Thursday, 20 November 2008

Germany wants greater Indian role to tackle recession

In his first-ever visit to India, German foreign minister Frank-Walter Steinmeier has a full agenda. In his conversations with counterpart Pranab Mukherjee on Thursday, Steinmeier will focus on the raging financial crisis , particularly as Germany slides into recession.

But closer home, it will be the instability in Afghanistan that will consume a lot of conversation with the Indian leadership . In an exclusive interview with TOI, Steinmeier said, “We would like to discuss the available options for increasing our support for the stabilization of South Asia and its trouble spots. There is also much we would like to accomplish bilaterally . Germany is deliberately building up its presence in India , for example in the areas of business and science.”

There has been a lot of talk that European nations want to get out of Afghanistan, using the “reconciliation” talks with the Taliban. It has, say sources, led to a kind of dissonance with the Americans whose presidentelect Barack Obama is determined to make Afghanistan a top foreign policy priority.

Steinmeier said there was some focus on getting Afghans in the frontlines, so the foreign troops could get out of direct combat. “It is crucial that our Afghan partners gradually take on more responsibility. As the Afghan government becomes more capable of providing security and stability, the presence of international troops can gradually be reduced and eventually ended,” he said. But he tried to dispel the notion that reconciliation talks were on with the Taliban. “Reconciliation will only be possible on the basis of the existing constitution and that the Taliban must renounce all use of violence as a precondition for serious negotiations . That’s why I caution not to misunderstand the willingness to engage in talks as a sign of weakness,” he said.

Germany has been hit by the financial crisis harder than most, and reports say it has officially slid into recession. During the recent ASEM and G-20 summits, one of the ideas that was discussed was the ceding of voting rights in the IMF to important emerging economies like India and China as well as opening up the Financial Stability Forum for these countries.

“The crisis underlines the need to improve the conditions for stable and transparent financial markets... the IMF along with the Financial Stability Forum should be given considerable influence when it comes to risk analysis, monitoring the stability of the system and the development of an early warning system,” the German minister said. While endorsing the results of last week’s G-20 summit , Steinmeier said the future lay in a permanent expansion of the G-8 . “It will be important to go beyond crisis management to discuss new conditions for the world economy as a whole with all the relevant global actors ... the format of the future will have to be a permanent expansion of the G-8 ,” he said.

But Germany will join the global cacophony to ask India to help break the deadlock in the Doha round of WTO talks. For everybody, it was India’s stonewalling that kept the world short of getting a deal on Doha.

“Bringing the WTO Doha Round to an end would be a significant impetus for the global economy. We should press ahead to reach agreement on the core arrangements in agriculture and industry. I am confident that India, with its growing influence , will also take on more responsibility ,” Steinmeier said.

Source: EconomicTimes

The year 2025: China and India continue to rise

A new US intelligence report predicts few countries will influence the world over the next two decades more than China.

The report by the National Intelligence Council said China is set by 2025 to have the world's second largest economy and be a leading military power; "it could also be the largest importer of natural resources and an even greater polluter than it is now."

The US analysts predict that China's economic growth "almost certainly will slow, or even recede, even with additional reforms to address mounting social pressures."

Analysts said that China's international standing is based partly on the world's treatment of Beijing as "the country of the future."

"If foreigners treat the country less deferentially, nationalistic Chinese could respond angrily," the report said.

In India, the report said, leaders will try to position their country as "a political and cultural bridge between a rising China and the United States."

Analysts said they expect India's "rapidly expanding middle class, youthful population, reduced reliance on agriculture and high domestic savings and investment rates to propel continued economic growth."

Source: EconomicTimes

Al Qaeda warns Obama

Nov 19 - Al Qaeda warns President-elect Barack Obama not to follow President W. Bush's policies.

An Obama spokeswoman in Washington said the president-elect's office was not planning to comment.

- Reuters

Is Warren Buffett losing his touch?

NEW YORK (Reuters) - Investors are wondering if Warren Buffett has lost his touch.

They are bailing out of Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) stock and have lost some confidence that the insurance and investment company, run by one of the world's most admired investors since 1965, can pay its debts.

Berkshire stock has lost close to half its value since hitting a record high last December, as the company struggles with lower returns at its insurance businesses, the declining value of its stock holdings, and paper losses on derivative contracts.

Meanwhile, the cost of protecting Berkshire's "triple-A" rated debt has soared to a level more befitting a "triple-B" or even a junk-rated company.

Omaha, Nebraska-based Berkshire has nearly 80 businesses -- from car insurance to carpeting, clothing, food, kitchen utensils, and manufactured housing -- and owns tens of billions of dollars of stock.

Buffett's empire is diversified enough so that at any given moment many parts are unlikely to run on all cylinders.

"Everything you're seeing that affects other companies is eventually going to catch up with Berkshire," said Vahan Janjigian, author of the 2008 book "Even Buffett Isn't Perfect." "I'm not saying Berkshire is not well-run, but that even well-run companies will be hit in a severe recession."

Buffett, 78, was not available for comment.

Berkshire Class A shares fell as low as $74,100 a share on Thursday, their lowest level since August 2003.

That's down 51 percent from their record $151,650 set last December 11. It's also down 34 percent since Berkshire said on November 7 that lower insurance returns as well as investment losses led to a 77 percent drop in third-quarter profit, the fourth straight quarterly decline. Operating earnings were down 18 percent. Berkshire ended September with $33.37 billion in cash.

"We're buying Berkshire like crazy. It was our largest position, and we have made it much larger in the last two weeks," said Whitney Tilson, managing partner at T2 Partners LLC, a hedge fund firm.

"Investors are looking at the derivative exposure, seeing Berkshire marking losses, and it reminds them of AIG and other companies whose derivative exposures got them into trouble," he added. "They are coming to the insane conclusion that Berkshire faces similar risks."

He referred to American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), which got a $152 billion government bailout.


In Thursday afternoon trading, the shares were down $2,760, or 3.3 percent, to $81,240 a share on the New York Stock Exchange. The cost of protecting $10 million of Berkshire debt against default for five years rose to $490,000 annually on Thursday from $294,000 a week ago and $31,000 at the start of 2008, according to Markit.

"We're in an unusual time," said Peter Schiff, editor of Schiff's Insurance Observer. "It's like comparing a person having trouble making mortgage payments with a billionaire. The financial crisis affects them, but not in the same way."

Berkshire could have to pay as much as $37.04 billion between 2019 and 2027 under some derivative contracts if the Standard & Poor's 500 index .SPX and three other stock indexes are lower than when Berkshire entered the contracts. It obtained about $4.85 billion of premiums upfront.

At September 30, Berkshire had written down $6.73 billion on the contracts. Losses have almost certainly mounted since then. In October alone, Berkshire shareholder equity fell $9 billion, or 7.5 percent.

Buffett has said he expects the contracts to be profitable, distinguishing them from the "financial weapons of mass destruction" that he labeled other derivatives.

Berkshire also ended September with $10.78 billion in potential liabilities tied to various credit events, such as junk bond defaults, up from $4.66 billion at year-end 2007.

Moody's Investors Service said the global junk bond default rate could rise to 10.4 percent by the end of 2009 from 2.8 percent in October. With a typical junk bond yielding more than 20 percent, new financing is essentially nonexistent.

"Based on his 50-year track record selling insurance, I have a great deal of confidence he is selling these at the right price," Tilson said. "The critical thing is he does not have to post cash collateral until there are actual defaults."

A credit rating downgrade would likely not be material. Berkshire would have to post "nominal" additional collateral on derivatives of "far below 1 percent of assets" if Berkshire lost its "triple-A" ratings, Buffett's assistant, Jackie Wilson, said. It was posting no such collateral as of Sept 30, when Berkshire assets totaled $281.7 billion.


Berkshire has other exposures to falling markets.

It ended September with $76 billion in stock investments, including multibillion dollar stakes in American Express Co (AXP.N: Quote, Profile, Research, Stock Buzz), Coca-Cola Co (KO.N: Quote, Profile, Research, Stock Buzz), ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz), Procter & Gamble Co (PG.N: Quote, Profile, Research, Stock Buzz) and Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz). Shares in all have fallen this quarter.

And investors have shrugged off Berkshire's investment of $8 billion in General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) and Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) preferred shares, with their 10 percent dividend yields. Shares of both have fallen, rendering Buffett's warrants to buy common shares worthless for the time being.

Buffett has been out of step with the markets before. After missing the late 1990s tech bubble, he gave himself a "D" for capital allocation in 1999, when Berkshire's book value barely budged, and the S&P 500, including dividends, rose 21 percent. Berkshire fared better in six of the subsequent eight years.

"Earnings of Berkshire's operating businesses will undoubtedly decline given the worldwide economic downturn," T2 Partners' Tilson said. "However, these businesses remain enormously profitable, and will almost certainly continue to be."

Schiff, of the Insurance Observer, expects Buffett will actually find new opportunities to win business or make acquisitions, in part because many insurance rivals are scrambling for capital. Several are applying to become bank holding companies to be eligible for the government's $700 billion financial rescue.

"When insurers lose capital, you're going to be more conservative with how much business you write," Schiff said. "Berkshire doesn't have this problem because its balance sheet is so strong. What they own may be worth less, but they get more opportunities to buy things at cheap prices."

S&P dives to lowest level since 1997

NEW YORK (Reuters) - Stocks plunged yet again on Thursday, as a frantic flight from risk prompted by investors' deepening economic fears drove the benchmark Standard & Poor's 500 index to its lowest level since 1997 -- completing the erasure of more than a decade of stock market gains.

The latest leg down in what has been a 13-month whipping of equities worldwide was led by the year's weakest links: banks, commodity producers and car makers.

The S&P 500 is now more than 52 percent below its October 2007 record high, making the current bear market the second biggest on record. The current decline is exceeded only by the 83 percent drop between 1930 and 1932, according to the Stock Trader's Almanac.

"People are looking for light at the end of the tunnel and people don't see anything," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois.

On Thursday, the price of oil hurtled below $50 a barrel, taking energy shares with it as dismal U.S. economic data intensified concerns of a long and deep global recession, crushing fuel demand expectations. Chevron tumbled more than 8 percent and dragged the most on the Dow.

The Dow Jones industrial average plunged 444.99 points, or 5.56 percent, to 7,552.29. The Standard & Poor's 500 Index lost 54.14 points, or 6.71 percent, to 752.44. The Nasdaq Composite Index slid 70.30 points, or 5.07 percent, to 1,316.12.


But after the closing bell, a bright spot emerged when shares of Dell Inc rose 6.3 percent to $10.43 after the world's No. 2 PC maker reported better-than-expected profit as cost cuts tempered lower revenue.

And in another positive development after hours, Fannie Mae and Freddie Mac, the two biggest home loan finance companies, said they would suspend foreclosures of occupied homes until early 2009 -- one of the biggest moves to date by the government to staunch the wave of evictions and home losses. [ID:nN20621384].

Earlier on Thursday, the number of American workers on the unemployment rolls surged to the highest in a quarter century, government data showed, while a regional manufacturing gauge slumped as the economic misery intensified.

Financial stocks helped lead the way lower. Citigroup dove 26.4 percent to $4.71 on growing worries about whether the second-largest U.S. bank has enough capital to withstand billions of dollars of additional loan losses, overshadowing fresh support from Saudi Prince Alwaleed, its largest individual investor.

An S&P index of financial shares tumbled 10.5 percent. JPMorgan Chase & Co was the second-heaviest weight on the Dow, falling 17.9 percent to $23.38.


Further uncertainty over the prospects for a bailout for struggling automakers added to the gloom. Democratic leaders warned the bill would not pass unless it included a plan for the industry to return to profitability.

Shares of General Motors and Ford were tied to the bailout news, ending higher after falling sharply earlier in the day. GM rose 3.2 percent to $2.88, while Ford advanced 10.3 percent to $1.39.

Democratic leaders said automakers can submit another plan by December 2, adding that the proposal could be considered the week of December 8.

In the energy sector, Chevron dropped 8.8 percent to $64.40, while an S&P index of energy companies tumbled 11.2 percent.

U.S. front-month crude oil fell $4.00 to settle at $49.62 a barrel, the lowest settlement since May 23, 2005.

Volume was heavy on the New York Stock Exchange, where about 2.23 billion shares changed hands, above last year's estimated daily average of 1.90 billion, while on the Nasdaq, about 3.15 billion shares traded, well above last year's daily average of 2.17 billion.

Decliners outnumbered advancers on the NYSE by a ratio of 13 to 1, while on the Nasdaq, nearly seven stocks fell for every one that rose.

IBM, Wipro in fray for Polaris stake

With the market abuzz with the possibility of Citigroup's plans to sell the 43 per cent stake in the Polaris Software, it seems like othe IT majors are getting ready for buying stake in the Chennai-based financial software firm.

NDTV has learnt from sources that IBM could be a clear frontrunner along with Wipro. The negotiations could be at Rs 60 per share which is double the current market price. Both of these companies are keen to acquire stake in Polaris as the firm offers unique retail banking solutions.

But a deal will only go through if Polaris chairman and managing director Arun Jain relinquishes control and his board seat. Jain has an agreement clause on his side that gives him full control of the company irrespective of his holdings.

On Thursday Jain dismissed any moves by Citi to sell their stake in the company. While reacting to stake dilution reports, he said Citi cannot move to dilute its investment without the prior approval of Polaris' management.

But with global losses mounting this is one Citi which clearly has lost its sleep. The firm needs cash so just one month after it sold off its captive BPO, cashing out of Polaris makes sense.

Citigroup along with its wholly-owned subsidiary Orbitech owns a little over 43 per cent stake in Polaris is on the block. And such a move would automatically trigger an open offer for another 20 per cent stake.

If successful it would mean the others apart from the promoters will hold 63 per cent stake translating to a buyout! The promoters currently hold 29 per cent in the company.

Sources have also told NDTV that it is a matter of time and both Citi and Arun Jain are working out a framework where he can cede control and take a non-executive chairman role.

"The first option these companies like Polaris will want is to bring in a private equity pklayer and retain management control but if they cant they will eventually need to cede management control," said Dipen Shah, VP, Kotak PCG.

If the Polaris deal goes through then its a clear message for other mid cap IT companies. And analysts say it will trigger the much needed consolidation in the space.

As for Citi, well the word is out that they are selling out their entire IT portfolio and earn a quick buck.

Source: ndtvprofit

Day Trading Guide 2 - November 21, 2008


A short-term support is at Rs 305 level for the stock. Buy the stock in dips with tight stop-loss at Rs 305 level.


Utilise rallies to sell the stock with tight stop-loss at Rs 1,180.


Initiate fresh short-position if the stock declines below the October low of Rs 680 with tight stop-loss.


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

Reliance Capital

In line with our expectation, the stock declined by 7 per cent, accompanied with high volume on Thursday. We reiterate our sell recommendation.

Reliance Communications

We re-affirm our sell recommendation.

Reliance Industries

The near-term stance is bearish for the stock. We recommend a sell.

Satyam Computer

The stock is currently testing the key support level of Rs 220. Buy the stock in dips with tight stop-loss at Rs 220.


The stock is witnessing selling pressure at higher levels. Sell the stock in rallies while maintaining stiff stop-loss at Rs 1,170.


We recommend a sell.

Source: TheHinduBusinessLine

Alphageo (Rs 108.05): Buy

We recommend a buy in Alphageo (India) from a short-term perspective. It is apparent from the charts of Alphageo that it has been on a long-term downtrend from its life-time high of Rs 1,078 recorded in early January. Since then, the stock has been forming lower troughs and lower peaks. During mid-September, the stock’s downtrend accelerated and it declined steeply. However, the stock found support at Rs 103 (52-week low) on November 20 and bounced up forming inverted hammer candlestick pattern, which indicates short-term bullishness. We observe that the stock has a significant long-term support at Rs 100 that is 1994 peak and 2006 low. Moreover, we notice that the daily relative strength index is displaying positive divergence and moving average convergence and divergence also is displaying positive divergence. The weekly RSI is hovering in the oversold territory. We take a contrarian view on the stock from a short-term perspective and anticipate it to make a corrective up move until it hits our price target of Rs 120 in the impending trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 102.

Source: TheHinduBusinessLine

Merrill posts $7.5 bn third-quarter loss

New York (Reuters): Merrill Lynch & Co reported a third-quarter net loss of $7.5 billion on write-downs and credit losses on complex debt securities.

The brokerage house, which last month accepted a takeover bid from Bank of America, said on Thursday that the net loss applicable to common shareholders widened to $5.58 per share from $2.3 billion, or $2.82 per share, a year earlier.
The loss was worse than analysts’ expectations of a $5.18 loss per share, according to Reuters’ Estimates.

Merrill, like former peers Lehman Brothers and Bear Stearns Cos, has struggled to survive the credit crisis, which has crippled its large mortgage and complex debt businesses.

In July, Merrill sold a $30.6 billion portfolio of toxic securities to private equity firm Lone Star Funds, taking a write-down and raising capital in the process - but this was not enough to end its problems. The company’s share price continued to fall, and Chief Executive John Thain engineered the speedy sale to Bank of America on the same weekend that Lehman Brothers was forced into bankruptcy.

Source: R

Thousands to lose job after Merrill takeover by BoA

According to estimates from New York City comptroller, William Thompson, New York is bracing itself for the loss of up to 35, 000 jobs in the banking sector

London: Thousands of employees of battered financial services firm Merrill Lynch will lose their jobs after the firm is taken over by Bank of America (BoA), media report says.

The Financial Times quoted Merrill Lynch Chief Executive John Thain as saying that thousands of employees would lose their jobs when the company is taken over by Bank of America and the jobs would be lost in the corporate and services sectors, such as information technology.

Thain, speaking in Dubai while on a regional tour, added that BoA acquisition of Merrill’s investment and wealth management businesses would be completed by the end of the year, the report added.

According to estimates from New York City comptroller, William Thompson, New York is bracing itself for the loss of up to 35, 000 jobs in the banking sector.
The majority of the job losses are the result of the collapse this year of Bear Stearns and Lehman Brothers. Furthermore, when the Merrill Lynch-BoA deal was announced last month, the merger was expected to result in $7 billion of savings, including redundancies.

Given the economic slowdown, Thain further said he expected consolidation in the financial sector.

“There will be smaller institutions that need to be recapitalised or acquired,” the report quoted him as saying.

Thain also said that the Middle East would not escape the global slowdown, however, the regions large accumulated capital reserves could also be mobilised to invest outside the region.

Earlier this month, John Thain was named as president of global banking, securities and wealth management at BoA following completion of Merrill Lynch’s merger with the bank.

Source: Livemint, PTI

Motilal Oswal | When everyone knows your name

This stock market veteran is handling the economic turmoil by simply keeping his cool

Perhaps it is a sign of the times that Kandahar, the Northwest Frontier theme restaurant at The Oberoi, is deserted for lunch on a recent Saturday. The restaurant’s empty tables, gleaming plates and wait staff, suitably ethnic in salwar suits and waistcoats, enjoy the spectacular view of a placid Arabian Sea under the bright Mumbai sun with not a paying soul for company.

Or perhaps one needlessly reads “economic meltdown” in every small thing nowadays. Motilal Oswal, the man, not the company, is not too reassuring later over lunch though. In 20 years of managing customers’ money—and seeing his fair share of domestic and international crises—Oswal confesses that this is probably the worst turmoil he has ever seen. “It will take a long time to come out of this mess,” he explains, “it is best if we all just wait and watch without panicking.”

Despite Kandahar’s piped music being dialled down to low volume, having a conversation with Oswal is not easy. The plainly dressed, genial-looking man speaks only slightly above whisper volume—later I find out that my audio recorder sometimes just didn’t pick up his voice—and I often lean over, pointing my stronger right ear at him.

The first thing that strikes me about Oswal is the complete absence of bling. When you meet someone who runs a diversified financial services firm, with broking and wealth management divisions among other things, that clocked Rs137 crore in revenues last quarter—“an understandably poor one under the circumstances”—and one named after themselves no less, you expect to see, at the very least, a chunky ring. Or, maybe one of those diamond-studded iPhones.

Instead, Oswal wears a sober black-and-yellow T-shirt, corduroy pants, brown shoes and a Titan Edge watch. No jewellery. When he notices me look at his T-shirt he clarifies: “This is our company T-shirt. The staff wear casuals on Saturday, including me.”

Oswal’s story starts from the village of Padru in Barmer near the Indo-Pak border, where his father was a grain trader. Despite always having the option of joining the family business, Oswal decided to first get a complete education and see what options the world had in store for him. “If things went bad, I could always go back and trade grain, no?” he says.

It was while studying for chartered accountancy in Mumbai that Oswal met and befriended Raamdeo Agarwal, who stayed with him in the same hostel—Rajasthan Vidhyarthi Griha in Andheri. Agarwal, in Oswal’s words, was a hard-working fellow with a very bookish bent of mind. “He was always reading balance sheets and doing research and calculating numbers.” It was also around this time that Oswal discovered this “animal called the stock market”. Both friends immediately spotted an opportunity.

After working with an audit firm for a while and then starting his own outfit, Oswal and Agarwal decided to try their hand at sub-broking themselves. Breaking into the Bombay Stock Exchange at the time was impossible. If it were not for some contacts that Agarwal had developed, Oswal remembers, they would have never made it.

“The whole exchange was run by Gujaratis. The floor was full of Gujarati traders and all official circulars and documents were published in that language,” he says, smiling broadly. But partner Agarwal was able to get in touch with a broker who promised to get them a sub-broker’s position on the floor as soon as a position fell vacant.

A few months later, the solitary sub-broker badge was made in the name of “Motilal Oswal”. The name of their enterprise has stuck ever since.

While the waiter serves Oswal his coconut water and me my watermelon juice, I ask him about his equation with Agarwal—the pair has been together ever since 1987 when they met in their hostel. How is it possible for two people to work together for more than two decades? Have they ever thought of splitting up and going their separate ways?

Without hesitation Oswal shakes his head: “No. Never. Raamdeo is now like family. I can’t think of him as anything less. We both have equal stakes in the company. It is actually something like a marriage now.”

Oswal goes on to explain how, over the years, he and Raamdeo have demarcated their responsibilities. Raamdeo takes care of all the “finance stuff”—largely by heading a 40-member research team—while Oswal takes care of customers, human resources, operations and the franchise network. (Later, Oswal tells me that the company had nothing to do with a franchisee in Tiruppur who allegedly sent out text messages asking people to withdraw money from ICICI Bank. “We only tell our customers which stocks to buy or sell. Not what to do with their bank deposits”.)

From their modest beginnings, the enterprise grew into a diversified company, with the latest additions being an investment bank in 2005—which involved poaching a team from Rabo India Finance Pvt. Ltd—and then a private equity fund in 2006. Today, the Motilal Oswal group has grown to 1,800 employees.

When the waiter appears, we decide to share, without a glance at the menu, a rather domestic meal of rotis, yellow dal, two subzis and drink refills. And just as the waiter turns around, Oswal reminds him to also bring a plate of some cut cucumbers, tomatoes and carrots.

As we break bread, I ask Oswal what he thinks of the current financial crisis. Did he have any inkling of the meltdown? I lean forward. “No idea whatsoever,” he says. “We did not expect this to happen at all. Who could have guessed that all these American banks would be so leveraged?”

This candour is probably one reason he is not among the omniscient talking heads on business TV channels. He continues: “See…I don’t think anyone can speak with any authority on the stock markets. More than 80% of all the traders are speculators. Everyone is either greedy or afraid. Besides, if I speak with one channel, then everyone will begin to call you for quotes.”

His explanation and criticism of the American financial system quickly segues into a discussion of his company’s two key principles: “Never speculate. Never borrow.” Oswal says that both partners try to uphold these beliefs in everything they do. From inception, he says, their idea was to sell their intellectual ability. “We always want to stay in an advisory capacity. Help other people invest money. If the American banks had stuck to their mandates, we would not be in this mess.”

As our waiter assaults the tablecloth with an elaborate brass crumber, I ask him if he has ever contemplated changing the name of his company. “Many times. I used to think it sounded very unprofessional. But nobody lets me. Even Raamdeo and my senior team thinks that the brand recognition is too great. Once, we hired a branding consultant who also felt the same way.”

And then, a moment later, he adds: “But then Goldman Sachs, Merrill Lynch, Morgan Stanley are all peoples’ names only, no? So, it’s not that bad…”
Besides the occasional trip abroad with family, Oswal spends most of his free time catching up on his reading. He is an obsessive reader of self-help books—Og Mandino, Stephen Covey, Robin Sharma, et al.— and business books of the Jim Collins ilk. The Monk Who Sold His Ferrari was so good, he says, that he would wake up half an hour earlier than usual, at 5am, to get some extra time with the book before his daily yoga session.

As we get up to leave after exchanging business cards, Oswal says he likes to email articles to friends and family. He skims my card for my email address and promises to include me on the list. “I send 12,000 emails every week in total!” he says with pride.

As for parting wisdom on the markets, Oswal simply says: “Stay cool, yaar! And don’t speculate.”

Three days later, I receive an email on “The Art of Letting Go”. It included several tips on successfully handling disappointment and betrayal. That could mean only one thing: Oswal had, indeed, added me to his list.

Curriculum Vitae

Motilal Oswal

Born: 15 May 1962

Education: SPU Jain College, Falna, Rajasthan; Institute of Chartered Accountants, Mumbai

Work Profile: Oswal briefly worked for an audit firm before starting his own accounting firm. He co-founded Motilal Oswal in 1989

Favourite Book: ‘The Ultimate Gift’ by Jim Stovall. Oswal liked it so much he bought 1,000 copies and distributed them among family, friends and employees

First Impression: What people tell him when they meet him for the first time: “Mr Oswal, you don’t look old enough to have a company named after you!”

Source: Livemint

Company Review: DLF Limited

DLF’s net sales for Q2’09 increased 15.2% y-o-y but fell 1.7% on a sequential basis. The EBITDA margin fell 840 bps to 64.1% owing to a shift in focus towards the low-margined mid-income housing segment.

While we expect the liquidity crisis to impact the Company adversely, we believe that the current stock price factors in the expected slowdown in the real estate sector.

The real estate demand is expected to weaken further in the next few quarters, owing to the current economic slowdown and the cautious approach of the banks towards the sector.

This is likely to create downward pressure on property prices. Accordingly, we have assumed a 15% correction in property prices over the next six months across all the segments.

During Q2’09, DLF launched only 0.25 million square feet (msf) of new space, the least since Q1’08. We believe that the drying up of sources of funds and high receivables (63% of sales) will intensify the shortage of funds, thereby delaying the existing projects and new launches.

The EBITDA margin for Q2’09 fell 840 bps (y-o-y) to 64.1%. We expect the margin to fall further, given the anticipated price decline and increased emphasis on the low-margined mid-income housing segment.

However, the expected fall in prices of major raw materials such as steel and cement should help ease the pressure on the margins to some extent.

Based on NAV, our fair value estimate of Rs240 suggests a 7% premium to the current market price. Currently the RoE of the company is around 39% and the stock is trading at a P/B of 1.6x. We maintain our HOLD rating.

Indiabulls Securities

5 mutual funds to watch

These mutual funds have been good performers in recent quarters. Keep an eye on them in these uncertain times

Reliance Mutual Fund: Mammoth Player

Reliance Mutual has a history of letting its funds get bloated in terms of its assets under management, or AUM. And the firm’s culture places a premium on running a big fund.

Ever since it started in 1995, it has rapidly increased its AUM. From being India’s largest private sector mutual fund in 2006, it became the largest mutual fund by 2007. Reliance Equity Advantage fund created history by mopping up Rs2,700 crore in its new fund offer, or NFO, in 2007. This year, Reliance Natural Resources Retail mopped up Rs5,660 crore. Reliance has managed to garner a huge amount of assets because it actively pursues NFOs. It started with the launch of two equity funds, Reliance Vision and Reliance Growth, whose performance in 2002 and 2003 made it a hit with investors.

The asset management company (AMC) has many firsts to its credit among sector funds: banking, media and entertainment, and power. This year, it came out with a Natural Resource Fund. On the debt side, the fund house has good, low expense ratio funds such as Reliance Short Term and Reliance Liquid Treasury.

Though the fund house barely has a presence in the hybrid category, it does have a huge choice in the types of funds, with some good performers.

HDFC Mutual Fund: Star Performer

One of the industry’s sturdiest shops, its performance has been strong over time. Lately, however, it has gravitated towards the back of the pack.

HDFC Mutual’s temperate ways have served it well over the years. It has been a consistent performer, providing a cushion as racier options fell. But investors are disappointed with its performance in the second half of the bull run. Certainly the risk-adjusted returns were not impressive, but it is no cause for alarm. These funds lag the pack when the market’s raciest names lead the charge.

In Prashant Jain, investors have a fund manager who has proved his mettle over various market cycles. In 2003, HDFC Mutual Fund bought out Zurich Mutual Fund to become the second largest fund house in India, inheriting a great equity portfolio, an aspect missing earlier (prior to this, HDFC Mutual Fund was focused on debt offerings.)

The funds’ performances have an enviable track record. The company currently has nine funds with a four-five-star rating. But there seem to be no star fund managers other than Jain. Recently, the fund house has also been losing talent. It seems to have gone on an asset-building spree—surprising, since it always steered clear of the NFO mania. In 2007, it launched a number of funds, including two close-ended equity funds, a mid-cap offering and an infrastructure fund.

ICICI Prudential Mutual Fund:Impressive Growth

It’s like having two AMCs under one roof: a large, well-run fixed income one and an average equity one.

This fund house has been quite aggressive in its product launches. In the equity segment, it came out with three schemes this year. It offers a lot of variety to investors. Unfortunately, its performance in equity does not match up to its debt funds.

From its inception a decade ago, it created history in the fund management industry, reaching the No. 2 position in just five years. But ICICI Prudential is more dependent on institutional investors and debt assets. Out of its asset base of Rs49,371.12 crore, around 28% comes from cash funds and almost 20% from fixed maturity plans, or FMPs. The company is credited with running the largest ultra short-term fund and floating rate short-term fund.

ICICI Mutual Fund was promoted by ICICI and later, US-based investment bank JPMorgan acquired a stake. In 1997, the latter was replaced by Prudential Plc., a British insurance and pension major, with a name change to Prudential ICICI (a joint holding in 55:45 ratio). In 2007, the name again changed to ICICI Prudential to reflect a change in the shareholding pattern.

UTI Mutual Fund:Needs a performance boost

Only a few of UTI’s funds are great performers but this public sector fund house has advantages its rivals lack. It has a huge base of retail equity investors and a vast distribution network largely inherited from the Unit Trust of India.

In the last few years, UTI slipped from being the largest AMC to being No. 4. However, its asset growth has been robust, if slow. It still has the largest investor base and biggest equity assets besides being, by far, the country’s most profitable fund company. Its conservative approach and stable parentage make it attractive.

Its problem is dragging performance. Recently, it has made an effort to improve, merging several equity schemes and overhauling its approach to equity investment. However, falling stock markets have made it impossible to judge its success. UTI’s top performers are a few index funds, some hybrid funds and its infrastructure funds. Some income funds also stack up well.

UTI is co-owned by four public sector enterprises: Life Insurance Corp., State Bank of India, Punjab National Bank and Bank of Baroda. It was planning an IPO this year which would have made it India’s only listed fund company. However, the issue was deferred due to falling stock markets.

Birla Sun Life Mutual Fund: Variety Galore
Birla Sun Life’s best performers tend to be its debt funds, with the bulk of its debt assets in cash funds. Some of its gilt and short-term funds stand out. However, interestingly, Birla Sun Life’s roster includes some of the best as well as some of the worst debt funds.

Of its 14 funds boasting a five-star or four-star rating, just one is an equity offering. Not surprising since equity assets stand at just around 17%. None of the equity funds, barring Birla Sun Life Equity, is a star performer.

In December last year, the company lost two good fund managers, equity and debt. This year, the CEO moved out; the new one has ambitious plans.

Birla Sun Life AMC is an equal stake-joint venture between Aditya Vikram Birla Group and Sun Life of Canada. Besides the mutual fund business, they are partners in financial distribution and stockbroking businesses and in life insurance.

In 2004, the AMC bought Alliance Capital AMC, becoming India’s fifth largest fund house. Alliance Mutual Fund had 14 schemes which got added to Birla Sun Life’s 38. It also benefited from some equity funds such as Alliance Basic Industries and Alliance Equity, which were excellent performers.



These days checking out returns from equity funds can be depressing, with some having fallen by as much as 67%. But one category of funds has actually delivered positive returns. Gilt funds are mutual funds that invest in government securities, or G-Secs, including Union government dated securities, state government securities and treasury bills.

Investments in G-Secs fetch the highest level of safety as they are immune from default. The only risk here is the interest rate sensitivity as they are marked to market. So, if the interest rate goes down, the price of the security rises, and vice-versa.

Unfazed by talk of a European recession, Fidelity has filed an offer document to launch the Fidelity European Dynamic Growth Fund. The Indian fund will invest in Fidelity’s European Dynamic Growth Fund, based in Luxembourg, which invests in mid-sized European companies with market capitalization of €1-10 billion (Rs6,280- 62,800 crore). The new fund can invest up to 20% in money market instruments or cash and liquid funds. In terms of geographic spread, 26% of the fund is in Switzerland, 25% in Germany, 15% in Sweden and 11% in the UK. It will be benchmarked against the MSCI Europe Index.


Religare Aegon, the new asset management company, has filed an offer document with Sebi for its first equity fund—Religare Aegon Business Leaders Fund.

The fund, to be benchmarked against the S&P CNX Nifty Index, will invest in stocks of leading companies in their respective industries. The fund manager will look for parameters such as better pricing power, superior cost structure, significant and sustainable competitive advantages, among others, which reflect in high market share, high return on equity or high growth rate. The fund may also invest up to 20% in debt and money market instruments.

There are at least two other funds with a similar portfolio focus to Religare Aegon’s Business Leaders Fund—UTI Leadership and Sundaram BNP Paribas India Leadership.


Investors should not need to time the market. The investing approach should stay the same regardless of market conditions.

• Put any cash you need for three-five years in fixed income assets.

• Long-term funds should be allocated between fixed income and equity depending on your ability to take temporary losses.

• If that balance changes because one asset type has earned more than the other, sell one and buy the other to restore the balance.

• Never invest large sums in equity. Do it gradually, SIP style.

Source: Livemint

Indian investors cheated out of land in England that never was

For those who took UKLI’s promise at face value, the dream of owning a piece of English property is turning into a nightmare

Shabana Hussain and Abhishek Prabhat

New Delhi: The promise of a plot in the idyllic English countryside near London, with an assurance that its price would rocket once regulators rezoned it as residential land, proved too hard to resist for at least 400 investors from India.

Unfortunately for them, it was a promise that was too good to be true.

The investors, some of whom squandered away their life’s savings on the scheme advertised last year, are from among at least 4,500 people who paid a collective £69 million (around Rs514 crore now) to UKLI Ltd, a UK-based land banking company that has since become insolvent and is unable to meet liabilities, according to Deloitte and Touche Llp., the audit company appointed as its administrator.

Besides India and the UK, UKLI had attracted investors from Pakistan, Georgia, South Africa, the US and Canada, and a small number of investors “based in Japan and European countries such as Greece, Sweden and Holland”, Deloitte said in an email reply to queries from Mint. Deloitte said it wasn’t able to provide an estimate of the money invested by Indians alone.

In April, the Financial Services Authority (FSA), Britain’s financial regulator, ordered UKLI to wind up its business “for operating as an illegal collective investment scheme and denying its investors protection for their money”.

By then, UKLI had sold 1,000 acres of agricultural land in 13 sites carved up into 5,000 plots. The land, on freehold ownership, was going cheap because it was not developed. The company promised that it would “lobby” to secure all necessary approvals required to build houses there. Once the approvals came through, the land price would zoom up, it told investors.

What UKLI did not tell them was that 11 of the 13 sites on offer were in the so-called green belt where no development is allowed under English law, according to a transcript of a creditors’ meeting held on 24 June by the administrator, which is available on UKLI’s website ( The two not in the green belt—Paddock Wood and Darmans Lane—had “onerous restrictions” in place with little prospect of development being allowed, the transcript said.

FSA is armed with an interim freezing and restraining order against UKLI to protect its assets for creditors, including investors. But FSA warns that UKLI operated an illegal scheme, meaning the investors aren’t entitled to complain to the financial services ombudsman or claim compensation from a statutory fund.

Dream to nightmare

For those who took UKLI’s promise at face value, the dream of owning a piece of English property is turning into a nightmare.

Like the 54-year-old widowed mother of two who invested Rs26 lakh, her life’s savings, to buy two plots after she saw newspaper advertisements in March 2007 promising high returns on land purchases in the UK. The ads were released by UKLI Real Estate Pvt. Ltd, the Indian branch of the UK-based land banking company.

Source: Livemint

Oil Prices: Are we at a multi-decade bottom?

Development nations has registered tepid growth since 2000 and their share has fallen by almost 5%

Global Beat | Rajeshree Varangaonkar and Bharat Indurkar

Oil has been one of the predominant stories for 2008. Characterizing the first half with its meteoric rise and capturing the second with a spectacular free fall, market chatter has swung from talk of $150 per barrel of crude to $35 per barrel in the span of a few months.

As with any commodity, the price of oil is decided by demand and supply. In the past few years, while on the demand side North America remained one of the largest consumers, incremental growth in demand has come from China, West Asia, India and countries of the former Soviet Union. Oil demand from the Organisation for Economic Cooperation and Development nations has registered tepid growth since 2000 and their share has fallen by almost 5%.

In the first half of 2008, demand for India and China was forecast to grow by around 10%. The high estimates argued that these countries would exhibit price inelasticity in their blistering path of growth, leading to fears of spare capacity exhaustion. Spare capacity as a percentage of demand has been coming off its peak of 14% in 1987 to an anaemic 3% in 2007. Hoarding by select nations added to the general level of panic, causing markets to bid oil contracts higher.

Through the summer the US saw a decline in demand—highway miles driven fell for the first time in 29 years, toll booth receipts dropped and several airlines grounded fleets. With the biggest consumer weaning off its addiction, oil started faltering. The final blow was dealt with worse-than-expected numbers coming out of China. While part of the price decline was funds flowing out of the commodity spectrum and the US dollar strengthening in a recessionary environment—in line with prior recessions—the crux of the matter is a fixation with the near-term demand.

In earlier recessions, developed nations would largely contribute to the growth in oil demand at the cusp of a recovery. However, over time, developed nations have lost share to emerging nations and hence any recovery in oil demand will now be led by these countries.

Estimates assume acceleration in demand growth in the second half of 2009. That might prove overly optimistic, with China’s economic growth undoubtedly set to slow further.

China’s reliance on exports and any prosperity thereof feeds into oil consumption.
Exports to developed countries have dramatically slowed and are hardly a self-starter in light of the severe downturns in these countries. While internal domestic growth could be a driver, we have severe doubts about China’s announced fiscal pump-priming.

Incremental demand was also registered from West Asia. With large infrastructure and development projects being rolled out, these cash-rich nations were once touted as self-sustaining and hence consumption-based economies. But as this levered story came unhinged, any incremental demand in oil from these nations is now suspect.

While in the near term the pull back in consumption is more than certain, we believe this will lead to an overcorrection in the price of oil.

The Organization of Petroleum Exporting Countries (Opec) faces one of the largest drops in global oil demand since the 1980s and will aggressively cut production. As demand overcorrects, so will supply.

A pull back in the price of oil will also put new projects on hold as it is no longer as profitable to spend capital in generating a commodity that can’t seem to bottom.

New expensive upstream projects such as oil sands and deep-water exploration will likely be delayed, thereby postponing any incremental supply additions.
Turning to existing supply, the picture is bleak. Mature oil fields are seeing accelerating decline rates, and outside of Opec, the supply is characterized mainly by mature fields. New discoveries are yielding much smaller fields, not to mention some fields trapped in geopolitical strife.

All this will eventually contribute in setting a floor to the price of oil. Additionally, China has pledged to build strategic reserves to service 180 days, demand over the next decade. As oil gets cheaper, nations will strengthen their strategic reserves, bringing natural buyers to the market.

The world will be weaned off oil only in the face of a major technological shift towards, say, battery cars or biofuels, or an increase in supply. However, the former will take a long time to become mainstream and the latter is highly unlikely.
Although oil prices have plummeted, the prospect of an economic recovery at some point in the future isn’t unreasonable. Neither is it unreasonable to consider the pressures of rising population on a shrinking natural resource.

As oil pulls back, we are likely sitting on a multi-decade bottom.

Source: Livemint

What the big boys recommended

Most of the big research organizations are as bad at timing the market as the rest of us

What has been the reaction of the research sections of large foreign banks to the current global crisis? Did the proportion of their “sell” recommendations rise last year when stock prices were sky-high, and has the proportion of their “buy” recommendations increased now that stock prices have crashed? We took a look at the global recommendations of some of these banks over the past year. The data is derived from the research reports of the respective banks.

Merrill Lynch had 45% “buys” in its global coverage on 1 October, down from 47% on 1 July. “Sell” recommendations went up from 29.7% on 1 July to 31% on 1 October. Interestingly, however, the broker had “sell” recommendations on only 9% of the stocks under its global coverage on 1 January. That seems to indicate it was over-optimistic at the beginning of the year and has become more pessimistic as the market went down.

UBS had “buy” recommendations on 55% of the stocks covered at the end of September and December 2007, rising to 59% at the end of March before falling back to 56% at end-September. “Sell” recommendations were 8% of stocks covered on 31 December, going down to 7% in March and back to 8% by end-September. It looks like UBS probably thought the worst was over in March.

HSBC was clearly worried about high valuations last year, which is probably why it had “sell” recommendations on 20% of the stocks covered in July 2007. This went down to 17% in January and then to 15% in June. The bank probably thought the situation would improve. But by November, the “sell” ratings were back to 17%.

Morgan Stanley’s “sell” percentage had been remarkably consistent at 15% in August and November 2007 and February 2008, but they had increased to 18% in October. “Buy” ratings, at 44% last February, were down to 39% by October.
JPMorgan, too, had remarkably consistent “sell” ratings on 14% of the stocks under its coverage in September and December 2007 and in June 2008. But by September, it rose to 15%.

And finally, Deutsche Bank had 61% of its stocks rated “buy” in September 2007, which went up to 62% in January this year, increasing to 66% by August.

What do the ratings say? HSBC was the only bank that had a relatively high proportion of “sell” ratings last year when valuations were high and they had a relatively lower proportion of “buy” ratings. It has decreased its “sell” ratings and increased its “buy” ratings as the markets fell, although they may have jumped the gun a bit.

Merrill Lynch was the exact opposite, increasing its “sell” rating as the market fell, while having a very low proportion of these ratings at the beginning of the year. Some of the other banks seem to keep almost the same proportion of “buy” and “sell” recommendations regardless of the state of earnings or of the market, which is rather odd.

The conclusion: Most of the big research organizations are as bad at timing the market as the rest of us. But then, that’s something we knew already, right?

Source: Livemint

Chinese firm wants land for Nano rival

FAW wants to make a Rs1.6 lakh car at Singur but West Bengal is holding back because land is still with Tata

Kolkata: West Bengal’s efforts to save face over the Singur issue seem to have backfired, with the combine that was to set up a facility to make a Rs1.6 lakh car on the plot of land where Tata Motors Ltd’s small car factory was to come up saying it will look to set up base in some other state if the state government takes a year to give it this land—the time the state’s industry secretary has said it could take Tata to vacate the plot.

Earlier, West Bengal had paraded Chinese auto company First Automotive Group Corp., or FAW, as a possible taker for the plot of land where the Tata Motors factory was to come up at Singur, an hour’s drive from Kolkata. Tata decided to move its factory out of Singur—it was coming up on land leased from the state—after protests from local farmer groups and a political party, the Trinamool Congress, which said the land for the factory had been forcibly acquired by the government. The Tata Motors factory is now coming up at Sanand in Gujarat.

FAW officials met chief minister Buddhadeb Bhattacharjee on 4 November, were shown the Singur site, and liked it. The catch? The state government can’t take a call on the Singur site; only Tata Motors can.

Interestingly, FAW is looking to launch a small car priced at Rs1.6 lakh. Prices of Tata Motors’ Nano, which was to be manufactured at Singur, start at Rs1 lakh.
West Bengal’s commerce and industries secretary Sabyasachi Sen said the government wouldn’t try to broker a deal between the two companies. “They can only buy if the Tatas are willing to sell,” said Sen, adding that the government couldn’t pressure Tata Motors to vacate the plot immediately because it had paid rent for it till 2009. A few days ago, Sen had said Tata Motors could take up to a year to vacate the plot.

“We are ready to buy the land (on) as is where is (basis), if the terms and conditions are mutually agreed (upon),” said J.K. Saraf, chairman of Ural India Ltd, a company that already manufactures trucks at a different location in West Bengal and the partner of FAW.

A Tata Motors spokesperson sidestepped questions on FAW’s interest in the abandoned factory at Singur and said his company would “discuss with the West Bengal government (all) matters related to the Singur site”.

Tata Motors has said it had invested Rs1,500 crore in Singur. While the company will be able to recover some of the costs, especially that incurred in machinery, it will have to write off the amount spent on some work, including raising the level of the factory by almost 2m to avoid flooding.

Meanwhile, two officials at West Bengal’s commerce and industries department said the state wasn’t convinced about the interest of the FAW-Ural India combine, even as Saraf said that the combine would be writing to Bhattacharjee with a firm offer for the site.

Officials at West Bengal’s commerce and industries department said on condition of anonymity that the government wasn’t convinced about the intentions of the FAW-Ural India combine. The state had allotted 300 acres to Ural India in Haldia to manufacture heavy trucks, but the project has failed to live up to expectations, said one of these officials. None of the officials wanted to be named.

Saraf said Ural India manufactures five trucks a day at present, and that it would increase production to 10,000 a year when the economy looks up.

Another of the officials said the government was still hopeful that it could persuade Tata Motors to do “something” with the Singur factory and not abandon it altogether.

Meanwhile, Saraf said FAW was likely going to wait till March for the state government to decide on the Singur plot. The company is considering a couple of sites in Maharashtra and Haryana, he added.

It is unlikely that Mamata Banerjee, the leader of the Trinamool Congress, will oppose FAW’s entry because the Chinese auto maker doesn’t want more than 600 acres. Banerjee was willing to let Tata Motors have 645 acres for its factory, but insisted on it returning at least 300 acres from the land allotted to its vendors.

Source: Livemint

GM, Ford shares soar on bailout optimism

NEW YORK (Reuters) - Shares of General Motors (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) soared on Thursday after a Senate Democratic aide said senators had reached agreement on a bipartisan auto aid deal.

GM shares jumped more than 23 percent to $3.43 on the New York Stock Exchange, while shares of Ford climbed more than 34 percent to $1.69.

The big-three U.S. automakers, including Chrysler, are pressing for a $25 billion bailout from the government to avert possible bankruptcy.

Stocks climb back on new auto aid optimism

NEW YORK (Reuters) - Stocks clawed back from multiyear lows on Thursday after hopes of a deal to rescue U.S. automakers were revived, offsetting growing concerns about the deepening economic downturn.

A group of senators said a bipartisan agreement had been reached on a bill to aid automakers, news that sent shares of General Motors shares up more than 15 percent to $3.29 on the New York Stock Exchange. Ford was up more than 22 percent to $1.51.

Earlier, the S&P 500 benchmark index had tumbled to a six-year low on worries about the carmakers' fate and the economic turmoil.

The big-three U.S. automakers, including Chrysler, are pressing for a $25 billion bailout from the government to avert possible bankruptcy.

The Dow Jones industrial average was up 96.29 points, or 1.20 percent, to 8,093.57. The Standard & Poor's 500 Index was up 3.68 points, or 0.46 percent, to 810.26. The Nasdaq Composite Index was up 13.03 points, to 0.94 percent, at 1,399.45.

Earlier in the session, stocks had slid, taking the S&P 500 to its lowest level since October 2002 as another round of bleak economic data unnerved investors.

And not everyone was convinced that the auto rescue bill was going to be a lasting or comprehensive solution.

"Once the back and forth between the Big Three and Congress goes off the front pages next week, we'll be back into trying to figure out how deep and how long will this recession last," John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas, said.

Data from the Labor Department showing that the number of new claims by U.S. workers for jobless benefits hit their highest level in 16 years in the recent week moved investors to the sideline, along with concern about the future of Citigroup.

In other economic news, factory activity in the U.S. Mid-Atlantic region fell to another 18-year low in November.

Shares of the Citigroup a major U.S. bank and Dow component, dropped to its lowest level in more than 13 years as investors remained concerned over the bloodletting in the financial sector.

With Congress winding down its session, the automakers' pitch to Washington for a $25 billion rescue package, which they say is necessary to avoid bankruptcy still left the fate of the industry hanging in the balance.

Buy Blue Dart, target of Rs 520: KRChoksey

KRChoksey Research has recommended a buy rating on Blue Dart Express with a target price of Rs 520 in its November 19, 2008 research report. "Net sales increased 27.8% y-o-y and 8.6% q-o-q to Rs 265.8 crore driven by increase in the average pricing (15-20% in air cargo charges and 10-15% in the ground network service charges). We recommend a BUY on this stock with target price of Rs 520, which represents an upside potential of 21.8%," says KRChoksey's research report.

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

Source: Moneycontrol

Apollo Hospitals has target of Rs 471:

Accoding to, Apollo Hospitals Enterprises has a target price of Rs 471.'s report on Apollo Hospitals Enterprises:

Apollo Hospitals reported its Q2FY09 results with net profit of Rs 30.13 crore led by better revenue growth and rise in other income. At the current price of Rs 411, the stock is trading at 14.9x its FY09E EV/EBITDA and at 11.1x its FY10E EV/EBITDA. We believe the current levels are attractive and have arrived at our target price of Rs 471 through our DCF valuation. At this price, the stock is available at 2.15x and 1.92x its FY09E and FY10E book value per share, respectively. We rate the stock as ‘PERFORMER’.

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

Source: Moneycontrol

Buy Everonn Systems: HDFC Securities

HDFC Securities has maintained its buy rating on Everonn Systems India in its November 20, 2008 research report. "Everonn’s Q2FY09 standalone revenues jumped 49% YoY. We expect Everonn to record revenue CAGR of 63.3% and PAT CAGR of 61.5% over FY08 to FY10E, making it the second fastest growing company under our coverage. We believe that Everonn’s revenue mix will shift towards the high margin ViTELS segment, thereby improving overall profitability and ROCE."

"In FY08, ViTELS segment contributed 41% to overall revenues and 50% to EBITDA. Considering the market scenario, converting the warrants at Rs 720 per share will be a concern going forward. However, the company has Rs 800 million as cash on its books as on Q2FY09. Considering the growth prospects of the company we maintain our ‘BUY’ rating on the stock," says HDFC Securities' research report.

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

Source: Moneycontrol

Hold Mastek, target of Rs 195: PINC

PINC Research has downgraded its rating on Mastek to hold with a target of Rs 195 in its November 19, 2008 research report. "Mastek had guided for a 32-34% growth in INR revenues for FY09, which translated into a USD growth rate of 14-16%. Our growth outlook for Mastek has been revised primarily on volatile exchange rates. We believe the bigger threat to earnings is the weak macro environment, which could impart pressure on Mastek’s application development led model leading to further uncertainty over earnings growth. Hence, we expect these factors to weigh on valuations and thus downgrade our recommendation to ‘HOLD’. with a price target of Rs 195," says PINC's research report.

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

Source: Moneycontrol

Reliance Money positive on Capital Goods sector

Reliance Money Capital maintains a positive view on the Capital Goods & Engineering sector in the long term but the outlook for the next quarter looks challening considering the slowdown see in the economy.

Key Sector trends:-

Large capital goods companies continued to grow, order book momentum also maintained. However incremental orders could take a hit and current
order book execution in the light of any order cancellation pose immediate risks to the sector
Margins have taken a hit due to sharp rise in raw material prices
Outlook on power equipment companies is positive due to strong capex in power sector

Going ahead for the H2 of FY09E, we expect slower growth in the incremental orderflows to capital goods and engineering company, more importantly with a sharpdownturn, in IIP nos expectation next couple of months coupled with seasonal margin pressure seen in user sector, we believe valuation of capital goods player to get aligned with broad markets. We continue to maintain a positive view on the sector in the long term but the outlook for the next quarter looks challening considering the slowdown see in the economy.


Sell- Cummins India, Kirloskar Oil.
Buy- Jyoti Structures.
Hold- Thermax, KEC Int Ltd, Kalpataru Power.
Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy NTPC, target of Rs 194: Indiabulls Securities

Indiabulls Securities Research has upgraded its rating on NTPC to buy with a target of Rs 194 in its November 11, 2008 research report. "NTPC clocked revenues to the tune of Rs 96.6 billion for Q2’09. Net profit for the quarter increased 9.6% yoy to Rs 21.1 billion. After the recent correction, we believe NTPC’s stock should prove to be a good buy. Based on our DCF valuation, we have arrived at a target price of Rs 194, assuming a terminal growth rate of 5% and a WACC of 10.5%. Since our target price implies an upside of 28% from the CMP, we upgrade our rating to Buy," says Indiabulls Securities' research report.

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

Source: Moneycontrol

Real estate companies likely to face rough weather: R Money

Acoording to Reliance Money, atleast for the next 12 - 18 months, real estate companies are likely to face rough weather.

Sector Outlook:-

Drying up of volumes, liquidity issues along with rising input cost is a curse to real estate companies. Inspite of these issues developers are not ready to reduce the list price. However indirect reduction in prices through discounts and freebies are part of the transaction. Real estate companies are taking several cost cutting measures to improve their margins in the face of the global economic turmoil. Most of the developers are now focusing towards Lower Income Group (LIG) and Middle Income Group (MIG) housing segment (Affordable housing). Also the focus has shifted from accumulating land to execution of current projects. Most of the developers are keeping away from launching of new projects. Malls rental rates are also expected to rationalize. In commercial space focus has shifted from IT/ITES commercial development segment to non IT/ITES commercial development as slowdown is expected in the sector. It’s time for the developers to recalibrate and reprice their products. On the other side buyers are in “Wait & Watch Policy” and are in no hurry to entry any transaction. We expect Q3FY09 will be tough ride for real estate sector. Decreasing commodity prices and interest rates will help the sector get rid of dark clouds in medium to long term. However atleast for the next 12 - 18 months, real estate companies are likely to face
rough weather.

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

Source: Moneycontrol

Buy Jyoti Structures: IIFL

Jyoti Structures remains IIFL's top pick among all the power T&D beneficiaries. The research firm recommends a buy rating on the stock. "Analysis of the current business mix for the various companies focussing on the power T&D segment indicates that Jyoti Structures and Kalpataru Power would be the biggest beneficiaries from a pick-up in award activity. Both these companies derive 85% of their revenues or order book from the domestic T&D space. Jyoti Structures remains our top pick among all the power T&D beneficiaries," says IIFL's research report

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

Source: Moneycontrol

Buy Godrej Consumer: Motilal Oswal

Motilal Oswal has maintained its buy rating on Godrej Consumer Products in its November 19, 2008 research report. "GCPL is expected to report strong margin expansion in Toilet Soaps and improved volumes in Hair Color in FY10. Stabilization of Kinky will be a key contributor to increased profits of its international business in FY10. Improved margins will result in PAT growth accelerating to 31% in FY10 versus just 2% in FY09. Promoters have started exercising the creeping acquisition route, as the limits for such acquisition has been relaxed to 75%; GCPL is also considering buyback of shares from the open market. The stock is trading at 16x FY09E EPS of Rs 7.1 and 12.2x FY10E EPS of Rs 9.3 and has a dividend yield of 3.5%. Maintain Buy," says Motilal Oswal's research report.

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

Source: Moneycontrol

Fast-food ad ban could cut child obesity: U.S. study

WASHINGTON (Reuters) - Banning fast-food advertising on television in the United States could reduce the number of overweight children by as much as 18 percent, researchers said on Wednesday.

But the team at the National Bureau of Economic Research questioned whether it would be practical to impose that kind of government regulation -- something only Sweden, Norway and Finland have done.

"We have known for some time that childhood obesity has gripped our culture, but little empirical research has been done that identifies television advertising as a possible cause," said economist Shin-Yi Chou of Lehigh University in Pennsylvania.

"Hopefully, this line of research can lead to a serious discussion about the type of policies that can curb America's obesity epidemic."

For their study, funded in part by the federal government, Chou and colleagues used data on nearly 13,000 children from the 1979 Child-Young Adult National Longitudinal Survey of Youth and the 1997 National Longitudinal Survey of Youth, both issued by the U.S. Department of Labor.

"The advertising measure used is the number of hours of spot television fast-food restaurant advertising messages seen per week," they wrote in the Journal of Law and Economics.

"Our results indicate that a ban on these advertisements would reduce the number of overweight children ages 3-11 in a fixed population by 18 percent and would reduce the number of overweight adolescents ages 12-18 by 14 percent."

The U.S. Centers for Disease Control and Prevention estimates that 13.9 percent of children aged 2 to 5 are overweight, 18.8 percent of those aged 6 to 11 are and more than 17 percent of those 12 to 19.

The percentages have been steadily rising.

Television watching is also known to raise obesity rates, both because children exercise less and because it can interfere with sleep.

The Institute of Medicine reported in 2006 that there was compelling evidence linking food advertising on television and increased childhood obesity.

One study suggested that children viewed an average of about 20,000 commercials aired on television per year in the late 1970s, rising to 30,000 per year in the late 1980s and more than 40,000 per year in the late 1990s.

Walking house takes a stroll

Nov 20 - A walking house designed by Danish art collective N55 explores nomadic living in the 21st century.

Donna Lynas, Director of Wysing Arts Centre in the UK which commissioned the project says the house is inspired by a utopian idea of the future where the whole world would be free to roam. The Cambridgeshire-based centre has explored ideas of neighbourliness and lifestyles in a series of projects called 'Communities Under Construction.'

- Reuters

Jobs data miserable, regional factories slump

NEW YORK (Reuters) - The number of American workers on the unemployment rolls surged to the highest in a quarter century and a regional manufacturing gauge slumped as U.S. economic misery intensified.

The reports on Thursday were the latest in a growing body of evidence that shows the United States has probably entered one of the worst downturns in decades, while economists expect the world's leading economies to be in recession for about a year.

The number of U.S. workers filing new claims for jobless benefits jumped last week to their highest level in 16 years, Labor Department data showed, suggesting next month's jobs data will add to the 1.2 million jobs already eliminated this year.

"No rest for the weary," said Carl Lantz, U.S. interest rate strategist at Credit Suisse in New York.

"It looks like we'll have another ugly payroll number in December."

Worse yet, the number of workers remaining on jobless benefits, or continuing claims, were the highest since December 1982, rising to 4.012 million in the week ended November 8, the latest data available, from 3.903 million the prior week.

An index of factory conditions in the U.S. Mid-Atlantic region fell to another 18-year low in November, a survey showed.

The Philadelphia Federal Reserve Bank said its business activity index fell to minus 39.3 from minus 37.5 in October. Any reading below zero indicates contraction in the region's manufacturing sector.

A key measure of inflation in the survey, the prices paid index, fell to its lowest since the survey's launch in 1968.

This gives the Federal Reserve leeway to fight the economic downturn by keeping rates low but could also heighten concerns that the U.S. may enter a destructive deflationary spiral, especially after data on Wednesday showed consumer prices fell at a record pace in October.

On Wall Street, U.S. stocks extended earlier losses after the weaker-than-expected Philadelphia Fed survey, though they later edged higher.

Government bonds, which benefit from signs of economic weakness, tested earlier session highs. The dollar edged up against the euro but remained sharply weaker versus yen.

Initial claims for state unemployment insurance benefits were a seasonally adjusted 542,000 in the week ended November 15 from a revised 515,000 the previous week, the Labor Department said.

That was higher than analysts' forecast for a reading of 505,000 new claims.

The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose to 506,500 from 490,750 the week before, the highest since the start of 1983.

The U.S. Conference Board's index of Leading Economic Indicators fell more than expected in October, as stock prices dropped and consumer expectations weakened, the research group said on Thursday.

The index fell 0.8 percent to 99.6 after rising by a revised 0.1 percent in September.

"The economy is contracting, and the pace of contraction may intensify over the next few months," said Ken Goldstein, economist at the Conference Board.

Citi, JPMorgan, Capital One bid for Chevy Chase: sources

NEW YORK (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) and Capital One Financial Corp (COF.N: Quote, Profile, Research, Stock Buzz) are among the final bidders for Chevy Chase Bank, a Bethesda, Maryland, lender, sources familiar with the matter said.

Other banks that looked at Chevy Chase include SunTrust Banks Inc (STI.N: Quote, Profile, Research, Stock Buzz) and BB&T Corp (BBT.N: Quote, Profile, Research, Stock Buzz), one source said.

The bids come as the largest U.S. banks turn their attention to expanding branch networks and amassing pools of low-cost retail deposits after seeing how unreliable capital markets can be when times are tough.

This strategy has already been put into play by JPMorgan, which snapped up banking assets of Washington Mutual Inc (WAMUQ.PK: Quote, Profile, Research, Stock Buzz) from the FDIC for $1.9 billion, and by Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), which trumped a low-ball Citigroup bid to take over East Coast banking giant Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz).

Even securities giants Goldman Sachs group Inc (GS.N: Quote, Profile, Research, Stock Buzz) and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) have become banks and joined the hunt for deposits.

Chevy Chase has $11.4 billion of deposits and 292 branches, according to the Federal Deposit Insurance Corp website.

"The key thing with that bank is that the asset side is not very attractive, but the deposit side is incredibly valuable because it is in Washington, D.C.," the source said.

Chevy Chase was founded in 1969 by Chairman and Chief Executive B. Francis Saul II. It opened its first branch in a trailer on Connecticut Avenue in Chevy Chase, Maryland.

Citi, JPMorgan and SunTrust declined to comment. BB&T, Capital One and Chevy Chase were not immediately available.

GM shares hit 70-year low as quick bailout hopes dim

DETROIT (Reuters) - Shares of General Motors Corp tumbled as much as 39 percent to hit a 70-year low on Thursday as prospects dimmed that lawmakers would reach a compromise on a proposed $25 billion bailout for U.S. automakers before Congress adjourns this week.

Shares of Ford Motor Co hit their lowest level in more than 26 years, and auto parts supplier stocks declined across the board amid concerns a failure by one of the U.S. automakers would touch off a cascade of failures in the struggling industry.

"We're still analyzing the situation, but the feeling is that without a loan package, the probability of GM or Chrysler going bankrupt in early 2009 is extremely high, at about 75 percent," said George Magliano, a forecasting director at influential auto industry tracking firm Global Insight.

Even with a government bailout, Magliano said he saw a 25 percent change of bankruptcy for either automaker amid the credit crisis that has pushed U.S. auto sales to 25-year lows.

Shares of GM were down 19 percent, or 53 cents, to $2.26 on the New York Stock Exchange, after falling earlier in the session to $1.70, their lowest level since 1938.

Shares of Ford fell 9 percent, or 10 cents to $1.16. The stock fell as low as $1.02.

Without a deal this week, any bailout would likely have to wait until the Obama administration takes over in January. By that time, GM has warned, it would run desperately short of its minimum cash needs.

Failure to craft a deal carries the risk that one or more of the U.S. automakers -- GM, Ford or Chrysler LLC -- could be forced into bankruptcy, analysts have warned.

Citigroup analyst Itay Michaeli said little progress appears to have been made to break the stalemate in the Senate over the mechanics of sourcing a $25 billion loan package. Any government actions to provide bridge loans are not expected to entirely solve GM's liquidity outlook through 2009, he added.

"We remain concerned that failure to obtain liquidity through this session may contribute to stakeholder perceptions that Detroit's liquidity options are dwindling, which in itself could increase the risk of a working capital driven liquidity crunch," Michaeli said in a research note.

Chances dimmed that a last-minute plan being crafted by Republican U.S. Senators, with White House support, to provide $25 billion to bail out U.S. automakers would receive enough backing from Democrats to pass before the end of this week.

The White House repeated Thursday it favors using $25 billion in loans already authorized and appropriated to help the industry retool plants and meet new fuel economy mandates versus a proposal by Democrats to provide automakers with another $25 billion out of the $700 billion financial rescue package.

Suppliers took a hit from the automakers' woes, with TRW Automotive Holdings Corp tumbling 21 percent to $2.11 and Lear Corp shedding 24 percent to 87 cents.

Separately, GM's long bonds fell to 14 cents on the dollar after hitting a record low of 12 cents earlier Thursday.

JPMorgan cuts investment banking jobs: sources

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) is cutting about 10 percent of its investment banking staff as the credit crunch and slowdown in the economy bite into bank earnings, people familiar with the situation said on Thursday.

The company will likely cut staff in line with competitors such as Goldman Sachs Group (GS.N: Quote, Profile, Research, Stock Buzz), which is cutting 10 percent, the sources said.

On Thursday, JPMorgan let go at least six equity sales officials from its New York desk, according to one person familiar with the matter.

The bank declined comment.

The company's investment bank has just under 31,000 employees, an increase of about 20 percent compared with the same quarter a year ago, according to a third-quarter regulatory filing.

JPMorgan took on about 6,000 staff from nearly insolvent Bear Stearns Cos in March and has also added about 40,000 staff through its acquisition of failed thrift Washington Mutual Inc (WAMUQ.PK: Quote, Profile, Research, Stock Buzz), according to its third-quarter earnings statement.

The bank's total head count was 228,452 at the end of September.

JPMorgan is seen as one of the Wall Street survivors of the credit crunch. It has not had to make the severe write-downs on mortgage-related assets that other banks have reported because it has limited exposure to the riskier classes of mortgages, such as subprime loans.

But in recent calls with investors and analysts, Jamie Dimon, chief executive, has been warning investors about possible losses to come from the bank's exposure to consumer debt.

At a conference two weeks ago, Dimon said the wider economic downturn could be worse for banks like JPMorgan than the credit crisis that has restricted financial markets over the last year.

This is because the bank has about $250 billion of prime mortgages and home equity loans and the bank is beginning to see customers miss payments on these loans. It has announced a plan to renegotiate about $70 billion in mortgages over the next two years to help these customers.

The company's shares slipped 10 percent to $25.54 on Thursday.

Pakistan protests over U.S. missile strikes

ISLAMABAD (Reuters) - Pakistan summoned U.S. ambassador Anne Patterson on Thursday to protest over missile strikes launched by pilotless drone aircraft against militant targets in Pakistan.

The protest came a day after a suspected U.S. missile strike on Pakistani soil killed five militants, possibly including an Arab al Qaeda operative.

There have been at least 20 strikes in the last three months, reflecting U.S. impatience over militants from Pakistan fueling the Taliban insurgency in Afghanistan and fears that al Qaeda fighters in northwest Pakistan could plan attacks in the West.

Pakistan says the attacks violate its sovereignty, undermine efforts to win public support for the fight against militancy, and make it harder to justify the U.S. alliance.

Wednesday's attack on Bannu district was unusual in that it took place deeper in Pakistani territory, in an area outside the semi-autonomous tribal lands bordering Afghanistan where most other attacks have focused.

Foreign Secretary Salman Bashir lodged "a strong protest" over the "two missiles fired by U.S. drones on a residential compound in Bannu district," a foreign ministry statement said.

Bashir "stressed that these attacks must be stopped."

An embassy spokeswoman confirmed the ambassador had been summoned and said any message from the Pakistani government would be conveyed to Washington, without elaborating further.

Speaking in the National Assembly, Prime Minister Yousaf Raza Gilani called the missile attacks "intolerable" and voiced hope President-elect Barack Obama's government would show more restraint.

"These kinds of acts are counter-productive ... it adds to our problems," Gilani said, adding he was sure when "Obama's government is formed, these attacks will be controlled."

A diplomatic storm blew up in September after a U.S. commando raid, and there has been no incursion by ground troops since.

Addressing NATO's military committee in Brussels on Wednesday Army Chief General Ashfaq Kayani also urged a halt to the use of unmanned "combat aerial vehicles within Pakistani territory."

Kayani met NATO Secretary-General Jaap de Hoop Scheffer, and held meetings with Admiral Michael Mullen, U.S. chairman of the joint chiefs of staff, and a French defense chief.

Earlier this week, the Foreign Ministry denied Pakistan had a secret agreement with Washington to publicly protest the attacks, while privately acquiescing.

Missile-armed drones are primarily used by U.S. forces in the region. The United States seldom confirms drone attacks. Pakistan does not have any combat drones.

The Arab killed in the attack in Bannu was identified by a Pakistani intelligence officer as Abdullah Azam al-Saudi. Bannu district in North West Frontier Province lies at the gateway to North Waziristan, a hotbed of Taliban and al Qaeda support.

The officer, based in neighboring Dera Ismail Khan district, described al-Saudi as a coordinator between al Qaeda and the Taliban in Pakistan.

The officer requested anonymity due to the sensitivity of the subject. There was no other corroboration of al-Saudi's death.

Taliban fighters cordoned off the area around the destroyed house, but photographers took pictures of young boys holding pieces of the missile that destroyed it.

The Pakistani Taliban, in a statement issued after a meeting of commanders in North Waziristan, threatened revenge attacks outside the tribal lands if missile attacks continued.


While the row over missile strikes simmered, NATO's spokesman in Kabul, Brigadier General Richard Blanchette, said coordination with Pakistan has been improving.

Pakistani forces are battling Islamist fighters in other parts of northwest Pakistan, notably Bajaur, a region at the other end of the tribal belt from Waziristan, and Swat valley.

A spokesman for Pakistan's paramilitary forces said on Thursday that 24 al Qaeda-linked militants, including 11 foreigners, had been killed as the military used artillery and jet fighters in support of the ground troops.

The military says more than 1,500 militants have been killed in Bajaur since August while 73 soldiers have also died, though independent casualty estimates are unavailable.

Western forces in Afghanistan have launched "Operation Lionheart" to put pressure on the border with Bajaur, to bottle up insurgents where they can be attacked, Blanchette said.

Sailors prefer pirates to no job

Nov 20 - Seafaring Filipinos worry more about landing work in a shrinking global economy than being hijacked by pirates off Somalia.

The mounting threat posed by Somali pirates is causing waves in many seafaring nations but not in the Philippines. Around 40 percent of the sailors who work on the world's supertankers and cargo ships hail from the Philippines. And sailors there are making light of the risk of being held hostage. They're far more worried about the economic downturn drying up demand for their services.

- Reuters

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.