Tuesday, 18 November 2008

U.S. STOCKS - Dow jumps 2 pct as HP optimism lifts market

NEW YORK (Reuters) - U.S. stocks advanced on Tuesday, sending the Dow up more than 2 percent, as Hewlett-Packard's reassuring quarterly results and an upbeat profit outlook, helped investors put aside worries about signs pointing to a deepening global economic slump.

The bounce in energy shares provided the market with an added spur, in addition to gains in technology stocks.

The Dow Jones industrial average was up 167.66 points, or 2.03 percent, at 8,441.24. The Standard & Poor's 500 Index was up 12.03 points, or 1.41 percent, at 862.78. The Nasdaq Composite Index was up 10.18 points, or 0.69 percent, at 1,492.23.

Yahoo shares soar as Yang agrees to quit CEO post

SAN FRANCISCO (Reuters) - Shares of Yahoo Inc soared nearly 15 percent on Tuesday on hopes that the departure of Jerry Yang, its embattled chief executive, would clear the way for a deal with Microsoft Corp.

Yahoo announced late on Monday that Yang, whose leadership had come under growing criticism from shareholders after he failed to agree to a deal with Microsoft, would step down from his role as soon as the board finds a replacement.

Yahoo is evaluating both internal and external candidates for the top post, and has hired executive search firm Heidrick & Struggles to run the search process.

Analysts said Yang's decision to step down is a sign that the board was frustrated with his efforts to turn around the company, which he co-founded. Yang took on the CEO role in June 2007.

"Jerry's resignation as CEO reflects failed promises he made while fighting off Microsoft's offers, and the board's displeasure with his go-it-alone strategy," wrote Jefferies & Co analyst Youssef Squali in a research note.

Microsoft on Jan. 31 offered $31 a share, or $44.6 billion, to buy all of Yahoo, an offer the Internet company rejected. Microsoft later sweetened its bid but withdrew it in May after being turned down by Yahoo again.

Analysts said Yahoo's board could now grab the opportunity to approach Microsoft under a new CEO.

"The departure of Yang could signal a new position by the board to reconsider the terms of a merger with Microsoft," said Needham & Co analyst Mark May in a research note.

He said the move was "appropriate" after Yahoo failed to strike a deal with Microsoft, teaming up with rival Google Inc to do a search advertising partnership that Google eventually abandoned.

Yahoo's shares rose 13 percent, or $1.37, to $12.00 in morning trading on the Nasdaq.

The shares have fallen roughly 65 percent this year while Yahoo has struggled to find a way to make money as advertisers have scaled back on spending amid a wider economic downturn.

Govt promises steps to stimulate economy

NEW DELHI (Reuters) - The government will take steps to stimulate the economy to offset effects of the global economic slowdown, Finance Minister Palaniappan Chidambaram said on Tuesday, adding that he expected to end the fiscal year with decent growth.

India has already cut interest rates and taken a series of measures to boost liquidity in the banking system after the credit crisis spilled into its markets in October.

"We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," Chidambaram told the World Economic Forum's India Summit.

India was likely to end the year with a satisfactory growth rate despite the downturn in advanced economies, he said, although he declined to put an exact number on the expected rate.

"Next year, we will bounce back to a much better growth rate," he said, adding this could reach 9 percent by the second half of fiscal 2009/10.

Analysts are sceptical, however. Securities firm Macquarie said India's growth outlook faced downside risks due to the global crisis and gross domestic product (GDP) growth was seen slowing this fiscal year and next.

"On our current forecast, GDP growth is poised to fall to a seven-year low of 6.0 percent in 2009/10, from an estimated 7.2 percent in 2008/09," Macquarie analyst Rajeev Malik said in a note released on Monday.

Chidambaram later met Reserve Bank of India Governor Duvvuri Subbarao, after which central bank chief said he was watching the economy and would take the appropriate action at the right time.

Speculation about further interest rate action has mounted in recent days but a senior finance ministry official said any move by the central bank was unlikely in the immediate future.

Later in the evening, the government imposed a 5 percent import duty on a range of iron and steel products, and slapped a 20 percent duty on crude soybean oil imports to protect domestic producers in the face of falling commodity prices.


The finance minister also said the rupee would strengthen again once capital inflows pick up. "It's quite possible that in about a month or two the direction of flows can reverse ... and the rupee will settle at an appropriate level," he said.

The rupee slid 0.6 percent to its lowest in three weeks on Tuesday as foreign portfolio outflow worries gathered momentum after the stock market extended a slide into a fifth straight session. It ended at 49.66/67 per dollar, a touch stronger than a record low of 50.29 on Oct. 27.

Foreign funds have withdrawn $13.1 billion from Indian shares this year, adding to pressure on the rupee which is also weighed down by a widening trade deficit as export growth slows.

Indian policymakers have already taken several steps, including making sharp cuts in the central bank's key lending rate and banks' reserve ratios, to shield the economy.

The economy has grown at an annual rate of 9 percent or more for the past three years. However, many private economists see expansion of around 7 percent this fiscal year to March 2009.

Chidambaram said Asia's third-largest economy could miss its annual export target of $200 billion for this fiscal year as the slowdown in developed nations trims overseas demand.

He urged companies to cut real estate prices and prices of goods such as cars as a way to stimulate domestic demand, saying state-run banks had assured him they were ready to lend to borrowers.

He said it would be good if interest rates trended down although he cautioned that India had still not quite overcome the problem of inflation, which has fallen from nearly 13 percent in early August to single digits. Chidambaram said later he saw it heading lower in the next few months.

Day Trading Guide - November 19, 2008


532475 Aptech Train Sell Below 77.15, tgt 74.05, sl 78.70.

532885 Central Bank Sell Below 36, tgt 34.20, sl 36.75.

532873 HDIL Sell Below 106.50, tgt 102.20, sl 108.65.

532627 JP Hydro Sell Below 26.15, tgt 24.85, sl 26.70.

500109 MRPL Sell Below 37.55, tgt 35.65, sl 38.30.

532743 RPL Sell Below 75.30, tgt 72.25, sl 76.80.

513683 Neyveli Lignite Sell Below 54.10, tgt 51.90, sl 55.20.

532780 Parsvnath Develop Sell Below 38.40, tgt 36.45, sl 39.20.

Word Of Caution: Trade After 15 Minutes When The Market Opens with Strict Stop Losses.

Source: BseNseTradingCalls

Buy NALCO November Futures above Rs 185: ICICIdirect.com

ICICIdirect.com has recommended to buy National Aluminium Company (NALCO) November Futures above Rs 185 with a stoploss of Rs 183 and target of Rs 189, Rs 192.

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 Hindalco below Rs 45: Mansukh Securities

Mansukh Securities and Finance has recommended investors to buy Hindalco Industries below Rs 45 for a target of Rs 90 in its November 15, 2008 research report. "Aluminium prices have come down drastically in last four months owing to the global liquidity conditions. It would reflect in lower realisations going forward for Hindalco. The outlook for the copper is also looking weak due to declining TcRc margins. Equity dilution on account of rights issue and fixed priced contracts of Novelis would impact the company’s profitability in days to come."

"Keeping in view the recent changes in the major factors we have downgraded our standalone EPS estimates for FY2009 to Rs 19.43, to factor in the lower aluminium prices in FY2009, which would lead to a demand slowdown for Aluminium globally. At the CMP of Rs 56.60, Hindalco is trading at a P/E of 2.91x FY2009 standalone EPS estimates. We recommend BUY for this scrip BELOW Rs 45 for a target of Rs 90.00," says Mansukh Securities and Finance's research report.

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

Source: Moneycontrol

Buy Repro India: LKP Shares

LKP Shares has maintained its buy rating on Repro India in its November 17, 2008 research report. "Q2-FY’09 witnessed revenue growth of 43% yoy and EBIDTA grew 48% yoy led by exports, which accounted for 64% of Q2 revenues. Repro had earmarked Rs 145 million out of its IPO proceeds to fund its SEZ and this SEZ at Surat would be fully operational during Q4 of the current fiscal for which Repro has taken an additional foreign currency loan of USD 7 million of which USD 5.5 million has already been expended."

"We estimate revenues of Rs 350 million from the SEZ during this fiscal and Rs 800 million next fiscal. Repro trading at 3xFY’10E earnings is held 73% by the Promoters and 7% by Institutional Investors. We re-iterate BUY on the stock," says LKP Shares' 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 Aegis Logistics, target of Rs 96: KRChoksey

KRChoksey Research has recommended a buy rating on Aegis Logistics with a target of Rs 96 in its November 17, 2008 research report. "Net sales increased 42.5% y-o-y to Rs 130.9 crore driven by strong growth in both gas (47.6%) and liquid logistics (18.0%) divisions. Net profit dipped 13.0% y-o-y to Rs 7.8 crore."

"In the long run, we firmly believe that the key upside to Aegis’ story is its Auto Gas business, which is likely to be driven by the company’s strong expansion plan and increasing price differential between Auto LPG, with respect to diesel and petrol. At CMP of Rs 67, the stock is trading at 3.2x on FY09E EPS of Rs 20.7. We recommend a BUY on this stock with target price of Rs 96, which represents an upside potential of 43.3%," 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 C and C Constuctions, target of Rs 137: KRChoksey

KRChoksey Research has maintained its buy rating on C and C Constuctions with a target of Rs 137 in its November 14, 2008 research report. "Company’s sales increased by 162% yoy to Rs 129 crore on the back of strong order book position. PAT was flat at Rs 4.95 crores. We have revised our sales estimates for the year upwards by 8.6% due to fresh inflow of orders. However, we anticipate slowdown in order execution thus affecting the topline. The EBITDA margins have been maintained owing to falling commodity prices. An increase in debt levels of the company is anticipated, which will impact the PAT margins of the company. We therefore downgrade our target price from Rs 265 to Rs 137, maintaining a BUY rating, with an upside potential of 25.6%," 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

KLG Systel has target of Rs 123: ICICIdirect.com

According to ICICIdirect.com, KLG Systel has a target of Rs 123 in its November 17, 2008 research report. "KLG Systel reported its Q2FY09 results with net sales of Rs 60.3 crore with Y-o-Y growth of merely 5.6%. The PAT saw a de-growth of 31.2% (Y-o-Y) at a level of Rs 8.64 crore. We believe that company will perform badly in the current fiscal due to its high dependence on ADPRP II scheme for its sales of SG61 & Vidushi whose execution is deferred and poor visibility & poor operational performance of its LCS business."

"On the back of poor visibility of revenue for the current financial year and steep downward revision of guidance by management, we value the company 4.1x its EPS for FY09E, which gives us target price of Rs 123," 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 JMC Project, target of Rs 97: KRChoksey

KRChoksey Research has maintained its buy rating on JMC Projects (India) with a target of Rs 97 in its November 17, 2008 research report. "Company’s sales increased by 76.4% y-o-y to Rs 325.5 crore. The PAT was flat at Rs 6.8 crores. We have reduced our sales estimates for FY09, as there is no visibility of fresh order inflows. However, we anticipate order execution will be at expected pace. The EBITDA margins have been revised downward, mainly due to an increasing trend in construction expenses."

"Interest cost estimates have been revised upwards due to an increase in interest cost during the quarter. It will impact the PAT margins of the company by 27bps. We have given additional liquidity discount of 10% to company’s multiples. We therefore downgrade our target price to Rs 97, maintaining a BUY rating, with an upside potential of 51.5%," 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 Thermax at declines: Asit C. Mehta

Asit C. Mehta has recommended to buy Thermax at declines with a target of Rs 280 in its November 18, 2008 research report. "Looking forward we expect the revenues to register a CAGR of 19% during FY08-10E with earnings growth of 15% during the same period. However, we remain cautious and expect the sluggishness in the economy to continue. In view of these factors, we believe that valuing the company on a book value basis would be the most appropriate valuation in the current market conditions. Therefore, we assign a Price/Book Value multiple of 2.5 to the FY10 book value of Rs 111.1 and arrive at a target price of Rs 280. At a current market price of Rs 229 we reinitiate coverage on Thermax Ltd with an “BUY AT DECLINES” recommendation for a target price of Rs 280," says Asit C. Mehta's research report.

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

Source: Moneycontrol

Reliance may re-test Rs 930-940: Gujral

Technical Analyst, Ashwani Gujral is of the view that Reliance Industries may re-test Rs 930-940.

Gujral told CNBC-TV18, "In Reliance Industries Rs 1,150 was the key level for us and once that is gone it should retest its previous lows of Rs 930-940. Till crude keeps falling, I think Reliance will remain under pressure and so will the market. So now you have three weak spots financials, commodities and infrastructure, which can take this market down."

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

Source: Moneycontrol

Buy Axis Bank on declines: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can buy Axis Bank on declines.

Baliga told CNBC-TV18, "In Axis Bank one should look at lower level and buy more because I don’t see an issue here; people believe that there could be an issue with the SME sector where Axis Bank has an exposure but clearly looking at the performance, which it has given in the past I don’t see the NPA’s rising much more from here and there could be possibly a rise of 0.2 or 0.3% but there is already there in the price to a very large extent, so if it falls about 5% to 8% from here you should try and average out and look at the next up move, which possibly is around 9-12 months away."

Source: Moneycontrol

Hold Apollo Hospitals: Mohoni

Technical Analyst, Deepak Mohoni is of the view that one can hold Apollo Hospitals Enterprises.

Mohoni told CNBC-TV18, "Apollo Hospitals Enterprises is very flat, which is not a bad thing in a bear market; it is not really falling or easing. So it’s a hold for the moment but it is not doing anything spectacular in either direction."

Source: Moneycontrol

Hold Kingfisher Airlines, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one should hold Kingfisher Airlines.

Baliga told CNBC-TV18, "The downside for most of the airlines stocks is over because very clearly they are looking at the operational efficiencies, which has improved. The oil prices have come down, which is positive, the fares have still not come down, which is again another positive. And in case this deal goes through as and when the approval comes from the government, I think there will be a decent upside in Kingfisher Airlines. So from here I don’t see much more downside for this stock and those who have should just hold on to the stock."

Source: Moneycontrol

Expect more weakness in largecap IT stocks: P Seth

Prashasta Seth, Senior Fund Manager, IIFL Wealth, India Infoline is of the view that one is going to see some more weakness in the largecap IT space.

Seth told CNBC-TV18, "We still believe that we are probably going to see some more weakness in the large-cap IT space. They are to a very large extent dependent on how FY10 will look like in US and there is a lot of uncertainty with respect to that. So given the fact that there is no earnings visibility for FY10, I think you will see a bit more weakness in the IT space as well."

Source: Moneycontrol

PSU banking a safe bet: P Seth

Prashasta Seth, Senior Fund Manager, IIFL Wealth, India Infoline feels that PSU banks are one of the safest bets in the market at this point of time.

Seth told CNBC-TV18, "In terms of private sector banks, I think the concerns are on two fold; one on the valuation side, HDFC Bank is still trading at a high teens with respect to next year earnings. Similarly, Axis and Kotak are also trading in double-digits in terms of P/E while if you compare the PSU banks they are trading in single-digit. So a bit of valuation concern was there in the private sector banks. Secondly, a lot of concerns have emerged in the last one month over the NPA (non-performing assets) levels that we might see at the private sector banks. Since there is no clarity on what the numbers will finally come out to be, people are moving out to stocks where there is a lot more clarity on the earnings front."

He further added, "Now the final numbers that we might see in FY10 might be slightly better than what market is anticipating now with respect to private sector banks but given that, we do not have any visibility of the earnings. People are taking the slide to safety. With respect to PSU banks joining, it is more of a market affected fact that they have been the strongest sector in the market. I think they are just joining the market fall. We still believe that PSU banks are one of the safest bets in the market at this point of time. I think there is a lot of valuation comfort with price to book on an average less than one and price to earnings in single-digits. So we still believe that PSU banks are one of the spaces to hold in the market though private sector banks might see slight more weakness on valuation concerns."

Source: Moneycontrol

Power Grid looks attractive: G Shah

Gaurang Shah of Geojit Financial Services is of the view that Power Grid is looking attractive.

Shah told CNBC-TV18, "Cairn India or in the power distribution Power Grid looks a little bit more attractive."

Disclosures: No personal holdings but analyst has a small amount of investment in Areva T&D and Texmaco.

Source: Moneycontrol

Invest in SBI, PNB: Bharatan

Sheshadri Bharatan of Dawnay Day AV Financial Services is of the view that one can invest in Punjab National Bank, State Bank of India, HDFC Bank, Axis Bank from one year time frame.

Bharatan told CNBC-TV18, "Today there was some reports that ICICI Bank might cut on their credit growth from 30% to 15%, so most of the banks might cut down their credit growth and that is one factor, which might affect the banking stock. Second is delinquencies, there are talks that the credit that has been given in the past also might see some kind of delinquencies be it personal loans, home loans etc. So I think there is a case of these stocks coming under selling pressure. Also yesterday expectations of rate cuts, which has not happened so these stocks went under hammer."

He further added, "If you look at a longer-term view banks, which have very higher Current Account and Saving Account (CASA) deposit like Punjab National Bank, State Bank of India, HDFC Bank, Axis Bank are banks that one can look for to invest for at least a years time. Because as and when the market turns around, the Indian economic growth story will continue, Gross Domestic Product (GDP) will grow above 7%, next year we might grow above 8%. So the first sector, which will benefit out of growth in economy would be banking sector. So anybody who is betting on India story has to participate in banking sector. At this point of time we are witnessing broad selling across the markets, as and when market shows some kind of stability, I would not say recovery we might see investors coming back into the banking sector again."

Source: Moneycontrol

Investors can buy around 8500 levels: Dipan Mehta

It was another disappointing day on Dalal Street after a gap down start. The markets made repeated attempts at a recovery but with selling pressure playing spoilsport, every rebound was cut short. Negative sentiment in global indices and fall in heavyweights weighed on the markets. The Nifty and Sensex struggled at the psychological mark of 2,700 and 9,000, before closing below those levels.

Will markets test October lows?

Dipan Mehta, Member, BSE and NSE said all markets are faced with a kind of a predicament of testing October lows and as usual all eyes are on US. “If they are able to hold on to the October bottom then I guess most other markets including ours also will be able to hold on to the October bottom.”

Mehta said 8,000-8,500 levels have been good levels in the past because of aggressive buying coming in from domestic insurance companies, even some of the long only FIIs do tend to invest around those levels. “Based on the present statistics and analyst estimates, it would appear that around 8,000-8,500 would be a good value picking opportunity."

According to him, Indian markets are sleazed to what is happening globally and to that extent it is very difficult to make a call whether the bottom will be tested and whether we will be broken or have a rebound from there because it is working on forces which are completely beyond our understanding also at this point of time. He advised not to make too many big bets on either side and one has to just live through these times because this also will end at some point of time.

Mehta said one has to realize that we are in a crisis situation and news flow remains extremely negative not a day goes by, where some statistics, some data point comes which clearly points out that. “All scenarios are possible and markets could easily test and break October lows, trade over there for a long period of time and it is also possible that you could test it and trade a double bottom and rally from there. If there is a semblance of stability in US markets, if the volatility comes down over there, if they get into a narrow band then automatically all the other markets also will follow what the US markets have done and the volatility will come down, they will start trading in narrow band or they may rebound from these levels.”

Rajesh Jain of Pranav Securities said one would like to believe that there is a consolidation range coming up but the manner in which the market gives up every time there is an upswing, very clearly indicates that the increasing number of people who believe that the market could retest its October lows is fast converting it into self fulfilling prophecy. “Indian markets may not see a very sharp recovery or any upmove, a sustained buying spree which will take it past the 3250 mark until December is over and you have some clarity on political picture because in addition to all the problem the world is witnessing and what India is seeing we have politics question mark, we have the five states right now and after which even after the December month sees cleaning up of balance sheet by the global financial world."

Jain said we will see that India faces a question mark in terms of the general elections and that could seriously affect the allocations to India as an emerging market despite all its fundamentals. "Until you have clarity on the national elections, India may not get its share of the global investments pie and to that extent a sharp midcap pullback recovery which takes it convincingly past 3250 or even 3600 mark is going to be that much more difficult. This is something that is at the back of the mind for all global fund managers and it will play on the Indian markets and it is being borne out of the fact that every time we are trying to come back there is always this inevitable position unwinding or position selling or fresh shorts that are taking the market down again.”

Where do we see value-buying in markets?

Mehta said 8,000-8,500 levels have been good levels in the past because of aggressive buying coming in from domestic insurance companies, even some of the long only FIIs do tend to invest around those levels. “Based on the present statistics and analyst estimates, it would appear that around 8,000-8,500 would be a good value picking opportunity. But then, it is a moving target and if we see further deterioration in the world economy more problems coming for the Indian economy, then even the 8,500 level is not sacrosanct and the market could easily trade lower than that. So it is a bit difficult to call at this point of time. I think next few trading sessions are very important and most of the world market, equity markets are poised at key support levels and we hope that there is a bounce from these support levels and then we could take off from there.“

What is worrying the markets?

Mehta feels the valuation gap between private and public sector seems to be narrowing and that is more on account of the fact that the performances to an extent growth rates also seem to have narrowed over the past two quarters. Public sector banks by and large have done better than market expectations and with the exception of maybe an Axis Bank most private sector banks have tended to disappoint, he added.

According to him, a lot of private sector banks are focused on retail and SME lending. “There are going to be issues in terms of asset quality over there so the losses could come in later on. One has to realize that in the banking sector, the revenue comes upfront and it is the cost which comes in the form of NPAs (non-performing assets) that comes two years down the line. So to that extent, the loan book of private sector seems to be threatened at this point of time. That is getting discounted in the markets.”

At the same time, we heard ICICI Bank targeting slower credit growth rates and what was going in favour of the private sector banks was the fact that they were able to demonstrate extremely high growth in credit, very high net interest income which is why they were enjoying such fancy valuation and maybe there is a change in that scenario, he added.

According to Mehta, these are the kind of trends which are getting discounted within the private sector banking space at this point of time. I think it is more to do with narrowing of the valuation gap between PSU banks and private sector banks which has taken place at this point of time, he added.

On technology:

Mehta said technology space is dependent on US (dollar) and euro and they are going to face challenges on the demand front. At the same time, the rupee is weakening so that goes in their favour, he added.

Mehta said there are no places left to hide in this market - every single stock, every single sector is being hit. “The fundamentals of every single sector - maybe with the exception of FMCG or pharma for that matter - have been damaged considerably. There are going to be lot of question marks on earnings and earnings growth going forward. So it could be technology’s day to be hammered today, it could be something else tomorrow. I do not think any specific development has taken place in technology, which explains this kind of sell off which we have seen today.”

How will midcap space shape up?

Jain said the midcap space will have just one savior and that can be if there is an increasing tendency amongst promoters to try and increase their stake and you see the announcements of buybacks, there will be a class of select midcap stocks which are the niche players where you will see some single piece of good news to really act in favor of the stock. So, along with some stock buying activity and some very focused positive news, the quality midcap stocks could try and see a comeback and that will happen only once, he added.

According to Jain, midcap stock investment is the tool of somebody trying to outperform the market. “We are currently all aware of the severe pressure that the large caps are facing simply because of large fund unwinding and midcap is certainly a space where you are not really looking at and it is difficult to sell midcaps also in such a market as today. “We are going to see a lot of pain in that space except for activity like I said promoter activity or single good news changing certain aspects of fundamentals as also the resumption for fund buying activity.”

Where are the markets headed?

According to Jain, there are several themes in which one can try and plan their investments along, book values, cash values, dividend deals, gearing ratios, working capital needs and try and juxtapose them viz the emerging financial picture. “There will be concerted action by global majors and even within India we have seen the kind of financial sector loosening up which is taking place, but unfortunately in India we have not seen the government try and give some sectoral push ups.”

Jain believes that it’s very difficult to try and come out with theme based and stock specific recommendations rather than if you are buying for an 18-24 month horizon you might make money. “If we break the October lows then I would reiterate that lets get over with December and see how much of a clean up the global world does in a failed financial year with a lot of firms failing and then see what sort of political picture emerges in India both in terms of the time frame for the elections and the relative strength of parties and ideologies.”

Source: Moneycontrol

Don't rush, wait till May '09 before buying: DSP BlackRock

Anup Maheshwari of DSP BlackRock said there is a lot of bad news in the system already. "The market needs to trade in a range for sometime. The next 12-15 months will test investor patience. Value destruction is likely to be lesser going forward." He believes excessive fear can drag markets down further.

According to him, investors should watch earnings growth closely before buying. "Markets are pricing in an economic slowdown. They are in a value zone, but there is no need to rush." He advises a wait and watch policy for the next six-months.

Source: Moneycontrol

G-20 summit: No happy ending

It is obvious from the latest G-20 meet that the West will not countenance a new power structure beyond the G-7, whose heads still don’t seem to see anything wrong in the BRIC group not having a legitimate say in global affairs.

The eagerly anticipated G-20 meeting that was to have solved much, if not all, of the world’s problems has happened, with leaders of the 20 nations and international financial institutions all good intent about working together to restore growth.

The key ‘good intentions’ of the summiteers include:

Reform of international financial institutions such as the World Bank and the International Monetary Fund

An agreement by the end of 2008, leading to a successful global free-trade deal

Improvements to financial market transparency and ensuring complete and accurate disclosure by firms of their financial conditions

Making sure banks and financial institutions’ incentives “prevent excessive risk-taking”

Asking finance ministers to draw-up a list of financial institutions whose collapse would endanger the global economic system

Strengthening countries’ financial regulatory regimes, and

Taking a “fresh look” at rules that govern market manipulation and fraud.

But more than ‘good intentions’ these sound like political escapism to push problems away as far as possible even while appearing to be solving them.

The way global financial architecture has evolved over the last couple of decades, the pre-eminence of national and international institutions has been usurped by global financial corporations, many of which are even bigger than some nations. The World Bank and the IMF, which see themselves at the vanguard of capitalism, are actually perceived as the hand-maidens of the West and, by extension, of the TNCs.

The IMF’s conditionalities and prescriptions that harp on total privatisation, including of utilities, have done little to the popularity of the organisation in much of the developing and less developed world. So it is all very well to speak blithely of new Bretton Woods institutions but, when there is no acceptance of a world mediated by Western ideas, the move is doomed ab initio.

Set in their ways

The West’s stock in the world is perhaps at the lowest ebb as the financial crisis begins to bite and the pain is beginning to be felt in economies as far removed as South Korea and Ukraine. Till yesterday the champions of “light touch” regulations, today they want financial market transparency and accurate disclosures by firms of their financial conditions.

A look at the British experience suggests how much wishful thinking this is. None of the banks that took help from the British government to recapitalise has passed on interest rate cuts, despite firm suggestions from the Office of the Exchequer.

Nor do they plan to cut out bonuses to their management. In fact, one bank, to avoid such interference, preferred to go a West Asian country for the funds. Banks and financial institutions have got used to playing with other people’s money. They will not willingly kick this habit and will fight till the last man against any serious government intervention.

The global financial/banking set-up has grown too vast for governments to rein it in. The insidious capital is so networked and entrenched that disengaging is well nigh impossible and indeed not desirable even, as that could lead to more tragedies.

All that can be done is for countries to strengthen their financial regulatory regimes. But this, if the Western memory is not too short, is what countries like India and China were reviled for doing a while ago. There was unseemly pressure, no doubt initiated by market-hungry TNCs from the West, on Beijing and New Delhi to open their markets or free their currencies.

Even more disingenuous is the intent to conclude a free trade deal by end-2008, when the Doha Round has been festering. The stalled trade talks, according to some leaders, should be pushed forward so that a basic agreement is reached before the US President, Mr George Bush, demits office in January. But this very fact will tie Mr Bush’s hands. Nor may the new incumbent, Mr Barack Obama, want the US committed to something he will have to live with.

In fact, this is one of the key factors of the G-20 meeting not generating any thing concrete. It is transition time for the world’s biggest power — the US. There is a lame duck government in office. It cannot commit the new government to deals that the new regime may not want nor has any say in.

This is why, perhaps, the British Prime Minister, Mr Gordon Brown, sees an opportunity to assert the UK’s presence in the world political firmament by appearing to give the lead in matters economic.

Most countries have no choice other than adopting the Keynesian revival model, but that has not stopped Mr Brown from claiming intellectual property rights for it. It is extreme irony that Mr Brown should be fount of wisdom when his economy is hurtling towards recession thanks to his ‘light touch’ regulation that gave banks the carte blanche to do what they wanted and they dragged people into the quagmire of easy, but dangerous, debt.

New power structure

It is obvious from the latest G-20 meet that the old lions may have lost their teeth but they are not going to vacate their place in the pride. For them the world remains frozen in 1944, at the time of the Bretton Woods conference.

If it can help it, the West will not countenance a new power structure beyond the G-7, never mind that this grouping no longer represents the world’s biggest. They do not, or at least pretend not to, see the impatience of the BRIC (Brazil, Russia, India and China) group in not getting a legitimate say in global affairs.

Only now does the World Bank chief, Mr Robert Zoellick, who in October said the G-20 was too unwieldy, think that a new grouping of nations must emerge. “We need to modernise the multilateral system to bring in the important developing country voices such as Brazil...” he said. But will this set him and his IMF counterpart thinking on re-working the quotas that determine the voting? Unlikely.

The more pragmatic leader in recent times, France’s Nicholas Sarkozy is suggesting bringing emerging economies on board as members of the club of industrialised nations, that is, expand the G-7. Possibly, he is eyeing the trillions of dollars in reserves that China and the Gulf states have that could help the developed countries as much as the smaller nations (via IMF) in the present turmoil.

But this storyline is about to change because, with oil prices dropping, West Asia may not, after all, be awash in dollars. The surpluses of China (and other Asian nations) depend on the splurging by the West.

With the West slowing down, Asia’s dollar riches may start to dwindle. Further, they may also need all the riches to stimulate their own economies in the face of the global slowdown.

Possibly, the only good thing about the summit was that it was of G-20, not the usual G-7. Maybe this is how it should be if there is to be a happy ending to the story. Of course, there will be many more twists and turns to it. Half has not been told.

Source: TheHinduBusinessLine

Mid-tier IT firms hire ‘average’ numbers

Caution is the word

Lateral hiring would be on the lower side vis-À-vis last year: Patni

We have long-term projects and we need manpower: Tech Mahindra

The utilisation rate is already quite high; the scope for reducing hiring is limited: MindTree

Not looking to hire technical people till April next: Ramco Systems

Because of the general slowdown, hiring will come down: Mastek

The uncertainty due to the economic meltdown in the US, which is the largest market for the Indian IT industry, may not have prompted mid-tier Indian IT companies to revise hiring plans, but most showed no increase in hiring compared with the previous fiscal, while some said they would hire less than last year.

More freshers

Patni Computer Systems Ltd, which plans to hire about 2,000 freshers by the end of the fiscal as against 2,700 in the previous, said lateral hiring would also be on the lower side vis-À-vis last year, when it added 1,300 laterals.

The company did not put a number to its lateral hiring plans as it would depend on the demand environment.

“Lateral hiring will continue but we will be hiring more freshers. We are comfortable with our lateral numbers but feel the need to make more inductions at the base of the pyramid. This is also a small function of the current economic and demand environment,” said Mr Rajesh Padmanabhan, Executive Vice-President and Global Head of Human Resources, Patni.

Tech Mahindra Ltd, which has already offered 1,500 jobs at campus hirings, said for fiscal 2009, the number would be between 2,000 and 3,000.

This has been the average for the company over the last two-three years, although it is a big reduction compared with the 5,000 the company hired last fiscal.

“In the last year we needed more people and therefore we hired 5,000. For 2009, we have no major reduction plans: we have long-term projects and we need manpower,” said Mr L.K. Bhatia, Vice-President, Resource Management Group, Tech Mahindra.

He said about 500 laterals have been hired in the last two-three months.

High utilisation rate

For MindTree Ltd too, manpower addition for the current fiscal is in line with last year. The company has added about 1,000 people this year, of whom about 70 per cent are freshers.

“Right now we are not looking at dramatic changes. It is more or less aligned to our last year figures, which is between 1,000 and 1,200,” said Mr Puneet Jetli, Head, People Function, MindTree.

Mr Jetli said the utilisation had gone from 65 per cent to about 70 per cent at the end of the second quarter, which has helped the company.

However, because the utilisation rate is already quite high, the scope for reducing hiring by further improving utilisation is limited, he added.

Ramco Systems Ltd said it is not looking to hire any more technical people till about April of next year because its products and solutions have reached a certain level of maturity.

However, it would hire 50 to 80 business consultants who have domain expertise in aviation, logistics, manufacturing and finance, said Mr J.S. Shivakumar, General Manager, Human Resource, Ramco Systems.

Mr R.S. Desikan, Group CFO and Director of Finance, Mastek Ltd, said the company follows the non-linear model where the headcount is not proportionately linked to the targeted revenue figures.

He said, because of the general slowdown hiring will come down, but not in the same proportion as decline in revenues.

This year, about 300 freshers have joined, which is the same as last year. The company would not put anybody on deferred joining. There would also be no dip at all in lateral hiring, he said.

Emerging trend?

The uncertainty may have also pushed the demand for temporary employees. A Mumbai-based temporary staffing firm said the requirement for temporary employees has grown up by almost 15 per cent over the past three months.

Moreover, the turnaround time in finalising temporary employees has become shorter; it just takes around five to seven days now.

Generally, companies show their temporary staffing under marketing expenses and not as HR expenditure, according to the firm.

Source: TheHinduBusinessLine

Global financial meltdown to last for some more time: Fin Min

Durban, Nov 18 (PTI) South Africa's Minister of Finance, Trevor Manuel, says that the world financial crisis is likely to last for some more time, even as long as for another five years.
Manuel, who has just returned from the G20 summit in Washington, was addressing delegates at a conference of financial educators in Johannesburg on Monday night.

Manuel said the financial crisis would affect almost every country in the world. "The current impact was too deep to be resolved soon. He said even if the G20 countries find answers to the current economic crisis, there was a little chance that the problems would disappear soon." He blamed lack of education on the markets, regulation and supervision for the turmoil. He called on banks to take greater monitoring measures so that both the banking industry and the consumers would be protected. PTI

Sensex dips below 9k level again; slid 327 pts in early trade

Mumbai, Nov 18 (PTI) The Bombay Stock Exchange benchmark Sensex today extended its downslide and dipped below 9,000 points level again by losing over 327 points in early trade on increased selling by foreign funds in heavy-weight stocks largely on concerns of growing global recession.
The 30-share index, which had lost nearly 1,250 points in the past four sessions, moved down by another 327.09 points to 8,963.92, a level last seen in October with shares of banking, metals and oil and gas leading the fall.

The National Stock Exchange's Nifty also fell by 89.70 points to 2,709.85.

Sentiments suffered another jolt on worsening global economic outlook after reports of more economies slipping into recession.

Stock brokers said overnight weakness in the US and similar trends on the other Asian bourses, mainly triggered selling by jittery foreign funds here.

They said weak Indian rupee, which depreciated by 29 paise to 49.63 against the dollar, also put pressure on the stock prices.

Major losers, which pulled the Sensex down, were Reliance Industries, Reliance Infra, RCom, Infosys Technologies, Satyam Computers, ICICI Bank, State Bank of India, HDFC Bank, ACC, Larsen and Toubro, BHEL, Maruti, Ranbaxy and Bharti Airtel.

Meanwhile, the US Dow Jones index closed 2.63 per cent down, while London FTSE was down by 2.38 per cent in the last session, Hong Kong's Hang Seng index slided by 3.17 per cent while Japan's Nikkei shed nearly one per cent in early trade today. PTI

FM asks airlines, auto & realty firms to cut rates

New Delhi, Nov 18 (PTI) Calling auto-makers, realty firms and airlines to reduce rates, Finance Minister P Chidambaram today promised to consider excise duty cut for sectors that are facing the heat of the global financial meltdown.
"Hotels must cut tariffs; airlines must cut prices; real estate must cut rates of apartments and homes they sell; car makers and two-wheeler makers must cut prices," he said, while addressing industrialists at the India Economic Summit organised by the World Economic Forum and the CII here.

His suggestions were aimed at stimulating consumer spending, a slowdown in which has eroded the output of manufacturing and other sectors with negative implications for economic growth.

The Finance Minister also promised to examine the possibility of excise duty cut, if required.

"Any sector faces problem. I am open to examining suggestions on cut in excise duty rates," Chidambaram said.

India, he said, will record satisfactory growth in the current fiscal and the Gross Domestic Product (GDP) growth rate will bounce back during the next year. PTI

Govt to inject Rs50,000 cr in infra projects

New Delhi(PTI): In a major initiative to pump prime the economy through public expenditure, the government has decided to inject a whopping Rs50,000 crore for funding infrastructure projects.

“The plan is to spend Rs50,000 crore on infrastructure... its specific contours will be announced anytime,” Minister of State for Industry Ashwani Kumar said on Tuesday.
He said the money would be spent on projects that would be built through the Public-Private-Partnership (PPP).

Prime Minister Manmohan Singh on Monday chaired a meeting of a committee, which discussed further liquidity injection into the cash-starved Indian economy that has started receiving blows from the global meltdown.

Finance Minister P Chidambaram, Commerce and Industry Minister Kamal Nath, Planning Commission Chairman Montek Singh Ahluwalia and Reserve Bank Governor D Subbarao are part of the committee, chaired by the Prime Minister, which is keeping a close eye on the impact of the global slowdown on the Indian economy. PTI

RBI committed to ensuring liquidity

New Delhi(Reuters): India’s central bank is committed to ensuring adequate liquidity in all the country’s financial markets, its deputy governor, Rakesh Mohan, said on Monday.

“As you have seen in the last five weeks, we have been acting on a consistent basis to make sure financial markets work efficiently, that adequate liquidity is available in the system and also that credit flows smoothly given the current global and Indian economic conditions,” he said before a business conference.

The Reserve Bank of India has taken a string of measures over the past few weeks to improve liquidity and boost growth, cutting its key lending rate - the repo - by 150 basis points to 7.5% and lowering banks’ reserve requirements.

The central bank expects the economy to grow 7.5-8% in 2008/09 fiscal year, slowing from rates of around 9 percent in each of the last three financial years.
RBI said it will conduct a special 14-day repo auction for $11.1 billion on Monday.
The reversal of Monday’s auction will take place on 1 December, it said in a statement.

The special repo facility was introduced on 14 October to meet liquidity needs of mutual funds for an allocated Rs20,000 crore.

RBI has increased the facility to Rs60,000 crore to include liquidity needs of non-banking financial companies, and said it would be held every day until further notice.

Citigroup layoffs to have a limited impact on India

New Delhi(PTI): Allaying fears of possible job cuts, global financial services giant Citigroup on Tuesday assured that about 52,000 layoffs over the world will have a ‘limited’ impact on India.

“The headcount reduction announced globally will have limited impact in India”, the company said in a statement.

The Citigroup has about 22,000 employees currently working in India. Of which, 12,000 work for Citigroup Global Services Ltd (CGSL).

Infact, the company in its statement has attributed the reason for a possible relief to a limited impact in India to the sale of Citigroup Global Services Ltd (formally e-serve) to Tata Consultancy Services, which is expected to be completed in the current quarter itself.

The Vikram Pandit-led Citigroup had created a flutter in the job market announcing to slash more than 52,000 jobs in the coming months and reduce expenses by 20% in 2009.

The company had stated that it would reduce the total head count to less than 3,00,000 in the near term as part of the plan. The financial services behemoth had a workforce of 3,52,000 in the third quarter of 2008.

The firm, severely battered by the financial crisis, had incurred huge losses in recent quarters. In the third quarter, Citi had a loss of $2.8 billion.
While, at the end of the fourth quarter of 2007, the company’s head count stood at 3,75,000, in the first three quarters of this year the company had chopped 23,000 jobs. PTI

Intel launches fastest processor on the planet

The Core i7 processor is the first member of a new family of Nehalem processor designs and is the most sophisticated ever built

Intel launched its most advanced desktop processor Intel Core i7 processor in India Tuesday.

The Core i7 processor is the first member of a new family of Nehalem processor designs and is the most sophisticated ever built, with new technologies that boost performance on demand and maximize data throughput.

The Core i7 processor speeds video editing, immersive games and other popular internet and computer activities by up to 40% without increasing power consumption.
Broadly heralded by the computing industry as a technical marvel, the Intel Core i7 processor holds a new world record of 117 for the SPECint_base_rate2006* benchmark test that measures the performance of a processor.

This is the first time ever for any single processor to exceed a score of 100 points.
“Intel has delivered the fastest desktop processor on earth to the most demanding users on earth, the ones who are using their PCs for video, gaming and music,” Intel’s South Asia Marketing Director, Prakash Bagri, told reporters.
The Core i7 also has the latest Intel power-saving technologies, allowing desktops to go into “sleep-states” formerly reserved for Intel-based notebooks.

Source: Livemint

Religare Hichens puts 'accumulate' on Reliance Petro

Religare Hichens Harrison has said that Reliance Petroleum's (RPL) state-of-the-art refinery is slated for commencement by end-2008 with a
capacity of 29mtpa (~580,000bpd), making it the sixth largest plant in the world. The refinery has a Nelson complexity of 14 – much higher than 11.7 for Reliance Industries' existing plant – and can process heavy crude types up to APIs of 17.

However, the brokerage highlighted that about 8.8 million barrels per day of new refining capacities are expected to come on stream between 2008–2013, particularly in China, India and the Middle East.

Further, growing concerns of an economic slowdown are leading to lower demand for gasoline and petroleum products, which would keep refining margins under pressure.

Religare Hichens has a target price of Rs 97 for RPL, and has an ‘accumulate’ rating on the stock.

Source: EconomicTimes

Analysts' Picks: Lanco Infratech

Lanco Infratech
cmp: Rs 145.30
target price: 171

ICICI Securities has maintained its ‘buy’ rating on the stock. “We believe that the expected commissioning of Amarkantak I (300MW) by end-November 2008 would result in reducing execution risk/discount associated with Lanco’s power portfolio,” said ICICI Securities in a note to its clients. According to ICICI Securities, Lanco’s ongoing litigation with MPSEB to convert Amarkantak I from PPA (power purchase agreement) to merchant is expected to be resolved soon and even 50% conversion will provide upside of Rs 35/share.

“Lanco has emerged as the sole bidder for the 1,320 MW coal-based power plant at Rajpura, Punjab. We expect the tariff of the project to be lucrative, providing healthy upside along with Rs 70 billion EPC potential,” said the note. The NAV (net asset value) estimates for Lanco stand at Rs 65 billion or Rs 296 per share, the ICICI note said. “Based on our FY09E, FY10E & FY11E EPS estimates of Rs 16, Rs 19.3 & Rs 26.3, Lanco trades at P/E (price to earning) of 10.7 times, 8.8 times & 6.5 times, respectively,” the note added.

Source: EconomicTimes

Analysts' Picks: Jet Airways

Jet Airways
cmp: Rs 181.50
target price: Rs 167

Citi investment research has changed its rating on the stock to ‘sell/high risk’ from sell/medium risk with a revised target price of Rs 167 from Rs 440. “Jet merits a high risk rating, given the competitive scenario in the domestic market, unstability in its international operations and its highly leveraged balance sheet,” said Citi in a note to its clients.

Citi believes that Jet’s operating cash losses will continue into FY10 and expects the company will need to raise fresh funds to refinance debt repayment (around $280 million over FY09/10E). “Debt/equity ratios are rendered meaningless given the significantly affected net worth — debt-equity is forecast at seven times end FY10E (including asset revaluation reserves),” said the Citi note. According to Citi, the company will face recurring losses of over Rs 36 billion (earlier Rs 20 billion) over FY09-FY10 due to decelerating passenger traffic and escalating cost pressures (aided by depreciating rupee). It expects the yields to dip by 12% in FY10E as lower fuel prices will be passed on to the customers.

Source: EconomicTimes

Analysts Picks: Bharti Airtel

Bharti Airtel
cmp: Rs 650.15
target price: Rs 843

HSBC Global Research has assigned an ‘overweight’ rating to the stock saying the company’s strong balance sheet and infra-sharing models will allow it to consolidate its revenue market share leadership further. “We value the core business at 12.5 times FY10 (estimated) EPS (earnings per share) at Rs 660 per share and tower valuations of Rs 183 per share,” said HSBC Global Research in a note to its clients.

The research firm is positive on Bharti based on a combination of expected sharp growth in the Indian wireless market, execution of a low-leverage, low-cost business model with a high return on invested capital, and a close alignment of majority and minority shareholder interests. However, it views higher regulatory charges and aggressive international expansion as key downside risks.

Source: EconomicTimes

Merrill Lynch maintains 'buy' on Tech Mahindra

Merrill Lynch has maintained "buy" recommendation on Tech Mahindra forseeing minimal impact from British Telecom's (BT) plan to layoff about
6,000 people by March 2009 but finds the appreciating rupee versus the sterling pounds (GBP) as a key risk.

"We anticipate a maximum of 5 percent impact to revenues of Indian offshore vendors and expect minimal impact to TML given its strong strategic positioning within BT group", says their analyst report.

BT recently announced that it will reduce its total headcount by 10,000 as of March 09 and in Merrill Lynch's view, the maximum would be sub-contractors and agency staff. Meanwhile, 4,000 employees have already been cut and 6,000 more would be cut by the end of the fiscal.

However, there is currency risk, as the rupee has appreciated by 14 percent versus GBP during the quarter. "We see greater risk from the recent appreciation of the rupee against the GBP, given that TML derives nearly 70 percent revenues in GBP. Its USD/GBP hedge of 300 million pounds should help reduce impact at net profit levels. We factor in INR/GBP rate of Rs.79 and Rs.75 for FY10e and FY11e versus current exchange rate of Rs75," says the report.

"We retain our Buy rating on the stock given its attractive valuation of 4x FY10e and strong visibility from BT group" the report says.

Source: EconomicTimes

World's major economies in recession

Policymakers' worst fears have finally come true. The worst financial crisis in 80 years has weakened the world's major economies, with many of them heading for recession.

Apart from the US and Japan, the 15-nation eurozone has also officially fell into recession for the first time ever, as their economies shrank for a second straight quarter because of the world financial crisis and sinking demand.

France narrowly escaped, growing just 0.1 per cent in the third quarter after shrinking in the second quarter, and so have some other countries. But nobody knows how long can they be that lucky.

Here we take a look at some of the world's major economies in recession:

The US has finally slipped into recession and the economy is estimated to shrink 2.6 per cent in the fourth quarter, primarily stoked by worsening credit conditions.

Moreover, the unemployment rate in the country is expected to reach 7.5 per cent by the end of 2009, says a survey of 50 professional forecasters, conducted by US-based professional group National Association for Business Economics between October 28 and November 7.

According to 96 per cent of those surveyed, a recession has already begun. About half the forecasters estimate that recession - two consecutive quarters of contraction - started in the fourth quarter of 2007 or in the first quarter of 2008.

In the third quarter, the American economy shrunk 0.1 per cent and is widely anticipated to witness contraction in the coming months due to rising job losses, declining consumer spending and lack of credit availability, among others.

Japan's economy shrank 0.1 per cent in the third quarter, sending the world's second-biggest economy into recession for the first time in seven years and lagging market expectations for anaemic 0.1 per cent growth.

The contraction confirmed the global financial crisis has sabotaged growth in yet another major economy, with the euro zone already in recession, using the most common definition of two consecutive quarters of contraction.

The government also revised the second-quarter contraction to a larger 0.9 per cent slide, the biggest quarterly drop for Japan's economy in seven years, and Taro Saito, a senior economist at NLI Research, saw more dark days ahead for the Japanese economy.

Japan's gross domestic product figure translated into an annualised fall of 0.4 per cent, lagging a consensus market forecast for a 0.3 per cent expansion, government data showed. In a sign the global economic slowdown was dealing a blow to Japanese companies, capital expenditure fell 1.7 per cent in July-September.

It's official now. Britain is also in recession. A forecast published by the Ernst & Young Item Club claims that Britain is now in a recession that will last for 12 months, with only a weak recovery in 2010.

Peter Spencer, the chief economist at Ernst & Young, said the economy fell sharply in the previous quarter and will shrink for three more quarters before bottoming out in the latter half of 2009. Meanwhile, GDP will drop by 1 per cent next year (the first negative growth for 16 years) and will grow by just 1 per cent in 2010.

Meanwhile, the British Chambers of Commerce has also said that it is pretty dismal and there is going to be a recession. Britain has been on the brink of recession since the end of June, when the economy came to a standstill with official growth at zero.

As the government struggles to avoid a recession, economist Roger Bootle believes that interest rates in the UK could fall below the 2 per cent mark, the lowest figure since the Bank of England was established in 1694.

Hong Kong slipped into recession in the third quarter as exports were hit by weakening global demand and consumption was hurt by a drop in asset prices and concern about the economic outlook.

Third-quarter gross domestic product shrank 0.5 per cent, seasonally adjusted, from the previous quarter.

Compared with a year earlier, GDP grew 1.7 per cent, well below an expected 2.6 per cent increase, and the government slashed its full-year growth forecast to between 3 and 3.5 per cent from a range of 4 per cent to 5 per cent.

The economy's performance in July-September was the weakest since the SARS outbreak hammered consumer and business confidence in the spring of 2003 and highlights Asia's vulnerability to a global economic downturn.

Singapore officially slid into recession in October after falling consumer demand from the US and Europe hammered its manufacturing exports.

Its economy contracted by 6.3 per cent in the third quarter, on an annualised seasonally adjusted basis, having shrunk by 5.7 per cent in the second quarter of 2008.

This forced the government to cut its growth forecast for this year from 4-5 per cent to 3 per cent.

Singapore's economy, which is heavily dependent on exports to the developed world, was one of the first in Asia to be hit by a global economic slowdown.

Germany, the largest euro economy, shrank 0.5 per cent in the third quarter as its main source of growth - exports - dropped and it could no longer rely on household demand to power the economy.

The Federal Statistics Office reported that German gross domestic product contracted 0.5 per cent in the third quarter - more than the 0.2 per cent decline that had been anticipated. That follows a decline in the second quarter of 0.4 per cent, a slight revision from the 0.5 per cent drop previously announced.

German economic activity had got off to a good start in 2008, expanding by 1.4 per cent in the three months to March. But the country has been hit by slumping activity in its major export markets while domestic consumption has remained at low levels. Corporate investment has suffered as well from a sharp decline in the business outlook.

In October, German business confidence hit its lowest point in more than five years, a widely-watched survey by the Ifo research institute showed.

Italy has officially slid into a recession as the euro zone's third biggest economy shrank 0.5 per cent in the third quarter from the previous three months, its sharpest quarterly decline since the end of 1998 and the same rate of decline reported by Germany, Europe's biggest economy.

Italy's economy has been hit by slowing consumer spending in the face of rising fuel and food prices.

The Rome-based ISTAT said consumer prices are up 4.1 per cent and that consumer spending for the year would grow just 0.1 per cent if it is assumed to remain unchanged for the rest of the year.

Before the release of the official data, Italy's main business lobby Confindustria had already declared Italy in a recession.

Estonia's economy shrank again in the third quarter - by an annual 3.3 per cent, thus clocking up the second-worst performance (after Latvia) in the 27-nation European Union.

Estonia and Latvia now lead the Eastern European slowdown, following repeated warnings over the past year of about the risks of an economic 'hard landing', warnings which were not unfortunately headed due to hopes that the eurozone itself would hold out against the US downturn.

Estonia's economy is contracting the second fastest, since Latvia's economy shrank 4.2 per cent in the third quarter, and currently has the worst growth rate in the EU.

Latvia's economy shrank 4.2 per cent in the third quarter, and currently has the worst growth rate in the EU.

Its economy has entered a period of deep recession after three years of stellar growth, when it led all EU members in gross domestic product growth.

Latvia's Prime Minister Ivars Godmanis has also said that the once vibrant 2004 European Union newcomer will fall into sharp recession next year, saying he expected the economy to contract by 1 per cent.

The International Monetary Fund expects the Latvian economy to shrink by 2.2 per cent in 2009 from its prediction of 0.9 per cent negative growth this year.

Ireland officially fell into recession in September itself. According to the Central Statistics Office, its once-aggressive economy contracted by 1 per cent in the first six months of the year. Dubbed the Celtic Tiger during massive growth in the late 1990s, the business sector is now facing its most difficult period since high unemployment and emigration hit the 1980s.

The Department of Finance recently pointed to the crumbling property market and the international credit crunch for the alarming figures. A government spokesman said: "As expected, lower levels of new house building had a major restraining influence on growth in the second quarter, as is evident from the very weak investment figures.

Other factors at work include higher commodity prices, global financial market problems, weak demand in our major trading partners and adverse exchange rate movements."

Source: EconomicTimes

US govt buys $159 bn worth shares in 30 American banks

NEW YORK (PTI): The US government, under its $ 700-billion bailout plan, has purchased shares in 30 American banks for a total of over $ 150 billion, half of which have gone into Citigroup, JPMorgan Chase and Wells Fargo.

According to the latest transaction report of the Capital Purchase Program, the US Treasury Department has purchased preferred stocks worth $ 25 billion each in Citigroup, JPMorgan Chase and Wells Fargo - three of the biggest banks hit by the worsening financial turmoil.

The government spent $ 158.56 billion for purchasing shares in the 30 banks, which included Bank of America getting $ 15 billion, while Goldman Sachs, Morgan Stanley and Merrill Lynch got $ 10 billion each.

Other major recipients of the funds under this program include Bank of New York Mellon ($ 3 billion), State Street Corp ($ 2 billion), Sun Trust Bank ($ 3.5 billion), BB&T Corp ($ 3.13 billion), Comerica ($ 2.25 billion), Regions Financial Corp ($ 3.5 billion), Capital One ($ 3.55 billion), KeyCorp ($ 2.5 billion) and US Bancorp (about $ 6.6 billion).

In the first round of the program, the Treasury injected $ 125 billion for shares in nine banks - namely, Citigroup, BoA, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, State Street, Merrill Lynch and Bank of New York Mellon Corp.

The government has also purchased preferred stocks in banks like Bank of Commerce Holdings, 1st FS Corp, UCBH Holding, Northern Trust, Broadway Financial, Washington Federal, Provident Bancshares, Umpqua Holdings, First Horizon National Corp, Huntington Bancshares, Valley National Bancorp, Zions Bancorporation, Marshall & Ilsley and TCF Financial.

After the two rounds of capital purchase program for publicly traded banks, the government said privately held banks can apply for assistance under the $ 700-billion bailout plan till December 8. A total of about 3,600 private banks are said to be eligible under this program.

The Treasury said the institutions that have applied for a bank or thrift holding company status on or before December 8 are eligible to apply to the TARP (Troubled Asset Relief Program) on a conditional basis.

Last week, Treasury Secretary Henry Paulson said, they would not be buying toxic mortgage assets from financial institutions as envisaged earlier in the mega rescue plan. PTI

India needs big rate cut to lift econ - ICICI chief

NEW DELHI (Reuters) - Interest rates in India have to come down by another 2-3 percentage points in order to stimulate demand in the economy, ICICI Bank chief K.V. Kamath said on Tuesday.

The Reserve Bank of India has taken a string of measures over the past few weeks to improve liquidity and boost growth, cutting its key lending rate -- the repo -- by 150 basis points to 7.5 percent and lowering banks' reserve requirements.

HSBC says to shed 500 jobs in Asia

HONG KONG (Reuters) - HSBC will lay off 500 staff in Asia, 90 percent of which will be in Hong Kong, due to deteriorating economic conditions and its cautious outlook for 2009, spokesman Gareth Hewett said on Tuesday.

This will be HSBC's second round of layoffs in the region. In September, HSBC said it was cutting 1,100 jobs in its investment banking operation, or 4 percent of the unit's total, including about 100 in Hong Kong, where the bank's Asian unit is based.

The 450 Hong Kong jobs that will be cut represent 2 percent of the bank's workforce in the city.

Taiwan plans to issue shopping vouchers to boost GDP

TAIPEI (Reuters) - Taiwan plans to give $2.5 billion in shopping vouchers to consumers to help boost its export-dependent economy, suffering in the global slowdown, Premier Liu Chao-shiuan said on Tuesday.

The plan, still subject to parliamentary approval, will likely contribute 0.64 percent to the island's $390 billion gross domestic product (GDP) in 2009, Liu said. Some analysts said the impact could be smaller.

"The global tsunami is spreading and we will have to go through a period of economic chill. We have to resort to the extreme at an extremely difficult time like that," Liu told a news conference.

Liu said every individual in Taiwan's 23 million population would get T$3,600 ($101), costing the government T$82.9 billion. Previously, local media had speculated only low-income households would be eligible for the scheme.

Some analysts expressed mixed views on the programme.

"It's a fairly novel plan. There are not many Asian countries that are actually providing coupons," said Rob Subbaraman, an economist at Nomura in Hong Kong.

"My feeling is the risk would be the contribution to growth will be lower than that."

The plan is part of government efforts to boost the domestic economy. Others include T$122.6 billion worth of subsidies and tax cuts and another T$58.3 billion in infrastructure spending.

Taiwan's economic growth will likely slow this year. A handful of economists expect the export-led economy next year to even shrink due to deepening fears of a global recession dampening consumer sentiment.

In October the consumer confidence index fell to a 7-year low, reflecting a plunging stock market and weak purchases of durables, data from Taiwan's National Central University showed.

The economic-boosting measures will likely cause Taiwan's fiscal deficit to widen and exceed 2 percent of GDP this year and next, from only 0.1 percent last year.

BSE Sensex falls 3.8 pct as global gloom deepens

MUMBAI (Reuters) – The BSE Sensex fell 3.8 percent on Tuesday, taking its losses to 15.2 percent over five consecutive sessions, as prospects of a global recession and massive job cuts at Citigroup rattled investors.

Promises by the finance minister the government will take steps to stimulate the economy to offset the impact of the global slowdown failed to soothe the sentiment.

Financials led by ICICI Bank, the country's second-largest lender, led the fall taking cues from its peers in regional markets that dropped on fears an economic downturn could spark defaults.

The stock fell 6.8 percent to 360.75 rupees, its lowest close in three weeks.

Top lender State Bank of India slipped 5.1 percent to 1,108.30 and the sector index dropped 4.5 percent.

The 30-share BSE index shed 3.81 percent, or 353.81 points, to 8,937.20, its lowest close since Oct. 27 when it hit a three-year low of 7,697.39.

"There is consistent selling pressure. The consensus is building the market would test its previous low," said Rajesh Jain, chief executive at Pranav Securities.

All but one of the index component fell, while in the broader market losers overwhelmed gainers in a ratio of almost 3:1 on moderate volume of 226.8 million shares.

The index fell as much as 4.5 percent in early deals and is down 56 percent so far in 2008 making it one of the worst performers in Asia.

"We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," Finance Minister Palaniappan Chidambaram told the World Economic Forum's India Summit on Tuesday.

He said India was likely to end the year with a satisfactory growth rate, despite the downturn in advanced economies, although he declined to put an exact number on the expected rate.

"Next year, we will bounce back to a much better growth rate," he said, adding growth could reach 9 percent by the second half of fiscal 2009/10.

Analysts were sceptical.

Securities firm Macquarie said India's growth outlook faced downside risks due to the global financial crisis and gross domestic product (GDP) growth was seen slowing this fiscal and

the next.

"On our current forecast, GDP growth is poised to fall to a seven-year low of 6.0 percent in 2009/10, from an estimated 7.2 percent in 2008/09," Macquarie analyst Rajeev Malik said in a note released on Monday.

Export-driven outsourcing firms such as Infosys Technologies fell 4.2 percent to 1,180.95 rupees and Wipro shed 8.8 percent to 229.85 rupees on the shockwaves in the global financial sector, which provides a bulk of their revenue.

"There's some more downside left to the market as we have still not reached the bottom," said K.K. Mital, head of portfolio management services at Globe Capital.

Citigroup on Monday announced plans to cut 52,000 jobs globally and HSBC added to the employment gloom on Tuesday, saying it would cut a further 500 staff in Asia, mostly in Hong Kong, due to deteriorating economic conditions.

"We keep hearing bad news from the global financial majors as well as regulators and experts as the global financial and economic crisis escalates," brokerage India Infoline said.

"This is unlikely to go away in a hurry and will cap any sharp movement on the way up," it said.

The broader 50-share NSE index closed down 4.2 percent at 2,683.15.


* Automotive Axles fell 11.1 percent to 112 rupees after it said it would shut down operations for at least a week due to slow demand.

* Binani Industries fell 18.9 percent to 32.45 rupees after it cancelled a plan to swap its shares with Binani Zinc and Binani Cement.


* GVK Power & Infrastructure on 16.1 million shares

* Suzlon Energy on 10.3 million shares

* Unitech on 7.2 million shares

Pepsi Bottling to cut jobs, trims forecast

NEW YORK (Reuters) - The Pepsi Bottling Group Inc announced restructuring plans on Tuesday that would eliminate some 3,150 jobs and cut its forecast for full-year earnings due to weaker foreign currencies.

It said its multiyear restructuring plan should yield $150 million to $160 million in annualized pretax savings when completed, starting with savings of about $70 million in 2009.

In the United States and Canada, Pepsi Bottling said it would streamline its selling and service organization and supply chain infrastructure, moves that would affect about 750 jobs. Plans to close plants and distribution centers in Mexico would affect 2,200 jobs there.

Similar actions in Europe will affect about 200 jobs, the company said.

The company expects cumulative charges from the plan of $140 million to $170 million, with a charge of 27 cents to 32 cents per share expected in the fourth quarter of 2008.

Pepsi Bottling said it now expects earnings per share of $2.20 to $2.26 for the full year, compared with a previous view of $2.32 to $2.38, due to foreign currency changes and a higher-than-expected interest cost on a recent bond issue.

Including its restructuring plan and an asset impairment charge, it forecast full-year earnings of 62 cents to 73 cents per share.

Govt ban on 4 commodity futures may go end-Nov

MUMBAI (Reuters) - Trading in four commodity futures in India may resume after a temporary ban lapses at the end of November, the futures market regulator said on Tuesday.

The government had suspended trading in soyoil, chickpea, rubber and potato futures in May under pressure from its then leftist allies who blamed the futures trade for surging prices.

The ban was initially for four months but was later extended till November.

"If the government doesn't intervene, they go," B.C. Khatua, chairman of the Forward Markets Commission (FMC), told reporters on the sidelines of an industry meeting. "There is no case for continuing it."

He said the FMC was preparing a status report on the commodities market for the government and would urge the resumption of trading in the four commodities.

"Inflation has come down below 10 percent... things are looking good," said Yashwant Bhave, secretary in the Consumer Affairs Ministry. "It is up to the FMC to decide on resuming trade."

The FMC comes under the purview of the Consumer Affairs Ministry.

Inflation rate in early November fell to 8.98 percent, the lowest in almost six months and sharply off an early August peak of 12.91 percent.

IMF says more countries seek help, banks struggle

LONDON (Reuters) - The International Monetary Fund (IMF) said on Tuesday the number of countries seeking help to cope with a spreading economic crisis was growing every day.

Japan's economy minister said recession in the world's second-biggest economy could last longer than feared. Measures of inflation fell sharply in the United States and Britain, paving the way for further interest rate cuts.

A decision by Ford Motor Co to sell its controlling interest in Japan's Mazda Motor Corp illustrated the alarm gripping America's auto industry and the impact of U.S. troubles on economies well beyond its frontiers.

The banking sector, seat of a crisis now inflicting a sharp slowdown across the globe, also showed the strain. Britain's Barclays altered fund-raising plans to quell shareholder anger and profits in Japan's largest bank tumbled.

The crisis has spread steadily in recent weeks beyond the major developed countries, with states from Ukraine and Iceland to Pakistan seeking help from the IMF.

"It is true to say that because of globalisation the amount which the IMF is asking for is increasing, and increasing rapidly, and the list of countries asking for some support is increasing every day," IMF Managing Director Dominique Strauss-Kahn told a news conference on a visit to Libya.

He said earlier this week his organisation was likely to need at least $100 billion in extra funding over the next six months in order to help countries out of the mire.

The deepening economic gloom prompted shares to slide.

U.S. stock futures pointed to a weak start on Wall Street. European shares fell 1.2 percent and Japan's Nikkei shed 2.3 percent.


Barclays, facing shareholder ire following a decision to take 5.8 billion pounds from Middle East investors on terms tougher than the British government offered, cancelled this year's executive bonuses, as U.S. investment bank Goldman Sachs and Swiss bank UBS have done.

It also said Qatar Holding LLC and Sheikh Mansour Bin Zayed Al Nahyan would each make up to 250 million pounds ($372.9 million) of reserve capital instruments available to existing shareholders -- effectively offering the prospect of enjoying some of the higher rates of return agreed to Gulf investors.

Barclays, one of the four biggest UK banks, had declined to accept any capital from the government under a 37 billion pound bailout, wary of conditions imposed on their operations.

Japan's biggest bank, Mitsubishi UFJ Financial Group, announced first half profit had tumbled 64 percent and stuck to its recently lowered full-year forecast.

Australia's biggest investment bank, Macquarie Group, said it was heading for its first fall in annual profit in 17 years.

HSBC added to the employment gloom, saying it would cut a further 500 staff in Asia, mostly in Hong Kong, due to deteriorating economic conditions and caution about next year.

Citigroup Inc, the second biggest U.S. bank, revealed plans on Monday to cut 52,000 jobs by next year, the second-largest corporate lay-off plan in history.


U.S. producer prices declined by a record 2.8 percent in October after energy prices slumped, showing pipeline inflation pressures receding sharply although a key measure of core inflation at the farm and factory gate rose more than forecast.

In Britain, already officially in recession, headline inflation dropped to 4.5 percent in October from 5.2 the previous month.

The larger than expected fall heightened expectations of a substantial cut in the UK's 3.0 percent interest rate next month to stimulate the economy and temper growing fears of deflation, following a dramatic 1.5 percentage point cut this month.

In a further sign of the crisis spreading to the broader economy, major British retailer John Lewis Partnership's department store sales fell 14 percent year-on-year in the latest week.

Politicians are seeking ways of stimulating demand, possibly by tax cuts, while others resort to more innovative measures.

Taiwan said it would issue shopping vouchers worth T$3,600 ($108) to its citizens. Premier Liu Chao-shiuan said the plan was expected to contribute 0.64 percent to GDP.

In Washington, lawmakers argued over a proposal by Senate Democrats for a $25 billion bailout loan for the auto industry to stave off an even wider economic collapse.

"The reason people think failure could be cataclysmic is that there are so many companies that are tied to the auto industry," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.

Automakers have been hit by a collapse in consumer spending, triggered by a housing crash and worsened by rising unemployment. Officials say even with major stimulus measures in place, it will take a long time for the U.S. economy to recover.

"There's going to be stress in the capital markets for a number of months here because housing prices are still declining and I think it's moved beyond housing," Treasury Secretary Henry Paulson said at a conference.

Paulson and Federal Reserve Chairman Ben Bernanke will testify to Congress later on the $700 billion U.S. bailout plan.

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.