflow and an increase in interest expense, which will impact the revenue and net profit margins of the company. We have reduced our EPS estimates for FY09 and FY10 by 10% & 9.8% respectively. We therefore downgrade our target price from Rs 381 to Rs 198, maintaining a BUY rating, with an upside potential of 41.4%," 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

Buy TCS, target of Rs 650: Anand Rathi

Anand Rathi Securities has recommended a buy rating on Tata Consultancy Services, TCS with a target price of Rs 650 in its November 17, 2008 research report. "TCS added 51 clients (gross) in 2QFY09, taking total active clients to 920. 1H09 saw TCS close 16 deals vis-à-vis 14 deals in 1H08. It is currently in pursuit of 20 deals. Its share of revenue from fixed-price projects is the highest of its peers (43.9% of TTM revenue). Efficient execution of these projects, along with decreasing share of domestic business, augurs well for TCS’ profitability. TCS trades at 8.8x FY09 and 9.9x FY10 estimated earnings."

"We rate it a Buy with a target price of Rs 650 at a target PE multiple of 10x its one-year forward earnings. At our target price, it would trade at 7.4x EV/EBITDA our one-year forward estimates. Our DCF valuations for TCS assume an 8.5% risk-free rate, a 6% risk premium and a 3% terminal growth rate. The DCF-based fair value, after taking estimated growth till FY10 and 10% growth during FY10-15, is Rs 645," says Anand Rathi'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 Wipro, target of Rs 325: Anand Rathi

Anand Rathi Securities has recommended a buy rating on Wipro with a target price of Rs 325 in its November 17, 2008 research report. "Wipro has built considerable scale in the IMS space (largest practice among Indian IT companies) and has been able to build on the leads. Wipro has undertaken several initiatives, such as hiring at a slower pace and focusing on internal processes, which have resulted in revenue growth overtaking volume growth. Wipro trades at 9.6x FY09 and 10.8x FY10 estimated earnings."

"We rate it a Buy with a target price of Rs 325 at a target PE multiple of 11.8x its one-year forward earnings. At our target price, the stock would trade at 7.6x EV/EBITDA our one-year forward estimates. Our DCF valuation for Wipro assumes an 8.5% risk-free rate, a 6% risk premium and a 3% terminal growth rate. The DCF-based fair value, after taking estimated growth till FY10 and 11% growth during FY10-15, is Rs 320," says Anand Rathi'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 Sobha Developers, target of Rs 155: Emkay Global

Emkay Global Financial Services has maintained its buy rating on Sobha Developers with a target of Rs 155 in its November 7, 2008 research report. "Net revenues decreased by 9.3% YoY to Rs 3.0 billion. PAT decreased by 13.0% YoY to Rs 490 million. We are revising our NAV estimates to Rs 367 / share (previous Rs 973), due to a) increase in cost of funds b) delay in projects c) factoring current net debt d) decrease in average realisations and rentals from commercial properties and e) increase in cap rate. We however maintain our BUY rating on the stock with target price of Rs 155 (earlier Rs 554) based on 60% discount to NAV and 2x EV / EBITDA of its contractual income," 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

CAT this year tougher, 20% rise in number of questions

For over 2.5 lakh candidates who took a crack at CAT—the common admission test to the coveted IIMs—in 23 cities across the country, belling
the CAT was a trifle tougher this year than it was for the last two years. This year there was a sharp increase in the number of questions in the CAT exam, which is used by over 110 institutes besides the IIMs.

While there were 75 questions worth a total of 200 marks for CAT 2006 and 2007, this year the number of questions increased to 90, worth a total of360 marks. However, while the number of questions were more than the previous two years, the duration of the exam remained the same—150 minutes.

Last year, there were 25 questions in each of the three sections—Quantitative Aptitude (QA), Data Interpretation (DA) and Verbal Ability/Reading Comprehension. This year, while the number of questions in the QA and the DA sections remained the same as last year, the 15 'extra' questions were in the verbal ability section.

"We wanted to increase the number of questions in the verbal section to 40. While both QA and DA involve number crunching and account for a total of 50 questions, we wanted to balance the paper with an almost equal weightage to verbal ability,'' said Subrata Mitra, admissions chairperson at IIM Calcutta.

Source: EconomicTimes

New record: 94,563 Indian students in US

Indian interest in an American degree remains unabated, notwithstanding random accidents and homicides involving students from India in the United States. For the seventh year running, India is the leading source of foreign enrolments on US campuses, sending a record 94,563 students during the academic year 2007-2008.

Indian students now constitute 15 per cent of the total US university foreign enrolment which stood at 623,000 in this academic year, a 7 per cent increase over the 583,000 foreign students who came here in 2006-2007, according Open Doors, the authoritative annual report on the subject released on Monday.

The Indian increase of 13 per cent (up from 83,833 in 2006-2007) is only marginally overshadowed by the resurgence of interest in the US from Chinese students, whose numbers jumped up from 67,723 in 2006-2007 to 81,127 this past year, a 20 per cent increase. But since 2001/02, when it took over from China, India has remained the leading place of origin for students coming to the United States.

South Korea (69,124), Japan (33,974), and Canada (29,051) round off the top five countries sending students to the US, together accounting for 49 per cent of all international students.

The surge in foreign enrolments has relieved and pleased the US administration, which was under criticism from the academia for instituting stricter controls that led to a momentary decline in foreign students after 9/11. Tougher US procedures had led many foreign students to countries such as Canada, U.K, Australia, and Singapore, but the US has evidently regained ground. Foreign students are also a major source of revenue for US universities.

"In today's competitive international environment, the increase in enrolments noted in this year's Open Doors data demonstrates again that the US remains the premier destination for international students," noted Assistant Secretary of State for Educational and Cultural Affairs, Goli Ameri, who is himself an international student who graduated from an American university, adding, "US higher education is unparalleled in its vitality, quality, and diversity. The US government joins the US higher education community in a commitment to welcome international students to the United States."

Among the many noteworthy facts in the 2008 Open Doors reports was the surge in students from Nepal coming to the US. There was a 15% increase in enrolments from Nepal this past year, putting it at number 11 with 8,936 students, following a 28% increase the previous year.

The Nepalese surge coincided with the decline in the number of students from Pakistan, which went down by one per cent to 5345, and pushed Pakistan out of the top 20 to number 23. Saudi Arabia is on the top ten and Indonesia and Nigeria in the top 20.

The report also looks at the trend of American students going abroad to study and finds that this has increased by 8.2 per cent over the past year and almost 150 per cent over the last decade. A record 242,000 US students studied abroad in 2006-2007, with UK, Italy, France and Spain taking the top four spots.

But there was a surge in US students' interest in China, and a 11,000 went there to study, up 25 per cent from the 8800 who went in 2005-2006. Along the same lines, there was also a 25 per cent increase in US students who went to India, but it was only around one-fourth the number who went to China. Around 2600 American students went to India in 2005-2006 compared to 2100 in the year before.

Other highlights of the Open Doors report: The top ten most popular fields of study for international students in the United States in 2007/08 were Business and Management (20% of total), Engineering (17%) and Physical and Life Sciences (9%), Social Sciences (9%), Mathematics and Computer Science (8%), Fine & Applied Arts (6%), Health Professions (5%), Intensive English Language (5%), Education (3%), Humanities (3%), and Agriculture (2%).

For the seventh year in a row, the University of Southern California is the leading host institution with 7,189 international students. New York University hosts the second highest number of foreign students (6,404). Other campuses in the top 10 are: Columbia University (6,297), University of Illinois at Urbana-Champaign (5,933), Purdue University (5,772), University of Michigan - Ann Arbor (5,748), University of California - Los Angeles (5,557), University of Texas - Austin (5,550), Harvard University (4,948), Boston University (4,789), and University of Pennsylvania (4,610).

California remains the leading host state for international students (84,800, up 9%), followed by New York (69,844, up 6%), Texas (51,824, up 6%), Massachusetts (31,817, up 11%), Illinois (28,804, up 12.5%), Florida (26,739, down 0.5%), Pennsylvania (26,090, up 12.5%), Michigan (22,857, up 8%), Ohio (19,343, up 4%), and Indiana (15,548, up 8%). 17 of the top 20 leading host states experienced increases in total international students, with Washington (21.5%) and Virginia (13%) showing the largest percentage increases.

Source: EconomicTimes

Forecasters: U.S. in 14 month recession, Q4 looks rough

NEW YORK (Reuters) - The U.S. economy fell into a recession last spring and will contract sharply this quarter as more than 200,000 workers per month are added to the rolls of the unemployed, a survey said on Monday.

The Philadelphia Federal Reserve's latest Survey of Professional Forecasters removed some of the glow from an earlier report showing industrial output rebounded in October after hurricane disruptions produced a stunning fall in September.

Early data from the factory sector also supported the grim view of the forecasters, showing manufacturing in New York state tumbled in November to yet another record low.

Japan on Monday joined the euro zone in recession. Although the U.S. economy contracted in third quarter, that followed two consecutive quarters of growth, albeit helped by government stimulus payments. The arbiter of U.S. business cycles has not yet declared the economy in recession.

The latest data and surveys provided new evidence that turmoil in credit markets was tightening its grip over the economy, which is unlikely to see any relief soon from the worst financial crisis since the Great Depression.

"The early signs suggest that the November data cycle is likely to be extremely weak," analysts at RDQ economics said in a research note.

On Wall Street, stocks were weaker in volatile trade, though off early lows, while government bonds were mixed and the dollar was a shade higher against the yen .

The Philadelphia Fed's survey predicted gross domestic product would shrink by 2.9 percent in the fourth quarter, a sharp downgrade from the previous prediction of 0.7 percent growth.

It said the U.S. economy entered a recession in April and that it will last 14 months, which would make it one of the longest recessions since the Great Depression of the 1930s.

Only the 16-month recessions in the mid-1970s and early 1980s were longer. Even though the economy was technically growing in April this year it would not be unprecedented for the National Bureau of Economic Research to declare a recession was occurring then.

The NBER measures recessions by "a significant decline in economic activity spread across the economy," rather than the traditional definition of two consecutive quarters of falling GDP.

The recession of March-November 2001 did not include two consecutive quarters of GDP contraction. This year, the economy has lost 1.2 million jobs since an uninterrupted labor market slump started in January, while manufacturing has contracted for most of the year.

The survey predicted the economy would shed an average of 222,400 jobs per month this quarter. It said first-quarter GDP would decline by 1.1 pct and the unemployment rate would hit 7.0 percent during the first three months of next year.

A separate report by the Federal Reserve showed U.S. industrial production rose a stronger-than-expected 1.3 percent in October after a downwardly revised September drop of 3.7 percent -- the biggest fall in more than 62 years.

The September slide in industrial output was the steepest since a 5.0 percent decline in February 1946.

The Fed said the revision to September output resulted, in part, from a larger estimate of the impacts that Hurricanes Gustav and Ike had on the chemical industry. This also set a lower base for October.

"The October improvement is not anything to cheer about," said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, a private economic research organization.

"EMPIRE" STRICKEN

In a separate report, the New York Fed said its "Empire State" general business conditions index fell to minus 25.43 in November from minus 24.62 in October. That was the lowest reading on manufacturing in New York state since the inception of the index in July 2001.

The report "paints a dim picture," said David Ader, head of government bond strategy at RBS Greenwich Capital, in Greenwich, Connecticut. "Still, this is not exactly surprising but more confirmation," he added.

Economists polled by Reuters had expected an even weaker reading of minus 26.10.

The report, based on a survey of manufacturers in New York state, was generally bleak. The indexes for new orders and shipments slid to record lows, while the measures for unfilled orders, employment and inventories all slipped to their lowest levels since late 2001.

As with many recent reports, the one silver lining was that inflation measures fell, which should give the Federal Reserve leeway to continue holding interest rates low as it fights the effects of the worst financial crisis in 80 years.

The prices paid index fell for the fourth straight month and the prices received index tumbled to its lowest level in more than three years, the report said.

IMF requires $1.2 trillion to boost world economy

Up to two percent of the world's income, or 1.2 trillion dollars, should be spent on reviving the global economy, the head of the Anatomy of a global credit crisis
International Monetary Fund said in Tripoli on Monday.

Dominique Strauss-Kahn, the fund's managing director, called for "massive" and coordinated use of budgetary policy to overcome the crisis.

"It is time to use all instruments," he said at the opening of a conference on economic integration in the Maghreb region, urging a budgetary "push" of two percent of countries' gross domestic product.

On a world scale, this would add up to 1.2 trillion dollars.

"A coordinated budgetary policy sharply increases the effect of the policy," Strauss-Kahn said.

He indicated that he would favour a further interest rate cut by the European Central Bank.

"In Europe, there are still possibities for flexibility" in monetary policy, unlike in countries such as the United States and Japan, he said.

The ECB cut its lead rate by 50 basis points on November 6, to 3.25 per cent.

Wall St falls as Citi, Japan news deepen worries

NEW YORK (Reuters) - U.S. stocks slid on Monday as the global economic outlook worsened, with Japan becoming the latest major economy to slide into recession and Citigroup Inc. revealed plans to slash 15 percent of its workforce.

Contributing to the dreary economic picture, a Philadelphia Federal Reserve Bank survey showed private-sector economists believe the U.S. economy fell into a recession last spring that will last 14 months, with the economy contracting sharply this quarter.

Japan, the world's second-largest economy, reported data showing that it was in recession, adding to jitters on the deepening global deterioration. The lack of any concrete stimulus plans over the weekend from a summit of 20 of the world's largest economies further undermined investor confidence.

"We've got to brace ourselves for a pretty ugly economy for the next six months," said John Forelli, portfolio manager at Independent Investments LLC in Boston.

Financials were a weight on the market after Citi announced plans to cut 52,000 jobs by early next year, Chief Executive Vikram Pandit's latest attempt to return the company to profitability and strengthen its share price. The move comes on the heels of 23,000 jobs eliminated in January and September.

The Dow Jones industrial average slid 79.49 points, or 0.94 percent, to 8,417.82. The Standard & Poor's 500 Index tumbled 6.79 points, or 0.78 percent, to 866.50. The Nasdaq Composite Index dropped 14.07 points, or 0.93 percent, to 1,502.78.

But General Motors Corp was among the advancers on the Dow, rising 6.0 percent to $3.19, as Congress prepares to debate a bailout of the American auto industry. The White House said it will continue to work with Republican lawmakers to determine if help can be extended to the ailing industry this week.

Elsewhere on the Dow, Alcoa's shares slumped 8.5 percent to $9.92 after UBS cut its rating on the company to "neutral" from "buy," citing uncertainty in the aluminum market.

Investors also dumped technology stocks seen vulnerable to a global downturn and reduced business spending. Microsoft shares fell about 0.8 percent while shares of Apple Inc fell 0.7 percent.

Target Corp shares shed 1.5 percent after the retailer posted a nearly 24 percent drop in profit as the economic downturn curtails shoppers' from splurging on the discount retailer's trendy wares and make payments on its credit cards.

Wachovia Capital Markets cut its 2009 operating earnings estimate on the Standard and Poor's 500 Index to $78.30 per share from $86 per share, citing deterioration in global growth prospects.

Data that showed a key manufacturing gauge in New York state fell to yet another record low in November underscored the grim view of the economy.

The S&P financial index shed 2.4 percent, while shares of Citigroup, a Dow component, fell 2.1 percent to $9.32.

Skepticism as crisis gives emerging powers clout

WASHINGTON (Reuters) - The rich nations' financial meltdown has in theory handed developing countries greater say in running the global economy, but the new stakeholders will need to offer more than rhetoric to turn theory into reality.

In the first sign of how difficult it could be to update the global financial architecture to include fast-growing developing countries like India, China and Brazil, none of the emerging countries at the Group of 20 summit offered to kick in money for the IMF to fight financial contagion.

The G20 agreed to add emerging market economies on the Financial Stability Forum, where top bank regulators evaluate banking and market risk. They also agreed to study ways to give the emerging countries more seats at the IMF and World Bank.

Canada's Prime Minister Stephen Harper called the weekend session "the beginning of an unprecedented process where developed and developing countries will work together."

The Brazilians went further. Foreign minister Celso Amorim declared "the G20 has effectively replaced the G8" and President Luiz Inacio Lula da Silva echoed years of blunt advice from the West, telling rich countries to "solve their economic problems."

But hopes voiced by Britain, Japan and others that their emerging economy partners would offer up cash for the IMF proved premature at the weekend.

Saudi Finance Minister Ibrahim al-Assaf told Reuters the rich oil-producing kingdom had no plans to cough up more money for the IMF. "There were lots of rumors that we were coming here to pay the bill, there is no such thing," he said.

China, with a pile of foreign reserves approaching $2 trillion -- the largest in history -- likewise did not respond to lobbying by British Prime Minister Gordon Brown for countries running huge surpluses to contribute. Japan had also hoped that oil producers and surplus countries would chip in.

"Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth," said President Hu Jintao, which announced a $586 billion domestic stimulus plan last week.

POLICY CHANGES SOUGHT

Even before this crisis, the structure of the G8 rich industrial democracies plus Russia had long been criticized as out of sync with economic reality that had been transformed by years of fast growth in China, India and Brazil.

Some participants said the first attempt to bring those countries together was an improvement on the old order.

"The G20 declaration is very detailed, very action oriented. If you look at the G7 or G8 leaders communique, it's five or six sentences, that's all," said South Korea's deputy finance minister Shin Je-yoon, who acknowledged that the G20 statement was also longer on plans than action.

Experts warn, however, that developing countries' lingering economic vulnerabilities, particularly their reliance on exports to rich country markets, put them at particular risk from the credit crunch.

The impact of the U.S.-bred financial crisis on China has quelled for now growing talk that Chinese growth had been "decoupled" from the health of Western economies.

Another impediment to stability in places like South America is a high debt burden, which analysts say could preclude the region from resorting to fiscal spending to offset the drag on economic growth from withering capital inflows.

"In Latin America, the scope for significant countercyclical fiscal policies is very limited due to the heavier debt burden," said Shelly Shetty, senior director for Latin American sovereign ratings at Fitch Ratings in New York.

Some U.S. economists are skeptical that China can become a part of a solution to the global credit crunch until it stops adding to the problem of huge global imbalances by keeping its currency artificially low to boost exports.

"The basic contribution of the developing countries to the current mess and the overwhelming disagreement with them is their undervalued exchange rates," said economist Peter Morici of the University of Maryland's business school.

"Until China and others are willing to stop intervening, we could admit four Chinese senators to the U.S. Congress and it would not help stabilize markets," he said.

Buy HDIL at lower levels: Bose

Technical Analyst, Rajat K Bose is of the view that one can buy HDIL at lower levels.

Bose told CNBC-TV18, "Among all the real estate stocks, HDIL stands as the best bet there. You can buy at lower levels expecting a bounce. But other than that if you take Unitech for instance my feeling is that Unitech still has far more downside in the sense that if it were to break Rs 39 levels, then it can break the earlier low and the projections that can be made on the charts, is actually suggesting that somewhere between Rs 20-50, this sock might find a bottom, although that might sound a bit scary but that is the kind of technical projection you can make."

He further added, "If I have to trade real estate stocks at all, then I would rather prefer HDIL because that has the best possibility of giving a bounce on the upside. Although currently I would not be looking at it may be intra-day there would be a good bounce in HDIL today, but as I said that may be I would be looking at them towards the end of the week or may be early next week, then they might offer even better opportunities."

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

Source: Moneycontrol

SBI a good bet says Mohindar

Rahul Mohindar of Viratechindia is of the view that State Bank of India, SBI looks good bet and one can expect 5-7% upside.

Mohindar told CNBC-TV18, "We can look for longs in the banking space, my guess is SBI is a fairly good bet where we are probably looking at an upside of 7% to 8% in the very short term, so the lows that it has made today would probably be a good stoploss and breaking that would look at probably cutting my trades, on a rally up. If one is looking for something to go short on, I still think thechnology is a weaker space which he/she could look at shorting and real estate is another weak sector which one may consider moving out of like DLF or Unitech etc."

Source: Moneycontrol

Sell Unitech on rallies: Mohindar

Rahul Mohindar of Viratechindia is of the view that one should sell Unitech on rallies.

Mohindar told CNBC-TV18, "One of the key things for this stock is that not to try and catch a bottom at this stage because these stocks look negative from a medium to long term aspect and even if the market gets into a fairly good recovery mode or some kind of a medium term uptrend, I don’t see real estate as a sector that’s going to be rallying up so I would probably like to exit on declines and I would stay away from a stock like Unitech whilst one may see a 5% or 8% type of bounce back but again it’s a rally to exit."

Source: Moneycontrol

Buy BHEL: H Jani

Hemang Jani, Senior Vice-President at Sharekhan is of the view that one can buy Reliance Industries, Larsen & Toubro, Bharat Heavy Electricals Limited, Bharti Airtel for a pullback rally.

Jani told CNBC-TV18, "For a pullback, we would be more comfortable buying into some of the known largecap names like Reliance Industries, Larsen & Toubro, Bharat Heavy Electricals Limited, Bharti Airtel and into some extent State Bank of India. At this point of time, we would not be comfortable participating through midcaps or some of the sectors, which are in some kind of an uncertain phase.

Source: Moneycontrol

ICICI Bank can slip to Rs 327: Bose

Technical Analyst, Rajat K Bose feels that if ICICI Bank falls below Rs 371 then you are looking at Rs 356 below that it can even hit Rs 327.

Bose told CNBC-TV18, "If ICICI Bank falls below Rs 371 then you are looking at Rs 356 below that it can even hit Rs 327. It is looking pretty weak and so is Axis Bank, if Rs 470 is broken, even Rs 450 would not act as a support , it can fall even further from there."

He further added, "The other bank, which is showing a marginally better strength as of now is HDFC Bank and if it falls below Rs 970, it can even hit Rs 920 and around that level it maybe bought with the stoploss below Rs 850 if you are looking at some kind of 5-6 weeks trading horizon."

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

Source: Moneycontrol

Exit TTML: Vijay

Portfolio Manager, PN Vijay is of the view that one can exit TTML.

Vijay told CNBC-TV18, "Telecom is becoming a fairly mature market in India quite quickly if you see the struggle that Reliance, a relatively late player, has been having in its ARPUs (Average Revenue Per User) etc and Indian telecom rates are the lowest in the world. So I do not know whether TTML is going to make that big grade, which Bharti has done so easily. So I would use this opportunity to get out of TTML."

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

Source: Moneycontrol

Mastek closing down BPO practice

Mid-size IT solutions firm Mastek Ltd is in the process of closing down its business process outsourcing practice.

In the last two years, the city-based company had stopped pitching in for renewal of back office contracts and has significantly reduced the number of people in its BPO-specific team.

Process outsourcing does not fit into Mastek’s business model of driving non-linear growth (by increasing revenue realised per employee), Mr R.S. Desikan, Group Chief Financial Officer, told Business Line.

“Though our BPO practice is not loss making at all, it is derogatory to our margins. It does not give us the scope to increase average revenues per employee to the level we want to take it to,” said Mr Desikan.

Mastek operates on operating margins of 15.94 per cent, according to Google Finance. According to technology analysts, margins in the BPO industry are in the 10 to 12 per cent range. For the fiscal ended March 2008, Mastek generated Rs 916 crore in revenues with around 4,000 employees.

Mastek will be completely out of the BPO business by the end of the current fiscal. “One client has asked us to carry operations for another 3 to 4 months till they transition it another vendor,” said Mr Desikan

Number Story


Mastek does back-office work related to cheque truncation and processing. The company’s earnings from its BPO operations have been coming down for several quarters now. According to details available on the company’s Web site, Mastek’s revenues from BPO (as on the quarter ended September 2008) was down by 35.7 per cent to Rs 3.63 crore as against Rs 5.65 crore reported for the corresponding quarter a year ago. On the manpower front too, Mastek has been steadily reducing capacity. As on September 2008, it employed 20 people in its BPO team as against 142 people in the corresponding quarter two years ago.

“Most of the employees of our BPO practice were absorbed into our internal operations. Several employees left on their own,” said Mr Desikan.

Mastek had forayed into the back office business through Carretek in May 2003, which was formed as a partnership between US-based Carreker Corporation and Mastek. From being a joint venture, Carretek became a 100 per cent owned practice of Mastek, which generates majority revenues from the Government and insurance space.

Source: TheHinduBusinessLine

Lupin (Rs 581.25): Sell



We recommend a sell in Lupin from a short-term horizon. It is evident from the charts of Lupin that after recording an all-time high of Rs 780 on October 3, it reversed direction and has been on a medium-term downtrend. The stock’s reversal was triggered by the prolonged negative divergence visible in the weekly relative strength index (RSI). The stock price band of Rs 750-780 acts as a significant resistance level.

While trending down, the stock breached the 21 and 50-day moving averages in early October and the 200-day moving average during the previous week. Moreover, the stock fell by 4.5 per cent, penetrating the short-term support level of Rs 600 on November 14.

The daily RSI has entered into the bearish zone and weekly RSI is on this verge of entering this zone. The daily moving average convergence and divergence is signalling a sell, supporting our view. Our short-term outlook for the stock is bearish.

We anticipate the stock to decline further until it hits our price target of Rs 520 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 609.

Source: TheHinduBusinessLine

Birla Sun Life Equity: Invest



Investors can consider investment in Birla Sun Life Equity Fund based on its consistent performance over a five-year period. With the markets going through a highly volatile period, funds with a long-term track record and with higher exposure to large-cap stocks may be relatively better options.

Birla Sun Life Equity Fund has an investment strategy of investing across market cap segments. However, over the past few years the fund has been predominantly invested in large-cap stocks with about one-third of the assets in mid-caps. The fund’s three-year return through systematic investment plan (SIP) is -9.1 per cent against 4.7 per cent earned through lump sum investment. This is not surprising, as a good two out of the three years were bull markets, where units are typically accumulated at higher prices in peak markets.

However, with the markets under a bear grip, investments through the systematic option would help, as any additional units bought at lower costs will reduce overall average costs and provide base for earning optimal returns once the market revives.

When markets went through similar, though intermittent, rough patches between November 2002 and October 2005, the fund had generated an annualised return of 35 per cent (under SIP) and outpaced the benchmark BSE 200 by 14 percentage points (over this period fund was managed by Alliance Mutual Fund).

Performance: Over the past one year, the fund has declined by 53 per cent although the fall is marginally lower than its benchmark BSE 200. Anticipating a volatile market, the fund started holding 15 per cent in cash even during the beginning of 2008. As the markets started to correct it increased its cash holdings; in the October portfolio debt and cash holdings accounted for 29 per cent of the assets. Despite moving to the cash position, the fund struggled to contain losses as a result of mid-cap stocks (market capitalisation less than Rs 7,500 crore) in its portfolio. The mid-cap stocks held by the fund could however hold potential once the market revives.

Portfolio overview: The fund sports a well diversified portfolio of 41 stocks with stock-specific exposure restricted to less than five per cent of the assets barring the case of Reliance Industries and Bharti Airtel. The top-three preferred sectors over the past few months were banks, telecom and software, which together accounted for 28 per cent of the assets. The year to date correction in NAV is far higher than the decline in the total asset size. The difference suggests possibility of fresh flows into the fund. The fund is managed by Mr Mahesh Patil. The NAV per unit is Rs 128.7.

Source: TheHinduBusinessLine

Tata Chemicals: Buy



A global de-rating of commodity stocks and worries over a sharp contraction in demand for commodities have bludgeoned Tata Chemicals’ valuation. The stock now trades at a P-E multiple of just 3.8 times its trailing 12-month earnings, down from 8 in August and 14 in March 2008. At the current market price of Rs163, the stock trades at a steep discount to global peers such as Solvay and FMC (9-10 times).

Tata Chemicals is an attractive ‘buy’ for conservative investors with a two-year perspective. A diversified global presence, a relatively strong soda ash cycle and the prospect of higher margins on the fertiliser business, suggest that the company may easily exceed the growth expectations reflected in its current stock price.

The low valuation and high dividend yield (5.5 per cent) provide protection against protracted downside.

Changing mix


Of its two leading business segments (fertilisers and chemicals), the fertiliser business has been the key revenue and profit driver for Tata Chemicals in recent times. It accounted for 60 per cent of revenues and 56 per cent of profits before interest and taxes in the first half of 2008-09.

Selling prices for both urea and complex fertilisers are fixed by the government with the difference between normative import prices or costs and the price reimbursed as subsidy to producers.

In this scenario, a spike in international prices of both fertilisers (urea and phosphates) and spiralling input costs resulted in a significant increase in fertiliser revenues for Tata Chemicals so far this fiscal.

Fertiliser margins to improve


Global urea prices have since fallen by 70 per cent from their peak levels in July, while DAP (di-amonium phosphate) prices have declined 35 per cent.

Revenues from this business are hence likely to decline significantly in the coming quarters. But this may not have significant margin or profit implications, as lower realisations are likely to be offset by a steeper fall in input costs (phosphoric acid prices are half of last year’s levels, while ammonia is at one-third).

In fact, the commodity meltdown may actually improve Tata Chemicals’ cash flows, as lower input costs may lighten working-capital requirements and lead to prompt receipt of subsidies.

The urea business is also likely to see an expansion in volumes and margins as the company’s de-bottlenecking project is commissioned in the first quarter of 2009.

Under the new urea policy, the output from this project will receive realisations linked to import parity prices of urea, which will mean a much higher margin profile.

Soda ash: Still firm prices


If the fertiliser business can look forward to volume growth and stable profit margins, Tata Chemicals’ soda ash business remains in a position of strength, despite the reversal in the global commodity cycle. A relatively tight-demand supply balance has kept global soda ash prices relatively firm, amid precipitous falls in most other commodities.

Global soda ash prices in non-US geographies now hover at $270-310 per tonne levels, 8-10 per cent higher than prices at the same time last year. Further increases are expected in the contracts for 2009.

Tata Chemicals, which markets the lion’s share of its soda ash output through long-term contracts, has already locked into higher prices for two of its facilities when contracts were renewed in August 2008. The remaining contracts are unlikely to see significant slippages. Higher exports from China do have the potential to moderate prices in the Asian region to some extent.

But for Tata Chemicals, a sharp correction in realisations compared to last year appears unlikely. Significant contributions from the Indian market, where prices are likely to remain stable (the depreciating rupee may offset any correction in dollar prices), may also help the company maintain margins in this business.

Easing trends in input prices are also likely to aid margins in the coming quarters.


An edge on costs


From a strategic perspective, Tata Chemicals’ aggressive inorganic growth strategy has also helped lower its cost structure and diversify, to benefit from price and demand trends across the world.

The acquisition of UK’s Brunner Mond in 2007 and the US-based General Chemicals in 2008 have taken the company’s overall soda ash capacities to 5.5 million tonnes, making it the second largest global producer of soda ash after Solvay.

The acquisitions have also endowed Tata Chemicals with manufacturing facilities spread across Northwich (UK), the Netherlands, Lake Magadi (Kenya), Wyoming (US) and Mithapur in India, enabling it to diversify currency and price risks across regions.

With over half the current capacities based on natural soda ash, which is much cheaper to produce than synthetic soda ash, the company has acquired a significant hedge against commodity cycles.

Future payoffs


With some of the facilities experiencing teething troubles earlier this year, contributions from the above buyouts are yet to fully reflect in Tata Chemicals’ numbers. Brunner Mond’s Kenyan facility for instance, reported a loss in FY08, due to high fuel costs, which impacted margins. Prospects for the facility have since improved on the back of the sharp fall in energy prices and better capacity utilisation levels.

Profit margins at the Wyoming facility may also show expansion on the back of cost savings and better realisations, from a higher contract price negotiated for the current year.

A better show from acquired facilities has helped Tata Chemicals report a 33 per cent profit growth (after charging off huge notional losses on foreign currency loans), on the back of a near two-fold expansion in sales in the September quarter, with margins improving sequentially.

The acquisition spree has hiked up the leverage on Tata Chemicals’ books, its debt equity rising from 0.7:1 to about 1.4:1 currently. Though refinancing of bridge loans contracted for the General Chemicals buy may peg up interest costs, the overall interest cover (at over 6 in the first half of this year) offers sufficient comfort to absorb a hike.

Notional forex losses arising from any further depreciation in the rupee could also depress reported earnings in the coming quarters; but the prospect of higher revenues and margins in the coming quarters appear likely to offset this impact.

Given its healthy cash flows and strong balance-sheet, the company may also be able to refinance loans at lower rates over the next couple of years.

On a consolidated basis, Tata Chemicals reported a per share earnings of Rs 41.7 over the trailing 12 months ended September 2008.

Source: TheHinduBusinessLine

C&C Constructions: Buy



The beaten down valuation of construction contractor — C&C Constructions — provides a good opportunity for investors to buy the stock. While remaining a small-sized company in the road segment, C&C has distinguished itself from peers through its focus on projects in tough terrains.

Strong growth in topline is suggestive of fast paced execution while the continuing inflow of orders indicate that the company has fared better than others even as the sector is threatened by macro risks to growth. Being a small-cap stock with liquidity issues and vulnerable to steep price declines, investing in C&C Constructions would, however, call for an above-average risk appetite in the current market.

The growth prospects over the long-term could, however, compensate for the short-term risks involved. At the current market price of Rs 109, the stock trades at 4.9 times its per share earnings. Investors can consider buying the stock in small lots, on declines linked to broad markets. Further, small-cap stocks such as C&C should form a limited proportion of one’s overall exposure to stocks in markets such as the present one.

Ruling in tough terrains


C&C made a mark in Afghanistan by undertaking challenging projects in the road and buildings segment, funded by multilateral funding agencies. For the higher risks undertaken, the company was compensated with superior profit margins. Operating profit margins (OPMs) for projects undertaken in this region are typically over 25 per cent. As a result, C&C could showcase profit margins far superior to the domestic industry average.

The company’s experience in Afghanistan earned it a reputation for working under harsh conditions that also challenged logistics, thus providing a niche in bidding for projects in regions such as the North East, Jammu and Kashmir or Bihar where there are negligible number of bidders. Here again, the profit margins tend to be higher than regions with higher competition.

However, over the last couple of years, with the proportion of assignments in India overtaking Afghan projects, C&C has seen a steady decline in its OPMs from over 23 per cent in FY06 to about 19 per cent now. We believe that the shift in focus to India may be a better strategy for the long term in terms of opportunities as well as lower risk, for the business. While OPMs could stabilise at these levels, they are likely to remain superior to the industry range of 10-12 per cent.

Another noteworthy strategy of C&C is its attempt to qualify for larger projects through the joint venture route. The company has had a longstanding partnership with established contractor B. Seenaiah. Partnerships could be the only way forward for mid-sized companies given the larger size of orders being awarded and the increasing complexity involved. The company’s first build operate transfer (BOT) was made possible only through a joint venture with B. Seenaiah.

Even as the company attempts to move forward as a road developer over the long term, its sub-contracting skills would stand in good stead in the near future as a number of large infrastructure developers bid for increasingly large projects. For instance, the company’s role as a road contractor for Jaiprakash Associates is evidence of road developers seeking partnership with quality contractors.

Improving asset turnover


The high investment in assets and the relatively lower asset turnovers are limitations that apply to most players in the road sector. To overcome this, C&C Constructions has diversified into water and power transmission projects.

While it has already won orders in the water sanitation and sewerage space, it is in advanced stages of bidding for a number of projects in the power transmission segment. Revenues from these segments, which call for little fresh investment, may help improve asset turnover, apart from aiding business diversification. The company seeks to ramp up orders from ‘other segments’ to 30 per cent of total projects over the next couple of years.

Interest costs worry


Cost overruns on its BOT project (being fixed price in nature) and higher interest cost resulted in muted growth in net profit for the first quarter ended September 2008. Sales, however, grew at a scorching 162 per cent over a year ago, suggesting healthy pace of order execution.

Apart from the BOT project, C&C’s total order book of Rs 2,100 crore is largely protected by price-escalation clauses. Besides, given the current softening of commodity prices, the pressure on profits from this source is likely to ease.

However, a larger debt base and higher interest rates have resulted in mounting interest costs. While interest costs have gone up compared to a year ago, the average borrowing cost of 13 per cent appears moderate compared to the 16-17 per cent rates resorted to by even bigger infrastructure players. This may also imply that lenders may be foreseeing lower risks in a road contracting company than in a road developer.

Source: TheHinduBusinessLine

Carborundum Universal: Buy



Strong growth in revenues, a highly diversified geographical base and increasing focus on the high-growth solar wafer business spell long-term potential for Carborundum Universal (CUMI), a leading player in the abrasives and industrial ceramics space. Those with a two-three year investment horizon can consider buying this stock.

Valuations

At the current market price of Rs 102, CUMI trades at about 11 times its likely FY09 per share earnings. While this may appear pricey when compared to some of the other manufacturing companies whose price earning multiples have been reduced to the single digits, that CUMI is fairly shielded from the impact of an economic slowdown may justify the ‘premium’ valuation accorded to it. For one, it has a highly fragmented user industry base, which may cushion it from the fallout of any significant slowdown in a particular user industry. That despite the slowdown in the auto industry, CUMI has managed to put in modest growth numbers is a case in point.

Two, CUMI’s access to low-cost funds for sustaining its capacity expansion and working capital requirements (at an average of 9 per cent) also allays concerns regarding funding constraints, the reason oft cited for marking down manufacturing companies. Three, a chunk of the demand for CUMI’s products is ‘maintenance and repair’ driven. So, to that extent the demand for its products will continue to remain healthy.

Access to minerals

Another factor in CUMI’s favour is access to rich yet cheaper reserves of minerals (alumina and SiC), essential raw materials for all its products. The company has strategically set up manufacturing facilities in countries such as China and Russia, which not only hold rich reserves of minerals but are also the target market for some of its products; Russian presence also holds significance in terms of providing proximity to CUMI’s clients in Europe.

Financials

For the quarter ended September 2008, helped by a strong performance in India, Russia and Australia, CUMI’s consolidated revenues and profits registered an increase of over 67 per cent, each. It has also turned around its Canadian operations. Further, Volzhsky Abrasive Works, the Russian company that CUMI acquired last year, is expected to report higher revenue contributions from this year. On a standalone basis, the company registered a sales growth of over 20 per cent. Margins, however, remained flat at 16.3 per cent as the quarter saw a 41 per cent increase in power costs. This was because CUMI’s manufacturing facilities in TN and Kerala have been battling with intermittent power cuts. An increase in raw material costs across all business segments also led to a cost push.

Segment-wise, abrasives registered 15 per cent growth in sales, while the sale of ceramics and electrominerals increased by 28 per cent and 27 per cent respectively. Forex loss and high interest outgo during the quarter however capped the profit growth at 6 per cent.

Margins to remain stable

The mismatch in supply and demand of minerals globally had driven CUMI to raise the price of its products to the extent of 5 per cent twice this year. The company may yet again hike the price of its products this quarter. Despite the price hikes, CUMI still counts among the low-cost manufacturer of abrasives and ceramics and this may help it sustain both revenue growth and margins.

Margins may also get a lift from the improving product mix and addition of ‘high value’ products to its kitty. From over 10 per cent of revenues last year, the contribution of value-added products has increased to 25 per cent last quarter.

On that note, the company’s proposal to set up a Silicon Carbide Microgrit facility (high-margin products) to cater to the increasing demand from the photovoltaic industry also leaves sufficient scope for margin expansion in the long-term.

Source: TheHinduBusinessLine

Idea Cellular: Buy



Investments with a two-year horizon may be considered in the shares of Idea Cellular (Idea), given the telecom operator’s strong pace of subscriber additions, entry into circles with higher realisations and synergies possible from Indus Towers.

Pressures on near term margins and earnings due to entry into new circles and high capital expenditure have seen the stock’s valuation being beaten down to a moderate 13 times forward earnings (estimated 2008-09). At Rs 48, the stock offers a good investment option for investors who are willing to look beyond the next few quarters, for appreciation over a 3-4 year time frame.

Once Idea’s capex in new circles tapers off (likely by mid 2010), its overall profitability would start to expand. Mobile number portability, on the anvil for 2009, may also work in Idea’s favour.

Idea’s profit margins over the last couple of quarters have come under strain, due to the capex for network rollout in Mumbai and Bihar, heavy rentals for tower infrastructure and marketing expenditure related to brand building. Though these forays are likely to remain in the investment phase for a while, the headway that Idea has made in capturing market share is impressive.

In Mumbai and Bihar, Idea has already managed to capture 18.5 per cent and 21 per cent share respectively in new subscriber additions within two months of launch. This is despite being the sixth or seventh operator in these circles. The subscriber churn rate in Idea’s existing 11 circles has declined.

Idea received an infusion of Rs 7,294.9 crore from TMI for a 14.9 per cent stake sale, and Rs 2,748 crore from Providence Equity for a 20 per cent stake sale in its subsidiary – Aditya Birla Telecom. This has ensured funds for Idea’s expansion in existing circles and entry into high-ARPU circles such as Tamil Nadu and Karnataka, where it is set to launch services over the next few months.

The acquisition of Spice Communications, apart from bringing in subscriber base, has given it access to the 900 Mhz band frequency in Karnataka, which entails lower expenses. The company has also improved its National Long Distance volumes and now carries 15 per cent of its own traffic. Over time, an increase here would drastically reduce access charges, aiding margins. Synergies from Indus Towers may aid quicker rollout and expansion in Tamil Nadu and Karnataka.

Source: TheHinduBusinessLine

IIM-C summer placement a big hit

IIM Calcutta (IIMC) issued a press release on Saturday evening claiming its summer placement process had been completed with the batch of
over 300 students being offered the widest possible range of sectors and job profiles.

Incidentally, ET on Saturday had, while breaking the news, said that barring a few students, everyone had been placed and that IIMC placement circles were confident on Friday evening about placing them all. In the press release, IIMC has claimed having just done that.

This time around, IIM Calcutta strategised to overcome the recession by inviting more firms to the campus to counter the negative vibes in the market. The total number of companies this year rose to the highest ever level with around 110 companies participating in the placement process.

Students were offered roles in investment banking, consulting, general management, marketing, media and private equity. As reported by ET in a report on November 12, the release said that Slot 0 at IIMC saw some 100 students being placed. Companies included Goldman Sachs, Morgan Stanley, Merrill Lynch, McKinsey, Macquarie, AT Kearney, BCG, Bain, JP Morgan Chase, and Deutsche Bank, among others.

Morgan Stanley London, UBS and Credit Suisse, chose to recruit exclusively from IIM Calcutta.The locations on offer include the United States, Europe, Australia, Hong Kong, Singapore, the Middle East and all major locations in India.
Some of the major marketing names this year included P&G, Unilever, Diageo, Pepsi, Nestle and ITC among others.

New firms on campus included Yahoo, Amazon, Provogue, DHL Logistics, Reebok, Century Ply and the Mahindra Group. Also part of the line-up were startups, online ventures and micro-credit institutions as well as those from the emerging media sector including the Times Group.

Source: EconomicTimes

Zero pay hike likely in IT sector next fiscal

As India's tech firms prepare to protect their operating margins amidst a worsening economy, companies such as Tata Consultancy Services
(TCS) are expected to bring down their wage costs by not providing any salary hikes to their employees next year.

According to the analyst firm Cowen & Company, TCS could bring down its wage hikes during financial year 2010 to almost zero. "Wage inflation is expected to moderate dramatically from over 12% to close to zero, which will help margins," Cowen &Company said in its recent note. When contacted, a TCS spokesperson said: "Salary hikes in TCS next fiscal are likely to be lower than FY09. Wage hikes in India in FY09 were 10% as against 15% in FY08."

The IT industry in India is under tremendous pressure especially with the downturn in the US and European economies, and order flows dwindling. Companies are seeking to reduce their operational costs through various measures. One of key component of reducing costs for the IT companies will be wages as this accounts for nearly 40% of their operating costs.

For now, the other IT services majors like Wipro has already announced a 7-8% hike in wages for its offshore employees while for Infosys it has been in the range of 11-13%. According to Amitabh Das of Vati Consulting, the average hike for the IT industry in the current calendar year has been in the range of 8-10%, down from the previous year's level of 15-18%. In the recent past, wage hikes were in the high double digit percentage owing to a higher demand for skilled IT professionals.

Source: EconomicTimes

L&T to add 10,000 jobs in next 3 years

Infrastructure major Larsen & Toubro on Sunday said it will be adding 10,000 new jobs in the next three years across its different
business verticals.

"Over the next three years we expect to add about 10,000 new jobs in different businesses we are in," L&T Chairman and Managing Director A M Naik told reporters here on the sidelines of World Economic Forum's India edition.

He said 7,000 jobs would be added in Gujarat through three joint ventures that the company has entered into.

"Half a dozen plants are being set up in Gujarat which would include boilers, forgings and castings. Out of the three JVs, two are with Japanese companies and one with the Central Government," Naik added.

He said the plants in Gujarat are expected to come up in the next one-and-a-half to two years. "Besides, our new plants are coming up in Coimbatore and Chennai also," Naik added.

Asked if the current slowdown has impacted the company and led to deferment of projects he said, "Not as such, but some of our clients have slowed down."

He said liquidity continues to be a problem for everyone but L&T's highest rating 'AAA' is helping the company to get funding.

"We maintain our projected target of 30-35 per cent growth in book order for the fiscal," Naik added.

Source: EconomicTimes

Outsourcing biggest post-Bush concern for India: Moody's arm

Outsourcing by US companies will be the biggest concern for India due to the change in US administration next year, says a global
research firm.

“For India, the biggest concerns perhaps in over its important outsourcing industry, as the practice of shifting jobs overseas had come under fire during the US presidential campaign,” Moody's economy.com, a subsidiary of global research firm Moody’s Corporation, has said in a report.

In February this year, continuing to play the anti-outsourcing card, Obama, the then Democrat presidential front-runner, had said, while America cannot “shy away” from globalisation, it would have to take measures to ensure that jobs are not shipped overseas. “We have to stop providing tax breaks for companies that are shipping jobs overseas and give those tax breaks to companies that are investing here in the United States of America,” Obama had said during a debate with rival Senator Hillary Clinton in Cleveland, Ohio.

However, Planning Commission deputy chairman Montek Singh Ahluwalia said on Saturday that the US has given an assurance to India that the policies to strengthen bilateral ties will continue and felt that outsourcing, a hot topic during the US presidential polls, will not be an issue.

The research firm added, India's outsourcing business depends on robust service industries in advanced economies, most of which are battling recession. The apex body of Indian software and services companies, Nasscom, has expressed cautious optimism on working out mutually beneficial policies to boost the economies of both the countries after Obama won the presidential election.

Source: EconomicTimes

SBI to hire 25,000 persons this fiscal

Country's largest lender State Bank of India today said it will recruit 25,000 people this fiscal, a move at a time when the banking
majors are reducing jobs to cut costs amid global slowdown.

"For the last so many years, the bank has not been recruiting people. I understand the problem... This year, we are recruiting 20,000 people in the clerical cadre and 5,000 supervisory staff," SBI Chairman O P Bhatt said at a SBI officers association meet in the capital.

Interestingly, in recent time, many financial institutions has showed pink slips to their employees as a measure of cost cutting due to economic slowdown.

The world's largest bank Citigroup plans to lay off at least 10,000 employees and raise its credit card interest rates as part of its plans to return to profitability.

US credit group American Express will also lay off its 7,000 employees, amounting to around 10 per cent of its workforce.

Bhatt said that SBI's business is of more than Rs 10 lakh crore and is also planning to increase its ATM from 9,000 to 15,000.

He pointed out, "Today we have got a largest technical network in the world, nearly 25,000 units are connected on core banking."

The bank is also improving in other areas as well, Bhatt said .

"In whichever parameter you choose, we have done extremely well and that because of you (its employees)...In home loan this year, we have become the leader and in education loan also, our share is 57 per cent," he added.

Source: EconomicTimes

Tech sector may lose 180,000 jobs

The technology sector is on pace to lose 180,000 jobs this year, the most since 2003, amid a global economic downturn, according to a
report.

Challenger, Gray & Christmas, Inc, a Chicago-based global consulting firm which tracks job-cut announcements, said telecommunications, electronics and computer industry companies had cut 140,422 jobs through October 31.

It said 69,654 tech-sector jobs had been cut in the third quarter of the year alone. That did not include major layoffs announced since October 31 such as the 5,000 to 6,000 job cuts at Sun Microsystems.

"At the current pace, the year-end total could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 job cuts," it said.

A total of 107,295 tech-sector jobs were cut in 2007.

"The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets," chief executive John Challenger said in a statement.

"Businesses and consumers have slashed their spending and no industry is immune," he added.

The 180,000 job cuts in the tech sector would be the most since 2003 but would still be far fewer than the 695,581 jobs lost in 2001, with the bursting of the dot-com bubble.

Source: EconomicTimes

Sensex sheds 94 points as global summit disappoints investors

Mumbai, Nov 17 (PTI) Markets closed down today with benchmark Sensex dropping over 90 points after slipping below 9,000 level on alternate bouts of buying and selling, showing that the Summit of G-20 leaders have failed to bolster investor sentiment here.
In see-saw trade, the BSE 30-share index closed at 9,291.01, a loss of 94.41 points or 1.01 per cent.

National Stock Exchange index Nifty also fell by 10.80 points or 0.38 per cent to close at 2,799.55.

The 30-share Sensex had slipped below 8,000 level at 7,697 points on October 27 last.

After a weak opening, the Sensex traded below 9,000 level before mid-session. With selling pressure intensifying, the bellwether index had lost nearly 428 points to touch the intra-day low of 8,956.68 points.

However, it regained 9,000 level on late buying by domestic funds. Erratic movements in European markets during their early trade also influenced local stocks in late afternoon trade, brokers said.

They said Reserve Bank's fresh measures on Saturday to enhance rupee and forex liquidity, besides reducing risk weights for corporate and commercial real estate loans to boost growth failed to have any desired impact on the market.

Marketmen said investors were cautious as the G-20 Summit on world failed to finalise any specific measures to combat global financial crisis.

At the G-20 Summit on Financial Market and World Economy Prime Minister Manmohan Singh warned the financial meltdown has exploded into a systemic crisis, while world leaders called for a strong regulatory mechanism to bring transparency in financial system and stimulate growth to beat recession. PTI

U.S. auto sector bankruptcy would devastate - GM CEO

DETROIT (Reuters) - U.S. auto industry bankruptcies would have a devastating impact on the domestic economy, many times larger than the aid automakers seek, General Motors Corp Chief Executive Rick Wagoner said on Sunday.

"This is an issue of the whole auto industry, if that becomes under severe pressure, the impact on the whole U.S. economy will be devastating," Wagoner said in an appearance on a NBC-affiliated television station in Detroit.

Wagoner, the chief executives of Ford Motor Co and Chrysler, and United Auto Workers union President Ron Gettelfinger are expected to testify to U.S. congressional committees this week in support of aid to the auto industry.

Democrats have moved to direct $25 billion of loans to the Detroit-based automakers, who have argued that they need the liquidity to survive the industry downturn in which U.S. auto sales have plunged to the lowest levels in a quarter century.

However, an auto industry bailout has hit stiff opposition from Republican senators and representatives who question whether the automakers would be viable even with the support.

The White House also has warned pushing a bailout using the $700 billion financial rescue fund already approved could lead to partisan gridlock and has suggested loosening restrictions on $25 billion of low-interest loans already approved for investments in fuel efficiency improvements.

Wagoner said GM's financial needs stem directly from the Wall Street financial crisis, and the aid automakers seek should not be looked at in terms of "federalizing a business."

"The financial system is failing to supply the credit that is necessary for small businesses, big businesses, any businesses to operate on a daily basis," Wagoner said.

The path out of bankruptcy would not be simple, he said.

"This idea that you just go into Chapter 11 and hang around for three months and agree to reduce your debt obligations and don't pay your retirees, this is a fantasy," Wagoner said. "Most people will stop buying the cars of a bankrupt company."

GLOBAL MARKETS WEEKAHEAD - Unremitting gloom and capital flight

LONDON (Reuters) - Investors enter the week surrounded by unrelentingly poor global economic news, fading hopes of a significant end-of-year stock market recovery and a growing reliance on governments coming to the rescue.

Attention is likely to be particularly keenly focused on Britain, a G7 economy from which investment is fleeing; Russia, which has been in free fall; and on global interest rate and tax policy.

But investors are also desperately sifting through the market wreckage for new investments that may bring returns after a year of mind-numbing losses for many.

"We are sitting at a point where the data is unremittingly gloomy, so any sign of life would be comforting," said John Stopford, head of fixed income at Anglo-South African firm Investec Asset Management.

Investors are being battered by a wave of economic indicators pointing to recession in the United States, Britain, Germany and the euro zone as a whole, while major emerging markets are toppling.

This is leading in many cases to investment flight.

Few places are currently under pressure as much as Britain, where growth has tumbled, unemployment has spiked and interest rates have been slashed.

Sterling has lost a quarter of its value against the dollar over the past 3-1/2 months and is down nearly 8 percent this month alone .

On a trade-weighted basis , the pound hit a 13-year low against other currencies last week and a new record low against the euro .

This is showing up in fixed income investments.

"After a 12-month period of relatively stable flows of foreign capital into and out of UK fixed income instruments," Bank of New York Mellon analyst Neil Mellor wrote last week, "since mid-September we have been registering extremely heavy outflows."

He estimated the outflows from UK fixed income instruments since Sept. 10 have offset around 75 percent of the inflows seen since the start of 2004.

The flight is unlikely to be reversed by the Bank of England. Just days after it slashed rates by 1-1/2 percentage points to 3.00 percent, Governor Mervyn King said last week it was prepared to cut rates further if needed to refloat the economy. That left many investors expecting rates of just 1.5 percent or even 1 percent next year.

Meanwhile, once-booming Russia is being clobbered by investor capital flight, triggered by a mixture of economic concern, falling oil prices and unease over the potential for political intervention.

Last week the authorities allowed what was effectively a 1 percent devaluation of the rouble against their euro/dollar basket, and investors are concerned about more if oil continues to fall.

Russian stocks, meanwhile, have shed more than $1 trillion since May with the dollar-based RTS exchange falling 73 percent since the beginning of June.

EARNINGS RECESSION

It is also becoming apparent to many investors that a hoped for year-end rally on stock markets may well not materialise.

MSCI's main gauge of world stocks, its all-country index, is heading for its sixth consecutive month of losses, down around 45 percent for the year to date.

The current batch of U.S. and European earnings have done little to lift spirits despite lowered expectations and about as many surprises on the upside as on the downside.

Neil Dwane, European chief investment officer of fund firm RCM, noted that companies are still reporting results that trigger sharp stock falls, suggesting that corporate gloom is still not properly priced in.

"Falls of 10 percent suggest the market is too optimistic," he said.

It has all led some investors to predict a severe earnings recession next year. France's AXA Investment Managers, for example, is forecasting an overall global earnings decline of 25 to 40 percent over two years.

Despite this, a number of leading investors have begun looking at corporate debt, which is seen as having priced in too much gloom.

Stopford of Investec, for example, reckons the current price of corporate bonds globally is assuming a far greater economic disaster than the Great Depression.

GOVERNMENT HELP

Little wonder, against this economic and market background, that investors are becoming increasingly reliant on governments and central banks to dig them out of the hole.

Following the weekend meeting of G20 political leaders in Washington, the focus is likely to be on new stimulus packages and tax cuts to re-inflate consumer spending.

Announcements of such plans in the past have lifted stock market sentiment, but often only for a brief time.

Stock markets, for example, rallied sharply a week ago after China announced a nearly $600 billion stimulus package, but it fizzled rapidly with world stocks falling for most of the week.

Meanwhile the relative absence of inflation -- the result of falling global demand -- is allowing central banks to cut or promise to cut interest rates.

On Wednesday, the Bank of England publishes the minutes of the Nov. 6 meeting when it slashed rates. The Bank of Japan will announce its latest decision on Friday.

Gold to remain a safe haven despite volatility

DUBAI (Reuters) - Gold will remain a safe haven for investors in what is one of the worst financial crises in history, despite the recent price volatility, a senior industry official said on Sunday.

Gold bullion has dropped nearly 20 percent since October after a recent wave of fund selling, but still offers the diversity and value which investors will be looking for in a climate of high risk, said Rozanna Wozniak, investment research manager with industry body the World Gold Council.

"Even at around $700 gold is higher than it was about two years ago," Wozniak said. "Gold has been keenly sought after, reflecting its perception as a safe haven and store of value. There is no risk of it being affected by defaults."

Wozniak added that the strong buying by investors in gold as a safe haven had been offset by speculative investors taking profits.

"A significant proportion of this selling has reflected gold's better performance relative to other assets," Wozniak said.

"These investors bought gold as their insurance policy and, during times of significant market turmoil and large falls in asset prices, have been able to make a claim against that policy."

U.S. gold futures for December delivery on Friday settled up $37.50, or 5.3 percent, to $742.50 an ounce on the COMEX division of the New York Mercantile Exchange.

Spot gold closed up at $743.35 on Friday, but was still more than $168 lower than the highest trading value in October of $911.50.

Jewellery sales in the United States had tapered off as consumer spending thinned due to the financial crisis, but investment in gold bullion was healthy, Wozniak said.

Demand for the American Eagle one-ounce bullion was unprecedented while U.S. government sales of the American Buffalo were briefly suspended in late September as strong demand depleted inventories.

Demand from emerging economies like China, India and the Middle East meant there was good potential medium- and long-term growth potential for gold, she said..

Indian demand for gold reached 215.4 tonnes in 2007, and was expected to stay healthy through early 2009 because of the wedding season.

In China, demand for gold as an investment hit 38.4 tonnes in the first nine months of the this year, Sun Zhaozue, president of China National Gold Corp said during a mining conference last week.

That nine-month figure is 60 percent above retail investment demand for the whole of 2007, which at 24 tonnes was a 60 percent increase on 2006.

JP Morgan could axe thousands of jobs - report

LONDON (Reuters) - JP Morgan, the US investment bank, is drawing up plans to axe thousands of jobs across its worldwide operations, reports The Sunday Telegraph.

The paper cites people close to the company, who say that it has started consulting on job cuts and they were likely to be on a comparable scale to those of rivals.

It points out that both Citigroup and Goldman Sachs are letting about 10 percent of their workforces go, which if applied to JP Morgan would mean more than 3,000 jobs being slashed across the world.

A spokesman for the bank refused to comment.

JPMorgan said in July it planned to cut as much as 10 percent of its European investment banking jobs.

TIMELINE - Financial crisis since October



REUTERS - Here is a chronology of the global financial crisis since October:

Oct. 2 - Irish lawmakers vote to enact legislation guaranteeing Irish bank deposits and debts up to a total of 400 billion euros ($554 billion).

Oct. 3 - The U.S. House of Representatives passes a revised $700 billion U.S. bailout plan which will take toxic mortgage assets off financial companies.

-- Wells Fargo & Co says it has agreed to buy Wachovia Corp for about $16 billion, thwarting a planned Citigroup Inc deal announced on Sept. 29. However, Citigroup wins a court order on Oct. 4 blocking the deal until the court rules otherwise. The two remain locked in an intense battle.

Oct. 5 - Germany pledges to guarantee private deposit accounts. Germany also clinches a revised rescue deal for lender Hypo Real Estate after banks and insurers pulled out of a state-led 35 billion euros ($48.5 billion) rescue programme.

Oct. 8 - The U.S. Fed leads a coordinated, global round of emergency interest rate cuts.

Oct. 9 - Iceland, whose prime minister warned of "national bankruptcy," takes control of its biggest bank, Kaupthing, the third major Icelandic bank to be taken over by the state.

Oct. 10 - Japan's Nikkei tumbles nearly 10 percent, registering its biggest one-day drop since 1987.

-- Finance ministers and central bankers from the Group of Seven meet in Washington and pledge to prevent big banks from collapse and to work together to stem the crisis. The International Monetary Fund backs the G7 plan the next day.

Oct. 12 - European leaders meeting in Paris rush out plans to help banks through the crisis.

Oct. 13 - Britain wades in with 37 billion pounds ($64 billion) of taxpayers' cash for three major banks -- Royal Bank of Scotland, HBOS and Lloyds TSB to help them survive.

Oct. 14 - Japan joins the global push, saying it could inject public funds into regional banks. The Nikkei surges more than 14 percent -- the biggest one-day gain in its history.

-- Iceland's stock market plunges 76 percent as it resumes trading.

-- The U.S. offers to take $250 billion worth of stakes in nine top banks. Paulson says government part-ownership of banks was "objectionable" but vital to tackle the crisis.

Oct. 16 - UBS AG is to get a 6 billion Swiss franc ($5.30 billion) injection from the state in return for a 9.3 percent shareholding. Switzerland's other major bank, Credit Suisse Group, says it will raise 10 billion from outside investors to insulate themselves from the crisis.

Oct. 18 - U.S. President George W. Bush meets with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso. They agree to hold global summits on the crisis.

Oct. 19 - South Korea unveils rescue package worth over $130 billion, offering state guarantee on foreign debt and promising to recapitalise financial firms. Oct 24 - The British economy shrinks more than expected and for 16 years Q3 2008. GDP fell 0.5 percent in the biggest drop since Q4 1990 and the first contraction since Q2 1992.

Oct. 27 - Iceland raises interest rates by a massive 6 percentage points to 18 percent, a surprise move that aims to please the IMF and restore trust in a shattered currency.

Oct. 29 - The IMF and the EU agree to a $25.1 billion economic rescue package for Hungary. It is the biggest for an emerging market economy since the global crisis began.

-- The United States cuts interest rates by half a percentage point to 1.0 percent. China cuts its interest rate to 6.66 percent from 6.93 percent and Norway also cuts its rate.

Oct. 30 - Japan unveils a 5 trillion yen ($51 billion) package of spending measures to support its economy. -- Germany plans a range of steps worth up to 25 billion euros ($32 billion) to boost business. Oct. 31 - Barclays Bank saying it plans to raise 7.3 billion pounds ($12.06 billion) in additional capital from outside investors, including Gulf states Qatar and Abu Dhabi.

-- The Bank of Japan cuts its benchmark overnight call rate for the first time in seven years, to 0.30 percent from 0.50 percent.

Nov. 4 - Democratic candidate Barack Obama's convincing win in the U.S. presidential election ends a source of uncertainty for global investors.

Nov. 6 - The Bank of England cuts rates by 1.5 points to 3 percent, the lowest level in more than half a century. The ECB reduces its benchmark interest rate 0.5 percentage point to 3.25 percent.

Nov. 11 - British Prime Minister Gordon Brown says he is ready to borrow to provide a fiscal boost to the British economy.

Nov. 12 - Bank of England says that Britain's economy will shrink sharply in 2009 and inflation could be less than 1 percent.

Nov. 13 - Germany says its economy, Europe's largest, contracted by 0.5 percent in the third quarter, putting it in recession for the first time in five years.

Nov. 15 - World leaders pledge rapid action at a G20 summit to rescue a weakening global economy, setting out plans to toughen oversight for major global banks and to try for a breakthrough by year end in global trade talks.

GM lobbying hard for U.S. bailout - Wall St Journal

NEW YORK (Reuters) - General Motors Corp has been telling U.S. government officials that a bankruptcy filing by the automaker would set off a chain reaction hitting hundreds of its suppliers and dealers as well as its Detroit rivals, The Wall Street Journal reported on Saturday.

Citing people familiar with the situation, the Journal said on its website that GM's auto-industry bailout lobbying effort in Washington was reaching out to congressional leaders, the outgoing Bush White House and members of the transition team of President-elect Barack Obama, with meetings going on over the weekend.

Central to the campaign is the idea that a bankruptcy filing by GM would trigger a domino effect, potentially crippling the nation's industrial base, the newspaper said.

Detroit automakers have sought emergency assistance to help them survive a steep and worsening drop in sales that they blame on the global credit crisis and slumping economy. GM has said it could run out of cash by early next year.

Democrats are proposing a bailout of distressed automakers through $25 billion in loans from the Treasury Department's $700 billion corporate rescue program.

The White House opposes that move and says that $25 billion already appropriated for loans to make automobiles more fuel-efficient should be accelerated.

According to the newspaper, GM is arguing that bankruptcy would threaten jobs and the government's pension-benefit insurance arm, which covers millions of workers outside the auto industry, by swamping the fund and further burdening a strained federal budget.

"There is no Plan B being discussed beyond a government bailout," the Journal quoted one top GM adviser as saying on Friday. Another person close to the company said executives recently told the board they were "increasingly optimistic" GM would receive a liquidity infusion before December, it said.

GM is also flooding dealers, supplier executives, employees and union members with letters encouraging their participation in the effort, the newspaper said.

United Auto Workers President Ron Gettelfinger said in a rare news conference on Saturday that U.S. automakers urgently needed a federal loan to survive, but added their work force should not be blamed for the industry crisis.

Citigroup to slash 50,000 jobs

NEW YORK (Reuters) - Citigroup Inc said on Monday it plans to cut about 50,000 jobs as souring economies and global credit conditions cause the U.S. bank with the farthest reach worldwide to retrench.

The cuts are expected in the near-term and are on top of the roughly 23,000 jobs eliminated by the second-largest U.S. bank between January and September. This would leave Citigroup with about 300,000 jobs worldwide, down 20 percent from the end of 2007.

Cuts are expected from layoffs, the sale of units and attrition. Citigroup plans to slash expenses 20 percent from peak levels and spend $50 billion to $52 billion in 2009, compared with $59.8 billion in 2007.

The cuts are Chief Executive Vikram Pandit's most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup stock fell into the single digits for the first time since Sanford "Sandy" Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp.

Shares of Citigroup fell 18 cents to $9.34 in premarket trading.

Pandit became chief executive last December, and has faced much criticism from investors and others for failing to implement a workable turnaround plan for Citigroup.

The New York-based bank has lost more than $20 billion in the last year, hurt by bad bets on complex and risky debt, often tied to mortgages. Some analysts say the bank might not be profitable before 2010.

Through Friday, shares of Citigroup had fallen 68 percent this year, leaving the bank with a market value of only $51.9 billion, barely twice the $25 billion of capital it received from the U.S. Treasury Department's bank bailout plan.

Citigroup was built principally by Weill, who ceded control to Pandit's predecessor, Charles Prince, in 2003.

Analysts believe Citigroup never invested enough in technology or to make the bank's parts work well together.

Its geographic diversity, including operations in more than 100 countries, is now also working against it as customers in such countries as Brazil, India and Mexico find it harder to keep up with their bills.

At the same time, Citigroup's ability to grow at home is relatively limited. Last month, Wells Fargo & Co derailed Citigroup's attempt to buy Wachovia Corp and its $418.8 billion of deposits.

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.